EXHIBIT 10.49
THIRD AMENDMENT TO CREDIT AGREEMENT
THIS THIRD AMENDMENT (this "Third Amendment"), dated as of
August 16, 1999, to the Credit Agreement, dated as of August 3,
1998, as amended to date ( the "Credit Agreement"), among WPI
Group, Inc., WPI Electronics, Inc., WPI Magnetec, Inc., WPI Micro
Palm, Inc., WPI Power Systems, Inc., WPI Oyster Termiflex, Inc.,
WPI Micro Processor Systems, Inc., WPI Decisionkey, Inc., WPI UK
Holding, Inc., WPI UK Holding, II, Inc., WPI Oyster Terminals,
Inc., WPI Husky Computers, Inc., and WPI Instruments, Inc.,
(collectively, the "Borrowers"), the various financial
institutions parties hereto (collectively, the "Lenders") and
Fleet Bank - NH, for itself, as Lender, and as Agent for Lenders
pursuant to the Credit Agreement (the "Agent").
WITNESSETH:
WHEREAS, the Borrowers, the Lenders and the Agent are
parties to the Credit Agreement, pursuant to which the Lenders
made certain Loans to the Borrowers; and
WHEREAS, the Borrowers, the Lenders and the Agent have
agreed that certain amendments be made to the Credit Agreement,
as further set forth below;
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein contained, the Borrowers, the Lenders
and the Agent hereby agree as follows:
SECTION 1. Definitions. Unless otherwise defined or the
context otherwise requires, terms for which meanings are provided
in the Credit Agreement shall have such meanings when used in
this Third Amendment.
SECTION 2. Amendment to Credit Agreement. Effective on
the Third Amendment Effective Date, the Credit Agreement is
hereby amended in accordance with this Section 2. Except as
expressly so amended, the Credit Agreement shall continue in full
force and effect in accordance with its terms.
SECTION 2.1. Amendment to Section 1.4 (Interest and
Applicable Margins). Paragraph (a) of Section 1.4 of the Credit
Agreement captioned "Interest and Applicable Margins" is hereby
amended to read in its entirety as follows:
1.4. Interest and Applicable Margins.
(a) Borrowers shall pay interest to Agent, for the ratable
benefit of Lenders in accordance with the various Loans being
made by each Lender, in arrears on each applicable Interest
Payment Date, at the following rates: (i) with respect to the
Revolving Credit Advances, the Index Rate plus the Applicable
Revolver Index Margin per annum or, at the election of Borrower
Representative, the applicable LIBOR Rate plus the Applicable
Revolver LIBOR Margin per annum, based on the aggregate Revolving
Credit Advances outstanding from time to time; (ii) with respect
to Term Loan A, the Index Rate plus the Applicable Term Loan A
Index Margin per annum or, at the election of Borrower
Representative, the applicable LIBOR Rate plus the Applicable
Term Loan A LIBOR Margin per annum; (iii) with respect to Term
Loan B, the Index Rate plus the Applicable Term Loan B Index
Margin per annum or, at the election of Borrower Representative,
the applicable LIBOR Rate plus the Applicable Term Loan B LIBOR
Margin per annum; and (iv) with respect to the Swing Line Loan,
the Index Rate plus the Applicable Revolver Index Margin per
annum.
Commencing on the Third Amendment Effective Date
(hereinafter defined), the Applicable Margins shall be as
follows:
Applicable Revolver Index Margin 3.50%
Applicable Revolver LIBOR Margin 4.75%
Applicable Term Loan A Index Margin 3.50%
Applicable Term Loan A LIBOR Margin 4.75%
Applicable Term Loan B Index Margin 4.00%
Applicable Term Loan B LIBOR Margin 5.25%
Applicable Unused Line Fee Margin 0.50%
The Applicable Margins will be adjusted (up or down)
prospectively on a quarterly basis as determined by Borrowers'
Total Debt to EBITDA Ratio, commencing with the first day of the
first calendar month that occurs more than five (5) days after
delivery of Borrowers' unaudited Financial Statements to Lenders
for the first Fiscal Quarter during which Borrowers achieve a
Total Debt to EBITDA Ratio of less than 3.75:1.0. Upon Borrowers
achieving Total Debt to EBITDA Ratio of less than 3.75:1.0,
adjustments in Applicable Margins will be determined by reference
to the following grids:
If the Total Debt to Level of
EBITDA Applicable Margins:
Ratio is:
3 3.75 Level I
3 3.5, but < 3.75 Level II
3 3.0, but < 3.5 Level III
3 2.5, but < 3.0 Level IV
< 2.5 Level V
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Applicable Margins
------------------
Xxxxx Xxxxx Xxxxx Xxxxx Xxxxx
X II III IV V
----- ----- ----- ----- -----
Applicable Revolver 3.50% 1.25% .875% 0.50% 0.25%
Index Margin
Applicable Revolver LIBOR 4.75% 2.50% 2.125% 1.75% 1.50%
Margin
Applicable Term Loan A 3.50% 1.25% .875% 0.50% 0.25%
Index Margin
Applicable Term Loan A 4.75% 2.50% 2.125% 1.75% 1.50%
LIBOR Margin
Applicable Term Loan B 4.0% 1.75% 1.375% 1.25% 1.0%
Index Margin
Applicable Term Loan B 5.25% 3.0% 2.625% 2.50% 2.25%
LIBOR Margin
Applicable Unused Line Fee 0.50% 0.50% 0.50% 0.375% 0.375%
Margin
All adjustments in the Applicable Margins after the Fiscal
Quarter during which Borrowers' achieve a Total Debt to EBITDA
Ratio of less than 3.75:1.0 will be implemented quarterly on a
prospective basis, for each calendar month commencing at least
five (5) days after the date of delivery to Lenders of the
quarterly unaudited or annual audited (as applicable) Financial
Statements of Borrowers evidencing the need for an adjustment.
Concurrently with the delivery of those Financial Statements,
Borrower Representative shall deliver to Agent and Lenders a
certificate, signed by its chief financial officer, setting forth
in reasonable detail the basis for the continuance of, or any
change in, the Applicable Margins. Failure to timely deliver
such Financial Statements shall, in addition to any other remedy
provided for in this Agreement, result in an increase in the
Applicable Margins to the highest level set forth in the
foregoing grid, until the first day of the first calendar month
following the delivery of those Financial Statements
demonstrating that such an increase is not required. If a Default
or Event of Default shall have occurred or be continuing at the
time any reduction in the Applicable Margins is to be
implemented, that reduction shall be deferred until the first day
of the first calendar month following the date on which such
Default or Event of Default is waived or cured.
SECTION 2.2. Amendment to Definition of "Maximum Amount"
set forth in Annex A to Credit Agreement (Definitions). The
definition of "Maximum Amount" set forth in Annex A to Credit
Agreement hereby amended to read in its entirety as follows:
"Maximum Amount" shall mean an amount equal to Fourteen
Million Eight Hundred Thousand Dollars
($14,800,000.00).
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SECTION 2.3. Amendment to Definition of "Borrowing Base"
set forth in Annex A to Credit Agreement (Definitions). The
definition of "Borrowing Base" set forth in Annex A to Credit
Agreement hereby amended to read in its entirety as follows:
"Borrowing Base" shall mean, as of any date of
determination by Agent, from time to time, an amount
equal to the sum of: (a) seventy-five percent (75%) of
Eligible Accounts, less any Reserves established by
Agent at such time, (b) twenty-five percent (25%) of
the value of Eligible Inventory, valued on a first-in,
first out basis (at the lower of cost or market) less
any Reserves established by Agent at such time, and (c)
one million nine hundred thousand dollars
($1,900,000.00) (the "Over Formula Amount"), which Over
Formula Amount shall be subject to step down as
follows: $1,000,000.00 on August 21, 1999; $750,000.00
on September 11, 1999; and $-0- on September 18, 1999.
SECTION 2.4. Amendment to Annex C (Section 4.1 (a) of
Credit Agreement) (Financial Statements and Projections -
Reporting). Paragraphs (l) and (m) are added to Annex C to the
Credit Agreement to read in their entirety as follows:
(l) Monthly Financials. To Agent and Lenders, monthly
financial statements for the Borrowers, prepared on
both a consolidated and individual business unit basis,
by the fifteenth day of the month following the
reported month, certified by the Chief Financial
Officer of Borrower Representative, including (i)
unaudited balance sheets as of the close of the
reported month and the related statements of income and
cash flow for that portion of the Fiscal Year ending as
of the close of such month, and (ii) unaudited
statements of income and cash flow for such month.
(m) Weekly Cash Flow Projections. To Agent and
Lenders, weekly in conjunction with delivery to the
Agent of the weekly Borrowing Base Certificate, rolling
thirteen (13) week cash flow projections prepared by
the Chief Financial Officer of Borrower Representative
in form and detail reasonably satisfactory to Agent.
SECTION 2.5. Amendment to Annex D (Section 4.1 (b) of
Credit Agreement) (Collateral Reports). The Borrowing Base
Certificate, including supporting detail and accompanying
documentation, required pursuant to Paragraph (a)(i) of Annex D
to the Credit Agreement, shall be delivered weekly by the
Wednesday following the reported week rather than on a quarterly
basis.
SECTION 3. Financial Consultant to Lenders. Borrowers
shall reimburse the Agent for all out of pocket expenses and fees
incurred by the Agent in the retention by Agent's legal counsel
of a financial consultant to review the operations, performances
and asset values of the various business units within the
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Borrowers, as well as Borrowers' financial projections. In
addition, Borrowers shall cooperate with such consultant in
conducting its review, to include without limitation access to
the facilities, books and records of the Borrowers and the
individual business units and the opportunity to interview
officers and key employees of the Borrowers.
SECTION 4. Detachable Warrants. In consideration of the
Lenders' limited waiver of Borrowers' default in complying with
their covenants respecting the (a) Total Debt to EBITDA Ratio for
the twelve month periods ended March 28, 1999 and June 27, 1999,
and (b) Minimum Fixed Charge Coverage Ratio for the twelve month
period ended June 27, 1999, as set forth in the limited waiver
executed this date as between the Agent and the Borrowers, in
form attached hereto as Exhibit A (the "Limited Waiver"), and
the accommodations afforded the Borrowers pursuant to this Third
Amendment, WPI Group, Inc. shall grant to the Lenders detachable
warrants to purchase in the aggregate 124,000 shares of its
common stock at an exercise price of $2.75 per share, such
warrants (the "Warrants") to be (a) exercisable at any time on or
after the first anniversary of the Third Amendment Effective Date
and prior to 5:00 p.m. Manchester, New Hampshire time on the
tenth anniversary of such date, (b) in form attached hereto as
Exhibit B, and (c) subject to certain registration rights set
forth in the registration rights agreement to be executed by the
Company and the Lenders, in the form attached hereto as Exhibit C
(the "Registration Rights Agreement").
SECTION 5. Effective Date. This Third Amendment shall
become effective as of the date first above written (the "Third
Amendment Effective Date") when each of the conditions precedent
set forth in this Section 5 have been satisfied and thereafter
shall be known, and may be referred to, as the "Third Amendment
to Credit Agreement".
SECTION 5.1. Execution of Counterparts. The Agent shall
have received executed counterparts of this Third Amendment duly
executed on behalf of the Borrowers and each of the Lenders.
SECTION 5.2. Certified Board Resolutions. The Agent shall
have received copies of resolutions duly adopted by the Boards of
Directors of each of the Borrowers authorizing the execution and
delivery of this Third Amendment by each of the Borrowers, and,
in the case of WPI Group, Inc., issuance of the Warrants and
execution and delivery of the Registration Rights Agreement,
which copies shall have been certified by the Secretaries of each
of the Borrowers as true and accurate, and the resolutions shall
have been certified by such Secretaries as duly adopted,
unamended and in full force and effect.
SECTION 5.3. Limited Waiver. All conditions set forth in
the Limited Waiver of near or even date, which must be satisfied
for such Limited Waiver to take effect, shall have been
satisfied.
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SECTION 5.4. Detachable Warrants; Registration Rights
Agreement. The Warrants, together with the Registration Rights
Agreement, shall have been executed and delivered by WPI Group,
Inc. to the Agent, on behalf of the Lenders.
SECTION 5.5. Amendment Fee. In consideration for the
accommodations afforded the Borrowers pursuant to the Limited
Waiver and this Third Amendment, and in addition to the
restructuring fee payable to the Agent for its own account
pursuant to a separate letter agreement, Borrowers shall have
paid to the Agent a fee of $50,000 for the pro rata accounts of
each of the Lenders.
SECTION 6. Expenses. The Borrowers agree to pay all out-of-
pocket expenses incurred by the Agent in connection with the
preparation of this Third Amendment, including, but not limited
to, the reasonable fees and disbursements of counsel to the
Agent.
SECTION 7. Credit Agreement. Except as expressly amended
hereby, the Credit Agreement shall continue in full force and
effect in accordance with the provisions thereof on the date
hereof. From and after the date on which this Third Amendment
becomes effective, the terms "Agreement", "this Agreement",
"Credit Agreement", "herein", "hereinafter", "hereto", and words
of similar import used in the Credit Agreement or any Loan
Document shall, unless the context otherwise requires, mean and
refer to the Credit Agreement as amended hereby.
SECTION 8. Document Pursuant to Credit Agreement. This
Third Amendment is a Loan Document executed pursuant to the
Credit Agreement and shall be governed in accordance with the
terms thereof.
SECTION 9. Successors and Assigns. This Third Amendment
shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns.
SECTION 10. Full Force and Effect. Except as expressly
amended hereby, all of the representations, warranties, terms,
covenants, and conditions of the Credit Agreement and each other
Loan Document shall remain unchanged and shall remain in full
force and effect in accordance with their respective terms. The
amendments set forth herein shall be limited precisely as
provided for herein to the provisions expressly amended herein
and shall not be deemed to be an amendment of, consent to or
modification of any other term or provision of the Credit
Agreement or of any term or provision of any other Loan Document
or of any transaction or further or future action on the part of
the Borrowers which would require the consent of the Lenders or
the Agent under the Credit Agreement.
SECTION 11. Release of Claims. In consideration for the
accommodations afforded the Borrowers pursuant to this Third
Amendment, the Borrowers waive and release any and all claims,
actions and causes of action of every name and description, known
or unknown, in law or in equity, which any of them has or may
have against the Agent, any of the Lenders and/or any of the
Agent's or Lenders' respective officers, directors, employees,
agents, representatives, affiliates, successors and assigns,
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individually and/or collectively, from the beginning of time to
this date, arising out of or otherwise relating to the Credit
Agreement, the Loan Documents, the Obligations, the transactions
contemplated in the Credit Agreement, and/or the negotiation,
servicing or funding (or failure to fund) of the Loans.
SECTION 12. Governing Law. THIS THIRD AMENDMENT SHALL BE
DEEMED TO BE A CONTRACT MADE UNDER AND BE GOVERNED BY THE
INTERNAL LAWS OF THE STATE OF NEW HAMPSHIRE.
SECTION 13. Counterparts. This Third Amendment may be
executed in any number of counterparts by the parties hereto,
each of which counterparts when so executed shall be an original,
but all the counterparts shall together constitute one and the
same agreement.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the Borrowers, the Agent and the Lenders
have caused this Third Amendment to be executed by their
respective officers thereunto duly authorized as of the day and
year first above written.
BORROWERS:
WPI GROUP, INC.,
WPI POWER SYSTEMS, INC.,
WPI MAGNETEC, INC.,
WPI ELECTRONICS, INC.,
WPI OYSTER TERMIFLEX, INC.,
WPI MICRO PALM, INC.,
WPI MICRO PROCESSOR
SYSTEMS, INC.,
WPI DECISIONKEY, INC.,
WPI UK HOLDING, INC.,
WPI UK HOLDING II, INC.,
WPI OYSTER TERMINALS, INC.,
HUSKY COMPUTERS, INC., and
WPI INSTRUMENTS, INC.
/s/ Xxxxxxx Whitab By:/s/Xxxx X. Xxxxxx
------------------ -----------------
Witness Xxxx X. Xxxxxx, for, on
behalf of, and as Duly
Authorized Officer or Agent of
each of the above-named entities
AGENT:
FLEET BANK-NH, as Agent and as a
Lender
/s/Xxxxxx X. Xxxxxx, Xx. By:/s/Xxxx X. Xxxxx
------------------------ -----------------
Witness Xxxx X. Xxxxx
Senior Vice President
OTHER LENDERS:
BANK OF NEW HAMPSHIRE
By:/s/Xxxxx X. XxXxxx
------------------------ ------------------
Witness Xxxxx X. XxXxxx
Vice President
SOVEREIGN BANK
By:/s/Xxxxxxx X. Xxxxxxxx
------------------------- ----------------------
Witness Xxxxxxx X. Xxxxxxxx
Senior Vice President
BANKBOSTON, N.A.
By:/s/Xxxxxx X. Xxxx
-------------------------- ------------------
Witness Xxxxxx X. Xxxx
Vice President
KEY CORPORATE CAPITAL INC.
By:/s/Xxxxxxxxx Xxxxxxxxxx
-------------------------- -----------------------
Witness Xxxxxxxxx Xxxxxxxxxx
Vice President
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EXHIBIT A
LIMITED WAIVER
LIMITED WAIVER executed August 16, 1999, effective as of
March 28, 1999, (the "Limited Waiver") to the Credit Agreement,
dated as of August 3, 1998, as amended to date (the "Credit
Agreement"), among WPI Group, Inc., WPI Electronics, Inc., WPI
Magnetec, Inc., WPI Micro Palm, Inc., WPI Power Systems, Inc.,
WPI Oyster Termiflex, Inc., WPI Micro Processor Systems, Inc.,
WPI Decisionkey, Inc., WPI UK Holding, Inc., WPI UK Holding, II,
Inc., WPI Oyster Terminals, Inc., WPI Husky Computers, Inc., and
WPI Instruments, Inc., (collectively, the "Borrowers"), the
various financial institutions parties thereto (collectively, the
"Lenders") and Fleet Bank - NH, for itself, as Lender, and as
Agent for Lenders pursuant to the Credit Agreement (the "Agent").
The Borrowers have requested that their compliance with (a)
the "Total Debt to EBITDA Ratio" covenant for the twelve month
periods ended March 28, 1999 and June 27, 1999, and (b) the
"Minimum Fixed Charge Coverage Ratio" covenant for the twelve
month period ended June 27, 1999, which covenants are set forth
in Annex E (Section 6.10) of the Credit Agreement, be waived up
to and until October 1, 1999 . The Borrowers acknowledge that
failure to comply with such covenants for the foregoing twelve
month periods constitutes Events of Default under the Credit
Agreement (the "Specified Defaults"), and that such Specified
Defaults are continuing and have not been previously waived. The
Agent, on behalf of itself and the Lenders, has agreed to grant
such limited waiver, but only on the specific terms and
conditions set forth herein. Accordingly, the Borrowers and the
Agent, on behalf of itself and the Lenders, hereby agree as
follows:
Section 1. Limited Waiver. Upon satisfaction of the
conditions set forth in Section 4 below, the Lenders hereby waive
up to and until October 1, 1999 compliance with the "Total Debt
to EBITDA Ratio" and "Minimum Fixed Charge Coverage Ratio"
covenants set forth in Annex E (Section 6.10) of the Credit
Agreement for the twelve month periods ended March 28, 1999 and
June 27, 1999 in the case of the "Total Debt to EBITDA Ratio",
and for the twelve month period ended June 27, 1999 in the case
of the "Minimum Fixed Charge Coverage Ratio". Such waiver is
expressly limited to compliance with such covenants on March 28,
1999 and June 27, 1999 (the latter date only in the case of the
"Minimum Fixed Charge Coverage Ratio"), and for the respective
twelve month periods then ended; subject to the limited waiver
set forth herein, such covenant , and all other covenants set
forth in the Credit Agreement, shall remain unchanged, binding
upon Borrowers and in full force and effect, subject to the
provisions of the Third Amendment dated as of August 16, 1999 to
the Credit Agreement (the "Third Amendment"). From and after
October 1, 1999, the Specified Defaults shall be Events of
Default for all purposes of the Credit Agreement and the other
Loan Documents. The Agent and the Lenders expressly reserve all
rights and remedies available to them (i) from and after October
1, 1999 as a result of the Specified Defaults and (ii) as a
result of any Events of Default other than the Specified
Defaults.
Section 2. Default Rate. Commencing March 28, 1999, and
continuing until the Third Amendment Effective Date (as defined
in the Third Amendment), interest shall be accrued on the Loans
at the Default Rate as provided in Section 1.4(d) of the Credit
Agreement.
Section 3. Third Amendment. The Borrowers and Lenders
shall execute the Third Amendment amending the interest rate on
the Loans, the Maximum Amount, the Borrowing Base and certain
financial reporting requirements contained in Annex C and Annex
D to the Credit Agreement, as well as providing for the issuance
of certain stock warrants to the Lenders by WPI Group, Inc. and
reimbursement of the fees of a financial consultant to be
retained by legal counsel to the Agent in consideration for this
Limited Waiver and the accommodations afforded the Borrowers
pursuant to the Third Amendment.
Section 4. Conditions of Effectiveness. This Limited
Waiver shall become effective, as of the date set forth above,
upon satisfaction of the following pre-conditions:
(a) the Agent shall have received executed counterparts (by
facsimile or otherwise) of this Limited Waiver, duly executed by
the Borrowers;
(b) accrued interest on the Loans at the Default Rate for
the period commencing March 28, 1999 and ending on the Third
Amendment Effective Date shall have been paid to the Agent; and
(c) the Agent, the Lenders and the Borrowers shall have
duly executed and delivered the Third Amendment, and the
Borrowers shall have satisfied all of the conditions imposed upon
them for such Third Amendment to become effective.
Section 5. Counterparts. This Limited Waiver may be
executed in two or more counterparts, each of which shall
constitute an original, but all of which when taken together
shall constitute but one instrument.
Section 6. Full Force and Effect. Except for the limited
waiver herein of the Specified Defaults, the Credit Agreement, as
amended by the Third Amendment, shall continue in full force and
effect in accordance with the provisions thereof.
Section 7. Expenses. The Borrowers shall pay all out-of-
pocket expenses incurred by the Agent in connection with the
preparation of this Limited Waiver.
Section 8. Headings. The headings of this Limited Waiver
are for the purposes of reference only and shall not limit or
otherwise affect the meaning hereof.
Section 9. Capitalized Terms. Unless otherwise specified,
capitalized terms used herein shall have the respective meanings
assigned thereto in the Credit Agreement.
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IN WITNESS WHEREOF, the undersigned have duly executed and
delivered this Limited Waiver as of the date first above written.
THE BORROWERS:
WPI GROUP, INC.,
WPI POWER SYSTEMS, INC.,
WPI MAGNETEC, INC.,
WPI ELECTRONICS, INC.,
WPI OYSTER TERMIFLEX, INC.,
WPI MICRO PALM, INC.,
WPI MICRO PROCESSOR
SYSTEMS, INC.,
WPI DECISIONKEY, INC.,
WPI UK HOLDING, INC.,
WPI UK HOLDING II, INC.,
WPI OYSTER TERMINALS, INC.,
HUSKY COMPUTERS, INC., and
WPI INSTRUMENTS, INC.
------------------------------ By:------------------------
Witness Xxxx X. Xxxxxx, for, on
behalf of, and as Duly
Authorized Officer or Agent of
each of the above-named entities
THE AGENT:
FLEET BANK - NH, as Agent for
the Lenders
------------------------------- By:-------------------------
Witness Xxxx X. Xxxxx
Senior Vice President
EXHIBIT B
THIS WARRANT AND THE UNDERLYING SHARES OF COMMON STOCK ISSUABLE
UPON ITS EXERCISE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS,
AND MAY NOT BE SOLD OR TRANSFERRED WITHOUT COMPLIANCE WITH THE
REGISTRATION OR QUALIFICATION PROVISIONS OF APPLICABLE FEDERAL
AND STATE SECURITIES LAWS OR APPLICABLE EXEMPTIONS THEREFROM.
THE SECURITIES REPRESENTED BY THIS WARRANT ARE SUBJECT TO A
REGISTRATION RIGHTS AGREEMENT DATED AS OF AUGUST 16, 1999 (THE
"REGISTRATION AGREEMENT"). COPIES OF THE REGISTRATION AGREEMENT
ARE ON FILE AT THE OFFICE OF THE SECRETARY OF THE COMPANY.
No. Right to Purchase
Shares of Common Stock
of
WPI GROUP, INC.
WPI GROUP, INC.
COMMON STOCK PURCHASE WARRANT
August 16, 1999
WPI GROUP, INC., a New Hampshire corporation (the
"Company"), hereby certifies that, for value received,-------------
or its assigns, as a Lender under the Credit Agreement dated as
of August 3, 1998, as amended to date, (the "Credit Agreement")
among the Company, certain of its subsidiaries, Fleet Bank - NH,
as Agent for Lenders identified therein, and such Lenders, is
entitled, subject to the terms set forth below, to purchase from
the Company at any time or from time to time after August 16,
2000 (subject to acceleration as hereinafter provided) (the
"Initial Exerciseability Date") and before 5:00 p.m., Manchester,
New Hampshire time, on August 16, 2009,---------- fully paid and
nonassessable shares of Common Stock, par value $0.01 per share,
of the Company, at a purchase price per share of $2.75 (such
purchase price per share as adjusted from time to time as herein
provided is referred to herein as the "Purchase Price"). The
number and character of such shares of Common Stock and the
Purchase Price are subject to adjustment as provided herein.
This Warrant is one of the Warrants evidencing the right to
purchase shares of Common Stock of the Company issued pursuant to
a certain Third Amendment dated as of August 16, 1999 to the
Credit Agreement (the Credit Agreement, as amended by such Third
Amendment, the "Agreement"), and subject to the Registration
Agreement, a copy of which agreement is on file at the principal
office of the Company, and the holder of this Warrant shall be
entitled to all of the benefits and bound by all of the
applicable obligations of the Registration Agreement, as provided
therein. This Warrant is detachable from the obligations
incurred by the Company pursuant to the Credit Agreement, and
shall survive the satisfaction of such obligations.
As used herein the following terms, unless the context
otherwise requires, have the following respective meanings:
(a) The term "Company" shall include WPI Group, Inc.,
and any corporation which shall succeed to, or assume the
obligations of, the Company hereunder.
(b) The term "Common Stock" includes (i) the Company's
Common Stock, par value $0.01 per share, as authorized on
the date of the Agreement, (ii) any other capital stock of
any class or classes (however designated) of the Company,
authorized on or after such date, the holders of which shall
have the right, without limitation as to amount per share,
either to all or to a share of the balance of current
dividends and liquidating distributions after the payment of
dividends and distributions on any shares entitled to
preference in the payment thereof, and the holders of which
shall ordinarily, in the absence of contingencies, be
entitled to vote for the election of a majority of directors
of the Company (even though the right so to vote may have
been suspended by the happening of such a contingency) and
(iii) any other securities into which or for which any of
the securities described in (i) or (ii) above may be
converted or exchanged pursuant to a plan of
recapitalization, reorganization, merger, sale of assets or
otherwise.
(c) The term "Other Securities" refers to any stock
(other than Common Stock) and other securities of the
Company or any other person (corporate or otherwise) which
the holders of the Warrants at any time shall be entitled to
receive, or shall have received, on the exercise of the
Warrants, in lieu of or in addition to Common Stock, or
which at any time shall be issuable or shall have been
issued in exchange for or in replacement of Common Stock or
Other Securities pursuant to Section 5 or otherwise.
(d)The term "Warrant" means this Common Stock Purchase
Warrant.
1. Exercise of Warrant.
1.1 Full Exercise. This Warrant may be exercised at any time
before its expiration in full by the holder hereof by surrender
of this Warrant, with the form of subscription at the end hereof
duly executed by such holder, to the Company at its principal
office, accompanied by payment, in cash or by certified or
official bank check payable to the order of the Company, in the
amount obtained by multiplying the number of shares of Common
Stock for which this Warrant is then exercisable by the Purchase
Price then in effect.
1.2 Partial Exercise. This Warrant may be exercised at any time
before its expiration in part (in lots of 100 shares or, if this
Warrant is then exercisable for a lesser amount, in such lesser
amount) by surrender of this Warrant and payment of the Purchase
Price then in effect in the manner and at the place provided in
subsection 1.1, except that the amount payable by the holder on
such partial exercise shall be the amount obtained by multiplying
(a) the number of shares of Common Stock designated by the holder
in the subscription at the end hereof by (b) the Purchase Price
then in effect. On any such partial exercise the Company at its
2
expense will forthwith issue and deliver to or upon the order of
the holder hereof a new Warrant or Warrants of like tenor, in the
name of the holder hereof or as such holder (upon payment by such
holder of any applicable transfer taxes) may request, calling in
the aggregate on the face or faces thereof for the number of
shares of Common Stock for which such Warrant or Warrants may
still be exercised.
1.3 Company Acknowledgment. The Company will, at the time of
the exercise of this Warrant, upon the request of the holder
hereof acknowledge in writing its continuing obligation to afford
to such holder any rights to which such holder shall continue to
be entitled after such exercise in accordance with the provisions
of this Warrant. If the holder shall fail to make any such
request, such failure shall not affect the continuing obligation
of the Company to afford to such holder any such rights.
1.4 Trustee for Warrant Holders. In the event that a bank or
trust company shall have been appointed as trustee for the
holders of the Warrants pursuant to subsection 4.2, such bank or
trust company shall have all the powers and duties of a warrant
agent appointed pursuant to Section 13 and shall accept, in its
own name for the account of the Company or such successor person
as may be entitled thereto, all amounts otherwise payable to the
Company or such successor, as the case may be, on exercise of
this Warrant pursuant to this Section 1.
1.5 Net Issue Election. The holder may elect to receive,
without the payment by the holder of any additional
consideration, shares equal to the value of this Warrant or any
portion hereof by the surrender of this Warrant or such portion
to the Company, with the net issue election notice annexed hereto
duly executed, at the office of the Company. Thereupon, the
Company shall issue to the holder such number of fully paid and
nonassessable shares of Common Stock as is computed using the
following formula:
X = Y (A-B)
A
where X =the number of shares to be issued to the holder
pursuant to this Section 1.5.
Y = the number of shares covered by this Warrant in
respect of which the net issue election is made
pursuant to this Section 1.5.
A = the fair market value of one share of Common
Stock, as determined in accordance with the provisions
of this Section 1.5.
B = the Purchase Price in effect under this Warrant at
the time the net issue election is made pursuant to
this Section 1.5.
For purposes of this Section 1.5, the "fair market value" per
share of the Company's Common Stock shall mean:
3
(a) If the Common Stock is traded on a national
securities exchange or admitted to unlisted trading
privileges on such an exchange, or is listed on the National
Market (the "National Market") of the National Association
of Securities Dealers Automated Quotations System (the
"NASDAQ"), the fair market value shall be the last reported
sale price of the Common Stock on such exchange or on the
National Market on the last business day before the
effective date of exercise of the net issue election or if
no such sale is made on such day, the mean of the closing
bid and asked prices for such day on such exchange or on the
National Market;
(b) If the Common Stock is not so listed or admitted
to unlisted trading privileges, the fair market value shall
be the mean of the last bid and asked prices reported on the
last business day before the date of the election (1) by the
NASDAQ or (2) if reports are unavailable under clause (a)
above by the National Quotation Bureau Incorporated; and
(c) If the Common Stock is not so listed or admitted
to unlisted trading privileges and bid and ask prices are
not reported, the fair market value shall be the price per
share which the Company could obtain from a willing buyer
for shares sold by the Company from authorized but unissued
shares, as such price shall be determined by mutual
agreement of the Company and the holder of this Warrant. If
the holder of this Warrant and the Company are unable to
agree on such fair market value, the holder of this Warrant
shall select a pool of three independent and nationally-
recognized investment banking firms from which the Company
shall select one such firm to appraise the fair market value
of the Warrant and to perform the computations involved.
The determination of such investment banking firm shall be
binding upon the Company, the holder of this Warrant and any
other holder of Warrants or Warrant Shares in connection
with any transaction occurring at the time of such
determination. All expenses of such investment banking firm
shall be borne by the Company. In all cases, the
determination of fair market value shall be made without
consideration of the lack of a liquid public market for the
Common Stock and without consideration of any "control
premium" or any discount for holding less than a majority or
controlling interest of the outstanding Common Stock.
1.6 Acceleration of Exercisability. Notwithstanding
the Initial Exercise DateExercisability Date, the Warrant shall
become exercisable on any earlier date that notices are sent to
holders of shares of Common Stock as contemplated in Section 8
with respect to any of the events set forth in subsection 4.1,
and the holder of this Warrant shall be entitled to receive any
such notice as provided in Section 8.
2. Delivery of Stock Certificates, etc. on Exercise. As soon
as practicable after the exercise of this Warrant in full or in
part, and in any event within ten (10) days thereafter, the
Company at its expense (including the payment by it of any
applicable issue taxes) will cause to be issued in the name of
and delivered to the holder hereof, or as such holder (upon
payment by such holder of any applicable transfer taxes) may
direct, a certificate or certificates for the number of fully
paid and nonassessable shares of Common Stock (or Other
Securities) to which such holder shall be entitled on such
exercise, plus, in lieu of any fractional share to which such
holder would otherwise be entitled, cash equal to such fraction
multiplied by the then current market value of one full share,
4
together with any other stock or other securities and property
(including cash, where applicable) to which such holder is
entitled upon such exercise pursuant to Section 1 or otherwise.
3. Adjustment for Dividends in Other Stock, Property, etc.;
Reclassification, etc. In case at any time or from time to time,
the holders of Common Stock (or Other Securities) in their
capacity as such shall have received, or (on or after the record
date fixed for the determination of shareholders eligible to
receive) shall have become entitled to receive, without payment
therefor,
(a) other or additional stock or other securities or property
(other than cash) by way of dividend, or
(b) any cash (excluding cash dividends payable solely out of
earnings or earned surplus of the Company), or
(c) other or additional stock or other securities or property
(including cash) by way of spin-off, split-up, reclassification,
recapitalization, combination of shares or similar corporate
rearrangement,
other than additional shares of Common Stock (or Other
Securities) issued as a stock dividend or in a stock-split
(adjustments in respect of which are provided for in Section 5),
then and in each such case the holder of this Warrant, on the
exercise hereof as provided in Section 1, shall be entitled to
receive the amount of stock and other securities and property
(including cash in the cases referred to in subdivisions (b) and
(c) of this Section 3) which such holder would hold on the date
of such exercise if on the date hereof he had been the holder of
record of the number of shares of Common Stock called for on the
face of this Warrant and had thereafter, during the period from
the date hereof to and including the date of such exercise,
retained such shares and all such other or additional stock and
other securities and property (including cash in the cases
referred to in subdivisions (b) and (c) of this Section 3)
receivable by him as aforesaid during such period, giving effect
to all adjustments called for during such period by Sections 4
and 5.
4. Adjustment for Reorganization, Consolidation, Merger, etc.
4.1 Reorganization, Consolidation, Merger, etc. In case at any
time or from time to time, the Company shall (a) effect a capital
reorganization or reclassification of its capital stock, (b)
consolidate with or merge into any other person, or (c) transfer
all or substantially all of its properties or assets to any other
corporation or other business entity under any plan or
arrangement contemplating the dissolution of the Company, then,
in each such case, the holder of this Warrant, on the exercise
hereof as provided in Section 1 at any time after the
consummation of such reorganization, consolidation or merger or
the effective date of such dissolution, as the case may be, shall
receive, in lieu of the Common Stock (or Other Securities)
issuable on such exercise prior to such consummation or such
effective date, the stock and other securities and property
(including cash) to which such holder would have been entitled
upon such consummation or in connection with such dissolution, as
the case may be, if such holder had so exercised this Warrant,
immediately prior thereto, all subject to further adjustment
5
thereafter as provided in Sections 3 and 5. The Company will 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 mailed or delivered to the holder of this Warrant at
the last address of such holder appearing on the books of the
Company, the obligation to delivery to such holder such shares of
stock, securities or assets as, in accordance with the foregoing
provisions, such holder may be entitled to purchase.
4.2 Dissolution. In the event of any dissolution of the Company
following the transfer of all or substantially all of its
properties or assets, the Company, prior to such dissolution,
shall at its expense deliver or cause to be delivered the stock
and other securities and property (including cash, where
applicable) receivable by the holders of the Warrants after the
effective date of such dissolution pursuant to this Section 4 to
a bank or trust company having its principal office in
Manchester, New Hampshire or Boston, Massachusetts, as trustee
for the holder or holders of the Warrants.
4.3 Continuation of Terms. Upon any reorganization,
consolidation, merger or transfer (and any dissolution following
any transfer) referred to in this Section 4, this Warrant shall
continue in full force and effect, subject to expiration in
accordance with Section 18 hereof, and the terms hereof shall be
applicable to the shares of stock and other securities and
property receivable on the exercise of this Warrant after the
consummation of such reorganization, consolidation or merger or
the effective date of dissolution following any such transfer, as
the case may be, and shall be binding upon the issuer of any such
stock or other securities, including, in the case of any such
transfer, the person acquiring all or substantially all of the
properties or assets of the Company, whether or not such person
shall have expressly assumed the terms of this Warrant as
provided in Section 6.
5. Anti-Dilution Adjustment.
5.1 General. The Purchase Price shall be subject to adjustment
from time to time as hereinafter provided. Upon each adjustment
of the Purchase Price, the holder of this Warrant shall
thereafter be entitled to purchase, at the Purchase Price
resulting from such adjustment, the number of shares obtained by
multiplying the 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 Purchase Price resulting from such
adjustment.
5.2 Purchase Price Adjustments. If and whenever after the date
hereof the Company shall issue or sell any shares of its Common
Stock (except (i) upon exercise of one or more of the Warrants or
(ii) shares of Common Stock issued to employees, officers,
directors of the Company upon the exercise of options granted
under the Company's Employee Stock Option/Purchase Plans
(hereinafter defined) not to exceed in the aggregate 1,200,000
shares of Common Stock) for a consideration per share less than
the Purchase Price in effect immediately prior to the time of
6
such issue or sale, or shall be deemed under the provisions of
this Section 5 to have effected any such issuance or sale, then,
forthwith upon such issue or sale, the Purchase Price shall be
reduced to the price (calculated to the nearest $0.0001) obtained
by multiplying the Purchase Price in effect immediately prior to
the time of such issue or sale by a fraction, the numerator of
which shall be the sum of (i) the number of shares of Common
Stock outstanding immediately prior to such issue or sale
multiplied by the Purchase Price immediately prior to such issue
or sale plus (ii) the consideration received by the Company upon
such issue or sale, and the denominator of which shall be the
product of (iii) the total number of shares of Common Stock
outstanding immediately after such issue or sale, multiplied by
(iv) the Purchase Price immediately prior to such issue or sale.
As used herein, "Employee Stock Option/Purchase Plans" consist of
the Company's 1997 Equity Incentive Plan, 1995 Stock Option Plan,
Employee Stock Purchase Plan, Employee Bonus Award Plan, and non
qualified options granted to certain Directors of the Company.
Notwithstanding the foregoing, no adjustment of the Purchase
Price shall be made in an amount less than $0.0001 per share, but
any such lesser adjustment shall be carried forward and shall be
made at the time of and together with the next subsequent
adjustment which together with any adjustments so carried forward
shall amount to $0.0001 per share or more.
5.3 Option Grants. In the event that at any time, other than
the issuance of options pursuant to the Company's Employee Stock
Option Plan, the Company shall in any manner grant (directly, 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 any stock or securities convertible into or exchangeable for
Common Stock (such rights or options being herein called
"Options" and such convertible or exchangeable stock or
securities being herein called "Convertible Securities"), whether
or not such 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 Options or upon conversion or exchange of such Convertible
Securities (determined by dividing (i) the total amount, if any,
received or receivable by the Company as consideration for the
granting of such Options, plus the minimum aggregate amount of
additional consideration payable to the Company upon the exercise
of all such Options, plus, in the case of any such 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 (ii) the total number of shares of Common
Stock issuable upon the exercise of such Options or upon the
conversion or exchange of all such Convertible Securities
issuable upon the exercise of such Options) shall be less than
the Purchase Price in effect immediately prior to the time of the
granting of such Options, then the total number of shares of
Common Stock issuable upon the exercise of such Options or upon
conversion or exchange of the total amount of such Convertible
Securities issuable upon the exercise of such Options shall (as
of the date of granting such Options) be deemed to be outstanding
and to have been issued for such price per share. Except as
otherwise provided in subsection 5.5, no further adjustment of
the Purchase Price shall be made upon the actual issue of such
Common Stock or of such Convertible Securities upon exercise of
such Options or upon the actual issue of such Common Stock upon
conversion or exchange of such Convertible Securities.
7
5.4 Convertible Security Grants. In the event that the Company
shall in any manner issue (directly, by assumption in a merger or
otherwise) or sell any Convertible Securities (other than
pursuant to the exercise of Options to purchase such Convertible
Securities covered by subsection 5.3), 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 (i) 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 (ii) 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 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, except as otherwise
provided in subsection 5.5, no further adjustment of the Purchase
Price shall be made upon the actual issue of such Common Stock
upon conversion or exchange of such Convertible Securities.
5.5 Effect of Alteration to Option or Convertible Security
Terms. In connection with any change in, or the expiration or
termination of, the purchase rights under any Option or the
conversion or exchange rights under any Convertible Securities,
the following provisions shall apply:
(A) If the purchase price provided for in any
Option referred to in subsection 5.3, the additional
consideration, if any, payable upon the conversion or
exchange of any Convertible Securities referred to in
subsection 5.3 or 5.4, or the rate at which any Convertible
Securities referred to in subsection 5.3 or 5.4 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), then the
Purchase Price in effect at the time of such change shall
forthwith be increased or decreased to the Purchase Price
which would be in effect immediately after such change if
(a) the adjustments which were made upon the issuance of such
Options or Convertible Securities had been made upon the
basis of (and taking into account the total consideration
received for) (i) the issuance at that time of the Common
Stock, if any, delivered upon the exercise of any such
Options or upon the conversion or exchange of any such
Convertible Securities before such change, and (ii) the
issuance at that time of all such Options or Convertible
Securities, with terms and provisions reflecting such change,
which are still outstanding after such change, and (b) the
Purchase Price as adjusted pursuant to clause (a) preceding
had been used as the basis for the adjustments required
hereunder in connection with all other issues or sales of
Common Stock, Options or Convertible Securities by the
Company subsequent to the issuance of such Options or
Convertible Securities.
8
(B) On the partial or complete expiration of any
Options or termination of any right to convert or exchange
Convertible Securities, the Purchase Price then in effect
hereunder shall forthwith be increased or decreased to the
Purchase Price which would be in effect at the time of such
expiration or termination if (a) the adjustments which were
made upon the issuance of such Options or Convertible
Securities had been made upon the basis of (and taking into
account the total consideration received for) (i) the
issuance at that time of the Common Stock, if any, delivered
upon the exercise of such Options or upon the conversion or
exchange of such Convertible Securities before such
expiration or termination, and (ii) the issuance at that time
of only those such Options or Convertible Securities which
remain outstanding after such expiration or termination, and
(b) the Purchase Price as adjusted pursuant to clause (a)
preceding had been used as the basis for adjustments required
hereunder in connection with all other issues or sales of
Common Stock, Options or Convertible Securities by the
Company subsequent to the issuance of such Options or
Convertible Securities.
(C) If the purchase price provided for in any
Option referred to in subsection 5.3 or the rate at which any
Convertible Securities referred to in subsection 5.3 or 5.4
are convertible into or exchangeable for Common Stock shall
be reduced at any time under or by reason ofr provisions with
respect thereto designed to protect against dilution, and the
event causing such reduction is one that did not also require
an adjustment in the Purchase Price under other provisions of
this Section 5, then in case of the delivery of shares of
Common Stock upon the exercise of any such Option or upon
conversion or exchange of any such Convertible Securities,
the Purchase Price then in effect hereunder shall forthwith
be adjusted to such amount as would have obtained if such
Option or Convertible Securities had never been issued and if
the adjustments made upon the issuance of such Option or
Convertible Securities had been made upon the basis of the
issuance of (and taking into account the total consideration
received for) the shares of Common Stock delivered as
aforesaid (provided that the Purchase Price used in such
determination shall be the Purchase Price on the date of
issue of such shares); provided that no such adjustment shall
be made unless the Purchase Price then in effect would be
reduced thereby.
5.6 Dividends of Common Stock, Options or Convertible
Securities. In the event that the Company shall declare a
dividend or make any other distribution upon any stock of the
Company payable in Common Stock, Options or Convertible
Securities, any Common Stock, Options or Convertible Securities,
as the case may be, issuable in payment of such dividend or
distribution shall be deemed to have been issued or sold without
consideration.
5.7 Dilution in Case of Other Securities. In case any Other
Securities shall be issued or sold by the Company, or shall
become subject to issue upon the conversion or exchange of any
stock (or Other Securities) of the Company (or any other issuer
of Other Securities or any other person referred to in Section 4)
or to subscription, purchase or other acquisition pursuant to any
rights or options granted by the Company (or such other issuer or
person), for a consideration per share such as to dilute the
purchase rights evidenced by this Warrant, the computations,
adjustments and readjustments provided for in this Section 5 with
9
respect to the Purchase Price and the number of shares of Common
Stock issuable upon exercise of this Warrant shall be made as
nearly as possible in the manner so provided and applied to
determine the amount of Other Securities from time to time
receivable on the exercise of the Warrants, so as to protect the
holders of the Warrants against the effect of such dilution.
5.8 Stock Splits and Reverse Splits. In the event that the
Company shall at any time subdivide its outstanding shares of
Common Stock into a greater number of shares, the Purchase Price
in effect immediately prior to such subdivision shall be
proportionately reduced and the number of Warrant Shares
purchasable pursuant to this Warrant immediately prior to such
subdivision shall be proportionately increased, and conversely,
in the event that the outstanding shares of Common Stock of the
Company shall at any time be combined into a smaller number of
shares, the Purchase Price in effect immediately prior to such
combination shall be proportionately increased and the number of
Warrant Shares purchasable upon the exercise of this Warrant
immediately prior to such combination shall be proportionately
reduced. Except as provided in this subsection 5.8 no adjustment
in the Purchase Price and no change in the number of Warrant
Shares purchasable shall be made under this Section 5 as a result
of or by reason of any such subdivision or combination.
5.9 Determination of Consideration Received. For purposes of
this Section 5, the amount of consideration received by the
Company in connection with the issuance or sale of Common Stock,
Options or Convertible Securities shall be determined in
accordance with the following:
(A) In the event that shares of Common Stock,
Options or Convertible Securities shall be issued or sold for
cash, the consideration received therefor shall be deemed to
be the amount payable to the Company therefor, without
deduction therefrom of any expenses incurred or any
underwriting commissions or concessions or discounts paid or
allowed by the Company in connection therewith.
(B) In the event that any shares of Common Stock,
Options or Convertible Securities shall be issued or sold for
a consideration other than cash, the amount of the
consideration other than cash payable to the Company shall be
deemed to be the fair value of such consideration as
reasonably determined by the Board of Directors of the
Company, without deduction of any expenses incurred or any
underwriting commissions or concessions or discounts paid or
allowed by the Company in connection therewith.
(C) The amount of consideration deemed to be
received by the Company pursuant to the foregoing provisions
of this subsection 5.9 upon any issuance and/or sale,
pursuant to an established compensation plan of the Company,
to directors, officers or employees of the Company in
connection with their employment, of shares of Common Stock,
Options or Convertible Securities, shall be increased by the
amount of any tax benefit realized by the Company as a result
of such issuance and/or sale, the amount of such tax benefit
being the amount by which the federal and/or state income or
other tax liability of the Company shall be reduced by reason
of any deduction or credit in respect of such issuance and/or
sale.
10
(D) In the event that any shares of Common Stock,
Options or Convertible Securities shall be issued in
connection with any merger in which the Company is the
surviving corporation, the amount of consideration therefor
shall be deemed to be the fair value as reasonably determined
by the Board of Directors of the Company of such portion of
the assets and business of the non-surviving corporation as
such Board shall determine to be attributable to such Common
Stock, Options or Convertible Securities, as the case may be.
(E) In the event that any Common Stock, Options
and/or Convertible Securities shall be issued in connection
with the issue and sale of other securities or property of
the Company, together comprising one integral transaction in
which no specific consideration is allocated to such Common
Stock, Options or Convertible Securities by the parties
thereto, such Common Stock, Options and/or Convertible
Securities shall be deemed to have been issued without
consideration.
5.10 Record Date as Date of Issue or Sale. In the event that at
any time the Company shall take a record of the holders of its
Common Stock for the purpose of entitling them (i) to receive a
dividend or other distribution payable in Common Stock, Options
or Convertible Securities, or (ii) to subscribe for or purchase
Common Stock, Options 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 right of
subscription or purchase, as the case may be.
5.11 Treasury Stock. 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 (other than their cancellation without
reissuance) shall be considered an issue or sale of Common Stock
for the purposes of this Section 5.
6. No Dilution or Impairment. 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 the Warrants, but will at all times in good
faith assist in the carrying out of all such terms and in the
taking of all such action as may be necessary or appropriate in
order to protect the rights of the holders of the Warrants
against dilution or other impairment. Without limiting the
generality of the foregoing, the Company (a) will not increase
the par value or stated value of any shares of stock receivable
on the exercise of the Warrants above the amount payable therefor
on such exercise, (b) will take all such action as may be
necessary or appropriate in order that the Company may validly
and legally issue fully paid and nonassessable shares of stock on
the exercise of all Warrants from time to time outstanding,
(c) will not issue any capital stock of any class which is
preferred as to dividends or as to the distribution of assets
upon voluntary or involuntary dissolution, liquidation or winding
up, unless the rights of the holders thereof shall be limited to
a fixed sum or percentage of par value in respect of
11
participation in dividends and in any such distribution of assets
or such stock shall be non voting and not be convertible into
shares of Common Stock or other voting stock, and (d) will not
transfer all or substantially all of its properties and assets to
any other person (corporate or otherwise), or consolidate with or
merge into any other person or permit any such person to
consolidate with or merge into the Company (if the Company is not
the surviving person), unless such other person shall expressly
assume in writing and become bound by all the terms of the
Warrants.
7. Accountants' Certificate as to Adjustments. In each case of
any adjustment or readjustment in the shares of Common Stock (or
Other Securities) issuable on the exercise of the Warrants, the
Company's chief financial officer will compute, or if requested
by the holders of Warrants to purchase over 50% of the shares of
Common Stock which may be purchased upon exercise of the Warrants
the Company at its expense will promptly cause independent
certified public accountants of recognized standing selected by
the Company at its expense to compute, such adjustment or
readjustment in accordance with the terms of the Warrants and
prepare a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which such
adjustment or readjustment is based, including a statement of (a)
the consideration received or receivable by the Company for any
additional shares of Common Stock (or Other Securities) issued or
sold or deemed to have been issued or sold, (b) the number of
shares of Common Stock (or Other Securities) outstanding or
deemed to be outstanding, and (c) the Purchase Price and the
number of shares of Common Stock to be received upon exercise of
this Warrant, in effect immediately prior to such issue or sale
and as adjusted and readjusted as provided in this Warrant. The
Company will forthwith mail a copy of each such certificate to
each holder of a Warrant, and will, on the written request at any
time of any holder of a Warrant (such request shall not be made
more than once in any Fiscal Quarter), furnish to such holder a
like certificate setting forth the Purchase Price at the time in
effect and showing how it was calculated.
8. Notices of Record Date, etc. In the event of
(a) any taking by the Company of a record of the holders of any
class of securities for the purpose of determining the holders
thereof who are entitled to receive any dividend or other
distribution, or any right to subscribe for, purchase or
otherwise acquire any shares of stock of any class or any other
securities or property, or to receive any other right or any
declaration of a cash dividend on the Common Stock, or
(b) any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the
Company or any transfer of all or substantially all the assets of
the Company to or consolidation or merger of the Company with or
into any other person, or
(c) any voluntary or involuntary dissolution, liquidation or
winding-up of the Company, or
(d) any proposed issue or grant by the Company of any shares of
12
stock of any class or any other securities, or any right or
option to subscribe for, purchase or otherwise acquire any shares
of stock of any class or any other securities (other than the
issue of Common Stock on the exercise of the Warrants),
then and in each such event the Company will mail or cause to be
mailed to each holder of a Warrant a notice specifying (i) the
date on which any such record is to be taken for the purpose of
such dividend, distribution or right, and stating the amount and
character of such dividend, distribution or right, (ii) the date
on which any such reorganization, reclassification,
recapitalization, transfer, consolidation, merger, dissolution,
liquidation or winding-up is to take place, and the time, if any
is to be fixed, as of which the holders of record of Common Stock
(or Other Securities) shall be entitled to exchange their shares
of Common Stock (or Other Securities) for securities or other
property deliverable on such reorganization, reclassification,
recapitalization, transfer, consolidation, merger, dissolution,
liquidation or winding-up, and (iii) the amount and character of
any stock or other securities, or rights or options with respect
thereto, proposed to be issued or granted, the date of such
proposed issue or grant and the persons or class of persons to
whom such proposed issue or grant is to be offered or made. Such
notice shall be mailed at least twenty (20) days prior to the
date specified in such notice on which any such action is to be
taken, except with respect to the grant of options under the
Company's Employee Stock Option/Purchase Plans in which case such
notice shall be given not later than the date of grant.
9. Reservation of Stock, etc. Issuable on Exercise of Warrants.
The Company will at all times reserve and keep available, solely
for issuance and delivery on the exercise of the Warrants, all
shares of Common Stock (or Other Securities) from time to time
issuable on the exercise of the Warrants.
10. Representations and Warranties of the Company. This Warrant
is issued and delivered by the Company on the basis of the
following:
(a) Authorization and Delivery. This Warrant has been duly
authorized and executed by the Company and when delivered will be
the valid and binding obligation of the Company enforceable in
accordance with its terms;
(b) Warrant Shares. The shares of Common Stock to be
issued pursuant to this Warrant have been duly authorized and
reserved for issuance by the Company and, when issued and paid
for in accordance with the terms hereof, will be validly issued,
fully paid and nonassessable;
(c) Rights and Privileges. The rights, preferences,
privileges and restrictions granted to or imposed upon such
shares of Common Stock and the holders thereof are as set forth
herein and in the Company's Articles of Incorporation.
(d) No Inconsistency. The execution and delivery of this
Warrant are not, and the issuance of the shares of Common Stock
upon exercise of this Warrant in accordance with the terms hereof
will not be, inconsistent with the Company's Articles of
Incorporation or by-laws, do not and will not contravene any law,
13
governmental rule or regulation, judgment or order applicable to
the Company, and do not and will not contravene any provision of,
or constitute a default under, any indenture, mortgage, contract
or other instrument of which the Company is a party or by which
it is bound or require the consent or approval of, the giving of
notice to, the registration with the taking of any action in
respect of or by, any Federal, state or local government
authority or agency or other person.
11. Exchange of Warrants. On surrender for exchange of any
Warrant, properly endorsed, to the Company, the Company at its
expense will issue and deliver to or on the order of the holder
thereof a new Warrant or Warrants of like tenor, in the name of
such holder or as such holder (on payment by such holder of any
applicable transfer taxes) may direct, calling in the aggregate
on the face or faces thereof for the number of shares of Common
Stock called for on the face or faces of the Warrant or Warrants
so surrendered.
12. Replacement of Warrants. On receipt of evidence
reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of any Warrant and, in the case of any
such loss, theft or destruction of any Warrant, on delivery of an
indemnity agreement or security reasonably satisfactory in form
and amount to the Company or, in the case of any such mutilation,
on surrender and cancellation of such Warrant, the Company at its
expense will execute and deliver, in lieu thereof, a new Warrant
of like tenor.
13. Warrant Agent. The Company may, by written notice to
each holder of a Warrant, appoint an agent having an office in
Boston, Massachusetts for the purpose of issuing Common Stock (or
Other Securities) on the exercise of the Warrants pursuant to
Section 1, exchanging Warrants pursuant to Section 11, and
replacing Warrants pursuant to Section 12, or any of the
foregoing, and thereafter any such issuance, exchange or
replacement, as the case may be, shall be made at such office by
such agent.
14. Remedies. The Company stipulates that the remedies at
law of the holder of this Warrant in the event of any default or
threatened default by the Company in the performance of or
compliance with any of the terms of this Warrant are not and will
not be adequate, and that such terms may be specifically enforced
by a decree for the specific performance of any agreement
contained herein or by an injunction against a violation of any
of the terms hereof or otherwise.
15. Negotiability, etc. This Warrant is issued upon the
following terms, to all of which each holder or owner hereof by
the taking hereof consents and agrees:
(a) title to this Warrant may be transferred by
endorsement (by the holder hereof executing the form of
assignment at the end hereof) and delivery in the same
manner as in the case of a negotiable instrument
transferable by endorsement and delivery; and
(b) any person in possession of this Warrant properly
endorsed for transfer to such person (including endorsed in
14
blank) is authorized to represent himself as absolute owner
hereof and is empowered to transfer absolute title hereto by
endorsement and delivery hereof to a bona fide purchaser
hereof for value; each prior taker or owner waives and
renounces all of his equities or rights in this Warrant in
favor of each such bona fide purchaser, and each such bona
fide purchaser shall acquire absolute title hereto and to
all rights represented hereby. Nothing in this
paragraph (b) shall create any liability on the part of the
Company beyond any liability or responsibility it has under
law.
16. Notices, etc. All notices and other communications
from the Company to the holder of this Warrant shall be mailed by
first class registered or certified mail, postage prepaid, at
such address as may have been furnished to the Company in writing
by such holder or, until any such holder furnishes to the Company
an address, then to, and at the address of, the last holder of
this Warrant who has so furnished an address to the Company.
17. Miscellaneous. This Warrant and any term hereof may be
changed, waived, discharged or terminated only by an instrument
in writing signed by the party against which enforcement of such
change, waiver, discharge or termination is sought. This Warrant
shall be construed and enforced in accordance with and governed
by the laws of the Commonwealth of Massachusetts. The headings
in this Warrant are for purposes of reference only, and shall not
limit or otherwise affect any of the terms hereof. This Warrant
is being executed as an instrument under seal. The invalidity or
unenforceability of any provision hereof shall in no way affect
the validity or enforceability of any other provision.
18. Expiration. The right to exercise this Warrant shall
expire at 5:00 p.m., Manchester, New Hampshire time, on
July , 2009. Notwithstanding the foregoing, this Warrant
shall automatically be deemed to be exercised in full pursuant to
the provisions of Section 1.5 hereof, without any further action
on behalf of the holder, immediately prior to the time this
Warrant would otherwise expire pursuant to the preceding
sentence.
[SIGNATURE PAGE FOLLOWS]
15
IN WITNESS WHEREOF, the Company has executed this Warrant
under seal as of the date first written above.
WPI GROUP, INC.
By:
----------------------
Name:
Title:
[Corporate Seal]
Attest:
By:
--------------------------
Name:
Title:
FORM OF SUBSCRIPTION
(To be signed only on exercise of Warrant)
WPI GROUP, INC.
The undersigned, the holder of the within Warrant, hereby
irrevocably elects to exercise this Warrant for, and to purchase
thereunder, ........ shares of Common Stock of WPI GROUP, INC.
and herewith makes payment of $........ therefor, and requests
that the certificates for such shares be issued in the name of,
and delivered to .............., federal taxpayer identification
number ............, whose address is ...................
Dated:
------------------------------
(Signature must conform to
name of holder as specified on the
face of the Warrant)
------------------------------
(Address)
Signed in the presence of:
----------------------------
--------------------------------
FORM OF ASSIGNMENT
(To be signed only on transfer of Warrant)
For value received, the undersigned hereby sells, assigns,
and transfers unto .................., federal taxpayer
identification number ..........., whose address is ............,
the right represented by the within Warrant to purchase
............. shares of Common Stock of WPI GROUP, INC. to which
the within Warrant relates, and appoints
.......................... Attorney to transfer such right on the
books of WPI GROUP, INC. with full power of substitution in the
premises.
Dated:
------------------------------
(Signature must conform to
name of holder as specified on the
face of the Warrant)
-------------------------------
(Address)
Signed in the presence of:
-----------------------------
17
EXHIBIT C
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "Agreement") dated as of
August , 1999, by and between WPI GROUP, INC., a New
Hampshire corporation, (the "Company") and the LENDERS or their
assigns (the "Lenders") who are parties to the Credit Agreement
dated as of August 3, 1998, as amended to date, including without
limitation the Third Amendment of even date, (the "Credit
Agreement") among the Company and certain of its subsidiaries,
Fleet Bank - NH, for itself as a Lender, and as Agent for the
other Lenders, and the other Lenders (the Lenders and their
assigns are herein collectively referred to as the "Holders" and
each Lender and its assigns a "Holder");
WHEREAS, the Holders are acquiring from the Company warrants
to purchase up to one hundred twenty-four thousand
(124,000) shares of the Company's common stock, par value
$.01 per share, pursuant to the Third Amendment to the Credit
Agreement referenced above (the "Third Amendment") by and between
the Company and the Holders; and
WHEREAS, it is a condition precedent to the effectiveness of
the Third Amendment that the Company enter into an agreement with
the Holders granting to the Holders certain securities
registration rights with respect to the shares of common stock
purchasable with the warrants.
NOW, THEREFORE, in consideration of the premises, as an
inducement to the Holders to effectuate the Third Amendment, and
for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company hereby
covenants and agrees with the Holders as follows:
1. Certain Definitions. As used in this Agreement, the
following terms shall have the following respective meanings:
"Commission" shall mean the United States Securities
and Exchange Commission, or any other federal agency at the time
administering the Securities Act.
"Common Stock" shall mean (i) the Company's Common
Stock, par value $.01 per share, as authorized on the date of
this Agreement, (ii) any other capital stock of any class or
classes (however designated) of the Company, authorized on or
after the date hereof, the holders of which shall have the right,
without limitation as to amount per share, either to all or to a
share of the balance of current dividends and liquidating
distributions after the payment of dividends and distributions on
any shares entitled to preference in the payment thereof, and the
holders of which shall ordinarily, in the absence of
contingencies, be entitled to vote for the election of a majority
of directors of the Company, and (iii) any other securities into
which or for which any of the securities described in (i) or (ii)
above may be converted or exchanged pursuant to a plan of
recapitalization, reorganization, merger, sale of assets or
otherwise.
"Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended, or any similar federal statute, and the
rules and regulations of the Commission thereunder, all as the
same shall be in effect at the time.
"Person" shall mean an individual, a corporation, a
partnership, a limited liability company, a joint venture, a
trust, an unincorporated organization, a government and any
agency or political subdivision thereof.
"Registrable Securities" shall mean the Warrant Shares
or any other securities of the Company issued and issuable upon
exercise of the Warrants.
"Registration Expenses" shall mean the expenses so des
cribed in Section 5.
"Securities Act" shall mean the Securities Act of 1933,
as amended, or any similar federal statute, and the rules and
regulations of the Commission thereunder, all as the same shall
be in effect at the time.
"Warrants" shall mean and include the Company's Common
Stock Purchase Warrants issued pursuant to the Third Amendment.
"Warrant Shares" shall mean shares of Common Stock
issued and issuable upon exercise of the Warrants.
2. Demand Registration.
(a) At any time after the Warrant becomes exercisable,
the holders of at least fifty percent (50%) of the Registrable
Securities may request the Company to register under the
Securities Act all or any portion of the Registrable Securities
held by such requesting holders in the manner specified in such
request, and upon receipt of such request the Company shall
promptly deliver notice of such request to all Persons holding
Registrable Securities who shall then have thirty (30) days to
notify the Company in writing of their desire to be included in
such registration. The Company will use its best efforts to
expeditiously effect the registration of all Registrable
Securities whose holders request participation in such
registration under the Securities Act, but only to the extent
provided for in the following provisions of this Agreement;
provided, however, that the Company shall not be required to
effect registration pursuant to a request under this Section 2
more than one (1) time for the holders of the Registrable
Securities as a group, and may register the Registrable
Securities on Form S-3 under the Securities Act if available.
Notwithstanding anything to the contrary contained herein, no
request may be made under this Section 2 within 180 days after
the effective date of a registration statement filed by the
Company covering a firm commitment underwritten public offering
in which the holders of Registrable Securities shall have been
entitled to join pursuant to Section 3 or 12 and in which there
shall have been effectively registered all Registrable Securities
as to which registration shall have been requested.
2
(b) Whenever a requested registration pursuant to
Section 2(a) above is for an underwritten offering, only
Registrable Securities which are to be included in the
underwriting may be included in the registration, and, if the
managing underwriter of such offering determines in good faith
that the number of Registrable Securities so included which are
to be sold by the holders of the Registrable Securities should be
limited due to market conditions and/or the necessity of
including in such underwriting or registration securities to be
sold for the account of the Company, the holders of Registrable
Securities to be included in such underwriting and registration
shall share pro rata in the number of such Registrable Securities
being underwritten and registered for their account, such sharing
to be based on the number of all Registrable Securities held by
such holders, respectively; provided, that in no event shall the
holders of Registrable Securities that requested such
registration pursuant to Section 2(a) above have the number of
their Registrable Securities to be included in such underwriting
and registration reduced or limited (including pursuant to
Section 3 hereof) until the number of securities whose holders
have a contractual, incidental "piggy back" right to include such
securities in the registration statement as to which inclusion
has been requested pursuant to such right have been reduced to
zero (0). Notwithstanding the foregoing, in the event that the
underwriter or underwriters cut back the number of Registrable
Securities required to be included by the Holders in such demand
registration by more than 20%, then such registration will not be
deemed to be a demand registration for purposes of this Section
2. Whenever a requested registration pursuant to Section 2(a)
above is for an underwritten public offering, the Company,
subject to the approval of the holders of a majority of the
Registrable Securities to be sold in such offering (which
approval will not be unreasonably withheld or delayed), may
designate the managing underwriter(s) of such offering. The
Company may not cause any other registration of securities for
sale for its own account (other than a registration effected
solely to implement an employee benefit plan or a transaction to
which Rule 145 of the Commission is applicable) to become
effective less than ninety (90) days after the effective date of
any registration required pursuant to this Section 2.
(c) If at the time of any request to register
Registrable Securities pursuant to Section 2(a) above the Company
is preparing or within thirty (30) days thereafter commences to
prepare a registration statement for a public offering (other
than a registration effected solely to implement an employee
benefit plan or a transaction to which Rule 145 of the Commission
is applicable) which in fact is filed and becomes effective
within ninety (90) days after the request, or is engaged in any
activity which, in the good faith determination of the Company's
board of directors, would be adversely affected by the requested
registration to the material detriment of the Company, then the
Company may at its option direct that such request be delayed for
a period not in excess of four (4) months from the effective date
of such offering or the date of commencement of such other
activity, as the case may be, such right to delay a request to be
exercised by the Company not more than once in any two (2) year
period. Nothing in this Section 2(c) shall preclude a holder of
Registrable Securities from enjoying registration rights which it
might otherwise possess under Section 3 hereof.
3. Piggyback Registration. If the Company, at any time
proposes to register any of its securities under the Securities
Act (including pursuant to a demand of any stockholder of the
Company exercising registration rights) for sale to the public
(except with respect to registration statements on Form S-4 or S-
3
8 or another form not available for registering the Registrable
Securities for sale to the public), each such time it will give
written notice to all holders of the outstanding Registrable
Securities, including each holder who has the right to acquire
Registrable Securities, of its intention to do so. Upon the
written request of any of such holders of the Registrable
Securities given within twenty (20) days after receipt by such
holder of such notice, the Company will, subject to the limits
contained in this Section 3, use its best efforts to cause all
such Registrable Securities of said requesting holders to be
registered under the Securities Act and qualified for sale under
any state blue sky law, all to the extent requisite to permit
such sale or other disposition by such holder of the Registrable
Securities so registered; provided, however, that if the Company
is advised in writing in good faith by any managing underwriter
of the Company's securities being offered in a public offering
pursuant to such registration statement that the amount to be
sold by Persons other than the Company (collectively, "Selling
Stockholders") is greater than the amount which can be offered
without adversely affecting the offering, the Company may reduce
the amount offered for the accounts of Selling Stockholders
(including holders of shares of Registrable Securities) pursuant
to a contractual, incidental "piggy back" right to include such
securities in a registration statement to a number deemed
satisfactory by such managing underwriter; provided, further,
that no reduction shall be made in the amount of Registrable
Securities offered for the accounts of the holders of Registrable
Securities unless such reduction is imposed pro rata with respect
to (i) all securities whose holders have a contractual,
incidental "piggy back" right to include such securities in the
registration statement as to which inclusion has been requested
pursuant to such right and (ii) any executive officer of the
Company; and provided, further, that there is first excluded from
such registration statement all shares of Common Stock sought to
be included therein by (i) any holder thereof, other than any
executive officer of the Company, not having any such
contractual, incidental registration rights, and (ii) any holder
thereof having contractual, incidental registration rights
subordinated and junior to the rights of the holders of
Registrable Securities. Notwithstanding the foregoing
provisions, the Company may withdraw any registration statement
referred to in this Section 3 without thereby incurring any
liability to the holders of Registrable Securities.
4. Registration Procedures. If and whenever the Company
is required by the provisions of this Agreement to use its best
efforts to effect the registration of any of its securities under
the Securities Act, the Company will, as expeditiously as
possible:
(i) prepare and file with the Commission a
registration statement with respect to such securities and use
its best efforts to cause such registration statement to become
and remain effective; provided, however, that notwithstanding any
other provision of this Agreement, the Company shall not in any
event be required to use its best efforts to maintain the
effectiveness of any such registration statement for a period in
excess of six (6) months;
(ii) prepare and file with the Commission such
amendments and supplements to such registration statement and the
prospectus used in connection therewith as may be necessary to
keep such registration statement effective and to comply with the
provisions of the Securities Act with respect to the sale or
4
other disposition of all securities covered by such registration
statement whenever the seller or sellers of such securities shall
desire to sell or otherwise dispose of the same, but only to the
extent provided in this Agreement;
(iii) furnish to each seller such number of copies
of a prospectus, including a preliminary prospectus, in
conformity with the requirements of the Securities Act, and such
other documents as such seller may reasonably request in order to
facilitate the public sale or other disposition of the securities
owned by such seller;
(iv) use every reasonable effort to register or qualify
the securities covered by such registration statement under such
other securities or state blue sky laws of such jurisdictions as
each seller shall reasonably request, and do any and all other
acts and things which may be necessary under such securities or
blue sky laws to enable such seller to consummate the public sale
or other disposition in such jurisdictions of the securities
owned by such seller, except that the Company shall not for any
such purpose be required to qualify to do business as a foreign
corporation in any jurisdiction wherein it is not so qualified;
(v) before filing the registration statement or
prospectus or amendments or supplements thereto, furnish to one
counsel selected by the holders of Registrable Securities copies
of such documents proposed to be filed which shall be subject to
the reasonable review of such counsel;
(vi) furnish to each prospective seller a signed
counterpart, addressed to the prospective seller, of (A) an
opinion of counsel for the Company, dated the effective date of
the registration statement, and (B) a "comfort" letter signed by
the independent public accountants who have certified the
Company's financial statements included in the registration
statement, covering substantially the same matters with respect
to the registration statement (and the prospectus included
therein) and (in the case of the accountants' letter) with
respect to events subsequent to the date of the financial
statements, as are customarily covered (at the time of such
registration) in opinions of the Company's counsel and in
accountants' letters delivered to the underwriters in
underwritten public offerings of securities, subject to any
requirement by the accountants for representation letters from
the selling holders of Registrable Securities; and
(vii) use its best efforts to list the Registrable
Securities covered by such registration statement with any
securities exchange on which the Common Stock of the Company is
then listed.
5. Expenses. All expenses incurred in effecting the
registrations provided for in Sections 2, 3 and 12, including,
without limitation, all registration and filing fees, printing
expenses, fees and disbursements of counsel for the Company and
fees of one counsel for all of the selling holders of Registrable
Securities (up to $25,000 per registration), underwriting
expenses (other than fees, commissions, discounts and transfer
taxes relating to the Registrable Securities), expenses of any
audits incident to or required by any such registration and
expenses of complying with the securities or blue sky laws of any
jurisdictions pursuant to Section 4(iv) hereof (all of such
expenses referred to as "Registration Expenses"), shall be paid
by the Company; provided, that if an offering pursuant to any
5
registration commenced pursuant to Section 2 above is abandoned
by the selling shareholders (other than by reason of adverse
information pertaining to the Company's business affairs or
financial position or the underwriters cut back the number of
Registrable Securities by more than 20% in a demand registration
as provided in Section 2), as opposed to stock market conditions,
unknown to the sellers prior to the commencement of such
registration proceedings, in which event the Company shall bear
all Registration Expenses), such selling shareholders shall bear
pro rata any costs incurred by the Company in conjunction with
such registration. In either event, the number of registrations
to which the holders of Registrable Securities are entitled
pursuant to Section 2 shall not be reduced thereby.
6. Termination of Registration Rights. All registration
rights granted under this Agreement shall terminate and be of no
further force and effect five (5) years after the date the
Warrant becomes exercisable . In addition, a Holder's
registration rights shall expire if (i) such Holder (together
with its affiliates and other Holders) holds less than 1% of the
Company's outstanding Common Stock (treating all shares of
convertible securities on an as converted basis) or (ii) all
Registrable Securities held by and issued to such Holder may be
sold under Rule 144 during any ninety (90) day period.
7. Furnishing Information. It shall be a condition
precedent to the obligations of the Company to take any action
pursuant to Section 2 or 3 that the selling holders shall furnish
to the Company such information regarding themselves, the
Registrable Securities held by them and the intended method of
disposition of such securities as shall be required to effect the
registration of their Registrable Securities.
8. Indemnification. (a) The Company shall indemnify and
hold harmless the seller of such securities, each underwriter (as
defined in the Securities Act), and each other Person who
participates in the offering of such securities and each other
Person, if any, who controls (within the meaning of the
Securities Act) such seller, underwriter or participating Person
(individually and collectively the "Company - Indemnified
Person") against any losses, claims, damages or liabilities
(collectively the "liability"), joint or several, to which such
Company - Indemnified Person may become subject under the
Securities Act or any other statute or at common law, insofar as
such liability (or action in respect thereof) arises out of or is
based upon (i) any untrue statement or alleged untrue statement
of any material fact contained, on the effective date thereof, in
any registration statement under which such securities were
registered under the Securities Act, any preliminary prospectus
or final prospectus contained therein, or any amendment or
supplement thereto, or (ii) any omission or alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading. Except
as otherwise provided in Section 8(d), the Company shall
reimburse each such Company - Indemnified Person in connection
6
with investigating or defending any such liability; provided,
however, that the Company shall not be liable to any Company -
Indemnified Person in any such case to the extent that any such
liability arises out of or is based upon any untrue statement or
alleged untrue statement or omission or alleged omission made in
such registration statement, preliminary or final prospectus, or
amendment or supplement thereto in reliance upon and in
conformity with information furnished in writing to the Company
by such Person specifically for use therein; and provided
further, that the Company shall not be required to indemnify any
Person against any liability arising from any untrue or
misleading statement or omission contained in any preliminary
prospectus if such deficiency is corrected in the final
prospectus or for any liability which arises out of the failure
of any Person to deliver a prospectus as required by the
Securities Act regardless of any investigation made by or on
behalf of such Company - Indemnified Person and shall survive
transfer of such securities by such seller.
(b) Each holder of any Registrable Securities shall,
by acceptance thereof, indemnify and hold harmless each other
holder of any Registrable Securities, the Company, its directors
and officers, each underwriter and each other Person, if any, who
controls the Company or such underwriter (individually and
collectively the "Holder - Indemnified Person"), against any
liability, joint or several, to which any such Holder -
Indemnified Person may become subject under the Securities Act or
any other statute or at common law, insofar as such liability (or
actions in respect thereof) arises out of or is based upon
(i) any untrue statement or alleged untrue statement of any
material fact contained, on the effective date thereof, in any
registration statement under which securities were registered
under the Securities Act at the request of such holder, any
preliminary prospectus or final prospectus contained therein, or
any amendment or supplement thereto, or (ii) any omission or
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, in the case of (i) and (ii) to the extent, but only
to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in such
registration statement, preliminary or final prospectus,
amendment or supplement thereto in reliance upon and in
conformity with information furnished in writing to the Company
by such holder specifically for use therein. Such holder shall
reimburse any Holder - Indemnified Person for any legal fees
incurred in investigating or defending any such liability;
provided, however, that such holder's obligation's hereunder
shall be limited to an amount equal to the net proceeds to such
holder of the Registrable Securities sold in any such
registration; and provided further, that no holder of Registrable
Securities shall be required to indemnify any Person against any
liability arising from any untrue or misleading statement or
omission contained in any preliminary prospectus if such
deficiency is corrected in the final prospectus or for any
liability which arises out of the failure of any Person to
deliver a prospectus as required by the Securities Act.
(c) Indemnification similar to that specified in
Sections 8(a) and (b) above shall be given by the Company and
each holder of any Registrable Securities (with such
modifications as may be appropriate) with respect to any required
registration or other qualification of the Registrable Securities
under any federal or state law or regulation of governmental
authority other than the Securities Act.
(d) In the event the Company, any holder or any other
Person receives a complaint, claim or other notice of any
liability or action, giving rise to a claim for indemnification
under Sections 8(a), (b) or (c) above, the Person claiming
indemnification under such paragraphs (the "indemnified Person")
shall promptly notify the Person against whom indemnification is
sought (the "indemnifying Person") of such complaint, notice,
claim or action, and such indemnifying Person shall have the
right to investigate and defend any such loss, claim, damage,
liability or action. The indemnified Person shall have the right
to employ separate counsel in any such action and to participate
7
in the defense thereof but the fees and expenses of such counsel
shall not be at the expense of the indemnifying Person, ,
provided, however, that an indemnified Person shall have the
right to retain its own counsel, with the fees and expenses to be
paid by the indemnifying Person, if (a) the indemnifying Person
fails promptly to defend or (b) representation of such
indemnified Person by the counsel retained by the indemnifying
Person would be inappropriate due to actual or reasonably likely
differing interests between such indemnified Person and any other
party presented by such counsel in such proceeding. In no event
shall an indemnifying Person be obligated to indemnify any Person
for any settlement of any claim or action effected without the
indemnifying Person's prior written consent.
9. Rule 144 Reporting. With a view to making
available to the Holders the benefits of certain rules and
regulations of the SEC which may permit the sale of the
Registrable Securities to the public without registration, the
Company shall:
(a) Make and keep public information available, as
those terms and understood and defined in SEC Rule 144 or
any similar or analogous rule promulgated under the
Securities Act;
(b) File with the SEC, in a timely manner, all reports
and other documents required of the Company under the
Securities Act and the Exchange Act;
(c) So long as a Holder owns any Registrable
Securities, furnish to such Holder forthwith upon request:
a written statement by the Company as to its compliance with
the reporting requirements of said Rule 144 of the
Securities Act, and of the Exchange Act (at any time after
it has become subject to such reporting requirements); a
copy of the most recent annual or quarterly report of the
Company; and such other reports and documents as a Holder
may reasonably request in availing itself of any rule or
regulation of the SEC allowing it to sell any such
securities without registration.
10. Consent to be Bound. Each subsequent holder of
Warrants or Registrable Securities must consent in writing to be
bound by the terms and conditions of this Agreement in order to
acquire the rights granted pursuant to this Agreement.
11. Amendments. The provisions of this Agreement may be
amended, and the Company may take any action herein prohibited or
omit to perform any act herein required to be performed by it,
only if the Company has obtained the written consent of the
holders of a majority of the Registrable Securities.
12. Form S-3. The Company shall use its best efforts to
qualify and remain qualified to register securities on Form S-3
under the Securities Act. The holders of the Registrable
Securities shall have the right to request any number of
registrations on Form S-3, but not more than one (1) registration
on Form S-3 in any six-month period (such requests shall be in
writing and shall state the number of shares of Registrable
Securities desired to be registered). The Company shall not be
required to effect a registration pursuant to this Section 12 if,
in the good faith judgment of the Company, such registration will
8
hinder or interfere with a concurrent or proposed security
issuance of, or acquisition by, the Company or if the holder or
holders requesting registration propose to dispose of Registrable
Securities having an aggregate disposition price (before
deduction of underwriting discounts and expenses of sale) of less
than $500,000. This Section shall not be interpreted to restrict
the Company from acquiring its own shares or to require the
Company to sell its own shares. The Company shall give notice to
all holders of the Registrable Securities of the receipt of a
request for registration pursuant to this Section 12 and shall
provide a reasonable opportunity for other holders to participate
in the registration. Subject to the foregoing, the Company will
use its best efforts, in each case, to effect promptly the
registration of all shares of the Registrable Securities on
Form S-3 to the extent requested by the holder or holders thereof
for purposes of disposition.
13. Assignability of Registration Rights. Subject to
Section 10 hereof, the registration rights set forth in this
Agreement are assignable to each assignee as to each Warrant or
each share of Registrable Securities conveyed in accordance
herewith who agrees in writing to be bound by the terms and
conditions of this Agreement. The term "seller" as used in this
Agreement refers to a holder of the Registrable Securities
selling such shares.
14. Rights Which May Be Granted to Subsequent Investors.
The Company shall not grant subsequent registration rights to
third parties superior to the registration rights granted
pursuant to this Agreement so long as any of the registration
rights under this Agreement remain in effect.
15. Damages. The Company recognizes and agrees that each
holder of Registrable Securities will not have an adequate remedy
if the Company fails to comply with the terms and provisions of
this Agreement and that damages will not be readily
ascertainable, and the Company expressly agrees that, in the
event of such failure, it shall not oppose an application by any
holder of Registrable Securities or any other Person entitled to
the benefits of this Agreement requiring specific performance of
any and all provisions hereof or enjoining the Company from
continuing to commit any such breach of this Agreement.
16. Representations and Warranties of the Company. The
Company represents and warrants to the Holders as follows:
(a) The execution, delivery and performance of this
Agreement by the Company have been duly authorized by all requi
site corporate action and will not violate any provision of law,
any order of any court or other agency of government, the
Articles of Incorporation or Bylaws of the Company or any
provision of any indenture, agreement or other instrument to
which it or any or its properties or assets is bound, conflict
with, result in a breach of or constitute (with due notice or
lapse of time or both) a default under any such indenture,
agreement or other instrument or result in the creation or
imposition of any lien, charge or encumbrance of any nature
whatsoever upon any of the properties or assets of the Company.
9
(b) This Agreement has been duly and validly executed
and delivered by the Company and constitutes the legal, valid and
binding obligation of the Company, enforceable in accordance with
its terms.
17. Miscellaneous.
(a) All notices, requests, demands and other
communications provided for hereunder shall be in writing and
mailed (by first class registered or certified mail, postage
prepaid), telegraphed, sent by express overnight courier service
or electronic facsimile transmission (with a copy by mail), or
delivered to the applicable party at its address provided in the
Credit Agreement (if to any holder of Warrants or Registrable
Securities who is not a party to the Credit Agreement, at such
holder's address for notice as set forth in the books and records
of the Company), or, as to each of the foregoing, at such other
address as shall be designated by such Person in a written notice
to the other parties complying as to delivery with the terms of
this subsection (a). All such notices, requests, demands and
other communications shall, when mailed, telegraphed or sent,
respectively, be effective (i) three (3) days after being
deposited in the mails or (ii) one (1) day after being delivered
to the telegraph company, deposited with the express overnight
courier service or sent by electronic facsimile transmission,
respectively, addressed as aforesaid.
(b) This Agreement shall be governed by and construed
in accordance with the laws of the State of New Hampshire.
(c) This Agreement may be executed in two or more coun
terparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
(d) If any provision of this Agreement shall be held
to be illegal, invalid or unenforceable, such illegality,
invalidity or unenforceability shall attach only to such
provision and shall not in any manner affect or render illegal,
invalid or unenforceable any other provision of this Agreement,
and this Agreement shall be carried out as if any such illegal,
invalid or unenforceable provision were not contained herein.
[SIGNATURE PAGE FOLLOWS]
10
IN WITNESS WHEREOF, the parties hereto have caused this
Registration Rights Agreement to be duly executed as of the date
first set forth above.
WPI GROUP, INC.
------------------------- By: ------------------------
Witness Xxxx X. Xxxxxx
Vice President/Chief
Financial Officer
LENDERS:
FLEET BANK-NH
------------------------- By: -----------------------
Witness Xxxx X. Xxxxx
Senior Vice President
BANK OF NEW HAMPSHIRE
------------------------- By: ------------------------
Witness Xxxxx X. XxXxxx
Vice President
SOVEREIGN BANK
------------------------- By: -------------------------
Witness Xxxxxxx X. Xxxxxxxx
Senior Vice President
FSC CORP., as Assignee of
BankBoston, N.A.
------------------------- By: -------------------------
Witness Xxxx X. Xxxxxx
KEY CORPORATE CAPITAL INC.
------------------------- By: -------------------------
Witness Xxxxxxxxx Xxxxxxxxxx
Vice President
11
EXHIBIT 10.50
LIMITED WAIVER
LIMITED WAIVER executed August 16, 1999, effective as of
March 28, 1999, (the "Limited Waiver") to the Credit Agreement,
dated as of August 3, 1998, as amended to date (the "Credit
Agreement"), among WPI Group, Inc., WPI Electronics, Inc., WPI
Magnetec, Inc., WPI Micro Palm, Inc., WPI Power Systems, Inc.,
WPI Oyster Termiflex, Inc., WPI Micro Processor Systems, Inc.,
WPI Decisionkey, Inc., WPI UK Holding, Inc., WPI UK Holding, II,
Inc., WPI Oyster Terminals, Inc., WPI Husky Computers, Inc., and
WPI Instruments, Inc., (collectively, the "Borrowers"), the
various financial institutions parties thereto (collectively, the
"Lenders") and Fleet Bank - NH, for itself, as Lender, and as
Agent for Lenders pursuant to the Credit Agreement (the "Agent").
The Borrowers have requested that their compliance with (a)
the "Total Debt to EBITDA Ratio" covenant for the twelve month
periods ended March 28, 1999 and June 27, 1999, and (b) the
"Minimum Fixed Charge Coverage Ratio" covenant for the twelve
month period ended June 27, 1999, which covenants are set forth
in Annex E (Section 6.10) of the Credit Agreement, be waived up
to and until October 1, 1999 . The Borrowers acknowledge that
failure to comply with such covenants for the foregoing twelve
month periods constitutes Events of Default under the Credit
Agreement (the "Specified Defaults"), and that such Specified
Defaults are continuing and have not been previously waived. The
Agent, on behalf of itself and the Lenders, has agreed to grant
such limited waiver, but only on the specific terms and
conditions set forth herein. Accordingly, the Borrowers and the
Agent, on behalf of itself and the Lenders, hereby agree as
follows:
Section 1. Limited Waiver. Upon satisfaction of the
conditions set forth in Section 4 below, the Lenders hereby waive
up to and until October 1, 1999 compliance with the "Total Debt
to EBITDA Ratio" and "Minimum Fixed Charge Coverage Ratio"
covenants set forth in Annex E (Section 6.10) of the Credit
Agreement for the twelve month periods ended March 28, 1999 and
June 27, 1999 in the case of the "Total Debt to EBITDA Ratio",
and for the twelve month period ended June 27, 1999 in the case
of the "Minimum Fixed Charge Coverage Ratio". Such waiver is
expressly limited to compliance with such covenants on March 28,
1999 and June 27, 1999 (the latter date only in the case of the
"Minimum Fixed Charge Coverage Ratio"), and for the respective
twelve month periods then ended; subject to the limited waiver
set forth herein, such covenant , and all other covenants set
forth in the Credit Agreement, shall remain unchanged, binding
upon Borrowers and in full force and effect, subject to the
provisions of the Third Amendment dated as of August 16, 1999 to
the Credit Agreement (the "Third Amendment"). From and after
October 1, 1999, the Specified Defaults shall be Events of
Default for all purposes of the Credit Agreement and the other
Loan Documents. The Agent and the Lenders expressly reserve all
rights and remedies available to them (i) from and after October
1, 1999 as a result of the Specified Defaults and (ii) as a
result of any Events of Default other than the Specified
Defaults.
Section 2. Default Rate. Commencing March 28, 1999, and
continuing until the Third Amendment Effective Date (as defined
in the Third Amendment), interest shall be accrued on the Loans
at the Default Rate as provided in Section 1.4(d) of the Credit
Agreement.
Section 3. Third Amendment. The Borrowers and Lenders
shall execute the Third Amendment amending the interest rate on
the Loans, the Maximum Amount, the Borrowing Base and certain
financial reporting requirements contained in Annex C and Annex
D to the Credit Agreement, as well as providing for the issuance
of certain stock warrants to the Lenders by WPI Group, Inc. and
reimbursement of the fees of a financial consultant to be
retained by legal counsel to the Agent in consideration for this
Limited Waiver and the accommodations afforded the Borrowers
pursuant to the Third Amendment.
Section 4. Conditions of Effectiveness. This Limited
Waiver shall become effective, as of the date set forth above,
upon satisfaction of the following pre-conditions:
(a) the Agent shall have received executed counterparts (by
facsimile or otherwise) of this Limited Waiver, duly executed by
the Borrowers;
(b) accrued interest on the Loans at the Default Rate for
the period commencing March 28, 1999 and ending on the Third
Amendment Effective Date shall have been paid to the Agent; and
(c) the Agent, the Lenders and the Borrowers shall have
duly executed and delivered the Third Amendment, and the
Borrowers shall have satisfied all of the conditions imposed upon
them for such Third Amendment to become effective.
Section 5. Counterparts. This Limited Waiver may be
executed in two or more counterparts, each of which shall
constitute an original, but all of which when taken together
shall constitute but one instrument.
Section 6. Full Force and Effect. Except for the limited
waiver herein of the Specified Defaults, the Credit Agreement, as
amended by the Third Amendment, shall continue in full force and
effect in accordance with the provisions thereof.
Section 7. Expenses. The Borrowers shall pay all out-of-
pocket expenses incurred by the Agent in connection with the
preparation of this Limited Waiver.
Section 8. Headings. The headings of this Limited Waiver
are for the purposes of reference only and shall not limit or
otherwise affect the meaning hereof.
Section 9. Capitalized Terms. Unless otherwise specified,
capitalized terms used herein shall have the respective meanings
assigned thereto in the Credit Agreement.
2
IN WITNESS WHEREOF, the undersigned have duly executed and
delivered this Limited Waiver as of the date first above written.
THE BORROWERS:
WPI GROUP, INC.,
WPI POWER SYSTEMS, INC.,
WPI MAGNETEC, INC.,
WPI ELECTRONICS, INC.,
WPI OYSTER TERMIFLEX, INC.,
WPI MICRO PALM, INC.,
WPI MICRO PROCESSOR
SYSTEMS, INC.,
WPI DECISIONKEY, INC.,
WPI UK HOLDING, INC.,
WPI UK HOLDING II, INC.,
WPI OYSTER TERMINALS, INC.,
HUSKY COMPUTERS, INC., and
WPI INSTRUMENTS, INC.
/s/Xxxxxxx Whitab By:/s/Xxxx X. Xxxxxx
--------------------- -------------------
Witness Xxxx X. Xxxxxx, for, on
behalf of, and as Duly
Authorized Officer or Agent of each
of the above-named entities
THE AGENT:
FLEET BANK - NH, as Agent for
the Lenders
/s/Xxxxxx X. Xxxxxx, Xx. By:/s/ Xxxx X. Xxxxx
------------------------ --------------------
Witness Xxxx X. Xxxxx
Senior Vice President
3
EXHIBIT 10.51
THIS WARRANT AND THE UNDERLYING SHARES OF COMMON STOCK ISSUABLE
UPON ITS EXERCISE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS,
AND MAY NOT BE SOLD OR TRANSFERRED WITHOUT COMPLIANCE WITH THE
REGISTRATION OR QUALIFICATION PROVISIONS OF APPLICABLE FEDERAL
AND STATE SECURITIES LAWS OR APPLICABLE EXEMPTIONS THEREFROM.
THE SECURITIES REPRESENTED BY THIS WARRANT ARE SUBJECT TO A
REGISTRATION RIGHTS AGREEMENT DATED AS OF AUGUST 16, 1999 (THE
"REGISTRATION AGREEMENT"). COPIES OF THE REGISTRATION AGREEMENT
ARE ON FILE AT THE OFFICE OF THE SECRETARY OF THE COMPANY.
No. W-2 Right to Purchase 20,670
Shares of Common Stock
of
WPI GROUP, INC.
WPI GROUP, INC.
COMMON STOCK PURCHASE WARRANT
August 16, 1999
WPI GROUP, INC., a New Hampshire corporation (the
"Company"), hereby certifies that, for value received, FSC CORP.
or its assigns, as assignee of BankBoston, N.A., a Lender under
the Credit Agreement dated as of August 3, 1998, as amended to
date, (the "Credit Agreement") among the Company, certain of its
subsidiaries, Fleet Bank - NH, as Agent for Lenders identified
therein, and such Lenders, is entitled, subject to the terms set
forth below, to purchase from the Company at any time or from
time to time after August 16, 2000 (subject to acceleration as
hereinafter provided) (the "Initial Exerciseability Date") and
before 5:00 p.m., Manchester, New Hampshire time, on August 16,
2009, 20,670 fully paid and nonassessable shares of Common Stock,
par value $0.01 per share, of the Company, at a purchase price
per share of $2.75 (such purchase price per share as adjusted
from time to time as herein provided is referred to herein as the
"Purchase Price"). The number and character of such shares of
Common Stock and the Purchase Price are subject to adjustment as
provided herein.
This Warrant is one of the Warrants evidencing the right to
purchase shares of Common Stock of the Company issued pursuant to
a certain Third Amendment dated as of August 16, 1999 to the
Credit Agreement (the Credit Agreement, as amended by such Third
Amendment, the "Agreement"), and subject to the Registration
Agreement, a copy of which agreement is on file at the principal
office of the Company, and the holder of this Warrant shall be
entitled to all of the benefits and bound by all of the
applicable obligations of the Registration Agreement, as provided
therein. This Warrant is detachable from the obligations
incurred by the Company pursuant to the Credit Agreement, and
shall survive the satisfaction of such obligations.
As used herein the following terms, unless the context
otherwise requires, have the following respective meanings:
(a) The term "Company" shall include WPI Group, Inc.,
and any corporation which shall succeed to, or assume the
obligations of, the Company hereunder.
(b) The term "Common Stock" includes (i) the Company's
Common Stock, par value $0.01 per share, as authorized on
the date of the Agreement, (ii) any other capital stock of
any class or classes (however designated) of the Company,
authorized on or after such date, the holders of which shall
have the right, without limitation as to amount per share,
either to all or to a share of the balance of current
dividends and liquidating distributions after the payment of
dividends and distributions on any shares entitled to
preference in the payment thereof, and the holders of which
shall ordinarily, in the absence of contingencies, be
entitled to vote for the election of a majority of directors
of the Company (even though the right so to vote may have
been suspended by the happening of such a contingency) and
(iii) any other securities into which or for which any of
the securities described in (i) or (ii) above may be
converted or exchanged pursuant to a plan of
recapitalization, reorganization, merger, sale of assets or
otherwise.
(c) The term "Other Securities" refers to any stock
(other than Common Stock) and other securities of the
Company or any other person (corporate or otherwise) which
the holders of the Warrants at any time shall be entitled to
receive, or shall have received, on the exercise of the
Warrants, in lieu of or in addition to Common Stock, or
which at any time shall be issuable or shall have been
issued in exchange for or in replacement of Common Stock or
Other Securities pursuant to Section 5 or otherwise.
(d)The term "Warrant" means this Common Stock Purchase
Warrant.
1. Exercise of Warrant.
1.1 Full Exercise. This Warrant may be exercised at any time
before its expiration in full by the holder hereof by surrender
of this Warrant, with the form of subscription at the end hereof
duly executed by such holder, to the Company at its principal
office, accompanied by payment, in cash or by certified or
official bank check payable to the order of the Company, in the
amount obtained by multiplying the number of shares of Common
Stock for which this Warrant is then exercisable by the Purchase
Price then in effect.
1.2 Partial Exercise. This Warrant may be exercised at any time
before its expiration in part (in lots of 100 shares or, if this
Warrant is then exercisable for a lesser amount, in such lesser
amount) by surrender of this Warrant and payment of the Purchase
Price then in effect in the manner and at the place provided in
subsection 1.1, except that the amount payable by the holder on
such partial exercise shall be the amount obtained by multiplying
(a) the number of shares of Common Stock designated by the holder
in the subscription at the end hereof by (b) the Purchase Price
2
then in effect. On any such partial exercise the Company at its
expense will forthwith issue and deliver to or upon the order of
the holder hereof a new Warrant or Warrants of like tenor, in the
name of the holder hereof or as such holder (upon payment by such
holder of any applicable transfer taxes) may request, calling in
the aggregate on the face or faces thereof for the number of
shares of Common Stock for which such Warrant or Warrants may
still be exercised.
1.3 Company Acknowledgment. The Company will, at the time of
the exercise of this Warrant, upon the request of the holder
hereof acknowledge in writing its continuing obligation to afford
to such holder any rights to which such holder shall continue to
be entitled after such exercise in accordance with the provisions
of this Warrant. If the holder shall fail to make any such
request, such failure shall not affect the continuing obligation
of the Company to afford to such holder any such rights.
1.4 Trustee for Warrant Holders. In the event that a bank or
trust company shall have been appointed as trustee for the
holders of the Warrants pursuant to subsection 4.2, such bank or
trust company shall have all the powers and duties of a warrant
agent appointed pursuant to Section 13 and shall accept, in its
own name for the account of the Company or such successor person
as may be entitled thereto, all amounts otherwise payable to the
Company or such successor, as the case may be, on exercise of
this Warrant pursuant to this Section 1.
1.5 Net Issue Election. The holder may elect to receive,
without the payment by the holder of any additional
consideration, shares equal to the value of this Warrant or any
portion hereof by the surrender of this Warrant or such portion
to the Company, with the net issue election notice annexed hereto
duly executed, at the office of the Company. Thereupon, the
Company shall issue to the holder such number of fully paid and
nonassessable shares of Common Stock as is computed using the
following formula:
X = Y (A-B)
A
where X = the number of shares to be issued to the holder
pursuant to this Section 1.5.
Y = the number of shares covered by this Warrant in
respect of which the net issue election is made
pursuant to this Section 1.5.
A = the fair market value of one share of Common
Stock, as determined in accordance with the provisions
of this Section 1.5.
B = the Purchase Price in effect under this Warrant at
the time the net issue election is made pursuant to
this Section 1.5.
For purposes of this Section 1.5, the "fair market value" per
share of the Company's Common Stock shall mean:
3
(a) If the Common Stock is traded on a national
securities exchange or admitted to unlisted trading
privileges on such an exchange, or is listed on the National
Market (the "National Market") of the National Association
of Securities Dealers Automated Quotations System (the
"NASDAQ"), the fair market value shall be the last reported
sale price of the Common Stock on such exchange or on the
National Market on the last business day before the
effective date of exercise of the net issue election or if
no such sale is made on such day, the mean of the closing
bid and asked prices for such day on such exchange or on the
National Market;
(b) If the Common Stock is not so listed or admitted
to unlisted trading privileges, the fair market value shall
be the mean of the last bid and asked prices reported on the
last business day before the date of the election (1) by the
NASDAQ or (2) if reports are unavailable under clause (a)
above by the National Quotation Bureau Incorporated; and
(c) If the Common Stock is not so listed or admitted
to unlisted trading privileges and bid and ask prices are
not reported, the fair market value shall be the price per
share which the Company could obtain from a willing buyer
for shares sold by the Company from authorized but unissued
shares, as such price shall be determined by mutual
agreement of the Company and the holder of this Warrant. If
the holder of this Warrant and the Company are unable to
agree on such fair market value, the holder of this Warrant
shall select a pool of three independent and nationally-
recognized investment banking firms from which the Company
shall select one such firm to appraise the fair market value
of the Warrant and to perform the computations involved.
The determination of such investment banking firm shall be
binding upon the Company, the holder of this Warrant and any
other holder of Warrants or Warrant Shares in connection
with any transaction occurring at the time of such
determination. All expenses of such investment banking firm
shall be borne by the Company. In all cases, the
determination of fair market value shall be made without
consideration of the lack of a liquid public market for the
Common Stock and without consideration of any "control
premium" or any discount for holding less than a majority or
controlling interest of the outstanding Common Stock.
1.6 Acceleration of Exercisability. Notwithstanding
the Initial Exercise DateExercisability Date, the Warrant shall
become exercisable on any earlier date that notices are sent to
holders of shares of Common Stock as contemplated in Section 8
with respect to any of the events set forth in subsection 4.1,
and the holder of this Warrant shall be entitled to receive any
such notice as provided in Section 8.
2. Delivery of Stock Certificates, etc. on Exercise. As soon
as practicable after the exercise of this Warrant in full or in
part, and in any event within ten (10) days thereafter, the
Company at its expense (including the payment by it of any
applicable issue taxes) will cause to be issued in the name of
and delivered to the holder hereof, or as such holder (upon
payment by such holder of any applicable transfer taxes) may
direct, a certificate or certificates for the number of fully
paid and nonassessable shares of Common Stock (or Other
Securities) to which such holder shall be entitled on such
exercise, plus, in lieu of any fractional share to which such
4
holder would otherwise be entitled, cash equal to such fraction
multiplied by the then current market value of one full share,
together with any other stock or other securities and property
(including cash, where applicable) to which such holder is
entitled upon such exercise pursuant to Section 1 or otherwise.
3. Adjustment for Dividends in Other Stock, Property, etc.;
Reclassification, etc. In case at any time or from time to time,
the holders of Common Stock (or Other Securities) in their
capacity as such shall have received, or (on or after the record
date fixed for the determination of shareholders eligible to
receive) shall have become entitled to receive, without payment
therefor,
(a) other or additional stock or other securities or property
(other than cash) by way of dividend, or
(b) any cash (excluding cash dividends payable solely out of
earnings or earned surplus of the Company), or
(c) other or additional stock or other securities or property
(including cash) by way of spin-off, split-up, reclassification,
recapitalization, combination of shares or similar corporate
rearrangement,
other than additional shares of Common Stock (or Other
Securities) issued as a stock dividend or in a stock-split
(adjustments in respect of which are provided for in Section 5),
then and in each such case the holder of this Warrant, on the
exercise hereof as provided in Section 1, shall be entitled to
receive the amount of stock and other securities and property
(including cash in the cases referred to in subdivisions (b) and
(c) of this Section 3) which such holder would hold on the date
of such exercise if on the date hereof he had been the holder of
record of the number of shares of Common Stock called for on the
face of this Warrant and had thereafter, during the period from
the date hereof to and including the date of such exercise,
retained such shares and all such other or additional stock and
other securities and property (including cash in the cases
referred to in subdivisions (b) and (c) of this Section 3)
receivable by him as aforesaid during such period, giving effect
to all adjustments called for during such period by Sections 4
and 5.
4. Adjustment for Reorganization, Consolidation, Merger, etc.
4.1 Reorganization, Consolidation, Merger, etc. In case at any
time or from time to time, the Company shall (a) effect a capital
reorganization or reclassification of its capital stock, (b)
consolidate with or merge into any other person, or (c) transfer
all or substantially all of its properties or assets to any other
corporation or other business entity under any plan or
arrangement contemplating the dissolution of the Company, then,
in each such case, the holder of this Warrant, on the exercise
hereof as provided in Section 1 at any time after the
consummation of such reorganization, consolidation or merger or
the effective date of such dissolution, as the case may be, shall
receive, in lieu of the Common Stock (or Other Securities)
issuable on such exercise prior to such consummation or such
effective date, the stock and other securities and property
(including cash) to which such holder would have been entitled
upon such consummation or in connection with such dissolution, as
5
the case may be, if such holder had so exercised this Warrant,
immediately prior thereto, all subject to further adjustment
thereafter as provided in Sections 3 and 5. The Company will 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 mailed or delivered to the holder of this Warrant at
the last address of such holder appearing on the books of the
Company, the obligation to delivery to such holder such shares of
stock, securities or assets as, in accordance with the foregoing
provisions, such holder may be entitled to purchase.
4.2 Dissolution. In the event of any dissolution of the Company
following the transfer of all or substantially all of its
properties or assets, the Company, prior to such dissolution,
shall at its expense deliver or cause to be delivered the stock
and other securities and property (including cash, where
applicable) receivable by the holders of the Warrants after the
effective date of such dissolution pursuant to this Section 4 to
a bank or trust company having its principal office in
Manchester, New Hampshire or Boston, Massachusetts, as trustee
for the holder or holders of the Warrants.
4.3 Continuation of Terms. Upon any reorganization,
consolidation, merger or transfer (and any dissolution following
any transfer) referred to in this Section 4, this Warrant shall
continue in full force and effect, subject to expiration in
accordance with Section 18 hereof, and the terms hereof shall be
applicable to the shares of stock and other securities and
property receivable on the exercise of this Warrant after the
consummation of such reorganization, consolidation or merger or
the effective date of dissolution following any such transfer, as
the case may be, and shall be binding upon the issuer of any such
stock or other securities, including, in the case of any such
transfer, the person acquiring all or substantially all of the
properties or assets of the Company, whether or not such person
shall have expressly assumed the terms of this Warrant as
provided in Section 6.
5. Anti-Dilution Adjustment.
5.1 General. The Purchase Price shall be subject to adjustment
from time to time as hereinafter provided. Upon each adjustment
of the Purchase Price, the holder of this Warrant shall
thereafter be entitled to purchase, at the Purchase Price
resulting from such adjustment, the number of shares obtained by
multiplying the 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 Purchase Price resulting from such
adjustment.
5.2 Purchase Price Adjustments. If and whenever after the date
hereof the Company shall issue or sell any shares of its Common
Stock (except (i) upon exercise of one or more of the Warrants or
(ii) shares of Common Stock issued to employees, officers,
directors of the Company upon the exercise of options granted
under the Company's Employee Stock Option/Purchase Plans
(hereinafter defined) not to exceed in the aggregate 1,200,000
shares of Common Stock) for a consideration per share less than
6
the Purchase Price in effect immediately prior to the time of
such issue or sale, or shall be deemed under the provisions of
this Section 5 to have effected any such issuance or sale, then,
forthwith upon such issue or sale, the Purchase Price shall be
reduced to the price (calculated to the nearest $0.0001) obtained
by multiplying the Purchase Price in effect immediately prior to
the time of such issue or sale by a fraction, the numerator of
which shall be the sum of (i) the number of shares of Common
Stock outstanding immediately prior to such issue or sale
multiplied by the Purchase Price immediately prior to such issue
or sale plus (ii) the consideration received by the Company upon
such issue or sale, and the denominator of which shall be the
product of (iii) the total number of shares of Common Stock
outstanding immediately after such issue or sale, multiplied by
(iv) the Purchase Price immediately prior to such issue or sale.
As used herein, "Employee Stock Option/Purchase Plans" consist of
the Company's 1997 Equity Incentive Plan, 1995 Stock Option Plan,
Employee Stock Purchase Plan, Employee Bonus Award Plan, and non
qualified options granted to certain Directors of the Company.
Notwithstanding the foregoing, no adjustment of the Purchase
Price shall be made in an amount less than $0.0001 per share, but
any such lesser adjustment shall be carried forward and shall be
made at the time of and together with the next subsequent
adjustment which together with any adjustments so carried forward
shall amount to $0.0001 per share or more.
5.3 Option Grants. In the event that at any time, other than
the issuance of options pursuant to the Company's Employee Stock
Option Plan, the Company shall in any manner grant (directly, 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 any stock or securities convertible into or exchangeable for
Common Stock (such rights or options being herein called
"Options" and such convertible or exchangeable stock or
securities being herein called "Convertible Securities"), whether
or not such 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 Options or upon conversion or exchange of such Convertible
Securities (determined by dividing (i) the total amount, if any,
received or receivable by the Company as consideration for the
granting of such Options, plus the minimum aggregate amount of
additional consideration payable to the Company upon the exercise
of all such Options, plus, in the case of any such 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 (ii) the total number of shares of Common
Stock issuable upon the exercise of such Options or upon the
conversion or exchange of all such Convertible Securities
issuable upon the exercise of such Options) shall be less than
the Purchase Price in effect immediately prior to the time of the
granting of such Options, then the total number of shares of
Common Stock issuable upon the exercise of such Options or upon
conversion or exchange of the total amount of such Convertible
Securities issuable upon the exercise of such Options shall (as
of the date of granting such Options) be deemed to be outstanding
and to have been issued for such price per share. Except as
otherwise provided in subsection 5.5, no further adjustment of
the Purchase Price shall be made upon the actual issue of such
Common Stock or of such Convertible Securities upon exercise of
such Options or upon the actual issue of such Common Stock upon
conversion or exchange of such Convertible Securities.
7
5.4 Convertible Security Grants. In the event that the Company
shall in any manner issue (directly, by assumption in a merger or
otherwise) or sell any Convertible Securities (other than
pursuant to the exercise of Options to purchase such Convertible
Securities covered by subsection 5.3), 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 (i) 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 (ii) 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 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, except as otherwise
provided in subsection 5.5, no further adjustment of the Purchase
Price shall be made upon the actual issue of such Common Stock
upon conversion or exchange of such Convertible Securities.
5.5 Effect of Alteration to Option or Convertible Security
Terms. In connection with any change in, or the expiration or
termination of, the purchase rights under any Option or the
conversion or exchange rights under any Convertible Securities,
the following provisions shall apply:
(A) If the purchase price provided for in any
Option referred to in subsection 5.3, the additional
consideration, if any, payable upon the conversion or
exchange of any Convertible Securities referred to in
subsection 5.3 or 5.4, or the rate at which any Convertible
Securities referred to in subsection 5.3 or 5.4 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), then the
Purchase Price in effect at the time of such change shall
forthwith be increased or decreased to the Purchase Price
which would be in effect immediately after such change if
(a) the adjustments which were made upon the issuance of such
Options or Convertible Securities had been made upon the
basis of (and taking into account the total consideration
received for) (i) the issuance at that time of the Common
Stock, if any, delivered upon the exercise of any such
Options or upon the conversion or exchange of any such
Convertible Securities before such change, and (ii) the
issuance at that time of all such Options or Convertible
Securities, with terms and provisions reflecting such change,
which are still outstanding after such change, and (b) the
Purchase Price as adjusted pursuant to clause (a) preceding
had been used as the basis for the adjustments required
hereunder in connection with all other issues or sales of
Common Stock, Options or Convertible Securities by the
Company subsequent to the issuance of such Options or
Convertible Securities.
8
(B) On the partial or complete expiration of any
Options or termination of any right to convert or exchange
Convertible Securities, the Purchase Price then in effect
hereunder shall forthwith be increased or decreased to the
Purchase Price which would be in effect at the time of such
expiration or termination if (a) the adjustments which were
made upon the issuance of such Options or Convertible
Securities had been made upon the basis of (and taking into
account the total consideration received for) (i) the
issuance at that time of the Common Stock, if any, delivered
upon the exercise of such Options or upon the conversion or
exchange of such Convertible Securities before such
expiration or termination, and (ii) the issuance at that time
of only those such Options or Convertible Securities which
remain outstanding after such expiration or termination, and
(b) the Purchase Price as adjusted pursuant to clause (a)
preceding had been used as the basis for adjustments required
hereunder in connection with all other issues or sales of
Common Stock, Options or Convertible Securities by the
Company subsequent to the issuance of such Options or
Convertible Securities.
(C) If the purchase price provided for in any
Option referred to in subsection 5.3 or the rate at which any
Convertible Securities referred to in subsection 5.3 or 5.4
are convertible into or exchangeable for Common Stock shall
be reduced at any time under or by reason ofr provisions with
respect thereto designed to protect against dilution, and the
event causing such reduction is one that did not also require
an adjustment in the Purchase Price under other provisions of
this Section 5, then in case of the delivery of shares of
Common Stock upon the exercise of any such Option or upon
conversion or exchange of any such Convertible Securities,
the Purchase Price then in effect hereunder shall forthwith
be adjusted to such amount as would have obtained if such
Option or Convertible Securities had never been issued and if
the adjustments made upon the issuance of such Option or
Convertible Securities had been made upon the basis of the
issuance of (and taking into account the total consideration
received for) the shares of Common Stock delivered as
aforesaid (provided that the Purchase Price used in such
determination shall be the Purchase Price on the date of
issue of such shares); provided that no such adjustment shall
be made unless the Purchase Price then in effect would be
reduced thereby.
5.6 Dividends of Common Stock, Options or Convertible
Securities. In the event that the Company shall declare a
dividend or make any other distribution upon any stock of the
Company payable in Common Stock, Options or Convertible
Securities, any Common Stock, Options or Convertible Securities,
as the case may be, issuable in payment of such dividend or
distribution shall be deemed to have been issued or sold without
consideration.
5.7 Dilution in Case of Other Securities. In case any Other
Securities shall be issued or sold by the Company, or shall
become subject to issue upon the conversion or exchange of any
stock (or Other Securities) of the Company (or any other issuer
of Other Securities or any other person referred to in Section 4)
or to subscription, purchase or other acquisition pursuant to any
rights or options granted by the Company (or such other issuer or
person), for a consideration per share such as to dilute the
purchase rights evidenced by this Warrant, the computations,
9
adjustments and readjustments provided for in this Section 5 with
respect to the Purchase Price and the number of shares of Common
Stock issuable upon exercise of this Warrant shall be made as
nearly as possible in the manner so provided and applied to
determine the amount of Other Securities from time to time
receivable on the exercise of the Warrants, so as to protect the
holders of the Warrants against the effect of such dilution.
5.8 Stock Splits and Reverse Splits. In the event that the
Company shall at any time subdivide its outstanding shares of
Common Stock into a greater number of shares, the Purchase Price
in effect immediately prior to such subdivision shall be
proportionately reduced and the number of Warrant Shares
purchasable pursuant to this Warrant immediately prior to such
subdivision shall be proportionately increased, and conversely,
in the event that the outstanding shares of Common Stock of the
Company shall at any time be combined into a smaller number of
shares, the Purchase Price in effect immediately prior to such
combination shall be proportionately increased and the number of
Warrant Shares purchasable upon the exercise of this Warrant
immediately prior to such combination shall be proportionately
reduced. Except as provided in this subsection 5.8 no adjustment
in the Purchase Price and no change in the number of Warrant
Shares purchasable shall be made under this Section 5 as a result
of or by reason of any such subdivision or combination.
5.9 Determination of Consideration Received. For purposes of
this Section 5, the amount of consideration received by the
Company in connection with the issuance or sale of Common Stock,
Options or Convertible Securities shall be determined in
accordance with the following:
(A) In the event that shares of Common Stock,
Options or Convertible Securities shall be issued or sold for
cash, the consideration received therefor shall be deemed to
be the amount payable to the Company therefor, without
deduction therefrom of any expenses incurred or any
underwriting commissions or concessions or discounts paid or
allowed by the Company in connection therewith.
(B) In the event that any shares of Common Stock,
Options or Convertible Securities shall be issued or sold for
a consideration other than cash, the amount of the
consideration other than cash payable to the Company shall be
deemed to be the fair value of such consideration as
reasonably determined by the Board of Directors of the
Company, without deduction of any expenses incurred or any
underwriting commissions or concessions or discounts paid or
allowed by the Company in connection therewith.
(C) The amount of consideration deemed to be
received by the Company pursuant to the foregoing provisions
of this subsection 5.9 upon any issuance and/or sale,
pursuant to an established compensation plan of the Company,
to directors, officers or employees of the Company in
connection with their employment, of shares of Common Stock,
Options or Convertible Securities, shall be increased by the
amount of any tax benefit realized by the Company as a result
of such issuance and/or sale, the amount of such tax benefit
being the amount by which the federal and/or state income or
other tax liability of the Company shall be reduced by reason
of any deduction or credit in respect of such issuance and/or
sale.
10
(D) In the event that any shares of Common Stock,
Options or Convertible Securities shall be issued in
connection with any merger in which the Company is the
surviving corporation, the amount of consideration therefor
shall be deemed to be the fair value as reasonably determined
by the Board of Directors of the Company of such portion of
the assets and business of the non-surviving corporation as
such Board shall determine to be attributable to such Common
Stock, Options or Convertible Securities, as the case may be.
(E) In the event that any Common Stock, Options
and/or Convertible Securities shall be issued in connection
with the issue and sale of other securities or property of
the Company, together comprising one integral transaction in
which no specific consideration is allocated to such Common
Stock, Options or Convertible Securities by the parties
thereto, such Common Stock, Options and/or Convertible
Securities shall be deemed to have been issued without
consideration.
5.10 Record Date as Date of Issue or Sale. In the event that at
any time the Company shall take a record of the holders of its
Common Stock for the purpose of entitling them (i) to receive a
dividend or other distribution payable in Common Stock, Options
or Convertible Securities, or (ii) to subscribe for or purchase
Common Stock, Options 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 right of
subscription or purchase, as the case may be.
5.11 Treasury Stock. 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 (other than their cancellation without
reissuance) shall be considered an issue or sale of Common Stock
for the purposes of this Section 5.
6. No Dilution or Impairment. 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 the Warrants, but will at all times in good
faith assist in the carrying out of all such terms and in the
taking of all such action as may be necessary or appropriate in
order to protect the rights of the holders of the Warrants
against dilution or other impairment. Without limiting the
generality of the foregoing, the Company (a) will not increase
the par value or stated value of any shares of stock receivable
on the exercise of the Warrants above the amount payable therefor
on such exercise, (b) will take all such action as may be
necessary or appropriate in order that the Company may validly
and legally issue fully paid and nonassessable shares of stock on
the exercise of all Warrants from time to time outstanding,
(c) will not issue any capital stock of any class which is
preferred as to dividends or as to the distribution of assets
upon voluntary or involuntary dissolution, liquidation or winding
11
up, unless the rights of the holders thereof shall be limited to
a fixed sum or percentage of par value in respect of
participation in dividends and in any such distribution of assets
or such stock shall be non voting and not be convertible into
shares of Common Stock or other voting stock, and (d) will not
transfer all or substantially all of its properties and assets to
any other person (corporate or otherwise), or consolidate with or
merge into any other person or permit any such person to
consolidate with or merge into the Company (if the Company is not
the surviving person), unless such other person shall expressly
assume in writing and become bound by all the terms of the
Warrants.
7. Accountants' Certificate as to Adjustments. In each case of
any adjustment or readjustment in the shares of Common Stock (or
Other Securities) issuable on the exercise of the Warrants, the
Company's chief financial officer will compute, or if requested
by the holders of Warrants to purchase over 50% of the shares of
Common Stock which may be purchased upon exercise of the Warrants
the Company at its expense will promptly cause independent
certified public accountants of recognized standing selected by
the Company at its expense to compute, such adjustment or
readjustment in accordance with the terms of the Warrants and
prepare a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which such
adjustment or readjustment is based, including a statement of (a)
the consideration received or receivable by the Company for any
additional shares of Common Stock (or Other Securities) issued or
sold or deemed to have been issued or sold, (b) the number of
shares of Common Stock (or Other Securities) outstanding or
deemed to be outstanding, and (c) the Purchase Price and the
number of shares of Common Stock to be received upon exercise of
this Warrant, in effect immediately prior to such issue or sale
and as adjusted and readjusted as provided in this Warrant. The
Company will forthwith mail a copy of each such certificate to
each holder of a Warrant, and will, on the written request at any
time of any holder of a Warrant (such request shall not be made
more than once in any Fiscal Quarter), furnish to such holder a
like certificate setting forth the Purchase Price at the time in
effect and showing how it was calculated.
8. Notices of Record Date, etc. In the event of
(a) any taking by the Company of a record of the holders of any
class of securities for the purpose of determining the holders
thereof who are entitled to receive any dividend or other
distribution, or any right to subscribe for, purchase or
otherwise acquire any shares of stock of any class or any other
securities or property, or to receive any other right or any
declaration of a cash dividend on the Common Stock, or
(b) any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the
Company or any transfer of all or substantially all the assets of
the Company to or consolidation or merger of the Company with or
into any other person, or
(c) any voluntary or involuntary dissolution, liquidation or
winding-up of the Company, or
12
(d) any proposed issue or grant by the Company of any shares of
stock of any class or any other securities, or any right or
option to subscribe for, purchase or otherwise acquire any shares
of stock of any class or any other securities (other than the
issue of Common Stock on the exercise of the Warrants),
then and in each such event the Company will mail or cause to be
mailed to each holder of a Warrant a notice specifying (i) the
date on which any such record is to be taken for the purpose of
such dividend, distribution or right, and stating the amount and
character of such dividend, distribution or right, (ii) the date
on which any such reorganization, reclassification,
recapitalization, transfer, consolidation, merger, dissolution,
liquidation or winding-up is to take place, and the time, if any
is to be fixed, as of which the holders of record of Common Stock
(or Other Securities) shall be entitled to exchange their shares
of Common Stock (or Other Securities) for securities or other
property deliverable on such reorganization, reclassification,
recapitalization, transfer, consolidation, merger, dissolution,
liquidation or winding-up, and (iii) the amount and character of
any stock or other securities, or rights or options with respect
thereto, proposed to be issued or granted, the date of such
proposed issue or grant and the persons or class of persons to
whom such proposed issue or grant is to be offered or made. Such
notice shall be mailed at least twenty (20) days prior to the
date specified in such notice on which any such action is to be
taken, except with respect to the grant of options under the
Company's Employee Stock Option/Purchase Plans in which case such
notice shall be given not later than the date of grant.
9. Reservation of Stock, etc. Issuable on Exercise of Warrants.
The Company will at all times reserve and keep available, solely
for issuance and delivery on the exercise of the Warrants, all
shares of Common Stock (or Other Securities) from time to time
issuable on the exercise of the Warrants.
10. Representations and Warranties of the Company. This Warrant
is issued and delivered by the Company on the basis of the
following:
(a) Authorization and Delivery. This Warrant has been duly
authorized and executed by the Company and when delivered will be
the valid and binding obligation of the Company enforceable in
accordance with its terms;
(b) Warrant Shares. The shares of Common Stock to be
issued pursuant to this Warrant have been duly authorized and
reserved for issuance by the Company and, when issued and paid
for in accordance with the terms hereof, will be validly issued,
fully paid and nonassessable;
(c) Rights and Privileges. The rights, preferences,
privileges and restrictions granted to or imposed upon such
shares of Common Stock and the holders thereof are as set forth
herein and in the Company's Articles of Incorporation.
(d) No Inconsistency. The execution and delivery of this
Warrant are not, and the issuance of the shares of Common Stock
upon exercise of this Warrant in accordance with the terms hereof
13
will not be, inconsistent with the Company's Articles of
Incorporation or by-laws, do not and will not contravene any law,
governmental rule or regulation, judgment or order applicable to
the Company, and do not and will not contravene any provision of,
or constitute a default under, any indenture, mortgage, contract
or other instrument of which the Company is a party or by which
it is bound or require the consent or approval of, the giving of
notice to, the registration with the taking of any action in
respect of or by, any Federal, state or local government
authority or agency or other person.
11. Exchange of Warrants. On surrender for exchange of any
Warrant, properly endorsed, to the Company, the Company at its
expense will issue and deliver to or on the order of the holder
thereof a new Warrant or Warrants of like tenor, in the name of
such holder or as such holder (on payment by such holder of any
applicable transfer taxes) may direct, calling in the aggregate
on the face or faces thereof for the number of shares of Common
Stock called for on the face or faces of the Warrant or Warrants
so surrendered.
12. Replacement of Warrants. On receipt of evidence
reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of any Warrant and, in the case of any
such loss, theft or destruction of any Warrant, on delivery of an
indemnity agreement or security reasonably satisfactory in form
and amount to the Company or, in the case of any such mutilation,
on surrender and cancellation of such Warrant, the Company at its
expense will execute and deliver, in lieu thereof, a new Warrant
of like tenor.
13. Warrant Agent. The Company may, by written notice to
each holder of a Warrant, appoint an agent having an office in
Boston, Massachusetts for the purpose of issuing Common Stock (or
Other Securities) on the exercise of the Warrants pursuant to
Section 1, exchanging Warrants pursuant to Section 11, and
replacing Warrants pursuant to Section 12, or any of the
foregoing, and thereafter any such issuance, exchange or
replacement, as the case may be, shall be made at such office by
such agent.
14. Remedies. The Company stipulates that the remedies at
law of the holder of this Warrant in the event of any default or
threatened default by the Company in the performance of or
compliance with any of the terms of this Warrant are not and will
not be adequate, and that such terms may be specifically enforced
by a decree for the specific performance of any agreement
contained herein or by an injunction against a violation of any
of the terms hereof or otherwise.
15. Negotiability, etc. This Warrant is issued upon the
following terms, to all of which each holder or owner hereof by
the taking hereof consents and agrees:
(a) title to this Warrant may be transferred by
endorsement (by the holder hereof executing the form of
assignment at the end hereof) and delivery in the same
manner as in the case of a negotiable instrument
transferable by endorsement and delivery; and
14
(b) any person in possession of this Warrant properly
endorsed for transfer to such person (including endorsed in
blank) is authorized to represent himself as absolute owner
hereof and is empowered to transfer absolute title hereto by
endorsement and delivery hereof to a bona fide purchaser
hereof for value; each prior taker or owner waives and
renounces all of his equities or rights in this Warrant in
favor of each such bona fide purchaser, and each such bona
fide purchaser shall acquire absolute title hereto and to
all rights represented hereby. Nothing in this
paragraph (b) shall create any liability on the part of the
Company beyond any liability or responsibility it has under
law.
16. Notices, etc. All notices and other communications
from the Company to the holder of this Warrant shall be mailed by
first class registered or certified mail, postage prepaid, at
such address as may have been furnished to the Company in writing
by such holder or, until any such holder furnishes to the Company
an address, then to, and at the address of, the last holder of
this Warrant who has so furnished an address to the Company.
17. Miscellaneous. This Warrant and any term hereof may be
changed, waived, discharged or terminated only by an instrument
in writing signed by the party against which enforcement of such
change, waiver, discharge or termination is sought. This Warrant
shall be construed and enforced in accordance with and governed
by the laws of the Commonwealth of Massachusetts. The headings
in this Warrant are for purposes of reference only, and shall not
limit or otherwise affect any of the terms hereof. This Warrant
is being executed as an instrument under seal. The invalidity or
unenforceability of any provision hereof shall in no way affect
the validity or enforceability of any other provision.
18. Expiration. The right to exercise this Warrant shall
expire at 5:00 p.m., Manchester, New Hampshire time, on
July, 2009. Notwithstanding the foregoing, this Warrant
shall automatically be deemed to be exercised in full pursuant to
the provisions of Section 1.5 hereof, without any further action
on behalf of the holder, immediately prior to the time this
Warrant would otherwise expire pursuant to the preceding
sentence.
[SIGNATURE PAGE FOLLOWS]
15
IN WITNESS WHEREOF, the Company has executed this Warrant
under seal as of the date first written above.
WPI GROUP, INC.
By:/s/Xxxx X. Xxxxxx
------------------
Xxxx X. Xxxxxx
Vice President/Chief Financial
Officer
[Corporate Seal]
Attest:
By:/s/Xxxxxxx Xxxx
----------------------
Name:Xxxxxxx Xxxx
Title:Secretary
16
FORM OF SUBSCRIPTION
(To be signed only on exercise of Warrant)
WPI GROUP, INC.
The undersigned, the holder of the within Warrant, hereby
irrevocably elects to exercise this Warrant for, and to purchase
thereunder, ........ shares of Common Stock of WPI GROUP, INC.
and herewith makes payment of $........ therefor, and requests
that the certificates for such shares be issued in the name of,
and delivered to .............., federal taxpayer identification
number ............, whose address is ...................
Dated:
-----------------------------
(Signature must conform to name
of holder as specified on the
face of the Warrant)
------------------------------
(Address)
Signed in the presence of:
----------------------------
----------------------------------------
FORM OF ASSIGNMENT
(To be signed only on transfer of Warrant)
For value received, the undersigned hereby sells, assigns,
and transfers unto .................., federal taxpayer
identification number ..........., whose address is ............,
the right represented by the within Warrant to purchase
............. shares of Common Stock of WPI GROUP, INC. to which
the within Warrant relates, and appoints
.......................... Attorney to transfer such right on the
books of WPI GROUP, INC. with full power of substitution in the
premises.
Dated:
------------------------------
(Signature must conform to name
of holder as specified on the
face of the Warrant)
-------------------------------
(Address)
Signed in the presence of:
--------------------------------
17
EXHIBIT 10.52
THIS WARRANT AND THE UNDERLYING SHARES OF COMMON STOCK ISSUABLE
UPON ITS EXERCISE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS,
AND MAY NOT BE SOLD OR TRANSFERRED WITHOUT COMPLIANCE WITH THE
REGISTRATION OR QUALIFICATION PROVISIONS OF APPLICABLE FEDERAL
AND STATE SECURITIES LAWS OR APPLICABLE EXEMPTIONS THEREFROM.
THE SECURITIES REPRESENTED BY THIS WARRANT ARE SUBJECT TO A
REGISTRATION RIGHTS AGREEMENT DATED AS OF AUGUST 16, 1999 (THE
"REGISTRATION AGREEMENT"). COPIES OF THE REGISTRATION AGREEMENT
ARE ON FILE AT THE OFFICE OF THE SECRETARY OF THE COMPANY.
No. W- 4 Right to Purchase 24,800
Shares of Common Stock
of
WPI GROUP, INC.
WPI GROUP, INC.
COMMON STOCK PURCHASE WARRANT
August 16, 1999
WPI GROUP, INC., a New Hampshire corporation (the
"Company"), hereby certifies that, for value received, BANK OF
NEW HAMPSHIRE, or its assigns, as a Lender under the Credit
Agreement dated as of August 3, 1998, as amended to date, (the
"Credit Agreement") among the Company, certain of its
subsidiaries, Fleet Bank - NH, as Agent for Lenders identified
therein, and such Lenders, is entitled, subject to the terms set
forth below, to purchase from the Company at any time or from
time to time after August 16, 2000 (subject to acceleration as
hereinafter provided) (the "Initial Exerciseability Date") and
before 5:00 p.m., Manchester, New Hampshire time, on August 16,
2009, 24,800 fully paid and nonassessable shares of Common Stock,
par value $0.01 per share, of the Company, at a purchase price
per share of $2.75 (such purchase price per share as adjusted
from time to time as herein provided is referred to herein as the
"Purchase Price"). The number and character of such shares of
Common Stock and the Purchase Price are subject to adjustment as
provided herein.
This Warrant is one of the Warrants evidencing the right to
purchase shares of Common Stock of the Company issued pursuant to
a certain Third Amendment dated as of August 16, 1999 to the
Credit Agreement (the Credit Agreement, as amended by such Third
Amendment, the "Agreement"), and subject to the Registration
Agreement, a copy of which agreement is on file at the principal
office of the Company, and the holder of this Warrant shall be
entitled to all of the benefits and bound by all of the
applicable obligations of the Registration Agreement, as provided
therein. This Warrant is detachable from the obligations
incurred by the Company pursuant to the Credit Agreement, and
shall survive the satisfaction of such obligations.
As used herein the following terms, unless the context
otherwise requires, have the following respective meanings:
(a) The term "Company" shall include WPI Group, Inc.,
and any corporation which shall succeed to, or assume the
obligations of, the Company hereunder.
(b) The term "Common Stock" includes (i) the Company's
Common Stock, par value $0.01 per share, as authorized on
the date of the Agreement, (ii) any other capital stock of
any class or classes (however designated) of the Company,
authorized on or after such date, the holders of which shall
have the right, without limitation as to amount per share,
either to all or to a share of the balance of current
dividends and liquidating distributions after the payment of
dividends and distributions on any shares entitled to
preference in the payment thereof, and the holders of which
shall ordinarily, in the absence of contingencies, be
entitled to vote for the election of a majority of directors
of the Company (even though the right so to vote may have
been suspended by the happening of such a contingency) and
(iii) any other securities into which or for which any of
the securities described in (i) or (ii) above may be
converted or exchanged pursuant to a plan of
recapitalization, reorganization, merger, sale of assets or
otherwise.
(c) The term "Other Securities" refers to any stock
(other than Common Stock) and other securities of the
Company or any other person (corporate or otherwise) which
the holders of the Warrants at any time shall be entitled to
receive, or shall have received, on the exercise of the
Warrants, in lieu of or in addition to Common Stock, or
which at any time shall be issuable or shall have been
issued in exchange for or in replacement of Common Stock or
Other Securities pursuant to Section 5 or otherwise.
(d)The term "Warrant" means this Common Stock Purchase
Warrant.
1. Exercise of Warrant.
1.1 Full Exercise. This Warrant may be exercised at any time
before its expiration in full by the holder hereof by surrender
of this Warrant, with the form of subscription at the end hereof
duly executed by such holder, to the Company at its principal
office, accompanied by payment, in cash or by certified or
official bank check payable to the order of the Company, in the
amount obtained by multiplying the number of shares of Common
Stock for which this Warrant is then exercisable by the Purchase
Price then in effect.
1.2 Partial Exercise. This Warrant may be exercised at any time
before its expiration in part (in lots of 100 shares or, if this
Warrant is then exercisable for a lesser amount, in such lesser
amount) by surrender of this Warrant and payment of the Purchase
Price then in effect in the manner and at the place provided in
subsection 1.1, except that the amount payable by the holder on
such partial exercise shall be the amount obtained by multiplying
(a) the number of shares of Common Stock designated by the holder
in the subscription at the end hereof by (b) the Purchase Price
2
then in effect. On any such partial exercise the Company at its
expense will forthwith issue and deliver to or upon the order of
the holder hereof a new Warrant or Warrants of like tenor, in the
name of the holder hereof or as such holder (upon payment by such
holder of any applicable transfer taxes) may request, calling in
the aggregate on the face or faces thereof for the number of
shares of Common Stock for which such Warrant or Warrants may
still be exercised.
1.3 Company Acknowledgment. The Company will, at the time of
the exercise of this Warrant, upon the request of the holder
hereof acknowledge in writing its continuing obligation to afford
to such holder any rights to which such holder shall continue to
be entitled after such exercise in accordance with the provisions
of this Warrant. If the holder shall fail to make any such
request, such failure shall not affect the continuing obligation
of the Company to afford to such holder any such rights.
1.4 Trustee for Warrant Holders. In the event that a bank or
trust company shall have been appointed as trustee for the
holders of the Warrants pursuant to subsection 4.2, such bank or
trust company shall have all the powers and duties of a warrant
agent appointed pursuant to Section 13 and shall accept, in its
own name for the account of the Company or such successor person
as may be entitled thereto, all amounts otherwise payable to the
Company or such successor, as the case may be, on exercise of
this Warrant pursuant to this Section 1.
1.5 Net Issue Election. The holder may elect to receive,
without the payment by the holder of any additional
consideration, shares equal to the value of this Warrant or any
portion hereof by the surrender of this Warrant or such portion
to the Company, with the net issue election notice annexed hereto
duly executed, at the office of the Company. Thereupon, the
Company shall issue to the holder such number of fully paid and
nonassessable shares of Common Stock as is computed using the
following formula:
X = Y (A-B)
A
where X = the number of shares to be issued to the holder
pursuant to this Section 1.5.
Y = the number of shares covered by this Warrant in
respect of which the net issue election is made
pursuant to this Section 1.5.
A = the fair market value of one share of Common
Stock, as determined in accordance with the provisions
of this Section 1.5.
B = the Purchase Price in effect under this Warrant at
the time the net issue election is made pursuant to
this Section 1.5.
For purposes of this Section 1.5, the "fair market value" per
share of the Company's Common Stock shall mean:
3
(a) If the Common Stock is traded on a national
securities exchange or admitted to unlisted trading
privileges on such an exchange, or is listed on the National
Market (the "National Market") of the National Association
of Securities Dealers Automated Quotations System (the
"NASDAQ"), the fair market value shall be the last reported
sale price of the Common Stock on such exchange or on the
National Market on the last business day before the
effective date of exercise of the net issue election or if
no such sale is made on such day, the mean of the closing
bid and asked prices for such day on such exchange or on the
National Market;
(b) If the Common Stock is not so listed or admitted
to unlisted trading privileges, the fair market value shall
be the mean of the last bid and asked prices reported on the
last business day before the date of the election (1) by the
NASDAQ or (2) if reports are unavailable under clause (a)
above by the National Quotation Bureau Incorporated; and
(c) If the Common Stock is not so listed or admitted
to unlisted trading privileges and bid and ask prices are
not reported, the fair market value shall be the price per
share which the Company could obtain from a willing buyer
for shares sold by the Company from authorized but unissued
shares, as such price shall be determined by mutual
agreement of the Company and the holder of this Warrant. If
the holder of this Warrant and the Company are unable to
agree on such fair market value, the holder of this Warrant
shall select a pool of three independent and nationally-
recognized investment banking firms from which the Company
shall select one such firm to appraise the fair market value
of the Warrant and to perform the computations involved.
The determination of such investment banking firm shall be
binding upon the Company, the holder of this Warrant and any
other holder of Warrants or Warrant Shares in connection
with any transaction occurring at the time of such
determination. All expenses of such investment banking firm
shall be borne by the Company. In all cases, the
determination of fair market value shall be made without
consideration of the lack of a liquid public market for the
Common Stock and without consideration of any "control
premium" or any discount for holding less than a majority or
controlling interest of the outstanding Common Stock.
1.6 Acceleration of Exercisability. Notwithstanding
the Initial Exercise DateExercisability Date, the Warrant shall
become exercisable on any earlier date that notices are sent to
holders of shares of Common Stock as contemplated in Section 8
with respect to any of the events set forth in subsection 4.1,
and the holder of this Warrant shall be entitled to receive any
such notice as provided in Section 8.
2. Delivery of Stock Certificates, etc. on Exercise. As soon
as practicable after the exercise of this Warrant in full or in
part, and in any event within ten (10) days thereafter, the
Company at its expense (including the payment by it of any
applicable issue taxes) will cause to be issued in the name of
and delivered to the holder hereof, or as such holder (upon
payment by such holder of any applicable transfer taxes) may
direct, a certificate or certificates for the number of fully
paid and nonassessable shares of Common Stock (or Other
Securities) to which such holder shall be entitled on such
exercise, plus, in lieu of any fractional share to which such
4
holder would otherwise be entitled, cash equal to such fraction
multiplied by the then current market value of one full share,
together with any other stock or other securities and property
(including cash, where applicable) to which such holder is
entitled upon such exercise pursuant to Section 1 or otherwise.
3. Adjustment for Dividends in Other Stock, Property, etc.;
Reclassification, etc. In case at any time or from time to time,
the holders of Common Stock (or Other Securities) in their
capacity as such shall have received, or (on or after the record
date fixed for the determination of shareholders eligible to
receive) shall have become entitled to receive, without payment
therefor,
(a) other or additional stock or other securities or property
(other than cash) by way of dividend, or
(b) any cash (excluding cash dividends payable solely out of
earnings or earned surplus of the Company), or
(c) other or additional stock or other securities or property
(including cash) by way of spin-off, split-up, reclassification,
recapitalization, combination of shares or similar corporate
rearrangement,
other than additional shares of Common Stock (or Other
Securities) issued as a stock dividend or in a stock-split
(adjustments in respect of which are provided for in Section 5),
then and in each such case the holder of this Warrant, on the
exercise hereof as provided in Section 1, shall be entitled to
receive the amount of stock and other securities and property
(including cash in the cases referred to in subdivisions (b) and
(c) of this Section 3) which such holder would hold on the date
of such exercise if on the date hereof he had been the holder of
record of the number of shares of Common Stock called for on the
face of this Warrant and had thereafter, during the period from
the date hereof to and including the date of such exercise,
retained such shares and all such other or additional stock and
other securities and property (including cash in the cases
referred to in subdivisions (b) and (c) of this Section 3)
receivable by him as aforesaid during such period, giving effect
to all adjustments called for during such period by Sections 4
and 5.
4. Adjustment for Reorganization, Consolidation, Merger, etc.
4.1 Reorganization, Consolidation, Merger, etc. In case at any
time or from time to time, the Company shall (a) effect a capital
reorganization or reclassification of its capital stock, (b)
consolidate with or merge into any other person, or (c) transfer
all or substantially all of its properties or assets to any other
corporation or other business entity under any plan or
arrangement contemplating the dissolution of the Company, then,
in each such case, the holder of this Warrant, on the exercise
hereof as provided in Section 1 at any time after the
consummation of such reorganization, consolidation or merger or
the effective date of such dissolution, as the case may be, shall
receive, in lieu of the Common Stock (or Other Securities)
issuable on such exercise prior to such consummation or such
effective date, the stock and other securities and property
(including cash) to which such holder would have been entitled
5
upon such consummation or in connection with such dissolution, as
the case may be, if such holder had so exercised this Warrant,
immediately prior thereto, all subject to further adjustment
thereafter as provided in Sections 3 and 5. The Company will 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 mailed or delivered to the holder of this Warrant at
the last address of such holder appearing on the books of the
Company, the obligation to delivery to such holder such shares of
stock, securities or assets as, in accordance with the foregoing
provisions, such holder may be entitled to purchase.
4.2 Dissolution. In the event of any dissolution of the Company
following the transfer of all or substantially all of its
properties or assets, the Company, prior to such dissolution,
shall at its expense deliver or cause to be delivered the stock
and other securities and property (including cash, where
applicable) receivable by the holders of the Warrants after the
effective date of such dissolution pursuant to this Section 4 to
a bank or trust company having its principal office in
Manchester, New Hampshire or Boston, Massachusetts, as trustee
for the holder or holders of the Warrants.
4.3 Continuation of Terms. Upon any reorganization,
consolidation, merger or transfer (and any dissolution following
any transfer) referred to in this Section 4, this Warrant shall
continue in full force and effect, subject to expiration in
accordance with Section 18 hereof, and the terms hereof shall be
applicable to the shares of stock and other securities and
property receivable on the exercise of this Warrant after the
consummation of such reorganization, consolidation or merger or
the effective date of dissolution following any such transfer, as
the case may be, and shall be binding upon the issuer of any such
stock or other securities, including, in the case of any such
transfer, the person acquiring all or substantially all of the
properties or assets of the Company, whether or not such person
shall have expressly assumed the terms of this Warrant as
provided in Section 6.
5. Anti-Dilution Adjustment.
5.1 General. The Purchase Price shall be subject to adjustment
from time to time as hereinafter provided. Upon each adjustment
of the Purchase Price, the holder of this Warrant shall
thereafter be entitled to purchase, at the Purchase Price
resulting from such adjustment, the number of shares obtained by
multiplying the 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 Purchase Price resulting from such
adjustment.
5.2 Purchase Price Adjustments. If and whenever after the date
hereof the Company shall issue or sell any shares of its Common
Stock (except (i) upon exercise of one or more of the Warrants or
(ii) shares of Common Stock issued to employees, officers,
directors of the Company upon the exercise of options granted
under the Company's Employee Stock Option/Purchase Plans
(hereinafter defined) not to exceed in the aggregate 1,200,000
6
shares of Common Stock) for a consideration per share less than
the Purchase Price in effect immediately prior to the time of
such issue or sale, or shall be deemed under the provisions of
this Section 5 to have effected any such issuance or sale, then,
forthwith upon such issue or sale, the Purchase Price shall be
reduced to the price (calculated to the nearest $0.0001) obtained
by multiplying the Purchase Price in effect immediately prior to
the time of such issue or sale by a fraction, the numerator of
which shall be the sum of (i) the number of shares of Common
Stock outstanding immediately prior to such issue or sale
multiplied by the Purchase Price immediately prior to such issue
or sale plus (ii) the consideration received by the Company upon
such issue or sale, and the denominator of which shall be the
product of (iii) the total number of shares of Common Stock
outstanding immediately after such issue or sale, multiplied by
(iv) the Purchase Price immediately prior to such issue or sale.
As used herein, "Employee Stock Option/Purchase Plans" consist of
the Company's 1997 Equity Incentive Plan, 1995 Stock Option Plan,
Employee Stock Purchase Plan, Employee Bonus Award Plan, and non
qualified options granted to certain Directors of the Company.
Notwithstanding the foregoing, no adjustment of the Purchase
Price shall be made in an amount less than $0.0001 per share, but
any such lesser adjustment shall be carried forward and shall be
made at the time of and together with the next subsequent
adjustment which together with any adjustments so carried forward
shall amount to $0.0001 per share or more.
5.3 Option Grants. In the event that at any time, other than
the issuance of options pursuant to the Company's Employee Stock
Option Plan, the Company shall in any manner grant (directly, 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 any stock or securities convertible into or exchangeable for
Common Stock (such rights or options being herein called
"Options" and such convertible or exchangeable stock or
securities being herein called "Convertible Securities"), whether
or not such 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 Options or upon conversion or exchange of such Convertible
Securities (determined by dividing (i) the total amount, if any,
received or receivable by the Company as consideration for the
granting of such Options, plus the minimum aggregate amount of
additional consideration payable to the Company upon the exercise
of all such Options, plus, in the case of any such 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 (ii) the total number of shares of Common
Stock issuable upon the exercise of such Options or upon the
conversion or exchange of all such Convertible Securities
issuable upon the exercise of such Options) shall be less than
the Purchase Price in effect immediately prior to the time of the
granting of such Options, then the total number of shares of
Common Stock issuable upon the exercise of such Options or upon
conversion or exchange of the total amount of such Convertible
Securities issuable upon the exercise of such Options shall (as
of the date of granting such Options) be deemed to be outstanding
and to have been issued for such price per share. Except as
otherwise provided in subsection 5.5, no further adjustment of
the Purchase Price shall be made upon the actual issue of such
Common Stock or of such Convertible Securities upon exercise of
such Options or upon the actual issue of such Common Stock upon
conversion or exchange of such Convertible Securities.
7
5.4 Convertible Security Grants. In the event that the Company
shall in any manner issue (directly, by assumption in a merger or
otherwise) or sell any Convertible Securities (other than
pursuant to the exercise of Options to purchase such Convertible
Securities covered by subsection 5.3), 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 (i) 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 (ii) 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 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, except as otherwise
provided in subsection 5.5, no further adjustment of the Purchase
Price shall be made upon the actual issue of such Common Stock
upon conversion or exchange of such Convertible Securities.
5.5 Effect of Alteration to Option or Convertible Security
Terms. In connection with any change in, or the expiration or
termination of, the purchase rights under any Option or the
conversion or exchange rights under any Convertible Securities,
the following provisions shall apply:
(A) If the purchase price provided for in any
Option referred to in subsection 5.3, the additional
consideration, if any, payable upon the conversion or
exchange of any Convertible Securities referred to in
subsection 5.3 or 5.4, or the rate at which any Convertible
Securities referred to in subsection 5.3 or 5.4 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), then the
Purchase Price in effect at the time of such change shall
forthwith be increased or decreased to the Purchase Price
which would be in effect immediately after such change if
(a) the adjustments which were made upon the issuance of such
Options or Convertible Securities had been made upon the
basis of (and taking into account the total consideration
received for) (i) the issuance at that time of the Common
Stock, if any, delivered upon the exercise of any such
Options or upon the conversion or exchange of any such
Convertible Securities before such change, and (ii) the
issuance at that time of all such Options or Convertible
Securities, with terms and provisions reflecting such change,
which are still outstanding after such change, and (b) the
Purchase Price as adjusted pursuant to clause (a) preceding
had been used as the basis for the adjustments required
hereunder in connection with all other issues or sales of
Common Stock, Options or Convertible Securities by the
Company subsequent to the issuance of such Options or
Convertible Securities.
8
(B) On the partial or complete expiration of any
Options or termination of any right to convert or exchange
Convertible Securities, the Purchase Price then in effect
hereunder shall forthwith be increased or decreased to the
Purchase Price which would be in effect at the time of such
expiration or termination if (a) the adjustments which were
made upon the issuance of such Options or Convertible
Securities had been made upon the basis of (and taking into
account the total consideration received for) (i) the
issuance at that time of the Common Stock, if any, delivered
upon the exercise of such Options or upon the conversion or
exchange of such Convertible Securities before such
expiration or termination, and (ii) the issuance at that time
of only those such Options or Convertible Securities which
remain outstanding after such expiration or termination, and
(b) the Purchase Price as adjusted pursuant to clause (a)
preceding had been used as the basis for adjustments required
hereunder in connection with all other issues or sales of
Common Stock, Options or Convertible Securities by the
Company subsequent to the issuance of such Options or
Convertible Securities.
(C) If the purchase price provided for in any
Option referred to in subsection 5.3 or the rate at which any
Convertible Securities referred to in subsection 5.3 or 5.4
are convertible into or exchangeable for Common Stock shall
be reduced at any time under or by reason ofr provisions with
respect thereto designed to protect against dilution, and the
event causing such reduction is one that did not also require
an adjustment in the Purchase Price under other provisions of
this Section 5, then in case of the delivery of shares of
Common Stock upon the exercise of any such Option or upon
conversion or exchange of any such Convertible Securities,
the Purchase Price then in effect hereunder shall forthwith
be adjusted to such amount as would have obtained if such
Option or Convertible Securities had never been issued and if
the adjustments made upon the issuance of such Option or
Convertible Securities had been made upon the basis of the
issuance of (and taking into account the total consideration
received for) the shares of Common Stock delivered as
aforesaid (provided that the Purchase Price used in such
determination shall be the Purchase Price on the date of
issue of such shares); provided that no such adjustment shall
be made unless the Purchase Price then in effect would be
reduced thereby.
5.6 Dividends of Common Stock, Options or Convertible
Securities. In the event that the Company shall declare a
dividend or make any other distribution upon any stock of the
Company payable in Common Stock, Options or Convertible
Securities, any Common Stock, Options or Convertible Securities,
as the case may be, issuable in payment of such dividend or
distribution shall be deemed to have been issued or sold without
consideration.
5.7 Dilution in Case of Other Securities. In case any Other
Securities shall be issued or sold by the Company, or shall
become subject to issue upon the conversion or exchange of any
stock (or Other Securities) of the Company (or any other issuer
of Other Securities or any other person referred to in Section 4)
or to subscription, purchase or other acquisition pursuant to any
rights or options granted by the Company (or such other issuer or
person), for a consideration per share such as to dilute the
purchase rights evidenced by this Warrant, the computations,
9
adjustments and readjustments provided for in this Section 5 with
respect to the Purchase Price and the number of shares of Common
Stock issuable upon exercise of this Warrant shall be made as
nearly as possible in the manner so provided and applied to
determine the amount of Other Securities from time to time
receivable on the exercise of the Warrants, so as to protect the
holders of the Warrants against the effect of such dilution.
5.8 Stock Splits and Reverse Splits. In the event that the
Company shall at any time subdivide its outstanding shares of
Common Stock into a greater number of shares, the Purchase Price
in effect immediately prior to such subdivision shall be
proportionately reduced and the number of Warrant Shares
purchasable pursuant to this Warrant immediately prior to such
subdivision shall be proportionately increased, and conversely,
in the event that the outstanding shares of Common Stock of the
Company shall at any time be combined into a smaller number of
shares, the Purchase Price in effect immediately prior to such
combination shall be proportionately increased and the number of
Warrant Shares purchasable upon the exercise of this Warrant
immediately prior to such combination shall be proportionately
reduced. Except as provided in this subsection 5.8 no adjustment
in the Purchase Price and no change in the number of Warrant
Shares purchasable shall be made under this Section 5 as a result
of or by reason of any such subdivision or combination.
5.9 Determination of Consideration Received. For purposes of
this Section 5, the amount of consideration received by the
Company in connection with the issuance or sale of Common Stock,
Options or Convertible Securities shall be determined in
accordance with the following:
(A) In the event that shares of Common Stock,
Options or Convertible Securities shall be issued or sold for
cash, the consideration received therefor shall be deemed to
be the amount payable to the Company therefor, without
deduction therefrom of any expenses incurred or any
underwriting commissions or concessions or discounts paid or
allowed by the Company in connection therewith.
(B) In the event that any shares of Common Stock,
Options or Convertible Securities shall be issued or sold for
a consideration other than cash, the amount of the
consideration other than cash payable to the Company shall be
deemed to be the fair value of such consideration as
reasonably determined by the Board of Directors of the
Company, without deduction of any expenses incurred or any
underwriting commissions or concessions or discounts paid or
allowed by the Company in connection therewith.
(C) The amount of consideration deemed to be
received by the Company pursuant to the foregoing provisions
of this subsection 5.9 upon any issuance and/or sale,
pursuant to an established compensation plan of the Company,
to directors, officers or employees of the Company in
connection with their employment, of shares of Common Stock,
Options or Convertible Securities, shall be increased by the
amount of any tax benefit realized by the Company as a result
of such issuance and/or sale, the amount of such tax benefit
being the amount by which the federal and/or state income or
other tax liability of the Company shall be reduced by reason
of any deduction or credit in respect of such issuance and/or
sale.
10
(D) In the event that any shares of Common Stock,
Options or Convertible Securities shall be issued in
connection with any merger in which the Company is the
surviving corporation, the amount of consideration therefor
shall be deemed to be the fair value as reasonably determined
by the Board of Directors of the Company of such portion of
the assets and business of the non-surviving corporation as
such Board shall determine to be attributable to such Common
Stock, Options or Convertible Securities, as the case may be.
(E) In the event that any Common Stock, Options
and/or Convertible Securities shall be issued in connection
with the issue and sale of other securities or property of
the Company, together comprising one integral transaction in
which no specific consideration is allocated to such Common
Stock, Options or Convertible Securities by the parties
thereto, such Common Stock, Options and/or Convertible
Securities shall be deemed to have been issued without
consideration.
5.10 Record Date as Date of Issue or Sale. In the event that at
any time the Company shall take a record of the holders of its
Common Stock for the purpose of entitling them (i) to receive a
dividend or other distribution payable in Common Stock, Options
or Convertible Securities, or (ii) to subscribe for or purchase
Common Stock, Options 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 right of
subscription or purchase, as the case may be.
5.11 Treasury Stock. 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 (other than their cancellation without
reissuance) shall be considered an issue or sale of Common Stock
for the purposes of this Section 5.
6. No Dilution or Impairment. 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 the Warrants, but will at all times in good
faith assist in the carrying out of all such terms and in the
taking of all such action as may be necessary or appropriate in
order to protect the rights of the holders of the Warrants
against dilution or other impairment. Without limiting the
generality of the foregoing, the Company (a) will not increase
the par value or stated value of any shares of stock receivable
on the exercise of the Warrants above the amount payable therefor
on such exercise, (b) will take all such action as may be
necessary or appropriate in order that the Company may validly
and legally issue fully paid and nonassessable shares of stock on
the exercise of all Warrants from time to time outstanding,
(c) will not issue any capital stock of any class which is
preferred as to dividends or as to the distribution of assets
upon voluntary or involuntary dissolution, liquidation or winding
11
up, unless the rights of the holders thereof shall be limited to
a fixed sum or percentage of par value in respect of
participation in dividends and in any such distribution of assets
or such stock shall be non voting and not be convertible into
shares of Common Stock or other voting stock, and (d) will not
transfer all or substantially all of its properties and assets to
any other person (corporate or otherwise), or consolidate with or
merge into any other person or permit any such person to
consolidate with or merge into the Company (if the Company is not
the surviving person), unless such other person shall expressly
assume in writing and become bound by all the terms of the
Warrants.
7. Accountants' Certificate as to Adjustments. In each case of
any adjustment or readjustment in the shares of Common Stock (or
Other Securities) issuable on the exercise of the Warrants, the
Company's chief financial officer will compute, or if requested
by the holders of Warrants to purchase over 50% of the shares of
Common Stock which may be purchased upon exercise of the Warrants
the Company at its expense will promptly cause independent
certified public accountants of recognized standing selected by
the Company at its expense to compute, such adjustment or
readjustment in accordance with the terms of the Warrants and
prepare a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which such
adjustment or readjustment is based, including a statement of (a)
the consideration received or receivable by the Company for any
additional shares of Common Stock (or Other Securities) issued or
sold or deemed to have been issued or sold, (b) the number of
shares of Common Stock (or Other Securities) outstanding or
deemed to be outstanding, and (c) the Purchase Price and the
number of shares of Common Stock to be received upon exercise of
this Warrant, in effect immediately prior to such issue or sale
and as adjusted and readjusted as provided in this Warrant. The
Company will forthwith mail a copy of each such certificate to
each holder of a Warrant, and will, on the written request at any
time of any holder of a Warrant (such request shall not be made
more than once in any Fiscal Quarter), furnish to such holder a
like certificate setting forth the Purchase Price at the time in
effect and showing how it was calculated.
8. Notices of Record Date, etc. In the event of
(a) any taking by the Company of a record of the holders of any
class of securities for the purpose of determining the holders
thereof who are entitled to receive any dividend or other
distribution, or any right to subscribe for, purchase or
otherwise acquire any shares of stock of any class or any other
securities or property, or to receive any other right or any
declaration of a cash dividend on the Common Stock, or
(b) any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the
Company or any transfer of all or substantially all the assets of
the Company to or consolidation or merger of the Company with or
into any other person, or
(c) any voluntary or involuntary dissolution, liquidation or
winding-up of the Company, or
12
(d) any proposed issue or grant by the Company of any shares of
stock of any class or any other securities, or any right or
option to subscribe for, purchase or otherwise acquire any shares
of stock of any class or any other securities (other than the
issue of Common Stock on the exercise of the Warrants),
then and in each such event the Company will mail or cause to be
mailed to each holder of a Warrant a notice specifying (i) the
date on which any such record is to be taken for the purpose of
such dividend, distribution or right, and stating the amount and
character of such dividend, distribution or right, (ii) the date
on which any such reorganization, reclassification,
recapitalization, transfer, consolidation, merger, dissolution,
liquidation or winding-up is to take place, and the time, if any
is to be fixed, as of which the holders of record of Common Stock
(or Other Securities) shall be entitled to exchange their shares
of Common Stock (or Other Securities) for securities or other
property deliverable on such reorganization, reclassification,
recapitalization, transfer, consolidation, merger, dissolution,
liquidation or winding-up, and (iii) the amount and character of
any stock or other securities, or rights or options with respect
thereto, proposed to be issued or granted, the date of such
proposed issue or grant and the persons or class of persons to
whom such proposed issue or grant is to be offered or made. Such
notice shall be mailed at least twenty (20) days prior to the
date specified in such notice on which any such action is to be
taken, except with respect to the grant of options under the
Company's Employee Stock Option/Purchase Plans in which case such
notice shall be given not later than the date of grant.
9. Reservation of Stock, etc. Issuable on Exercise of Warrants.
The Company will at all times reserve and keep available, solely
for issuance and delivery on the exercise of the Warrants, all
shares of Common Stock (or Other Securities) from time to time
issuable on the exercise of the Warrants.
10. Representations and Warranties of the Company. This Warrant
is issued and delivered by the Company on the basis of the
following:
(a) Authorization and Delivery. This Warrant has been duly
authorized and executed by the Company and when delivered will be
the valid and binding obligation of the Company enforceable in
accordance with its terms;
(b) Warrant Shares. The shares of Common Stock to be
issued pursuant to this Warrant have been duly authorized and
reserved for issuance by the Company and, when issued and paid
for in accordance with the terms hereof, will be validly issued,
fully paid and nonassessable;
(c) Rights and Privileges. The rights, preferences,
privileges and restrictions granted to or imposed upon such
shares of Common Stock and the holders thereof are as set forth
herein and in the Company's Articles of Incorporation.
(d) No Inconsistency. The execution and delivery of this
Warrant are not, and the issuance of the shares of Common Stock
upon exercise of this Warrant in accordance with the terms hereof
13
will not be, inconsistent with the Company's Articles of
Incorporation or by-laws, do not and will not contravene any law,
governmental rule or regulation, judgment or order applicable to
the Company, and do not and will not contravene any provision of,
or constitute a default under, any indenture, mortgage, contract
or other instrument of which the Company is a party or by which
it is bound or require the consent or approval of, the giving of
notice to, the registration with the taking of any action in
respect of or by, any Federal, state or local government
authority or agency or other person.
11. Exchange of Warrants. On surrender for exchange of any
Warrant, properly endorsed, to the Company, the Company at its
expense will issue and deliver to or on the order of the holder
thereof a new Warrant or Warrants of like tenor, in the name of
such holder or as such holder (on payment by such holder of any
applicable transfer taxes) may direct, calling in the aggregate
on the face or faces thereof for the number of shares of Common
Stock called for on the face or faces of the Warrant or Warrants
so surrendered.
12. Replacement of Warrants. On receipt of evidence
reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of any Warrant and, in the case of any
such loss, theft or destruction of any Warrant, on delivery of an
indemnity agreement or security reasonably satisfactory in form
and amount to the Company or, in the case of any such mutilation,
on surrender and cancellation of such Warrant, the Company at its
expense will execute and deliver, in lieu thereof, a new Warrant
of like tenor.
13. Warrant Agent. The Company may, by written notice to
each holder of a Warrant, appoint an agent having an office in
Boston, Massachusetts for the purpose of issuing Common Stock (or
Other Securities) on the exercise of the Warrants pursuant to
Section 1, exchanging Warrants pursuant to Section 11, and
replacing Warrants pursuant to Section 12, or any of the
foregoing, and thereafter any such issuance, exchange or
replacement, as the case may be, shall be made at such office by
such agent.
14. Remedies. The Company stipulates that the remedies at
law of the holder of this Warrant in the event of any default or
threatened default by the Company in the performance of or
compliance with any of the terms of this Warrant are not and will
not be adequate, and that such terms may be specifically enforced
by a decree for the specific performance of any agreement
contained herein or by an injunction against a violation of any
of the terms hereof or otherwise.
15. Negotiability, etc. This Warrant is issued upon the
following terms, to all of which each holder or owner hereof by
the taking hereof consents and agrees:
(a) title to this Warrant may be transferred by
endorsement (by the holder hereof executing the form of
assignment at the end hereof) and delivery in the same
manner as in the case of a negotiable instrument
transferable by endorsement and delivery; and
14
(b) any person in possession of this Warrant properly
endorsed for transfer to such person (including endorsed in
blank) is authorized to represent himself as absolute owner
hereof and is empowered to transfer absolute title hereto by
endorsement and delivery hereof to a bona fide purchaser
hereof for value; each prior taker or owner waives and
renounces all of his equities or rights in this Warrant in
favor of each such bona fide purchaser, and each such bona
fide purchaser shall acquire absolute title hereto and to
all rights represented hereby. Nothing in this
paragraph (b) shall create any liability on the part of the
Company beyond any liability or responsibility it has under
law.
16. Notices, etc. All notices and other communications
from the Company to the holder of this Warrant shall be mailed by
first class registered or certified mail, postage prepaid, at
such address as may have been furnished to the Company in writing
by such holder or, until any such holder furnishes to the Company
an address, then to, and at the address of, the last holder of
this Warrant who has so furnished an address to the Company.
17. Miscellaneous. This Warrant and any term hereof may be
changed, waived, discharged or terminated only by an instrument
in writing signed by the party against which enforcement of such
change, waiver, discharge or termination is sought. This Warrant
shall be construed and enforced in accordance with and governed
by the laws of the Commonwealth of Massachusetts. The headings
in this Warrant are for purposes of reference only, and shall not
limit or otherwise affect any of the terms hereof. This Warrant
is being executed as an instrument under seal. The invalidity or
unenforceability of any provision hereof shall in no way affect
the validity or enforceability of any other provision.
18. Expiration. The right to exercise this Warrant shall
expire at 5:00 p.m., Manchester, New Hampshire time, on
July_____, 2009. Notwithstanding the foregoing, this Warrant
shall automatically be deemed to be exercised in full pursuant to
the provisions of Section 1.5 hereof, without any further action
on behalf of the holder, immediately prior to the time this
Warrant would otherwise expire pursuant to the preceding
sentence.
[SIGNATURE PAGE FOLLOWS]
15
IN WITNESS WHEREOF, the Company has executed this Warrant
under seal as of the date first written above.
WPI GROUP, INC.
By:/s/Xxxx X. Xxxxxx
------------------------
Xxxx X. Xxxxxx
Vice President/Chief
Financial Officer
[Corporate Seal]
Attest:
By:/s/Xxxxxxx Xxxx
------------------------
Name:Xxxxxxx Xxxx
Title:Secretary
16
FORM OF SUBSCRIPTION
(To be signed only on exercise of Warrant)
WPI GROUP, INC.
The undersigned, the holder of the within Warrant, hereby
irrevocably elects to exercise this Warrant for, and to purchase
thereunder, ........ shares of Common Stock of WPI GROUP, INC.
and herewith makes payment of $........ therefor, and requests
that the certificates for such shares be issued in the name of,
and delivered to .............., federal taxpayer identification
number ............, whose address is ...................
Dated:
-------------------------------
(Signature must conform to name
of holder as specified on the
face of the Warrant)
--------------------------------
(Address)
Signed in the presence of:
-------------------------------
-------------------------------------
FORM OF ASSIGNMENT
(To be signed only on transfer of Warrant)
For value received, the undersigned hereby sells, assigns,
and transfers unto .................., federal taxpayer
identification number ..........., whose address is ............,
the right represented by the within Warrant to purchase
............. shares of Common Stock of WPI GROUP, INC. to which
the within Warrant relates, and appoints
.......................... Attorney to transfer such right on the
books of WPI GROUP, INC. with full power of substitution in the
premises.
Dated:
----------------------------------
(Signature must conform to name
of holder as specified on the
face of the Warrant)
-----------------------------------
(Address)
Signed in the presence of:
------------------------------
17
EXHIBIT 10.53
THIS WARRANT AND THE UNDERLYING SHARES OF COMMON STOCK ISSUABLE
UPON ITS EXERCISE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS,
AND MAY NOT BE SOLD OR TRANSFERRED WITHOUT COMPLIANCE WITH THE
REGISTRATION OR QUALIFICATION PROVISIONS OF APPLICABLE FEDERAL
AND STATE SECURITIES LAWS OR APPLICABLE EXEMPTIONS THEREFROM.
THE SECURITIES REPRESENTED BY THIS WARRANT ARE SUBJECT TO A
REGISTRATION RIGHTS AGREEMENT DATED AS OF AUGUST 16, 1999 (THE
"REGISTRATION AGREEMENT"). COPIES OF THE REGISTRATION AGREEMENT
ARE ON FILE AT THE OFFICE OF THE SECRETARY OF THE COMPANY.
No. W - 1 Right to Purchase 37,200
Shares of Common Stock
of
WPI GROUP, INC.
WPI GROUP, INC.
COMMON STOCK PURCHASE WARRANT
August 16, 1999
WPI GROUP, INC., a New Hampshire corporation (the
"Company"), hereby certifies that, for value received, FLEET BANK
- NH, or its assigns, as a Lender under the Credit Agreement
dated as of August 3, 1998, as amended to date, (the "Credit
Agreement") among the Company, certain of its subsidiaries, Fleet
Bank - NH, as Agent for Lenders identified therein, and such
Lenders, is entitled, subject to the terms set forth below, to
purchase from the Company at any time or from time to time after
August 16, 2000 (subject to acceleration as hereinafter provided)
(the "Initial Exerciseability Date") and before 5:00 p.m.,
Manchester, New Hampshire time, on August 16, 2009, 37,200 fully
paid and nonassessable shares of Common Stock, par value $0.01
per share, of the Company, at a purchase price per share of $2.75
(such purchase price per share as adjusted from time to time as
herein provided is referred to herein as the "Purchase Price").
The number and character of such shares of Common Stock and the
Purchase Price are subject to adjustment as provided herein.
This Warrant is one of the Warrants evidencing the right to
purchase shares of Common Stock of the Company issued pursuant to
a certain Third Amendment dated as of August 16, 1999 to the
Credit Agreement (the Credit Agreement, as amended by such Third
Amendment, the "Agreement"), and subject to the Registration
Agreement, a copy of which agreement is on file at the principal
office of the Company, and the holder of this Warrant shall be
entitled to all of the benefits and bound by all of the
applicable obligations of the Registration Agreement, as provided
therein. This Warrant is detachable from the obligations
incurred by the Company pursuant to the Credit Agreement, and
shall survive the satisfaction of such obligations.
As used herein the following terms, unless the context
otherwise requires, have the following respective meanings:
(a) The term "Company" shall include WPI Group, Inc.,
and any corporation which shall succeed to, or assume the
obligations of, the Company hereunder.
(b) The term "Common Stock" includes (i) the Company's
Common Stock, par value $0.01 per share, as authorized on
the date of the Agreement, (ii) any other capital stock of
any class or classes (however designated) of the Company,
authorized on or after such date, the holders of which shall
have the right, without limitation as to amount per share,
either to all or to a share of the balance of current
dividends and liquidating distributions after the payment of
dividends and distributions on any shares entitled to
preference in the payment thereof, and the holders of which
shall ordinarily, in the absence of contingencies, be
entitled to vote for the election of a majority of directors
of the Company (even though the right so to vote may have
been suspended by the happening of such a contingency) and
(iii) any other securities into which or for which any of
the securities described in (i) or (ii) above may be
converted or exchanged pursuant to a plan of
recapitalization, reorganization, merger, sale of assets or
otherwise.
(c) The term "Other Securities" refers to any stock
(other than Common Stock) and other securities of the
Company or any other person (corporate or otherwise) which
the holders of the Warrants at any time shall be entitled to
receive, or shall have received, on the exercise of the
Warrants, in lieu of or in addition to Common Stock, or
which at any time shall be issuable or shall have been
issued in exchange for or in replacement of Common Stock or
Other Securities pursuant to Section 5 or otherwise.
(d)The term "Warrant" means this Common Stock Purchase
Warrant.
1. Exercise of Warrant.
1.1 Full Exercise. This Warrant may be exercised at any time
before its expiration in full by the holder hereof by surrender
of this Warrant, with the form of subscription at the end hereof
duly executed by such holder, to the Company at its principal
office, accompanied by payment, in cash or by certified or
official bank check payable to the order of the Company, in the
amount obtained by multiplying the number of shares of Common
Stock for which this Warrant is then exercisable by the Purchase
Price then in effect.
1.2 Partial Exercise. This Warrant may be exercised at any time
before its expiration in part (in lots of 100 shares or, if this
Warrant is then exercisable for a lesser amount, in such lesser
amount) by surrender of this Warrant and payment of the Purchase
Price then in effect in the manner and at the place provided in
subsection 1.1, except that the amount payable by the holder on
such partial exercise shall be the amount obtained by multiplying
(a) the number of shares of Common Stock designated by the holder
in the subscription at the end hereof by (b) the Purchase Price
2
then in effect. On any such partial exercise the Company at its
expense will forthwith issue and deliver to or upon the order of
the holder hereof a new Warrant or Warrants of like tenor, in the
name of the holder hereof or as such holder (upon payment by such
holder of any applicable transfer taxes) may request, calling in
the aggregate on the face or faces thereof for the number of
shares of Common Stock for which such Warrant or Warrants may
still be exercised.
1.3 Company Acknowledgment. The Company will, at the time of
the exercise of this Warrant, upon the request of the holder
hereof acknowledge in writing its continuing obligation to afford
to such holder any rights to which such holder shall continue to
be entitled after such exercise in accordance with the provisions
of this Warrant. If the holder shall fail to make any such
request, such failure shall not affect the continuing obligation
of the Company to afford to such holder any such rights.
1.4 Trustee for Warrant Holders. In the event that a bank or
trust company shall have been appointed as trustee for the
holders of the Warrants pursuant to subsection 4.2, such bank or
trust company shall have all the powers and duties of a warrant
agent appointed pursuant to Section 13 and shall accept, in its
own name for the account of the Company or such successor person
as may be entitled thereto, all amounts otherwise payable to the
Company or such successor, as the case may be, on exercise of
this Warrant pursuant to this Section 1.
1.5 Net Issue Election. The holder may elect to receive,
without the payment by the holder of any additional
consideration, shares equal to the value of this Warrant or any
portion hereof by the surrender of this Warrant or such portion
to the Company, with the net issue election notice annexed hereto
duly executed, at the office of the Company. Thereupon, the
Company shall issue to the holder such number of fully paid and
nonassessable shares of Common Stock as is computed using the
following formula:
X = Y (A-B)
A
where X = the number of shares to be issued to the holder
pursuant to this Section 1.5.
Y = the number of shares covered by this Warrant in
respect of which the net issue election is made
pursuant to this Section 1.5.
A = the fair market value of one share of Common
Stock, as determined in accordance with the provisions
of this Section 1.5.
B = the Purchase Price in effect under this Warrant at
the time the net issue election is made pursuant to
this Section 1.5.
For purposes of this Section 1.5, the "fair market value" per
share of the Company's Common Stock shall mean:
3
(a) If the Common Stock is traded on a national
securities exchange or admitted to unlisted trading
privileges on such an exchange, or is listed on the National
Market (the "National Market") of the National Association
of Securities Dealers Automated Quotations System (the
"NASDAQ"), the fair market value shall be the last reported
sale price of the Common Stock on such exchange or on the
National Market on the last business day before the
effective date of exercise of the net issue election or if
no such sale is made on such day, the mean of the closing
bid and asked prices for such day on such exchange or on the
National Market;
(b) If the Common Stock is not so listed or admitted
to unlisted trading privileges, the fair market value shall
be the mean of the last bid and asked prices reported on the
last business day before the date of the election (1) by the
NASDAQ or (2) if reports are unavailable under clause (a)
above by the National Quotation Bureau Incorporated; and
(c) If the Common Stock is not so listed or admitted
to unlisted trading privileges and bid and ask prices are
not reported, the fair market value shall be the price per
share which the Company could obtain from a willing buyer
for shares sold by the Company from authorized but unissued
shares, as such price shall be determined by mutual
agreement of the Company and the holder of this Warrant. If
the holder of this Warrant and the Company are unable to
agree on such fair market value, the holder of this Warrant
shall select a pool of three independent and nationally-
recognized investment banking firms from which the Company
shall select one such firm to appraise the fair market value
of the Warrant and to perform the computations involved.
The determination of such investment banking firm shall be
binding upon the Company, the holder of this Warrant and any
other holder of Warrants or Warrant Shares in connection
with any transaction occurring at the time of such
determination. All expenses of such investment banking firm
shall be borne by the Company. In all cases, the
determination of fair market value shall be made without
consideration of the lack of a liquid public market for the
Common Stock and without consideration of any "control
premium" or any discount for holding less than a majority or
controlling interest of the outstanding Common Stock.
1.6 Acceleration of Exercisability. Notwithstanding
the Initial Exercise DateExercisability Date, the Warrant shall
become exercisable on any earlier date that notices are sent to
holders of shares of Common Stock as contemplated in Section 8
with respect to any of the events set forth in subsection 4.1,
and the holder of this Warrant shall be entitled to receive any
such notice as provided in Section 8.
2. Delivery of Stock Certificates, etc. on Exercise. As soon
as practicable after the exercise of this Warrant in full or in
part, and in any event within ten (10) days thereafter, the
Company at its expense (including the payment by it of any
applicable issue taxes) will cause to be issued in the name of
and delivered to the holder hereof, or as such holder (upon
payment by such holder of any applicable transfer taxes) may
direct, a certificate or certificates for the number of fully
paid and nonassessable shares of Common Stock (or Other
Securities) to which such holder shall be entitled on such
exercise, plus, in lieu of any fractional share to which such
4
holder would otherwise be entitled, cash equal to such fraction
multiplied by the then current market value of one full share,
together with any other stock or other securities and property
(including cash, where applicable) to which such holder is
entitled upon such exercise pursuant to Section 1 or otherwise.
3. Adjustment for Dividends in Other Stock, Property, etc.;
Reclassification, etc. In case at any time or from time to time,
the holders of Common Stock (or Other Securities) in their
capacity as such shall have received, or (on or after the record
date fixed for the determination of shareholders eligible to
receive) shall have become entitled to receive, without payment
therefor,
(a) other or additional stock or other securities or property
(other than cash) by way of dividend, or
(b) any cash (excluding cash dividends payable solely out of
earnings or earned surplus of the Company), or
(c) other or additional stock or other securities or property
(including cash) by way of spin-off, split-up, reclassification,
recapitalization, combination of shares or similar corporate
rearrangement,
other than additional shares of Common Stock (or Other
Securities) issued as a stock dividend or in a stock-split
(adjustments in respect of which are provided for in Section 5),
then and in each such case the holder of this Warrant, on the
exercise hereof as provided in Section 1, shall be entitled to
receive the amount of stock and other securities and property
(including cash in the cases referred to in subdivisions (b) and
(c) of this Section 3) which such holder would hold on the date
of such exercise if on the date hereof he had been the holder of
record of the number of shares of Common Stock called for on the
face of this Warrant and had thereafter, during the period from
the date hereof to and including the date of such exercise,
retained such shares and all such other or additional stock and
other securities and property (including cash in the cases
referred to in subdivisions (b) and (c) of this Section 3)
receivable by him as aforesaid during such period, giving effect
to all adjustments called for during such period by Sections 4
and 5.
4. Adjustment for Reorganization, Consolidation, Merger, etc.
4.1 Reorganization, Consolidation, Merger, etc. In case at any
time or from time to time, the Company shall (a) effect a capital
reorganization or reclassification of its capital stock, (b)
consolidate with or merge into any other person, or (c) transfer
all or substantially all of its properties or assets to any other
corporation or other business entity under any plan or
arrangement contemplating the dissolution of the Company, then,
in each such case, the holder of this Warrant, on the exercise
hereof as provided in Section 1 at any time after the
consummation of such reorganization, consolidation or merger or
the effective date of such dissolution, as the case may be, shall
receive, in lieu of the Common Stock (or Other Securities)
issuable on such exercise prior to such consummation or such
effective date, the stock and other securities and property
(including cash) to which such holder would have been entitled
upon such consummation or in connection with such dissolution, as
5
the case may be, if such holder had so exercised this Warrant,
immediately prior thereto, all subject to further adjustment
thereafter as provided in Sections 3 and 5. The Company will 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 mailed or delivered to the holder of this Warrant at
the last address of such holder appearing on the books of the
Company, the obligation to delivery to such holder such shares of
stock, securities or assets as, in accordance with the foregoing
provisions, such holder may be entitled to purchase.
4.2 Dissolution. In the event of any dissolution of the Company
following the transfer of all or substantially all of its
properties or assets, the Company, prior to such dissolution,
shall at its expense deliver or cause to be delivered the stock
and other securities and property (including cash, where
applicable) receivable by the holders of the Warrants after the
effective date of such dissolution pursuant to this Section 4 to
a bank or trust company having its principal office in
Manchester, New Hampshire or Boston, Massachusetts, as trustee
for the holder or holders of the Warrants.
4.3 Continuation of Terms. Upon any reorganization,
consolidation, merger or transfer (and any dissolution following
any transfer) referred to in this Section 4, this Warrant shall
continue in full force and effect, subject to expiration in
accordance with Section 18 hereof, and the terms hereof shall be
applicable to the shares of stock and other securities and
property receivable on the exercise of this Warrant after the
consummation of such reorganization, consolidation or merger or
the effective date of dissolution following any such transfer, as
the case may be, and shall be binding upon the issuer of any such
stock or other securities, including, in the case of any such
transfer, the person acquiring all or substantially all of the
properties or assets of the Company, whether or not such person
shall have expressly assumed the terms of this Warrant as
provided in Section 6.
5. Anti-Dilution Adjustment.
5.1 General. The Purchase Price shall be subject to adjustment
from time to time as hereinafter provided. Upon each adjustment
of the Purchase Price, the holder of this Warrant shall
thereafter be entitled to purchase, at the Purchase Price
resulting from such adjustment, the number of shares obtained by
multiplying the 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 Purchase Price resulting from such
adjustment.
5.2 Purchase Price Adjustments. If and whenever after the date
hereof the Company shall issue or sell any shares of its Common
Stock (except (i) upon exercise of one or more of the Warrants or
(ii) shares of Common Stock issued to employees, officers,
directors of the Company upon the exercise of options granted
under the Company's Employee Stock Option/Purchase Plans
(hereinafter defined) not to exceed in the aggregate 1,200,000
shares of Common Stock) for a consideration per share less than
6
the Purchase Price in effect immediately prior to the time of
such issue or sale, or shall be deemed under the provisions of
this Section 5 to have effected any such issuance or sale, then,
forthwith upon such issue or sale, the Purchase Price shall be
reduced to the price (calculated to the nearest $0.0001) obtained
by multiplying the Purchase Price in effect immediately prior to
the time of such issue or sale by a fraction, the numerator of
which shall be the sum of (i) the number of shares of Common
Stock outstanding immediately prior to such issue or sale
multiplied by the Purchase Price immediately prior to such issue
or sale plus (ii) the consideration received by the Company upon
such issue or sale, and the denominator of which shall be the
product of (iii) the total number of shares of Common Stock
outstanding immediately after such issue or sale, multiplied by
(iv) the Purchase Price immediately prior to such issue or sale.
As used herein, "Employee Stock Option/Purchase Plans" consist of
the Company's 1997 Equity Incentive Plan, 1995 Stock Option Plan,
Employee Stock Purchase Plan, Employee Bonus Award Plan, and non
qualified options granted to certain Directors of the Company.
Notwithstanding the foregoing, no adjustment of the Purchase
Price shall be made in an amount less than $0.0001 per share, but
any such lesser adjustment shall be carried forward and shall be
made at the time of and together with the next subsequent
adjustment which together with any adjustments so carried forward
shall amount to $0.0001 per share or more.
5.3 Option Grants. In the event that at any time, other than
the issuance of options pursuant to the Company's Employee Stock
Option Plan, the Company shall in any manner grant (directly, 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 any stock or securities convertible into or exchangeable for
Common Stock (such rights or options being herein called
"Options" and such convertible or exchangeable stock or
securities being herein called "Convertible Securities"), whether
or not such 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 Options or upon conversion or exchange of such Convertible
Securities (determined by dividing (i) the total amount, if any,
received or receivable by the Company as consideration for the
granting of such Options, plus the minimum aggregate amount of
additional consideration payable to the Company upon the exercise
of all such Options, plus, in the case of any such 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 (ii) the total number of shares of Common
Stock issuable upon the exercise of such Options or upon the
conversion or exchange of all such Convertible Securities
issuable upon the exercise of such Options) shall be less than
the Purchase Price in effect immediately prior to the time of the
granting of such Options, then the total number of shares of
Common Stock issuable upon the exercise of such Options or upon
conversion or exchange of the total amount of such Convertible
Securities issuable upon the exercise of such Options shall (as
of the date of granting such Options) be deemed to be outstanding
and to have been issued for such price per share. Except as
otherwise provided in subsection 5.5, no further adjustment of
the Purchase Price shall be made upon the actual issue of such
Common Stock or of such Convertible Securities upon exercise of
such Options or upon the actual issue of such Common Stock upon
conversion or exchange of such Convertible Securities.
7
5.4 Convertible Security Grants. In the event that the Company
shall in any manner issue (directly, by assumption in a merger or
otherwise) or sell any Convertible Securities (other than
pursuant to the exercise of Options to purchase such Convertible
Securities covered by subsection 5.3), 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 (i) 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 (ii) 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 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, except as otherwise
provided in subsection 5.5, no further adjustment of the Purchase
Price shall be made upon the actual issue of such Common Stock
upon conversion or exchange of such Convertible Securities.
5.5 Effect of Alteration to Option or Convertible Security
Terms. In connection with any change in, or the expiration or
termination of, the purchase rights under any Option or the
conversion or exchange rights under any Convertible Securities,
the following provisions shall apply:
(A) If the purchase price provided for in any
Option referred to in subsection 5.3, the additional
consideration, if any, payable upon the conversion or
exchange of any Convertible Securities referred to in
subsection 5.3 or 5.4, or the rate at which any Convertible
Securities referred to in subsection 5.3 or 5.4 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), then the
Purchase Price in effect at the time of such change shall
forthwith be increased or decreased to the Purchase Price
which would be in effect immediately after such change if
(a) the adjustments which were made upon the issuance of such
Options or Convertible Securities had been made upon the
basis of (and taking into account the total consideration
received for) (i) the issuance at that time of the Common
Stock, if any, delivered upon the exercise of any such
Options or upon the conversion or exchange of any such
Convertible Securities before such change, and (ii) the
issuance at that time of all such Options or Convertible
Securities, with terms and provisions reflecting such change,
which are still outstanding after such change, and (b) the
Purchase Price as adjusted pursuant to clause (a) preceding
had been used as the basis for the adjustments required
hereunder in connection with all other issues or sales of
Common Stock, Options or Convertible Securities by the
Company subsequent to the issuance of such Options or
Convertible Securities.
8
(B) On the partial or complete expiration of any
Options or termination of any right to convert or exchange
Convertible Securities, the Purchase Price then in effect
hereunder shall forthwith be increased or decreased to the
Purchase Price which would be in effect at the time of such
expiration or termination if (a) the adjustments which were
made upon the issuance of such Options or Convertible
Securities had been made upon the basis of (and taking into
account the total consideration received for) (i) the
issuance at that time of the Common Stock, if any, delivered
upon the exercise of such Options or upon the conversion or
exchange of such Convertible Securities before such
expiration or termination, and (ii) the issuance at that time
of only those such Options or Convertible Securities which
remain outstanding after such expiration or termination, and
(b) the Purchase Price as adjusted pursuant to clause (a)
preceding had been used as the basis for adjustments required
hereunder in connection with all other issues or sales of
Common Stock, Options or Convertible Securities by the
Company subsequent to the issuance of such Options or
Convertible Securities.
(C) If the purchase price provided for in any
Option referred to in subsection 5.3 or the rate at which any
Convertible Securities referred to in subsection 5.3 or 5.4
are convertible into or exchangeable for Common Stock shall
be reduced at any time under or by reason ofr provisions with
respect thereto designed to protect against dilution, and the
event causing such reduction is one that did not also require
an adjustment in the Purchase Price under other provisions of
this Section 5, then in case of the delivery of shares of
Common Stock upon the exercise of any such Option or upon
conversion or exchange of any such Convertible Securities,
the Purchase Price then in effect hereunder shall forthwith
be adjusted to such amount as would have obtained if such
Option or Convertible Securities had never been issued and if
the adjustments made upon the issuance of such Option or
Convertible Securities had been made upon the basis of the
issuance of (and taking into account the total consideration
received for) the shares of Common Stock delivered as
aforesaid (provided that the Purchase Price used in such
determination shall be the Purchase Price on the date of
issue of such shares); provided that no such adjustment shall
be made unless the Purchase Price then in effect would be
reduced thereby.
5.6 Dividends of Common Stock, Options or Convertible
Securities. In the event that the Company shall declare a
dividend or make any other distribution upon any stock of the
Company payable in Common Stock, Options or Convertible
Securities, any Common Stock, Options or Convertible Securities,
as the case may be, issuable in payment of such dividend or
distribution shall be deemed to have been issued or sold without
consideration.
5.7 Dilution in Case of Other Securities. In case any Other
Securities shall be issued or sold by the Company, or shall
become subject to issue upon the conversion or exchange of any
stock (or Other Securities) of the Company (or any other issuer
of Other Securities or any other person referred to in Section 4)
or to subscription, purchase or other acquisition pursuant to any
rights or options granted by the Company (or such other issuer or
person), for a consideration per share such as to dilute the
purchase rights evidenced by this Warrant, the computations,
9
adjustments and readjustments provided for in this Section 5 with
respect to the Purchase Price and the number of shares of Common
Stock issuable upon exercise of this Warrant shall be made as
nearly as possible in the manner so provided and applied to
determine the amount of Other Securities from time to time
receivable on the exercise of the Warrants, so as to protect the
holders of the Warrants against the effect of such dilution.
5.8 Stock Splits and Reverse Splits. In the event that the
Company shall at any time subdivide its outstanding shares of
Common Stock into a greater number of shares, the Purchase Price
in effect immediately prior to such subdivision shall be
proportionately reduced and the number of Warrant Shares
purchasable pursuant to this Warrant immediately prior to such
subdivision shall be proportionately increased, and conversely,
in the event that the outstanding shares of Common Stock of the
Company shall at any time be combined into a smaller number of
shares, the Purchase Price in effect immediately prior to such
combination shall be proportionately increased and the number of
Warrant Shares purchasable upon the exercise of this Warrant
immediately prior to such combination shall be proportionately
reduced. Except as provided in this subsection 5.8 no adjustment
in the Purchase Price and no change in the number of Warrant
Shares purchasable shall be made under this Section 5 as a result
of or by reason of any such subdivision or combination.
5.9 Determination of Consideration Received. For purposes of
this Section 5, the amount of consideration received by the
Company in connection with the issuance or sale of Common Stock,
Options or Convertible Securities shall be determined in
accordance with the following:
(A) In the event that shares of Common Stock,
Options or Convertible Securities shall be issued or sold for
cash, the consideration received therefor shall be deemed to
be the amount payable to the Company therefor, without
deduction therefrom of any expenses incurred or any
underwriting commissions or concessions or discounts paid or
allowed by the Company in connection therewith.
(B) In the event that any shares of Common Stock,
Options or Convertible Securities shall be issued or sold for
a consideration other than cash, the amount of the
consideration other than cash payable to the Company shall be
deemed to be the fair value of such consideration as
reasonably determined by the Board of Directors of the
Company, without deduction of any expenses incurred or any
underwriting commissions or concessions or discounts paid or
allowed by the Company in connection therewith.
(C) The amount of consideration deemed to be
received by the Company pursuant to the foregoing provisions
of this subsection 5.9 upon any issuance and/or sale,
pursuant to an established compensation plan of the Company,
to directors, officers or employees of the Company in
connection with their employment, of shares of Common Stock,
Options or Convertible Securities, shall be increased by the
amount of any tax benefit realized by the Company as a result
of such issuance and/or sale, the amount of such tax benefit
being the amount by which the federal and/or state income or
other tax liability of the Company shall be reduced by reason
of any deduction or credit in respect of such issuance and/or
sale.
10
(D) In the event that any shares of Common Stock,
Options or Convertible Securities shall be issued in
connection with any merger in which the Company is the
surviving corporation, the amount of consideration therefor
shall be deemed to be the fair value as reasonably determined
by the Board of Directors of the Company of such portion of
the assets and business of the non-surviving corporation as
such Board shall determine to be attributable to such Common
Stock, Options or Convertible Securities, as the case may be.
(E) In the event that any Common Stock, Options
and/or Convertible Securities shall be issued in connection
with the issue and sale of other securities or property of
the Company, together comprising one integral transaction in
which no specific consideration is allocated to such Common
Stock, Options or Convertible Securities by the parties
thereto, such Common Stock, Options and/or Convertible
Securities shall be deemed to have been issued without
consideration.
5.10 Record Date as Date of Issue or Sale. In the event that at
any time the Company shall take a record of the holders of its
Common Stock for the purpose of entitling them (i) to receive a
dividend or other distribution payable in Common Stock, Options
or Convertible Securities, or (ii) to subscribe for or purchase
Common Stock, Options 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 right of
subscription or purchase, as the case may be.
5.11 Treasury Stock. 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 (other than their cancellation without
reissuance) shall be considered an issue or sale of Common Stock
for the purposes of this Section 5.
6. No Dilution or Impairment. 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 the Warrants, but will at all times in good
faith assist in the carrying out of all such terms and in the
taking of all such action as may be necessary or appropriate in
order to protect the rights of the holders of the Warrants
against dilution or other impairment. Without limiting the
generality of the foregoing, the Company (a) will not increase
the par value or stated value of any shares of stock receivable
on the exercise of the Warrants above the amount payable therefor
on such exercise, (b) will take all such action as may be
necessary or appropriate in order that the Company may validly
and legally issue fully paid and nonassessable shares of stock on
the exercise of all Warrants from time to time outstanding,
(c) will not issue any capital stock of any class which is
preferred as to dividends or as to the distribution of assets
upon voluntary or involuntary dissolution, liquidation or winding
11
up, unless the rights of the holders thereof shall be limited to
a fixed sum or percentage of par value in respect of
participation in dividends and in any such distribution of assets
or such stock shall be non voting and not be convertible into
shares of Common Stock or other voting stock, and (d) will not
transfer all or substantially all of its properties and assets to
any other person (corporate or otherwise), or consolidate with or
merge into any other person or permit any such person to
consolidate with or merge into the Company (if the Company is not
the surviving person), unless such other person shall expressly
assume in writing and become bound by all the terms of the
Warrants.
7. Accountants' Certificate as to Adjustments. In each case of
any adjustment or readjustment in the shares of Common Stock (or
Other Securities) issuable on the exercise of the Warrants, the
Company's chief financial officer will compute, or if requested
by the holders of Warrants to purchase over 50% of the shares of
Common Stock which may be purchased upon exercise of the Warrants
the Company at its expense will promptly cause independent
certified public accountants of recognized standing selected by
the Company at its expense to compute, such adjustment or
readjustment in accordance with the terms of the Warrants and
prepare a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which such
adjustment or readjustment is based, including a statement of (a)
the consideration received or receivable by the Company for any
additional shares of Common Stock (or Other Securities) issued or
sold or deemed to have been issued or sold, (b) the number of
shares of Common Stock (or Other Securities) outstanding or
deemed to be outstanding, and (c) the Purchase Price and the
number of shares of Common Stock to be received upon exercise of
this Warrant, in effect immediately prior to such issue or sale
and as adjusted and readjusted as provided in this Warrant. The
Company will forthwith mail a copy of each such certificate to
each holder of a Warrant, and will, on the written request at any
time of any holder of a Warrant (such request shall not be made
more than once in any Fiscal Quarter), furnish to such holder a
like certificate setting forth the Purchase Price at the time in
effect and showing how it was calculated.
8. Notices of Record Date, etc. In the event of
(a) any taking by the Company of a record of the holders of any
class of securities for the purpose of determining the holders
thereof who are entitled to receive any dividend or other
distribution, or any right to subscribe for, purchase or
otherwise acquire any shares of stock of any class or any other
securities or property, or to receive any other right or any
declaration of a cash dividend on the Common Stock, or
(b) any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the
Company or any transfer of all or substantially all the assets of
the Company to or consolidation or merger of the Company with or
into any other person, or
(c) any voluntary or involuntary dissolution, liquidation or
winding-up of the Company, or
12
(d) any proposed issue or grant by the Company of any shares of
stock of any class or any other securities, or any right or
option to subscribe for, purchase or otherwise acquire any shares
of stock of any class or any other securities (other than the
issue of Common Stock on the exercise of the Warrants),
then and in each such event the Company will mail or cause to be
mailed to each holder of a Warrant a notice specifying (i) the
date on which any such record is to be taken for the purpose of
such dividend, distribution or right, and stating the amount and
character of such dividend, distribution or right, (ii) the date
on which any such reorganization, reclassification,
recapitalization, transfer, consolidation, merger, dissolution,
liquidation or winding-up is to take place, and the time, if any
is to be fixed, as of which the holders of record of Common Stock
(or Other Securities) shall be entitled to exchange their shares
of Common Stock (or Other Securities) for securities or other
property deliverable on such reorganization, reclassification,
recapitalization, transfer, consolidation, merger, dissolution,
liquidation or winding-up, and (iii) the amount and character of
any stock or other securities, or rights or options with respect
thereto, proposed to be issued or granted, the date of such
proposed issue or grant and the persons or class of persons to
whom such proposed issue or grant is to be offered or made. Such
notice shall be mailed at least twenty (20) days prior to the
date specified in such notice on which any such action is to be
taken, except with respect to the grant of options under the
Company's Employee Stock Option/Purchase Plans in which case such
notice shall be given not later than the date of grant.
9. Reservation of Stock, etc. Issuable on Exercise of Warrants.
The Company will at all times reserve and keep available, solely
for issuance and delivery on the exercise of the Warrants, all
shares of Common Stock (or Other Securities) from time to time
issuable on the exercise of the Warrants.
10. Representations and Warranties of the Company. This Warrant
is issued and delivered by the Company on the basis of the
following:
(a) Authorization and Delivery. This Warrant has been duly
authorized and executed by the Company and when delivered will be
the valid and binding obligation of the Company enforceable in
accordance with its terms;
(b) Warrant Shares. The shares of Common Stock to be
issued pursuant to this Warrant have been duly authorized and
reserved for issuance by the Company and, when issued and paid
for in accordance with the terms hereof, will be validly issued,
fully paid and nonassessable;
(c) Rights and Privileges. The rights, preferences,
privileges and restrictions granted to or imposed upon such
shares of Common Stock and the holders thereof are as set forth
herein and in the Company's Articles of Incorporation.
(d) No Inconsistency. The execution and delivery of this
Warrant are not, and the issuance of the shares of Common Stock
upon exercise of this Warrant in accordance with the terms hereof
13
will not be, inconsistent with the Company's Articles of
Incorporation or by-laws, do not and will not contravene any law,
governmental rule or regulation, judgment or order applicable to
the Company, and do not and will not contravene any provision of,
or constitute a default under, any indenture, mortgage, contract
or other instrument of which the Company is a party or by which
it is bound or require the consent or approval of, the giving of
notice to, the registration with the taking of any action in
respect of or by, any Federal, state or local government
authority or agency or other person.
11. Exchange of Warrants. On surrender for exchange of any
Warrant, properly endorsed, to the Company, the Company at its
expense will issue and deliver to or on the order of the holder
thereof a new Warrant or Warrants of like tenor, in the name of
such holder or as such holder (on payment by such holder of any
applicable transfer taxes) may direct, calling in the aggregate
on the face or faces thereof for the number of shares of Common
Stock called for on the face or faces of the Warrant or Warrants
so surrendered.
12. Replacement of Warrants. On receipt of evidence
reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of any Warrant and, in the case of any
such loss, theft or destruction of any Warrant, on delivery of an
indemnity agreement or security reasonably satisfactory in form
and amount to the Company or, in the case of any such mutilation,
on surrender and cancellation of such Warrant, the Company at its
expense will execute and deliver, in lieu thereof, a new Warrant
of like tenor.
13. Warrant Agent. The Company may, by written notice to
each holder of a Warrant, appoint an agent having an office in
Boston, Massachusetts for the purpose of issuing Common Stock (or
Other Securities) on the exercise of the Warrants pursuant to
Section 1, exchanging Warrants pursuant to Section 11, and
replacing Warrants pursuant to Section 12, or any of the
foregoing, and thereafter any such issuance, exchange or
replacement, as the case may be, shall be made at such office by
such agent.
14. Remedies. The Company stipulates that the remedies at
law of the holder of this Warrant in the event of any default or
threatened default by the Company in the performance of or
compliance with any of the terms of this Warrant are not and will
not be adequate, and that such terms may be specifically enforced
by a decree for the specific performance of any agreement
contained herein or by an injunction against a violation of any
of the terms hereof or otherwise.
15. Negotiability, etc. This Warrant is issued upon the
following terms, to all of which each holder or owner hereof by
the taking hereof consents and agrees:
(a) title to this Warrant may be transferred by
endorsement (by the holder hereof executing the form of
assignment at the end hereof) and delivery in the same
manner as in the case of a negotiable instrument
transferable by endorsement and delivery; and
14
(b) any person in possession of this Warrant properly
endorsed for transfer to such person (including endorsed in
blank) is authorized to represent himself as absolute owner
hereof and is empowered to transfer absolute title hereto by
endorsement and delivery hereof to a bona fide purchaser
hereof for value; each prior taker or owner waives and
renounces all of his equities or rights in this Warrant in
favor of each such bona fide purchaser, and each such bona
fide purchaser shall acquire absolute title hereto and to
all rights represented hereby. Nothing in this
paragraph (b) shall create any liability on the part of the
Company beyond any liability or responsibility it has under
law.
16. Notices, etc. All notices and other communications
from the Company to the holder of this Warrant shall be mailed by
first class registered or certified mail, postage prepaid, at
such address as may have been furnished to the Company in writing
by such holder or, until any such holder furnishes to the Company
an address, then to, and at the address of, the last holder of
this Warrant who has so furnished an address to the Company.
17. Miscellaneous. This Warrant and any term hereof may be
changed, waived, discharged or terminated only by an instrument
in writing signed by the party against which enforcement of such
change, waiver, discharge or termination is sought. This Warrant
shall be construed and enforced in accordance with and governed
by the laws of the Commonwealth of Massachusetts. The headings
in this Warrant are for purposes of reference only, and shall not
limit or otherwise affect any of the terms hereof. This Warrant
is being executed as an instrument under seal. The invalidity or
unenforceability of any provision hereof shall in no way affect
the validity or enforceability of any other provision.
18. Expiration. The right to exercise this Warrant shall
expire at 5:00 p.m., Manchester, New Hampshire time, on
July_____, 2009. Notwithstanding the foregoing, this Warrant
shall automatically be deemed to be exercised in full pursuant to
the provisions of Section 1.5 hereof, without any further action
on behalf of the holder, immediately prior to the time this
Warrant would otherwise expire pursuant to the preceding
sentence.
[SIGNATURE PAGE FOLLOWS]
15
IN WITNESS WHEREOF, the Company has executed this Warrant
under seal as of the date first written above.
WPI GROUP, INC.
By:/s/Xxxx X. Xxxxxx
-------------------------
Xxxx X. Xxxxxx
Vice President/Chief
Financial Officer
[Corporate Seal]
Attest:
By:/s/Xxxxxxx Xxxx
----------------------
Name:Xxxxxxx Xxxx
Title:Secretary
16
FORM OF SUBSCRIPTION
(To be signed only on exercise of Warrant)
WPI GROUP, INC.
The undersigned, the holder of the within Warrant, hereby
irrevocably elects to exercise this Warrant for, and to purchase
thereunder, ........ shares of Common Stock of WPI GROUP, INC.
and herewith makes payment of $........ therefor, and requests
that the certificates for such shares be issued in the name of,
and delivered to .............., federal taxpayer identification
number ............, whose address is ...................
Dated:
---------------------------------
(Signature must conform to name
of holder as specified on the
face of the Warrant)
----------------------------------
(Address)
Signed in the presence of:
---------------------------------
----------------------------------------
FORM OF ASSIGNMENT
(To be signed only on transfer of Warrant)
For value received, the undersigned hereby sells, assigns,
and transfers unto .................., federal taxpayer
identification number ..........., whose address is ............,
the right represented by the within Warrant to purchase
............. shares of Common Stock of WPI GROUP, INC. to which
the within Warrant relates, and appoints
.......................... Attorney to transfer such right on the
books of WPI GROUP, INC. with full power of substitution in the
premises.
Dated:
------------------------------------
(Signature must conform to name
of holder as specified on the
face of the Warrant)
-------------------------------------
(Address)
Signed in the presence of:
--------------------------------
17
EXHIBIT 10.54
THIS WARRANT AND THE UNDERLYING SHARES OF COMMON STOCK ISSUABLE
UPON ITS EXERCISE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS,
AND MAY NOT BE SOLD OR TRANSFERRED WITHOUT COMPLIANCE WITH THE
REGISTRATION OR QUALIFICATION PROVISIONS OF APPLICABLE FEDERAL
AND STATE SECURITIES LAWS OR APPLICABLE EXEMPTIONS THEREFROM.
THE SECURITIES REPRESENTED BY THIS WARRANT ARE SUBJECT TO A
REGISTRATION RIGHTS AGREEMENT DATED AS OF AUGUST 16, 1999 (THE
"REGISTRATION AGREEMENT"). COPIES OF THE REGISTRATION AGREEMENT
ARE ON FILE AT THE OFFICE OF THE SECRETARY OF THE COMPANY.
No. W - 3 Right to Purchase 16,530
Shares of Common Stock
of
WPI GROUP, INC.
WPI GROUP, INC.
COMMON STOCK PURCHASE WARRANT
August 16, 1999
WPI GROUP, INC., a New Hampshire corporation (the
"Company"), hereby certifies that, for value received, KEY
CORPORATE CAPITAL INC., or its assigns, as a Lender under the
Credit Agreement dated as of August 3, 1998, as amended to date,
(the "Credit Agreement") among the Company, certain of its
subsidiaries, Fleet Bank - NH, as Agent for Lenders identified
therein, and such Lenders, is entitled, subject to the terms set
forth below, to purchase from the Company at any time or from
time to time after August 16, 2000 (subject to acceleration as
hereinafter provided) (the "Initial Exerciseability Date") and
before 5:00 p.m., Manchester, New Hampshire time, on August 16,
2009, 16,530 fully paid and nonassessable shares of Common Stock,
par value $0.01 per share, of the Company, at a purchase price
per share of $2.75 (such purchase price per share as adjusted
from time to time as herein provided is referred to herein as the
"Purchase Price"). The number and character of such shares of
Common Stock and the Purchase Price are subject to adjustment as
provided herein.
This Warrant is one of the Warrants evidencing the right to
purchase shares of Common Stock of the Company issued pursuant to
a certain Third Amendment dated as of August 16, 1999 to the
Credit Agreement (the Credit Agreement, as amended by such Third
Amendment, the "Agreement"), and subject to the Registration
Agreement, a copy of which agreement is on file at the principal
office of the Company, and the holder of this Warrant shall be
entitled to all of the benefits and bound by all of the
applicable obligations of the Registration Agreement, as provided
therein. This Warrant is detachable from the obligations
incurred by the Company pursuant to the Credit Agreement, and
shall survive the satisfaction of such obligations.
As used herein the following terms, unless the context
otherwise requires, have the following respective meanings:
(a) The term "Company" shall include WPI Group, Inc.,
and any corporation which shall succeed to, or assume the
obligations of, the Company hereunder.
(b) The term "Common Stock" includes (i) the Company's
Common Stock, par value $0.01 per share, as authorized on
the date of the Agreement, (ii) any other capital stock of
any class or classes (however designated) of the Company,
authorized on or after such date, the holders of which shall
have the right, without limitation as to amount per share,
either to all or to a share of the balance of current
dividends and liquidating distributions after the payment of
dividends and distributions on any shares entitled to
preference in the payment thereof, and the holders of which
shall ordinarily, in the absence of contingencies, be
entitled to vote for the election of a majority of directors
of the Company (even though the right so to vote may have
been suspended by the happening of such a contingency) and
(iii) any other securities into which or for which any of
the securities described in (i) or (ii) above may be
converted or exchanged pursuant to a plan of
recapitalization, reorganization, merger, sale of assets or
otherwise.
(c) The term "Other Securities" refers to any stock
(other than Common Stock) and other securities of the
Company or any other person (corporate or otherwise) which
the holders of the Warrants at any time shall be entitled to
receive, or shall have received, on the exercise of the
Warrants, in lieu of or in addition to Common Stock, or
which at any time shall be issuable or shall have been
issued in exchange for or in replacement of Common Stock or
Other Securities pursuant to Section 5 or otherwise.
(d)The term "Warrant" means this Common Stock Purchase
Warrant.
1. Exercise of Warrant.
1.1 Full Exercise. This Warrant may be exercised at any time
before its expiration in full by the holder hereof by surrender
of this Warrant, with the form of subscription at the end hereof
duly executed by such holder, to the Company at its principal
office, accompanied by payment, in cash or by certified or
official bank check payable to the order of the Company, in the
amount obtained by multiplying the number of shares of Common
Stock for which this Warrant is then exercisable by the Purchase
Price then in effect.
1.2 Partial Exercise. This Warrant may be exercised at any time
before its expiration in part (in lots of 100 shares or, if this
Warrant is then exercisable for a lesser amount, in such lesser
amount) by surrender of this Warrant and payment of the Purchase
Price then in effect in the manner and at the place provided in
subsection 1.1, except that the amount payable by the holder on
such partial exercise shall be the amount obtained by multiplying
(a) the number of shares of Common Stock designated by the holder
in the subscription at the end hereof by (b) the Purchase Price
2
then in effect. On any such partial exercise the Company at its
expense will forthwith issue and deliver to or upon the order of
the holder hereof a new Warrant or Warrants of like tenor, in the
name of the holder hereof or as such holder (upon payment by such
holder of any applicable transfer taxes) may request, calling in
the aggregate on the face or faces thereof for the number of
shares of Common Stock for which such Warrant or Warrants may
still be exercised.
1.3 Company Acknowledgment. The Company will, at the time of
the exercise of this Warrant, upon the request of the holder
hereof acknowledge in writing its continuing obligation to afford
to such holder any rights to which such holder shall continue to
be entitled after such exercise in accordance with the provisions
of this Warrant. If the holder shall fail to make any such
request, such failure shall not affect the continuing obligation
of the Company to afford to such holder any such rights.
1.4 Trustee for Warrant Holders. In the event that a bank or
trust company shall have been appointed as trustee for the
holders of the Warrants pursuant to subsection 4.2, such bank or
trust company shall have all the powers and duties of a warrant
agent appointed pursuant to Section 13 and shall accept, in its
own name for the account of the Company or such successor person
as may be entitled thereto, all amounts otherwise payable to the
Company or such successor, as the case may be, on exercise of
this Warrant pursuant to this Section 1.
1.5 Net Issue Election. The holder may elect to receive,
without the payment by the holder of any additional
consideration, shares equal to the value of this Warrant or any
portion hereof by the surrender of this Warrant or such portion
to the Company, with the net issue election notice annexed hereto
duly executed, at the office of the Company. Thereupon, the
Company shall issue to the holder such number of fully paid and
nonassessable shares of Common Stock as is computed using the
following formula:
X = Y (A-B)
A
where X = the number of shares to be issued to the holder
pursuant to this Section 1.5.
Y = the number of shares covered by this Warrant in
respect of which the net issue election is made
pursuant to this Section 1.5.
A = the fair market value of one share of Common
Stock, as determined in accordance with the provisions
of this Section 1.5.
B = the Purchase Price in effect under this Warrant at
the time the net issue election is made pursuant to
this Section 1.5.
For purposes of this Section 1.5, the "fair market value" per
share of the Company's Common Stock shall mean:
3
(a) If the Common Stock is traded on a national
securities exchange or admitted to unlisted trading
privileges on such an exchange, or is listed on the National
Market (the "National Market") of the National Association
of Securities Dealers Automated Quotations System (the
"NASDAQ"), the fair market value shall be the last reported
sale price of the Common Stock on such exchange or on the
National Market on the last business day before the
effective date of exercise of the net issue election or if
no such sale is made on such day, the mean of the closing
bid and asked prices for such day on such exchange or on the
National Market;
(b) If the Common Stock is not so listed or admitted
to unlisted trading privileges, the fair market value shall
be the mean of the last bid and asked prices reported on the
last business day before the date of the election (1) by the
NASDAQ or (2) if reports are unavailable under clause (a)
above by the National Quotation Bureau Incorporated; and
(c) If the Common Stock is not so listed or admitted
to unlisted trading privileges and bid and ask prices are
not reported, the fair market value shall be the price per
share which the Company could obtain from a willing buyer
for shares sold by the Company from authorized but unissued
shares, as such price shall be determined by mutual
agreement of the Company and the holder of this Warrant. If
the holder of this Warrant and the Company are unable to
agree on such fair market value, the holder of this Warrant
shall select a pool of three independent and nationally-
recognized investment banking firms from which the Company
shall select one such firm to appraise the fair market value
of the Warrant and to perform the computations involved.
The determination of such investment banking firm shall be
binding upon the Company, the holder of this Warrant and any
other holder of Warrants or Warrant Shares in connection
with any transaction occurring at the time of such
determination. All expenses of such investment banking firm
shall be borne by the Company. In all cases, the
determination of fair market value shall be made without
consideration of the lack of a liquid public market for the
Common Stock and without consideration of any "control
premium" or any discount for holding less than a majority or
controlling interest of the outstanding Common Stock.
1.6 Acceleration of Exercisability. Notwithstanding
the Initial Exercise DateExercisability Date, the Warrant shall
become exercisable on any earlier date that notices are sent to
holders of shares of Common Stock as contemplated in Section 8
with respect to any of the events set forth in subsection 4.1,
and the holder of this Warrant shall be entitled to receive any
such notice as provided in Section 8.
2. Delivery of Stock Certificates, etc. on Exercise. As soon
as practicable after the exercise of this Warrant in full or in
part, and in any event within ten (10) days thereafter, the
Company at its expense (including the payment by it of any
applicable issue taxes) will cause to be issued in the name of
and delivered to the holder hereof, or as such holder (upon
payment by such holder of any applicable transfer taxes) may
direct, a certificate or certificates for the number of fully
paid and nonassessable shares of Common Stock (or Other
Securities) to which such holder shall be entitled on such
exercise, plus, in lieu of any fractional share to which such
4
holder would otherwise be entitled, cash equal to such fraction
multiplied by the then current market value of one full share,
together with any other stock or other securities and property
(including cash, where applicable) to which such holder is
entitled upon such exercise pursuant to Section 1 or otherwise.
3. Adjustment for Dividends in Other Stock, Property, etc.;
Reclassification, etc. In case at any time or from time to time,
the holders of Common Stock (or Other Securities) in their
capacity as such shall have received, or (on or after the record
date fixed for the determination of shareholders eligible to
receive) shall have become entitled to receive, without payment
therefor,
(a) other or additional stock or other securities or property
(other than cash) by way of dividend, or
(b) any cash (excluding cash dividends payable solely out of
earnings or earned surplus of the Company), or
(c) other or additional stock or other securities or property
(including cash) by way of spin-off, split-up, reclassification,
recapitalization, combination of shares or similar corporate
rearrangement,
other than additional shares of Common Stock (or Other
Securities) issued as a stock dividend or in a stock-split
(adjustments in respect of which are provided for in Section 5),
then and in each such case the holder of this Warrant, on the
exercise hereof as provided in Section 1, shall be entitled to
receive the amount of stock and other securities and property
(including cash in the cases referred to in subdivisions (b) and
(c) of this Section 3) which such holder would hold on the date
of such exercise if on the date hereof he had been the holder of
record of the number of shares of Common Stock called for on the
face of this Warrant and had thereafter, during the period from
the date hereof to and including the date of such exercise,
retained such shares and all such other or additional stock and
other securities and property (including cash in the cases
referred to in subdivisions (b) and (c) of this Section 3)
receivable by him as aforesaid during such period, giving effect
to all adjustments called for during such period by Sections 4
and 5.
4. Adjustment for Reorganization, Consolidation, Merger, etc.
4.1 Reorganization, Consolidation, Merger, etc. In case at any
time or from time to time, the Company shall (a) effect a capital
reorganization or reclassification of its capital stock, (b)
consolidate with or merge into any other person, or (c) transfer
all or substantially all of its properties or assets to any other
corporation or other business entity under any plan or
arrangement contemplating the dissolution of the Company, then,
in each such case, the holder of this Warrant, on the exercise
hereof as provided in Section 1 at any time after the
consummation of such reorganization, consolidation or merger or
the effective date of such dissolution, as the case may be, shall
receive, in lieu of the Common Stock (or Other Securities)
issuable on such exercise prior to such consummation or such
effective date, the stock and other securities and property
(including cash) to which such holder would have been entitled
upon such consummation or in connection with such dissolution, as
5
the case may be, if such holder had so exercised this Warrant,
immediately prior thereto, all subject to further adjustment
thereafter as provided in Sections 3 and 5. The Company will 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 mailed or delivered to the holder of this Warrant at
the last address of such holder appearing on the books of the
Company, the obligation to delivery to such holder such shares of
stock, securities or assets as, in accordance with the foregoing
provisions, such holder may be entitled to purchase.
4.2 Dissolution. In the event of any dissolution of the Company
following the transfer of all or substantially all of its
properties or assets, the Company, prior to such dissolution,
shall at its expense deliver or cause to be delivered the stock
and other securities and property (including cash, where
applicable) receivable by the holders of the Warrants after the
effective date of such dissolution pursuant to this Section 4 to
a bank or trust company having its principal office in
Manchester, New Hampshire or Boston, Massachusetts, as trustee
for the holder or holders of the Warrants.
4.3 Continuation of Terms. Upon any reorganization,
consolidation, merger or transfer (and any dissolution following
any transfer) referred to in this Section 4, this Warrant shall
continue in full force and effect, subject to expiration in
accordance with Section 18 hereof, and the terms hereof shall be
applicable to the shares of stock and other securities and
property receivable on the exercise of this Warrant after the
consummation of such reorganization, consolidation or merger or
the effective date of dissolution following any such transfer, as
the case may be, and shall be binding upon the issuer of any such
stock or other securities, including, in the case of any such
transfer, the person acquiring all or substantially all of the
properties or assets of the Company, whether or not such person
shall have expressly assumed the terms of this Warrant as
provided in Section 6.
5. Anti-Dilution Adjustment.
5.1 General. The Purchase Price shall be subject to adjustment
from time to time as hereinafter provided. Upon each adjustment
of the Purchase Price, the holder of this Warrant shall
thereafter be entitled to purchase, at the Purchase Price
resulting from such adjustment, the number of shares obtained by
multiplying the 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 Purchase Price resulting from such
adjustment.
5.2 Purchase Price Adjustments. If and whenever after the date
hereof the Company shall issue or sell any shares of its Common
Stock (except (i) upon exercise of one or more of the Warrants or
(ii) shares of Common Stock issued to employees, officers,
directors of the Company upon the exercise of options granted
under the Company's Employee Stock Option/Purchase Plans
(hereinafter defined) not to exceed in the aggregate 1,200,000
6
shares of Common Stock) for a consideration per share less than
the Purchase Price in effect immediately prior to the time of
such issue or sale, or shall be deemed under the provisions of
this Section 5 to have effected any such issuance or sale, then,
forthwith upon such issue or sale, the Purchase Price shall be
reduced to the price (calculated to the nearest $0.0001) obtained
by multiplying the Purchase Price in effect immediately prior to
the time of such issue or sale by a fraction, the numerator of
which shall be the sum of (i) the number of shares of Common
Stock outstanding immediately prior to such issue or sale
multiplied by the Purchase Price immediately prior to such issue
or sale plus (ii) the consideration received by the Company upon
such issue or sale, and the denominator of which shall be the
product of (iii) the total number of shares of Common Stock
outstanding immediately after such issue or sale, multiplied by
(iv) the Purchase Price immediately prior to such issue or sale.
As used herein, "Employee Stock Option/Purchase Plans" consist of
the Company's 1997 Equity Incentive Plan, 1995 Stock Option Plan,
Employee Stock Purchase Plan, Employee Bonus Award Plan, and non
qualified options granted to certain Directors of the Company.
Notwithstanding the foregoing, no adjustment of the Purchase
Price shall be made in an amount less than $0.0001 per share, but
any such lesser adjustment shall be carried forward and shall be
made at the time of and together with the next subsequent
adjustment which together with any adjustments so carried forward
shall amount to $0.0001 per share or more.
5.3 Option Grants. In the event that at any time, other than
the issuance of options pursuant to the Company's Employee Stock
Option Plan, the Company shall in any manner grant (directly, 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 any stock or securities convertible into or exchangeable for
Common Stock (such rights or options being herein called
"Options" and such convertible or exchangeable stock or
securities being herein called "Convertible Securities"), whether
or not such 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 Options or upon conversion or exchange of such Convertible
Securities (determined by dividing (i) the total amount, if any,
received or receivable by the Company as consideration for the
granting of such Options, plus the minimum aggregate amount of
additional consideration payable to the Company upon the exercise
of all such Options, plus, in the case of any such 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 (ii) the total number of shares of Common
Stock issuable upon the exercise of such Options or upon the
conversion or exchange of all such Convertible Securities
issuable upon the exercise of such Options) shall be less than
the Purchase Price in effect immediately prior to the time of the
granting of such Options, then the total number of shares of
Common Stock issuable upon the exercise of such Options or upon
conversion or exchange of the total amount of such Convertible
Securities issuable upon the exercise of such Options shall (as
of the date of granting such Options) be deemed to be outstanding
and to have been issued for such price per share. Except as
otherwise provided in subsection 5.5, no further adjustment of
the Purchase Price shall be made upon the actual issue of such
Common Stock or of such Convertible Securities upon exercise of
such Options or upon the actual issue of such Common Stock upon
conversion or exchange of such Convertible Securities.
7
5.4 Convertible Security Grants. In the event that the Company
shall in any manner issue (directly, by assumption in a merger or
otherwise) or sell any Convertible Securities (other than
pursuant to the exercise of Options to purchase such Convertible
Securities covered by subsection 5.3), 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 (i) 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 (ii) 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 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, except as otherwise
provided in subsection 5.5, no further adjustment of the Purchase
Price shall be made upon the actual issue of such Common Stock
upon conversion or exchange of such Convertible Securities.
5.5 Effect of Alteration to Option or Convertible Security
Terms. In connection with any change in, or the expiration or
termination of, the purchase rights under any Option or the
conversion or exchange rights under any Convertible Securities,
the following provisions shall apply:
(A) If the purchase price provided for in any
Option referred to in subsection 5.3, the additional
consideration, if any, payable upon the conversion or
exchange of any Convertible Securities referred to in
subsection 5.3 or 5.4, or the rate at which any Convertible
Securities referred to in subsection 5.3 or 5.4 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), then the
Purchase Price in effect at the time of such change shall
forthwith be increased or decreased to the Purchase Price
which would be in effect immediately after such change if
(a) the adjustments which were made upon the issuance of such
Options or Convertible Securities had been made upon the
basis of (and taking into account the total consideration
received for) (i) the issuance at that time of the Common
Stock, if any, delivered upon the exercise of any such
Options or upon the conversion or exchange of any such
Convertible Securities before such change, and (ii) the
issuance at that time of all such Options or Convertible
Securities, with terms and provisions reflecting such change,
which are still outstanding after such change, and (b) the
Purchase Price as adjusted pursuant to clause (a) preceding
had been used as the basis for the adjustments required
hereunder in connection with all other issues or sales of
Common Stock, Options or Convertible Securities by the
Company subsequent to the issuance of such Options or
Convertible Securities.
8
(B) On the partial or complete expiration of any
Options or termination of any right to convert or exchange
Convertible Securities, the Purchase Price then in effect
hereunder shall forthwith be increased or decreased to the
Purchase Price which would be in effect at the time of such
expiration or termination if (a) the adjustments which were
made upon the issuance of such Options or Convertible
Securities had been made upon the basis of (and taking into
account the total consideration received for) (i) the
issuance at that time of the Common Stock, if any, delivered
upon the exercise of such Options or upon the conversion or
exchange of such Convertible Securities before such
expiration or termination, and (ii) the issuance at that time
of only those such Options or Convertible Securities which
remain outstanding after such expiration or termination, and
(b) the Purchase Price as adjusted pursuant to clause (a)
preceding had been used as the basis for adjustments required
hereunder in connection with all other issues or sales of
Common Stock, Options or Convertible Securities by the
Company subsequent to the issuance of such Options or
Convertible Securities.
(C) If the purchase price provided for in any
Option referred to in subsection 5.3 or the rate at which any
Convertible Securities referred to in subsection 5.3 or 5.4
are convertible into or exchangeable for Common Stock shall
be reduced at any time under or by reason ofr provisions with
respect thereto designed to protect against dilution, and the
event causing such reduction is one that did not also require
an adjustment in the Purchase Price under other provisions of
this Section 5, then in case of the delivery of shares of
Common Stock upon the exercise of any such Option or upon
conversion or exchange of any such Convertible Securities,
the Purchase Price then in effect hereunder shall forthwith
be adjusted to such amount as would have obtained if such
Option or Convertible Securities had never been issued and if
the adjustments made upon the issuance of such Option or
Convertible Securities had been made upon the basis of the
issuance of (and taking into account the total consideration
received for) the shares of Common Stock delivered as
aforesaid (provided that the Purchase Price used in such
determination shall be the Purchase Price on the date of
issue of such shares); provided that no such adjustment shall
be made unless the Purchase Price then in effect would be
reduced thereby.
5.6 Dividends of Common Stock, Options or Convertible
Securities. In the event that the Company shall declare a
dividend or make any other distribution upon any stock of the
Company payable in Common Stock, Options or Convertible
Securities, any Common Stock, Options or Convertible Securities,
as the case may be, issuable in payment of such dividend or
distribution shall be deemed to have been issued or sold without
consideration.
5.7 Dilution in Case of Other Securities. In case any Other
Securities shall be issued or sold by the Company, or shall
become subject to issue upon the conversion or exchange of any
stock (or Other Securities) of the Company (or any other issuer
of Other Securities or any other person referred to in Section 4)
or to subscription, purchase or other acquisition pursuant to any
rights or options granted by the Company (or such other issuer or
person), for a consideration per share such as to dilute the
purchase rights evidenced by this Warrant, the computations,
9
adjustments and readjustments provided for in this Section 5 with
respect to the Purchase Price and the number of shares of Common
Stock issuable upon exercise of this Warrant shall be made as
nearly as possible in the manner so provided and applied to
determine the amount of Other Securities from time to time
receivable on the exercise of the Warrants, so as to protect the
holders of the Warrants against the effect of such dilution.
5.8 Stock Splits and Reverse Splits. In the event that the
Company shall at any time subdivide its outstanding shares of
Common Stock into a greater number of shares, the Purchase Price
in effect immediately prior to such subdivision shall be
proportionately reduced and the number of Warrant Shares
purchasable pursuant to this Warrant immediately prior to such
subdivision shall be proportionately increased, and conversely,
in the event that the outstanding shares of Common Stock of the
Company shall at any time be combined into a smaller number of
shares, the Purchase Price in effect immediately prior to such
combination shall be proportionately increased and the number of
Warrant Shares purchasable upon the exercise of this Warrant
immediately prior to such combination shall be proportionately
reduced. Except as provided in this subsection 5.8 no adjustment
in the Purchase Price and no change in the number of Warrant
Shares purchasable shall be made under this Section 5 as a result
of or by reason of any such subdivision or combination.
5.9 Determination of Consideration Received. For purposes of
this Section 5, the amount of consideration received by the
Company in connection with the issuance or sale of Common Stock,
Options or Convertible Securities shall be determined in
accordance with the following:
(A) In the event that shares of Common Stock,
Options or Convertible Securities shall be issued or sold for
cash, the consideration received therefor shall be deemed to
be the amount payable to the Company therefor, without
deduction therefrom of any expenses incurred or any
underwriting commissions or concessions or discounts paid or
allowed by the Company in connection therewith.
(B) In the event that any shares of Common Stock,
Options or Convertible Securities shall be issued or sold for
a consideration other than cash, the amount of the
consideration other than cash payable to the Company shall be
deemed to be the fair value of such consideration as
reasonably determined by the Board of Directors of the
Company, without deduction of any expenses incurred or any
underwriting commissions or concessions or discounts paid or
allowed by the Company in connection therewith.
(C) The amount of consideration deemed to be
received by the Company pursuant to the foregoing provisions
of this subsection 5.9 upon any issuance and/or sale,
pursuant to an established compensation plan of the Company,
to directors, officers or employees of the Company in
connection with their employment, of shares of Common Stock,
Options or Convertible Securities, shall be increased by the
amount of any tax benefit realized by the Company as a result
of such issuance and/or sale, the amount of such tax benefit
being the amount by which the federal and/or state income or
other tax liability of the Company shall be reduced by reason
10
of any deduction or credit in respect of such issuance and/or
sale.
(D) In the event that any shares of Common Stock,
Options or Convertible Securities shall be issued in
connection with any merger in which the Company is the
surviving corporation, the amount of consideration therefor
shall be deemed to be the fair value as reasonably determined
by the Board of Directors of the Company of such portion of
the assets and business of the non-surviving corporation as
such Board shall determine to be attributable to such Common
Stock, Options or Convertible Securities, as the case may be.
(E) In the event that any Common Stock, Options
and/or Convertible Securities shall be issued in connection
with the issue and sale of other securities or property of
the Company, together comprising one integral transaction in
which no specific consideration is allocated to such Common
Stock, Options or Convertible Securities by the parties
thereto, such Common Stock, Options and/or Convertible
Securities shall be deemed to have been issued without
consideration.
5.10 Record Date as Date of Issue or Sale. In the event that at
any time the Company shall take a record of the holders of its
Common Stock for the purpose of entitling them (i) to receive a
dividend or other distribution payable in Common Stock, Options
or Convertible Securities, or (ii) to subscribe for or purchase
Common Stock, Options 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 right of
subscription or purchase, as the case may be.
5.11 Treasury Stock. 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 (other than their cancellation without
reissuance) shall be considered an issue or sale of Common Stock
for the purposes of this Section 5.
6. No Dilution or Impairment. 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 the Warrants, but will at all times in good
faith assist in the carrying out of all such terms and in the
taking of all such action as may be necessary or appropriate in
order to protect the rights of the holders of the Warrants
against dilution or other impairment. Without limiting the
generality of the foregoing, the Company (a) will not increase
the par value or stated value of any shares of stock receivable
on the exercise of the Warrants above the amount payable therefor
on such exercise, (b) will take all such action as may be
necessary or appropriate in order that the Company may validly
and legally issue fully paid and nonassessable shares of stock on
the exercise of all Warrants from time to time outstanding,
(c) will not issue any capital stock of any class which is
preferred as to dividends or as to the distribution of assets
upon voluntary or involuntary dissolution, liquidation or winding
11
up, unless the rights of the holders thereof shall be limited to
a fixed sum or percentage of par value in respect of
participation in dividends and in any such distribution of assets
or such stock shall be non voting and not be convertible into
shares of Common Stock or other voting stock, and (d) will not
transfer all or substantially all of its properties and assets to
any other person (corporate or otherwise), or consolidate with or
merge into any other person or permit any such person to
consolidate with or merge into the Company (if the Company is not
the surviving person), unless such other person shall expressly
assume in writing and become bound by all the terms of the
Warrants.
7. Accountants' Certificate as to Adjustments. In each case of
any adjustment or readjustment in the shares of Common Stock (or
Other Securities) issuable on the exercise of the Warrants, the
Company's chief financial officer will compute, or if requested
by the holders of Warrants to purchase over 50% of the shares of
Common Stock which may be purchased upon exercise of the Warrants
the Company at its expense will promptly cause independent
certified public accountants of recognized standing selected by
the Company at its expense to compute, such adjustment or
readjustment in accordance with the terms of the Warrants and
prepare a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which such
adjustment or readjustment is based, including a statement of (a)
the consideration received or receivable by the Company for any
additional shares of Common Stock (or Other Securities) issued or
sold or deemed to have been issued or sold, (b) the number of
shares of Common Stock (or Other Securities) outstanding or
deemed to be outstanding, and (c) the Purchase Price and the
number of shares of Common Stock to be received upon exercise of
this Warrant, in effect immediately prior to such issue or sale
and as adjusted and readjusted as provided in this Warrant. The
Company will forthwith mail a copy of each such certificate to
each holder of a Warrant, and will, on the written request at any
time of any holder of a Warrant (such request shall not be made
more than once in any Fiscal Quarter), furnish to such holder a
like certificate setting forth the Purchase Price at the time in
effect and showing how it was calculated.
8. Notices of Record Date, etc. In the event of
(a) any taking by the Company of a record of the holders of any
class of securities for the purpose of determining the holders
thereof who are entitled to receive any dividend or other
distribution, or any right to subscribe for, purchase or
otherwise acquire any shares of stock of any class or any other
securities or property, or to receive any other right or any
declaration of a cash dividend on the Common Stock, or
(b) any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the
Company or any transfer of all or substantially all the assets of
the Company to or consolidation or merger of the Company with or
into any other person, or
(c) any voluntary or involuntary dissolution, liquidation or
winding-up of the Company, or
12
(d) any proposed issue or grant by the Company of any shares of
stock of any class or any other securities, or any right or
option to subscribe for, purchase or otherwise acquire any shares
of stock of any class or any other securities (other than the
issue of Common Stock on the exercise of the Warrants),
then and in each such event the Company will mail or cause to be
mailed to each holder of a Warrant a notice specifying (i) the
date on which any such record is to be taken for the purpose of
such dividend, distribution or right, and stating the amount and
character of such dividend, distribution or right, (ii) the date
on which any such reorganization, reclassification,
recapitalization, transfer, consolidation, merger, dissolution,
liquidation or winding-up is to take place, and the time, if any
is to be fixed, as of which the holders of record of Common Stock
(or Other Securities) shall be entitled to exchange their shares
of Common Stock (or Other Securities) for securities or other
property deliverable on such reorganization, reclassification,
recapitalization, transfer, consolidation, merger, dissolution,
liquidation or winding-up, and (iii) the amount and character of
any stock or other securities, or rights or options with respect
thereto, proposed to be issued or granted, the date of such
proposed issue or grant and the persons or class of persons to
whom such proposed issue or grant is to be offered or made. Such
notice shall be mailed at least twenty (20) days prior to the
date specified in such notice on which any such action is to be
taken, except with respect to the grant of options under the
Company's Employee Stock Option/Purchase Plans in which case such
notice shall be given not later than the date of grant.
9. Reservation of Stock, etc. Issuable on Exercise of Warrants.
The Company will at all times reserve and keep available, solely
for issuance and delivery on the exercise of the Warrants, all
shares of Common Stock (or Other Securities) from time to time
issuable on the exercise of the Warrants.
10. Representations and Warranties of the Company. This Warrant
is issued and delivered by the Company on the basis of the
following:
(a) Authorization and Delivery. This Warrant has been duly
authorized and executed by the Company and when delivered will be
the valid and binding obligation of the Company enforceable in
accordance with its terms;
(b) Warrant Shares. The shares of Common Stock to be
issued pursuant to this Warrant have been duly authorized and
reserved for issuance by the Company and, when issued and paid
for in accordance with the terms hereof, will be validly issued,
fully paid and nonassessable;
(c) Rights and Privileges. The rights, preferences,
privileges and restrictions granted to or imposed upon such
shares of Common Stock and the holders thereof are as set forth
herein and in the Company's Articles of Incorporation.
(d) No Inconsistency. The execution and delivery of this
Warrant are not, and the issuance of the shares of Common Stock
upon exercise of this Warrant in accordance with the terms hereof
will not be, inconsistent with the Company's Articles of
13
Incorporation or by-laws, do not and will not contravene any law,
governmental rule or regulation, judgment or order applicable to
the Company, and do not and will not contravene any provision of,
or constitute a default under, any indenture, mortgage, contract
or other instrument of which the Company is a party or by which
it is bound or require the consent or approval of, the giving of
notice to, the registration with the taking of any action in
respect of or by, any Federal, state or local government
authority or agency or other person.
11. Exchange of Warrants. On surrender for exchange of any
Warrant, properly endorsed, to the Company, the Company at its
expense will issue and deliver to or on the order of the holder
thereof a new Warrant or Warrants of like tenor, in the name of
such holder or as such holder (on payment by such holder of any
applicable transfer taxes) may direct, calling in the aggregate
on the face or faces thereof for the number of shares of Common
Stock called for on the face or faces of the Warrant or Warrants
so surrendered.
12. Replacement of Warrants. On receipt of evidence
reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of any Warrant and, in the case of any
such loss, theft or destruction of any Warrant, on delivery of an
indemnity agreement or security reasonably satisfactory in form
and amount to the Company or, in the case of any such mutilation,
on surrender and cancellation of such Warrant, the Company at its
expense will execute and deliver, in lieu thereof, a new Warrant
of like tenor.
13. Warrant Agent. The Company may, by written notice to
each holder of a Warrant, appoint an agent having an office in
Boston, Massachusetts for the purpose of issuing Common Stock (or
Other Securities) on the exercise of the Warrants pursuant to
Section 1, exchanging Warrants pursuant to Section 11, and
replacing Warrants pursuant to Section 12, or any of the
foregoing, and thereafter any such issuance, exchange or
replacement, as the case may be, shall be made at such office by
such agent.
14. Remedies. The Company stipulates that the remedies at
law of the holder of this Warrant in the event of any default or
threatened default by the Company in the performance of or
compliance with any of the terms of this Warrant are not and will
not be adequate, and that such terms may be specifically enforced
by a decree for the specific performance of any agreement
contained herein or by an injunction against a violation of any
of the terms hereof or otherwise.
15. Negotiability, etc. This Warrant is issued upon the
following terms, to all of which each holder or owner hereof by
the taking hereof consents and agrees:
(a) title to this Warrant may be transferred by
endorsement (by the holder hereof executing the form of
assignment at the end hereof) and delivery in the same
manner as in the case of a negotiable instrument
transferable by endorsement and delivery; and
14
(b) any person in possession of this Warrant properly
endorsed for transfer to such person (including endorsed in
blank) is authorized to represent himself as absolute owner
hereof and is empowered to transfer absolute title hereto by
endorsement and delivery hereof to a bona fide purchaser
hereof for value; each prior taker or owner waives and
renounces all of his equities or rights in this Warrant in
favor of each such bona fide purchaser, and each such bona
fide purchaser shall acquire absolute title hereto and to
all rights represented hereby. Nothing in this
paragraph (b) shall create any liability on the part of the
Company beyond any liability or responsibility it has under
law.
16. Notices, etc. All notices and other communications
from the Company to the holder of this Warrant shall be mailed by
first class registered or certified mail, postage prepaid, at
such address as may have been furnished to the Company in writing
by such holder or, until any such holder furnishes to the Company
an address, then to, and at the address of, the last holder of
this Warrant who has so furnished an address to the Company.
17. Miscellaneous. This Warrant and any term hereof may be
changed, waived, discharged or terminated only by an instrument
in writing signed by the party against which enforcement of such
change, waiver, discharge or termination is sought. This Warrant
shall be construed and enforced in accordance with and governed
by the laws of the Commonwealth of Massachusetts. The headings
in this Warrant are for purposes of reference only, and shall not
limit or otherwise affect any of the terms hereof. This Warrant
is being executed as an instrument under seal. The invalidity or
unenforceability of any provision hereof shall in no way affect
the validity or enforceability of any other provision.
18. Expiration. The right to exercise this Warrant shall
expire at 5:00 p.m., Manchester, New Hampshire time, on
July_____, 2009. Notwithstanding the foregoing, this Warrant
shall automatically be deemed to be exercised in full pursuant to
the provisions of Section 1.5 hereof, without any further action
on behalf of the holder, immediately prior to the time this
Warrant would otherwise expire pursuant to the preceding
sentence.
[SIGNATURE PAGE FOLLOWS]
15
IN WITNESS WHEREOF, the Company has executed this Warrant
under seal as of the date first written above.
WPI GROUP, INC.
By:/s/Xxxx X. Xxxxxx
--------------------------
Xxxx X. Xxxxxx
Vice President/Chief
Financial Officer
[Corporate Seal]
Attest:
By:/s/Xxxxxxx Xxxx
-----------------------
Name:Xxxxxxx Xxxx
Title:Secretary
16
FORM OF SUBSCRIPTION
(To be signed only on exercise of Warrant)
WPI GROUP, INC.
The undersigned, the holder of the within Warrant, hereby
irrevocably elects to exercise this Warrant for, and to purchase
thereunder, ........ shares of Common Stock of WPI GROUP, INC.
and herewith makes payment of $........ therefor, and requests
that the certificates for such shares be issued in the name of,
and delivered to .............., federal taxpayer identification
number ............, whose address is ...................
Dated:
--------------------------------
(Signature must conform to name
of holder as specified on the
face of the Warrant)
-------------------------------
(Address)
Signed in the presence of:
---------------------------------
-------------------------------------
FORM OF ASSIGNMENT
(To be signed only on transfer of Warrant)
For value received, the undersigned hereby sells, assigns,
and transfers unto .................., federal taxpayer
identification number ..........., whose address is ............,
the right represented by the within Warrant to purchase
............. shares of Common Stock of WPI GROUP, INC. to which
the within Warrant relates, and appoints
.......................... Attorney to transfer such right on the
books of WPI GROUP, INC. with full power of substitution in the
premises.
Dated:
---------------------------------
(Signature must conform to name
of holder as specified on the
face of the Warrant)
---------------------------------
(Address)
Signed in the presence of:
-----------------------------------
17
EXHIBIT 10.55
THIS WARRANT AND THE UNDERLYING SHARES OF COMMON STOCK ISSUABLE
UPON ITS EXERCISE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS,
AND MAY NOT BE SOLD OR TRANSFERRED WITHOUT COMPLIANCE WITH THE
REGISTRATION OR QUALIFICATION PROVISIONS OF APPLICABLE FEDERAL
AND STATE SECURITIES LAWS OR APPLICABLE EXEMPTIONS THEREFROM.
THE SECURITIES REPRESENTED BY THIS WARRANT ARE SUBJECT TO A
REGISTRATION RIGHTS AGREEMENT DATED AS OF AUGUST 16, 1999 (THE
"REGISTRATION AGREEMENT"). COPIES OF THE REGISTRATION AGREEMENT
ARE ON FILE AT THE OFFICE OF THE SECRETARY OF THE COMPANY.
No. W- 5 Right to Purchase 24,800
Shares of Common Stock
of
WPI GROUP, INC.
WPI GROUP, INC.
COMMON STOCK PURCHASE WARRANT
August 16, 1999
WPI GROUP, INC., a New Hampshire corporation (the
"Company"), hereby certifies that, for value received, SOVEREIGN
BANK, or its assigns, as a Lender under the Credit Agreement
dated as of August 3, 1998, as amended to date, (the "Credit
Agreement") among the Company, certain of its subsidiaries, Fleet
Bank - NH, as Agent for Lenders identified therein, and such
Lenders, is entitled, subject to the terms set forth below, to
purchase from the Company at any time or from time to time after
August 16, 2000 (subject to acceleration as hereinafter provided)
(the "Initial Exerciseability Date") and before 5:00 p.m.,
Manchester, New Hampshire time, on August 16, 2009, 24,800 fully
paid and nonassessable shares of Common Stock, par value $0.01
per share, of the Company, at a purchase price per share of $2.75
(such purchase price per share as adjusted from time to time as
herein provided is referred to herein as the "Purchase Price").
The number and character of such shares of Common Stock and the
Purchase Price are subject to adjustment as provided herein.
This Warrant is one of the Warrants evidencing the right to
purchase shares of Common Stock of the Company issued pursuant to
a certain Third Amendment dated as of August 16, 1999 to the
Credit Agreement (the Credit Agreement, as amended by such Third
Amendment, the "Agreement"), and subject to the Registration
Agreement, a copy of which agreement is on file at the principal
office of the Company, and the holder of this Warrant shall be
entitled to all of the benefits and bound by all of the
applicable obligations of the Registration Agreement, as provided
therein. This Warrant is detachable from the obligations
incurred by the Company pursuant to the Credit Agreement, and
shall survive the satisfaction of such obligations.
As used herein the following terms, unless the context
otherwise requires, have the following respective meanings:
(a) The term "Company" shall include WPI Group, Inc.,
and any corporation which shall succeed to, or assume the
obligations of, the Company hereunder.
(b) The term "Common Stock" includes (i) the Company's
Common Stock, par value $0.01 per share, as authorized on
the date of the Agreement, (ii) any other capital stock of
any class or classes (however designated) of the Company,
authorized on or after such date, the holders of which shall
have the right, without limitation as to amount per share,
either to all or to a share of the balance of current
dividends and liquidating distributions after the payment of
dividends and distributions on any shares entitled to
preference in the payment thereof, and the holders of which
shall ordinarily, in the absence of contingencies, be
entitled to vote for the election of a majority of directors
of the Company (even though the right so to vote may have
been suspended by the happening of such a contingency) and
(iii) any other securities into which or for which any of
the securities described in (i) or (ii) above may be
converted or exchanged pursuant to a plan of
recapitalization, reorganization, merger, sale of assets or
otherwise.
(c) The term "Other Securities" refers to any stock
(other than Common Stock) and other securities of the
Company or any other person (corporate or otherwise) which
the holders of the Warrants at any time shall be entitled to
receive, or shall have received, on the exercise of the
Warrants, in lieu of or in addition to Common Stock, or
which at any time shall be issuable or shall have been
issued in exchange for or in replacement of Common Stock or
Other Securities pursuant to Section 5 or otherwise.
(d)The term "Warrant" means this Common Stock Purchase
Warrant.
1. Exercise of Warrant.
1.1 Full Exercise. This Warrant may be exercised at any time
before its expiration in full by the holder hereof by surrender
of this Warrant, with the form of subscription at the end hereof
duly executed by such holder, to the Company at its principal
office, accompanied by payment, in cash or by certified or
official bank check payable to the order of the Company, in the
amount obtained by multiplying the number of shares of Common
Stock for which this Warrant is then exercisable by the Purchase
Price then in effect.
1.2 Partial Exercise. This Warrant may be exercised at any time
before its expiration in part (in lots of 100 shares or, if this
Warrant is then exercisable for a lesser amount, in such lesser
amount) by surrender of this Warrant and payment of the Purchase
Price then in effect in the manner and at the place provided in
subsection 1.1, except that the amount payable by the holder on
such partial exercise shall be the amount obtained by multiplying
(a) the number of shares of Common Stock designated by the holder
in the subscription at the end hereof by (b) the Purchase Price
2
then in effect. On any such partial exercise the Company at its
expense will forthwith issue and deliver to or upon the order of
the holder hereof a new Warrant or Warrants of like tenor, in the
name of the holder hereof or as such holder (upon payment by such
holder of any applicable transfer taxes) may request, calling in
the aggregate on the face or faces thereof for the number of
shares of Common Stock for which such Warrant or Warrants may
still be exercised.
1.3 Company Acknowledgment. The Company will, at the time of
the exercise of this Warrant, upon the request of the holder
hereof acknowledge in writing its continuing obligation to afford
to such holder any rights to which such holder shall continue to
be entitled after such exercise in accordance with the provisions
of this Warrant. If the holder shall fail to make any such
request, such failure shall not affect the continuing obligation
of the Company to afford to such holder any such rights.
1.4 Trustee for Warrant Holders. In the event that a bank or
trust company shall have been appointed as trustee for the
holders of the Warrants pursuant to subsection 4.2, such bank or
trust company shall have all the powers and duties of a warrant
agent appointed pursuant to Section 13 and shall accept, in its
own name for the account of the Company or such successor person
as may be entitled thereto, all amounts otherwise payable to the
Company or such successor, as the case may be, on exercise of
this Warrant pursuant to this Section 1.
1.5 Net Issue Election. The holder may elect to receive,
without the payment by the holder of any additional
consideration, shares equal to the value of this Warrant or any
portion hereof by the surrender of this Warrant or such portion
to the Company, with the net issue election notice annexed hereto
duly executed, at the office of the Company. Thereupon, the
Company shall issue to the holder such number of fully paid and
nonassessable shares of Common Stock as is computed using the
following formula:
X = Y (A-B)
A
where X = the number of shares to be issued to the holder
pursuant to this Section 1.5.
Y = the number of shares covered by this Warrant in
respect of which the net issue election is made
pursuant to this Section 1.5.
A = the fair market value of one share of Common
Stock, as determined in accordance with the provisions
of this Section 1.5.
B = the Purchase Price in effect under this Warrant at
the time the net issue election is made pursuant to
this Section 1.5.
For purposes of this Section 1.5, the "fair market value" per
share of the Company's Common Stock shall mean:
3
(a) If the Common Stock is traded on a national
securities exchange or admitted to unlisted trading
privileges on such an exchange, or is listed on the National
Market (the "National Market") of the National Association
of Securities Dealers Automated Quotations System (the
"NASDAQ"), the fair market value shall be the last reported
sale price of the Common Stock on such exchange or on the
National Market on the last business day before the
effective date of exercise of the net issue election or if
no such sale is made on such day, the mean of the closing
bid and asked prices for such day on such exchange or on the
National Market;
(b) If the Common Stock is not so listed or admitted
to unlisted trading privileges, the fair market value shall
be the mean of the last bid and asked prices reported on the
last business day before the date of the election (1) by the
NASDAQ or (2) if reports are unavailable under clause (a)
above by the National Quotation Bureau Incorporated; and
(c) If the Common Stock is not so listed or admitted
to unlisted trading privileges and bid and ask prices are
not reported, the fair market value shall be the price per
share which the Company could obtain from a willing buyer
for shares sold by the Company from authorized but unissued
shares, as such price shall be determined by mutual
agreement of the Company and the holder of this Warrant. If
the holder of this Warrant and the Company are unable to
agree on such fair market value, the holder of this Warrant
shall select a pool of three independent and nationally-
recognized investment banking firms from which the Company
shall select one such firm to appraise the fair market value
of the Warrant and to perform the computations involved.
The determination of such investment banking firm shall be
binding upon the Company, the holder of this Warrant and any
other holder of Warrants or Warrant Shares in connection
with any transaction occurring at the time of such
determination. All expenses of such investment banking firm
shall be borne by the Company. In all cases, the
determination of fair market value shall be made without
consideration of the lack of a liquid public market for the
Common Stock and without consideration of any "control
premium" or any discount for holding less than a majority or
controlling interest of the outstanding Common Stock.
1.6 Acceleration of Exercisability. Notwithstanding
the Initial Exercise DateExercisability Date, the Warrant shall
become exercisable on any earlier date that notices are sent to
holders of shares of Common Stock as contemplated in Section 8
with respect to any of the events set forth in subsection 4.1,
and the holder of this Warrant shall be entitled to receive any
such notice as provided in Section 8.
2. Delivery of Stock Certificates, etc. on Exercise. As soon
as practicable after the exercise of this Warrant in full or in
part, and in any event within ten (10) days thereafter, the
Company at its expense (including the payment by it of any
applicable issue taxes) will cause to be issued in the name of
and delivered to the holder hereof, or as such holder (upon
payment by such holder of any applicable transfer taxes) may
direct, a certificate or certificates for the number of fully
paid and nonassessable shares of Common Stock (or Other
Securities) to which such holder shall be entitled on such
4
exercise, plus, in lieu of any fractional share to which such
holder would otherwise be entitled, cash equal to such fraction
multiplied by the then current market value of one full share,
together with any other stock or other securities and property
(including cash, where applicable) to which such holder is
entitled upon such exercise pursuant to Section 1 or otherwise.
3. Adjustment for Dividends in Other Stock, Property, etc.;
Reclassification, etc. In case at any time or from time to time,
the holders of Common Stock (or Other Securities) in their
capacity as such shall have received, or (on or after the record
date fixed for the determination of shareholders eligible to
receive) shall have become entitled to receive, without payment
therefor,
(a) other or additional stock or other securities or property
(other than cash) by way of dividend, or
(b) any cash (excluding cash dividends payable solely out of
earnings or earned surplus of the Company), or
(c) other or additional stock or other securities or property
(including cash) by way of spin-off, split-up, reclassification,
recapitalization, combination of shares or similar corporate
rearrangement,
other than additional shares of Common Stock (or Other
Securities) issued as a stock dividend or in a stock-split
(adjustments in respect of which are provided for in Section 5),
then and in each such case the holder of this Warrant, on the
exercise hereof as provided in Section 1, shall be entitled to
receive the amount of stock and other securities and property
(including cash in the cases referred to in subdivisions (b) and
(c) of this Section 3) which such holder would hold on the date
of such exercise if on the date hereof he had been the holder of
record of the number of shares of Common Stock called for on the
face of this Warrant and had thereafter, during the period from
the date hereof to and including the date of such exercise,
retained such shares and all such other or additional stock and
other securities and property (including cash in the cases
referred to in subdivisions (b) and (c) of this Section 3)
receivable by him as aforesaid during such period, giving effect
to all adjustments called for during such period by Sections 4
and 5.
4. Adjustment for Reorganization, Consolidation, Merger, etc.
4.1 Reorganization, Consolidation, Merger, etc. In case at any
time or from time to time, the Company shall (a) effect a capital
reorganization or reclassification of its capital stock, (b)
consolidate with or merge into any other person, or (c) transfer
all or substantially all of its properties or assets to any other
corporation or other business entity under any plan or
arrangement contemplating the dissolution of the Company, then,
in each such case, the holder of this Warrant, on the exercise
hereof as provided in Section 1 at any time after the
consummation of such reorganization, consolidation or merger or
the effective date of such dissolution, as the case may be, shall
receive, in lieu of the Common Stock (or Other Securities)
issuable on such exercise prior to such consummation or such
effective date, the stock and other securities and property
(including cash) to which such holder would have been entitled
5
upon such consummation or in connection with such dissolution, as
the case may be, if such holder had so exercised this Warrant,
immediately prior thereto, all subject to further adjustment
thereafter as provided in Sections 3 and 5. The Company will 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 mailed or delivered to the holder of this Warrant at
the last address of such holder appearing on the books of the
Company, the obligation to delivery to such holder such shares of
stock, securities or assets as, in accordance with the foregoing
provisions, such holder may be entitled to purchase.
4.2 Dissolution. In the event of any dissolution of the Company
following the transfer of all or substantially all of its
properties or assets, the Company, prior to such dissolution,
shall at its expense deliver or cause to be delivered the stock
and other securities and property (including cash, where
applicable) receivable by the holders of the Warrants after the
effective date of such dissolution pursuant to this Section 4 to
a bank or trust company having its principal office in
Manchester, New Hampshire or Boston, Massachusetts, as trustee
for the holder or holders of the Warrants.
4.3 Continuation of Terms. Upon any reorganization,
consolidation, merger or transfer (and any dissolution following
any transfer) referred to in this Section 4, this Warrant shall
continue in full force and effect, subject to expiration in
accordance with Section 18 hereof, and the terms hereof shall be
applicable to the shares of stock and other securities and
property receivable on the exercise of this Warrant after the
consummation of such reorganization, consolidation or merger or
the effective date of dissolution following any such transfer, as
the case may be, and shall be binding upon the issuer of any such
stock or other securities, including, in the case of any such
transfer, the person acquiring all or substantially all of the
properties or assets of the Company, whether or not such person
shall have expressly assumed the terms of this Warrant as
provided in Section 6.
5. Anti-Dilution Adjustment.
5.1 General. The Purchase Price shall be subject to adjustment
from time to time as hereinafter provided. Upon each adjustment
of the Purchase Price, the holder of this Warrant shall
thereafter be entitled to purchase, at the Purchase Price
resulting from such adjustment, the number of shares obtained by
multiplying the 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 Purchase Price resulting from such
adjustment.
5.2 Purchase Price Adjustments. If and whenever after the date
hereof the Company shall issue or sell any shares of its Common
Stock (except (i) upon exercise of one or more of the Warrants or
(ii) shares of Common Stock issued to employees, officers,
directors of the Company upon the exercise of options granted
under the Company's Employee Stock Option/Purchase Plans
(hereinafter defined) not to exceed in the aggregate 1,200,000
6
shares of Common Stock) for a consideration per share less than
the Purchase Price in effect immediately prior to the time of
such issue or sale, or shall be deemed under the provisions of
this Section 5 to have effected any such issuance or sale, then,
forthwith upon such issue or sale, the Purchase Price shall be
reduced to the price (calculated to the nearest $0.0001) obtained
by multiplying the Purchase Price in effect immediately prior to
the time of such issue or sale by a fraction, the numerator of
which shall be the sum of (i) the number of shares of Common
Stock outstanding immediately prior to such issue or sale
multiplied by the Purchase Price immediately prior to such issue
or sale plus (ii) the consideration received by the Company upon
such issue or sale, and the denominator of which shall be the
product of (iii) the total number of shares of Common Stock
outstanding immediately after such issue or sale, multiplied by
(iv) the Purchase Price immediately prior to such issue or sale.
As used herein, "Employee Stock Option/Purchase Plans" consist of
the Company's 1997 Equity Incentive Plan, 1995 Stock Option Plan,
Employee Stock Purchase Plan, Employee Bonus Award Plan, and non
qualified options granted to certain Directors of the Company.
Notwithstanding the foregoing, no adjustment of the Purchase
Price shall be made in an amount less than $0.0001 per share, but
any such lesser adjustment shall be carried forward and shall be
made at the time of and together with the next subsequent
adjustment which together with any adjustments so carried forward
shall amount to $0.0001 per share or more.
5.3 Option Grants. In the event that at any time, other than
the issuance of options pursuant to the Company's Employee Stock
Option Plan, the Company shall in any manner grant (directly, 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 any stock or securities convertible into or exchangeable for
Common Stock (such rights or options being herein called
"Options" and such convertible or exchangeable stock or
securities being herein called "Convertible Securities"), whether
or not such 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 Options or upon conversion or exchange of such Convertible
Securities (determined by dividing (i) the total amount, if any,
received or receivable by the Company as consideration for the
granting of such Options, plus the minimum aggregate amount of
additional consideration payable to the Company upon the exercise
of all such Options, plus, in the case of any such 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 (ii) the total number of shares of Common
Stock issuable upon the exercise of such Options or upon the
conversion or exchange of all such Convertible Securities
issuable upon the exercise of such Options) shall be less than
the Purchase Price in effect immediately prior to the time of the
granting of such Options, then the total number of shares of
Common Stock issuable upon the exercise of such Options or upon
conversion or exchange of the total amount of such Convertible
Securities issuable upon the exercise of such Options shall (as
of the date of granting such Options) be deemed to be outstanding
and to have been issued for such price per share. Except as
otherwise provided in subsection 5.5, no further adjustment of
the Purchase Price shall be made upon the actual issue of such
Common Stock or of such Convertible Securities upon exercise of
such Options or upon the actual issue of such Common Stock upon
conversion or exchange of such Convertible Securities.
7
5.4 Convertible Security Grants. In the event that the Company
shall in any manner issue (directly, by assumption in a merger or
otherwise) or sell any Convertible Securities (other than
pursuant to the exercise of Options to purchase such Convertible
Securities covered by subsection 5.3), 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 (i) 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 (ii) 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 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, except as otherwise
provided in subsection 5.5, no further adjustment of the Purchase
Price shall be made upon the actual issue of such Common Stock
upon conversion or exchange of such Convertible Securities.
5.5 Effect of Alteration to Option or Convertible Security
Terms. In connection with any change in, or the expiration or
termination of, the purchase rights under any Option or the
conversion or exchange rights under any Convertible Securities,
the following provisions shall apply:
(A) If the purchase price provided for in any
Option referred to in subsection 5.3, the additional
consideration, if any, payable upon the conversion or
exchange of any Convertible Securities referred to in
subsection 5.3 or 5.4, or the rate at which any Convertible
Securities referred to in subsection 5.3 or 5.4 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), then the
Purchase Price in effect at the time of such change shall
forthwith be increased or decreased to the Purchase Price
which would be in effect immediately after such change if
(a) the adjustments which were made upon the issuance of such
Options or Convertible Securities had been made upon the
basis of (and taking into account the total consideration
received for) (i) the issuance at that time of the Common
Stock, if any, delivered upon the exercise of any such
Options or upon the conversion or exchange of any such
Convertible Securities before such change, and (ii) the
issuance at that time of all such Options or Convertible
Securities, with terms and provisions reflecting such change,
which are still outstanding after such change, and (b) the
Purchase Price as adjusted pursuant to clause (a) preceding
had been used as the basis for the adjustments required
hereunder in connection with all other issues or sales of
Common Stock, Options or Convertible Securities by the
Company subsequent to the issuance of such Options or
Convertible Securities.
8
(B) On the partial or complete expiration of any
Options or termination of any right to convert or exchange
Convertible Securities, the Purchase Price then in effect
hereunder shall forthwith be increased or decreased to the
Purchase Price which would be in effect at the time of such
expiration or termination if (a) the adjustments which were
made upon the issuance of such Options or Convertible
Securities had been made upon the basis of (and taking into
account the total consideration received for) (i) the
issuance at that time of the Common Stock, if any, delivered
upon the exercise of such Options or upon the conversion or
exchange of such Convertible Securities before such
expiration or termination, and (ii) the issuance at that time
of only those such Options or Convertible Securities which
remain outstanding after such expiration or termination, and
(b) the Purchase Price as adjusted pursuant to clause (a)
preceding had been used as the basis for adjustments required
hereunder in connection with all other issues or sales of
Common Stock, Options or Convertible Securities by the
Company subsequent to the issuance of such Options or
Convertible Securities.
(C) If the purchase price provided for in any
Option referred to in subsection 5.3 or the rate at which any
Convertible Securities referred to in subsection 5.3 or 5.4
are convertible into or exchangeable for Common Stock shall
be reduced at any time under or by reason ofr provisions with
respect thereto designed to protect against dilution, and the
event causing such reduction is one that did not also require
an adjustment in the Purchase Price under other provisions of
this Section 5, then in case of the delivery of shares of
Common Stock upon the exercise of any such Option or upon
conversion or exchange of any such Convertible Securities,
the Purchase Price then in effect hereunder shall forthwith
be adjusted to such amount as would have obtained if such
Option or Convertible Securities had never been issued and if
the adjustments made upon the issuance of such Option or
Convertible Securities had been made upon the basis of the
issuance of (and taking into account the total consideration
received for) the shares of Common Stock delivered as
aforesaid (provided that the Purchase Price used in such
determination shall be the Purchase Price on the date of
issue of such shares); provided that no such adjustment shall
be made unless the Purchase Price then in effect would be
reduced thereby.
5.6 Dividends of Common Stock, Options or Convertible
Securities. In the event that the Company shall declare a
dividend or make any other distribution upon any stock of the
Company payable in Common Stock, Options or Convertible
Securities, any Common Stock, Options or Convertible Securities,
as the case may be, issuable in payment of such dividend or
distribution shall be deemed to have been issued or sold without
consideration.
5.7 Dilution in Case of Other Securities. In case any Other
Securities shall be issued or sold by the Company, or shall
become subject to issue upon the conversion or exchange of any
stock (or Other Securities) of the Company (or any other issuer
of Other Securities or any other person referred to in Section 4)
or to subscription, purchase or other acquisition pursuant to any
rights or options granted by the Company (or such other issuer or
person), for a consideration per share such as to dilute the
purchase rights evidenced by this Warrant, the computations,
9
adjustments and readjustments provided for in this Section 5 with
respect to the Purchase Price and the number of shares of Common
Stock issuable upon exercise of this Warrant shall be made as
nearly as possible in the manner so provided and applied to
determine the amount of Other Securities from time to time
receivable on the exercise of the Warrants, so as to protect the
holders of the Warrants against the effect of such dilution.
5.8 Stock Splits and Reverse Splits. In the event that the
Company shall at any time subdivide its outstanding shares of
Common Stock into a greater number of shares, the Purchase Price
in effect immediately prior to such subdivision shall be
proportionately reduced and the number of Warrant Shares
purchasable pursuant to this Warrant immediately prior to such
subdivision shall be proportionately increased, and conversely,
in the event that the outstanding shares of Common Stock of the
Company shall at any time be combined into a smaller number of
shares, the Purchase Price in effect immediately prior to such
combination shall be proportionately increased and the number of
Warrant Shares purchasable upon the exercise of this Warrant
immediately prior to such combination shall be proportionately
reduced. Except as provided in this subsection 5.8 no adjustment
in the Purchase Price and no change in the number of Warrant
Shares purchasable shall be made under this Section 5 as a result
of or by reason of any such subdivision or combination.
5.9 Determination of Consideration Received. For purposes of
this Section 5, the amount of consideration received by the
Company in connection with the issuance or sale of Common Stock,
Options or Convertible Securities shall be determined in
accordance with the following:
(A) In the event that shares of Common Stock,
Options or Convertible Securities shall be issued or sold for
cash, the consideration received therefor shall be deemed to
be the amount payable to the Company therefor, without
deduction therefrom of any expenses incurred or any
underwriting commissions or concessions or discounts paid or
allowed by the Company in connection therewith.
(B) In the event that any shares of Common Stock,
Options or Convertible Securities shall be issued or sold for
a consideration other than cash, the amount of the
consideration other than cash payable to the Company shall be
deemed to be the fair value of such consideration as
reasonably determined by the Board of Directors of the
Company, without deduction of any expenses incurred or any
underwriting commissions or concessions or discounts paid or
allowed by the Company in connection therewith.
(C) The amount of consideration deemed to be
received by the Company pursuant to the foregoing provisions
of this subsection 5.9 upon any issuance and/or sale,
pursuant to an established compensation plan of the Company,
to directors, officers or employees of the Company in
connection with their employment, of shares of Common Stock,
Options or Convertible Securities, shall be increased by the
amount of any tax benefit realized by the Company as a result
of such issuance and/or sale, the amount of such tax benefit
being the amount by which the federal and/or state income or
other tax liability of the Company shall be reduced by reason
10
of any deduction or credit in respect of such issuance and/or
sale.
(D) In the event that any shares of Common Stock,
Options or Convertible Securities shall be issued in
connection with any merger in which the Company is the
surviving corporation, the amount of consideration therefor
shall be deemed to be the fair value as reasonably determined
by the Board of Directors of the Company of such portion of
the assets and business of the non-surviving corporation as
such Board shall determine to be attributable to such Common
Stock, Options or Convertible Securities, as the case may be.
(E) In the event that any Common Stock, Options
and/or Convertible Securities shall be issued in connection
with the issue and sale of other securities or property of
the Company, together comprising one integral transaction in
which no specific consideration is allocated to such Common
Stock, Options or Convertible Securities by the parties
thereto, such Common Stock, Options and/or Convertible
Securities shall be deemed to have been issued without
consideration.
5.10 Record Date as Date of Issue or Sale. In the event that at
any time the Company shall take a record of the holders of its
Common Stock for the purpose of entitling them (i) to receive a
dividend or other distribution payable in Common Stock, Options
or Convertible Securities, or (ii) to subscribe for or purchase
Common Stock, Options 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 right of
subscription or purchase, as the case may be.
5.11 Treasury Stock. 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 (other than their cancellation without
reissuance) shall be considered an issue or sale of Common Stock
for the purposes of this Section 5.
6. No Dilution or Impairment. 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 the Warrants, but will at all times in good
faith assist in the carrying out of all such terms and in the
taking of all such action as may be necessary or appropriate in
order to protect the rights of the holders of the Warrants
against dilution or other impairment. Without limiting the
generality of the foregoing, the Company (a) will not increase
the par value or stated value of any shares of stock receivable
on the exercise of the Warrants above the amount payable therefor
on such exercise, (b) will take all such action as may be
necessary or appropriate in order that the Company may validly
and legally issue fully paid and nonassessable shares of stock on
the exercise of all Warrants from time to time outstanding,
(c) will not issue any capital stock of any class which is
preferred as to dividends or as to the distribution of assets
upon voluntary or involuntary dissolution, liquidation or winding
11
up, unless the rights of the holders thereof shall be limited to
a fixed sum or percentage of par value in respect of
participation in dividends and in any such distribution of assets
or such stock shall be non voting and not be convertible into
shares of Common Stock or other voting stock, and (d) will not
transfer all or substantially all of its properties and assets to
any other person (corporate or otherwise), or consolidate with or
merge into any other person or permit any such person to
consolidate with or merge into the Company (if the Company is not
the surviving person), unless such other person shall expressly
assume in writing and become bound by all the terms of the
Warrants.
7. Accountants' Certificate as to Adjustments. In each case of
any adjustment or readjustment in the shares of Common Stock (or
Other Securities) issuable on the exercise of the Warrants, the
Company's chief financial officer will compute, or if requested
by the holders of Warrants to purchase over 50% of the shares of
Common Stock which may be purchased upon exercise of the Warrants
the Company at its expense will promptly cause independent
certified public accountants of recognized standing selected by
the Company at its expense to compute, such adjustment or
readjustment in accordance with the terms of the Warrants and
prepare a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which such
adjustment or readjustment is based, including a statement of (a)
the consideration received or receivable by the Company for any
additional shares of Common Stock (or Other Securities) issued or
sold or deemed to have been issued or sold, (b) the number of
shares of Common Stock (or Other Securities) outstanding or
deemed to be outstanding, and (c) the Purchase Price and the
number of shares of Common Stock to be received upon exercise of
this Warrant, in effect immediately prior to such issue or sale
and as adjusted and readjusted as provided in this Warrant. The
Company will forthwith mail a copy of each such certificate to
each holder of a Warrant, and will, on the written request at any
time of any holder of a Warrant (such request shall not be made
more than once in any Fiscal Quarter), furnish to such holder a
like certificate setting forth the Purchase Price at the time in
effect and showing how it was calculated.
8. Notices of Record Date, etc. In the event of
(a) any taking by the Company of a record of the holders of any
class of securities for the purpose of determining the holders
thereof who are entitled to receive any dividend or other
distribution, or any right to subscribe for, purchase or
otherwise acquire any shares of stock of any class or any other
securities or property, or to receive any other right or any
declaration of a cash dividend on the Common Stock, or
(b) any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the
Company or any transfer of all or substantially all the assets of
the Company to or consolidation or merger of the Company with or
into any other person, or
(c) any voluntary or involuntary dissolution, liquidation or
winding-up of the Company, or
12
(d) any proposed issue or grant by the Company of any shares of
stock of any class or any other securities, or any right or
option to subscribe for, purchase or otherwise acquire any shares
of stock of any class or any other securities (other than the
issue of Common Stock on the exercise of the Warrants),
then and in each such event the Company will mail or cause to be
mailed to each holder of a Warrant a notice specifying (i) the
date on which any such record is to be taken for the purpose of
such dividend, distribution or right, and stating the amount and
character of such dividend, distribution or right, (ii) the date
on which any such reorganization, reclassification,
recapitalization, transfer, consolidation, merger, dissolution,
liquidation or winding-up is to take place, and the time, if any
is to be fixed, as of which the holders of record of Common Stock
(or Other Securities) shall be entitled to exchange their shares
of Common Stock (or Other Securities) for securities or other
property deliverable on such reorganization, reclassification,
recapitalization, transfer, consolidation, merger, dissolution,
liquidation or winding-up, and (iii) the amount and character of
any stock or other securities, or rights or options with respect
thereto, proposed to be issued or granted, the date of such
proposed issue or grant and the persons or class of persons to
whom such proposed issue or grant is to be offered or made. Such
notice shall be mailed at least twenty (20) days prior to the
date specified in such notice on which any such action is to be
taken, except with respect to the grant of options under the
Company's Employee Stock Option/Purchase Plans in which case such
notice shall be given not later than the date of grant.
9. Reservation of Stock, etc. Issuable on Exercise of Warrants.
The Company will at all times reserve and keep available, solely
for issuance and delivery on the exercise of the Warrants, all
shares of Common Stock (or Other Securities) from time to time
issuable on the exercise of the Warrants.
10. Representations and Warranties of the Company. This Warrant
is issued and delivered by the Company on the basis of the
following:
(a) Authorization and Delivery. This Warrant has been duly
authorized and executed by the Company and when delivered will be
the valid and binding obligation of the Company enforceable in
accordance with its terms;
(b) Warrant Shares. The shares of Common Stock to be
issued pursuant to this Warrant have been duly authorized and
reserved for issuance by the Company and, when issued and paid
for in accordance with the terms hereof, will be validly issued,
fully paid and nonassessable;
(c) Rights and Privileges. The rights, preferences,
privileges and restrictions granted to or imposed upon such
shares of Common Stock and the holders thereof are as set forth
herein and in the Company's Articles of Incorporation.
(d) No Inconsistency. The execution and delivery of this
Warrant are not, and the issuance of the shares of Common Stock
upon exercise of this Warrant in accordance with the terms hereof
13
will not be, inconsistent with the Company's Articles of
Incorporation or by-laws, do not and will not contravene any law,
governmental rule or regulation, judgment or order applicable to
the Company, and do not and will not contravene any provision of,
or constitute a default under, any indenture, mortgage, contract
or other instrument of which the Company is a party or by which
it is bound or require the consent or approval of, the giving of
notice to, the registration with the taking of any action in
respect of or by, any Federal, state or local government
authority or agency or other person.
11. Exchange of Warrants. On surrender for exchange of any
Warrant, properly endorsed, to the Company, the Company at its
expense will issue and deliver to or on the order of the holder
thereof a new Warrant or Warrants of like tenor, in the name of
such holder or as such holder (on payment by such holder of any
applicable transfer taxes) may direct, calling in the aggregate
on the face or faces thereof for the number of shares of Common
Stock called for on the face or faces of the Warrant or Warrants
so surrendered.
12. Replacement of Warrants. On receipt of evidence
reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of any Warrant and, in the case of any
such loss, theft or destruction of any Warrant, on delivery of an
indemnity agreement or security reasonably satisfactory in form
and amount to the Company or, in the case of any such mutilation,
on surrender and cancellation of such Warrant, the Company at its
expense will execute and deliver, in lieu thereof, a new Warrant
of like tenor.
13. Warrant Agent. The Company may, by written notice to
each holder of a Warrant, appoint an agent having an office in
Boston, Massachusetts for the purpose of issuing Common Stock (or
Other Securities) on the exercise of the Warrants pursuant to
Section 1, exchanging Warrants pursuant to Section 11, and
replacing Warrants pursuant to Section 12, or any of the
foregoing, and thereafter any such issuance, exchange or
replacement, as the case may be, shall be made at such office by
such agent.
14. Remedies. The Company stipulates that the remedies at
law of the holder of this Warrant in the event of any default or
threatened default by the Company in the performance of or
compliance with any of the terms of this Warrant are not and will
not be adequate, and that such terms may be specifically enforced
by a decree for the specific performance of any agreement
contained herein or by an injunction against a violation of any
of the terms hereof or otherwise.
15. Negotiability, etc. This Warrant is issued upon the
following terms, to all of which each holder or owner hereof by
the taking hereof consents and agrees:
(a) title to this Warrant may be transferred by
endorsement (by the holder hereof executing the form of
assignment at the end hereof) and delivery in the same
manner as in the case of a negotiable instrument
transferable by endorsement and delivery; and
14
(b) any person in possession of this Warrant properly
endorsed for transfer to such person (including endorsed in
blank) is authorized to represent himself as absolute owner
hereof and is empowered to transfer absolute title hereto by
endorsement and delivery hereof to a bona fide purchaser
hereof for value; each prior taker or owner waives and
renounces all of his equities or rights in this Warrant in
favor of each such bona fide purchaser, and each such bona
fide purchaser shall acquire absolute title hereto and to
all rights represented hereby. Nothing in this
paragraph (b) shall create any liability on the part of the
Company beyond any liability or responsibility it has under
law.
16. Notices, etc. All notices and other communications
from the Company to the holder of this Warrant shall be mailed by
first class registered or certified mail, postage prepaid, at
such address as may have been furnished to the Company in writing
by such holder or, until any such holder furnishes to the Company
an address, then to, and at the address of, the last holder of
this Warrant who has so furnished an address to the Company.
17. Miscellaneous. This Warrant and any term hereof may be
changed, waived, discharged or terminated only by an instrument
in writing signed by the party against which enforcement of such
change, waiver, discharge or termination is sought. This Warrant
shall be construed and enforced in accordance with and governed
by the laws of the Commonwealth of Massachusetts. The headings
in this Warrant are for purposes of reference only, and shall not
limit or otherwise affect any of the terms hereof. This Warrant
is being executed as an instrument under seal. The invalidity or
unenforceability of any provision hereof shall in no way affect
the validity or enforceability of any other provision.
18. Expiration. The right to exercise this Warrant shall
expire at 5:00 p.m., Manchester, New Hampshire time, on
July_____, 2009. Notwithstanding the foregoing, this Warrant
shall automatically be deemed to be exercised in full pursuant to
the provisions of Section 1.5 hereof, without any further action
on behalf of the holder, immediately prior to the time this
Warrant would otherwise expire pursuant to the preceding
sentence.
[SIGNATURE PAGE FOLLOWS]
15
IN WITNESS WHEREOF, the Company has executed this Warrant
under seal as of the date first written above.
WPI GROUP, INC.
By:/s/Xxxx X. Xxxxxx
-------------------------
Xxxx X. Xxxxxx
Vice President/Chief
Financial Officer
[Corporate Seal]
Attest:
By:/s/Xxxxxxx Xxxx
---------------------
Name:Xxxxxxx Xxxx
Title:Secretary
16
FORM OF SUBSCRIPTION
(To be signed only on exercise of Warrant)
WPI GROUP, INC.
The undersigned, the holder of the within Warrant, hereby
irrevocably elects to exercise this Warrant for, and to purchase
thereunder, ........ shares of Common Stock of WPI GROUP, INC.
and herewith makes payment of $........ therefor, and requests
that the certificates for such shares be issued in the name of,
and delivered to .............., federal taxpayer identification
number ............, whose address is ...................
Dated:
-------------------------------
(Signature must conform to name
of holder as specified on the
face of the Warrant)
--------------------------------
(Address)
Signed in the presence of:
-----------------------------
-------------------------
FORM OF ASSIGNMENT
(To be signed only on transfer of Warrant)
For value received, the undersigned hereby sells, assigns,
and transfers unto .................., federal taxpayer
identification number ..........., whose address is ............,
the right represented by the within Warrant to purchase
............. shares of Common Stock of WPI GROUP, INC. to which
the within Warrant relates, and appoints
.......................... Attorney to transfer such right on the
books of WPI GROUP, INC. with full power of substitution in the
premises.
Dated:
--------------------------------
(Signature must conform to name
of holder as specified on the
face of the Warrant)
--------------------------------
(Address)
Signed in the presence of:
---------------------------------
17
EXHIBIT 10.56
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "Agreement") dated as of
August 16, 1999, by and between WPI GROUP, INC., a New Hampshire
corporation, (the "Company") and the LENDERS or their assigns
(the "Lenders") who are parties to the Credit Agreement dated as
of August 3, 1998, as amended to date, including without
limitation the Third Amendment of even date, (the "Credit
Agreement") among the Company and certain of its subsidiaries,
Fleet Bank - NH, for itself as a Lender, and as Agent for the
other Lenders, and the other Lenders (the Lenders and their
assigns are herein collectively referred to as the "Holders" and
each Lender and its assigns a "Holder");
WHEREAS, the Holders are acquiring from the Company warrants
to purchase up to one hundred twenty-four thousand
(124,000) shares of the Company's common stock, par value
$.01 per share, pursuant to the Third Amendment to the Credit
Agreement referenced above (the "Third Amendment") by and between
the Company and the Holders; and
WHEREAS, it is a condition precedent to the effectiveness of
the Third Amendment that the Company enter into an agreement with
the Holders granting to the Holders certain securities
registration rights with respect to the shares of common stock
purchasable with the warrants.
NOW, THEREFORE, in consideration of the premises, as an
inducement to the Holders to effectuate the Third Amendment, and
for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company hereby
covenants and agrees with the Holders as follows:
1. Certain Definitions. As used in this Agreement, the
following terms shall have the following respective meanings:
"Commission" shall mean the United States Securities
and Exchange Commission, or any other federal agency at the time
administering the Securities Act.
"Common Stock" shall mean (i) the Company's Common
Stock, par value $.01 per share, as authorized on the date of
this Agreement, (ii) any other capital stock of any class or
classes (however designated) of the Company, authorized on or
after the date hereof, the holders of which shall have the right,
without limitation as to amount per share, either to all or to a
share of the balance of current dividends and liquidating
distributions after the payment of dividends and distributions on
any shares entitled to preference in the payment thereof, and the
holders of which shall ordinarily, in the absence of
contingencies, be entitled to vote for the election of a majority
of directors of the Company, and (iii) any other securities into
which or for which any of the securities described in (i) or (ii)
above may be converted or exchanged pursuant to a plan of
recapitalization, reorganization, merger, sale of assets or
otherwise.
"Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended, or any similar federal statute, and the
rules and regulations of the Commission thereunder, all as the
same shall be in effect at the time.
"Person" shall mean an individual, a corporation, a
partnership, a limited liability company, a joint venture, a
trust, an unincorporated organization, a government and any
agency or political subdivision thereof.
"Registrable Securities" shall mean the Warrant Shares
or any other securities of the Company issued and issuable upon
exercise of the Warrants.
"Registration Expenses" shall mean the expenses so des
cribed in Section 5.
"Securities Act" shall mean the Securities Act of 1933,
as amended, or any similar federal statute, and the rules and
regulations of the Commission thereunder, all as the same shall
be in effect at the time.
"Warrants" shall mean and include the Company's Common
Stock Purchase Warrants issued pursuant to the Third Amendment.
"Warrant Shares" shall mean shares of Common Stock
issued and issuable upon exercise of the Warrants.
2. Demand Registration.
(a) At any time after the Warrant becomes exercisable,
the holders of at least fifty percent (50%) of the Registrable
Securities may request the Company to register under the
Securities Act all or any portion of the Registrable Securities
held by such requesting holders in the manner specified in such
request, and upon receipt of such request the Company shall
promptly deliver notice of such request to all Persons holding
Registrable Securities who shall then have thirty (30) days to
notify the Company in writing of their desire to be included in
such registration. The Company will use its best efforts to
expeditiously effect the registration of all Registrable
Securities whose holders request participation in such
registration under the Securities Act, but only to the extent
provided for in the following provisions of this Agreement;
provided, however, that the Company shall not be required to
effect registration pursuant to a request under this Section 2
more than one (1) time for the holders of the Registrable
Securities as a group, and may register the Registrable
Securities on Form S-3 under the Securities Act if available.
Notwithstanding anything to the contrary contained herein, no
request may be made under this Section 2 within 180 days after
the effective date of a registration statement filed by the
Company covering a firm commitment underwritten public offering
in which the holders of Registrable Securities shall have been
entitled to join pursuant to Section 3 or 12 and in which there
shall have been effectively registered all Registrable Securities
as to which registration shall have been requested.
2
(b) Whenever a requested registration pursuant to
Section 2(a) above is for an underwritten offering, only
Registrable Securities which are to be included in the
underwriting may be included in the registration, and, if the
managing underwriter of such offering determines in good faith
that the number of Registrable Securities so included which are
to be sold by the holders of the Registrable Securities should be
limited due to market conditions and/or the necessity of
including in such underwriting or registration securities to be
sold for the account of the Company, the holders of Registrable
Securities to be included in such underwriting and registration
shall share pro rata in the number of such Registrable Securities
being underwritten and registered for their account, such sharing
to be based on the number of all Registrable Securities held by
such holders, respectively; provided, that in no event shall the
holders of Registrable Securities that requested such
registration pursuant to Section 2(a) above have the number of
their Registrable Securities to be included in such underwriting
and registration reduced or limited (including pursuant to
Section 3 hereof) until the number of securities whose holders
have a contractual, incidental "piggy back" right to include such
securities in the registration statement as to which inclusion
has been requested pursuant to such right have been reduced to
zero (0). Notwithstanding the foregoing, in the event that the
underwriter or underwriters cut back the number of Registrable
Securities required to be included by the Holders in such demand
registration by more than 20%, then such registration will not be
deemed to be a demand registration for purposes of this Section
2. Whenever a requested registration pursuant to Section 2(a)
above is for an underwritten public offering, the Company,
subject to the approval of the holders of a majority of the
Registrable Securities to be sold in such offering (which
approval will not be unreasonably withheld or delayed), may
designate the managing underwriter(s) of such offering. The
Company may not cause any other registration of securities for
sale for its own account (other than a registration effected
solely to implement an employee benefit plan or a transaction to
which Rule 145 of the Commission is applicable) to become
effective less than ninety (90) days after the effective date of
any registration required pursuant to this Section 2.
(c) If at the time of any request to register
Registrable Securities pursuant to Section 2(a) above the Company
is preparing or within thirty (30) days thereafter commences to
prepare a registration statement for a public offering (other
than a registration effected solely to implement an employee
benefit plan or a transaction to which Rule 145 of the Commission
is applicable) which in fact is filed and becomes effective
within ninety (90) days after the request, or is engaged in any
activity which, in the good faith determination of the Company's
board of directors, would be adversely affected by the requested
registration to the material detriment of the Company, then the
Company may at its option direct that such request be delayed for
a period not in excess of four (4) months from the effective date
of such offering or the date of commencement of such other
activity, as the case may be, such right to delay a request to be
exercised by the Company not more than once in any two (2) year
period. Nothing in this Section 2(c) shall preclude a holder of
Registrable Securities from enjoying registration rights which it
might otherwise possess under Section 3 hereof.
3. Piggyback Registration. If the Company, at any time
proposes to register any of its securities under the Securities
Act (including pursuant to a demand of any stockholder of the
Company exercising registration rights) for sale to the public
(except with respect to registration statements on Form S-4 or S-
3
8 or another form not available for registering the Registrable
Securities for sale to the public), each such time it will give
written notice to all holders of the outstanding Registrable
Securities, including each holder who has the right to acquire
Registrable Securities, of its intention to do so. Upon the
written request of any of such holders of the Registrable
Securities given within twenty (20) days after receipt by such
holder of such notice, the Company will, subject to the limits
contained in this Section 3, use its best efforts to cause all
such Registrable Securities of said requesting holders to be
registered under the Securities Act and qualified for sale under
any state blue sky law, all to the extent requisite to permit
such sale or other disposition by such holder of the Registrable
Securities so registered; provided, however, that if the Company
is advised in writing in good faith by any managing underwriter
of the Company's securities being offered in a public offering
pursuant to such registration statement that the amount to be
sold by Persons other than the Company (collectively, "Selling
Stockholders") is greater than the amount which can be offered
without adversely affecting the offering, the Company may reduce
the amount offered for the accounts of Selling Stockholders
(including holders of shares of Registrable Securities) pursuant
to a contractual, incidental "piggy back" right to include such
securities in a registration statement to a number deemed
satisfactory by such managing underwriter; provided, further,
that no reduction shall be made in the amount of Registrable
Securities offered for the accounts of the holders of Registrable
Securities unless such reduction is imposed pro rata with respect
to (i) all securities whose holders have a contractual,
incidental "piggy back" right to include such securities in the
registration statement as to which inclusion has been requested
pursuant to such right and (ii) any executive officer of the
Company; and provided, further, that there is first excluded from
such registration statement all shares of Common Stock sought to
be included therein by (i) any holder thereof, other than any
executive officer of the Company, not having any such
contractual, incidental registration rights, and (ii) any holder
thereof having contractual, incidental registration rights
subordinated and junior to the rights of the holders of
Registrable Securities. Notwithstanding the foregoing
provisions, the Company may withdraw any registration statement
referred to in this Section 3 without thereby incurring any
liability to the holders of Registrable Securities.
4. Registration Procedures. If and whenever the Company
is required by the provisions of this Agreement to use its best
efforts to effect the registration of any of its securities under
the Securities Act, the Company will, as expeditiously as
possible:
(i) prepare and file with the Commission a
registration statement with respect to such securities and use
its best efforts to cause such registration statement to become
and remain effective; provided, however, that notwithstanding any
other provision of this Agreement, the Company shall not in any
event be required to use its best efforts to maintain the
effectiveness of any such registration statement for a period in
excess of six (6) months;
(ii) prepare and file with the Commission such
amendments and supplements to such registration statement and the
prospectus used in connection therewith as may be necessary to
keep such registration statement effective and to comply with the
provisions of the Securities Act with respect to the sale or
other disposition of all securities covered by such registration
4
statement whenever the seller or sellers of such securities shall
desire to sell or otherwise dispose of the same, but only to the
extent provided in this Agreement;
(iii) furnish to each seller such number of copies
of a prospectus, including a preliminary prospectus, in
conformity with the requirements of the Securities Act, and such
other documents as such seller may reasonably request in order to
facilitate the public sale or other disposition of the securities
owned by such seller;
(iv) use every reasonable effort to register or qualify
the securities covered by such registration statement under such
other securities or state blue sky laws of such jurisdictions as
each seller shall reasonably request, and do any and all other
acts and things which may be necessary under such securities or
blue sky laws to enable such seller to consummate the public sale
or other disposition in such jurisdictions of the securities
owned by such seller, except that the Company shall not for any
such purpose be required to qualify to do business as a foreign
corporation in any jurisdiction wherein it is not so qualified;
(v) before filing the registration statement or
prospectus or amendments or supplements thereto, furnish to one
counsel selected by the holders of Registrable Securities copies
of such documents proposed to be filed which shall be subject to
the reasonable review of such counsel;
(vi) furnish to each prospective seller a signed
counterpart, addressed to the prospective seller, of (A) an
opinion of counsel for the Company, dated the effective date of
the registration statement, and (B) a "comfort" letter signed by
the independent public accountants who have certified the
Company's financial statements included in the registration
statement, covering substantially the same matters with respect
to the registration statement (and the prospectus included
therein) and (in the case of the accountants' letter) with
respect to events subsequent to the date of the financial
statements, as are customarily covered (at the time of such
registration) in opinions of the Company's counsel and in
accountants' letters delivered to the underwriters in
underwritten public offerings of securities, subject to any
requirement by the accountants for representation letters from
the selling holders of Registrable Securities; and
(vii) use its best efforts to list the Registrable
Securities covered by such registration statement with any
securities exchange on which the Common Stock of the Company is
then listed.
5. Expenses. All expenses incurred in effecting the
registrations provided for in Sections 2, 3 and 12, including,
without limitation, all registration and filing fees, printing
expenses, fees and disbursements of counsel for the Company and
fees of one counsel for all of the selling holders of Registrable
Securities (up to $25,000 per registration), underwriting
expenses (other than fees, commissions, discounts and transfer
taxes relating to the Registrable Securities), expenses of any
audits incident to or required by any such registration and
expenses of complying with the securities or blue sky laws of any
jurisdictions pursuant to Section 4(iv) hereof (all of such
expenses referred to as "Registration Expenses"), shall be paid
by the Company; provided, that if an offering pursuant to any
registration commenced pursuant to Section 2 above is abandoned
5
by the selling shareholders (other than by reason of adverse
information pertaining to the Company's business affairs or
financial position or the underwriters cut back the number of
Registrable Securities by more than 20% in a demand registration
as provided in Section 2), as opposed to stock market conditions,
unknown to the sellers prior to the commencement of such
registration proceedings, in which event the Company shall bear
all Registration Expenses), such selling shareholders shall bear
pro rata any costs incurred by the Company in conjunction with
such registration. In either event, the number of registrations
to which the holders of Registrable Securities are entitled
pursuant to Section 2 shall not be reduced thereby.
6. Termination of Registration Rights. All registration
rights granted under this Agreement shall terminate and be of no
further force and effect five (5) years after the date the
Warrant becomes exercisable . In addition, a Holder's
registration rights shall expire if (i) such Holder (together
with its affiliates and other Holders) holds less than 1% of the
Company's outstanding Common Stock (treating all shares of
convertible securities on an as converted basis) or (ii) all
Registrable Securities held by and issued to such Holder may be
sold under Rule 144 during any ninety (90) day period.
7. Furnishing Information. It shall be a condition
precedent to the obligations of the Company to take any action
pursuant to Section 2 or 3 that the selling holders shall furnish
to the Company such information regarding themselves, the
Registrable Securities held by them and the intended method of
disposition of such securities as shall be required to effect the
registration of their Registrable Securities.
8. Indemnification. (a) The Company shall indemnify and
hold harmless the seller of such securities, each underwriter (as
defined in the Securities Act), and each other Person who
participates in the offering of such securities and each other
Person, if any, who controls (within the meaning of the
Securities Act) such seller, underwriter or participating Person
(individually and collectively the "Company - Indemnified
Person") against any losses, claims, damages or liabilities
(collectively the "liability"), joint or several, to which such
Company - Indemnified Person may become subject under the
Securities Act or any other statute or at common law, insofar as
such liability (or action in respect thereof) arises out of or is
based upon (i) any untrue statement or alleged untrue statement
of any material fact contained, on the effective date thereof, in
any registration statement under which such securities were
registered under the Securities Act, any preliminary prospectus
or final prospectus contained therein, or any amendment or
supplement thereto, or (ii) any omission or alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading. Except
as otherwise provided in Section 8(d), the Company shall
reimburse each such Company - Indemnified Person in connection
with investigating or defending any such liability; provided,
however, that the Company shall not be liable to any Company -
Indemnified Person in any such case to the extent that any such
liability arises out of or is based upon any untrue statement or
alleged untrue statement or omission or alleged omission made in
such registration statement, preliminary or final prospectus, or
amendment or supplement thereto in reliance upon and in
conformity with information furnished in writing to the Company
by such Person specifically for use therein; and provided
further, that the Company shall not be required to indemnify any
6
Person against any liability arising from any untrue or
misleading statement or omission contained in any preliminary
prospectus if such deficiency is corrected in the final
prospectus or for any liability which arises out of the failure
of any Person to deliver a prospectus as required by the
Securities Act regardless of any investigation made by or on
behalf of such Company - Indemnified Person and shall survive
transfer of such securities by such seller.
(b) Each holder of any Registrable Securities shall,
by acceptance thereof, indemnify and hold harmless each other
holder of any Registrable Securities, the Company, its directors
and officers, each underwriter and each other Person, if any, who
controls the Company or such underwriter (individually and
collectively the "Holder - Indemnified Person"), against any
liability, joint or several, to which any such Holder -
Indemnified Person may become subject under the Securities Act or
any other statute or at common law, insofar as such liability (or
actions in respect thereof) arises out of or is based upon
(i) any untrue statement or alleged untrue statement of any
material fact contained, on the effective date thereof, in any
registration statement under which securities were registered
under the Securities Act at the request of such holder, any
preliminary prospectus or final prospectus contained therein, or
any amendment or supplement thereto, or (ii) any omission or
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, in the case of (i) and (ii) to the extent, but only
to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in such
registration statement, preliminary or final prospectus,
amendment or supplement thereto in reliance upon and in
conformity with information furnished in writing to the Company
by such holder specifically for use therein. Such holder shall
reimburse any Holder - Indemnified Person for any legal fees
incurred in investigating or defending any such liability;
provided, however, that such holder's obligation's hereunder
shall be limited to an amount equal to the net proceeds to such
holder of the Registrable Securities sold in any such
registration; and provided further, that no holder of Registrable
Securities shall be required to indemnify any Person against any
liability arising from any untrue or misleading statement or
omission contained in any preliminary prospectus if such
deficiency is corrected in the final prospectus or for any
liability which arises out of the failure of any Person to
deliver a prospectus as required by the Securities Act.
(c) Indemnification similar to that specified in
Sections 8(a) and (b) above shall be given by the Company and
each holder of any Registrable Securities (with such
modifications as may be appropriate) with respect to any required
registration or other qualification of the Registrable Securities
under any federal or state law or regulation of governmental
authority other than the Securities Act.
(d) In the event the Company, any holder or any other
Person receives a complaint, claim or other notice of any
liability or action, giving rise to a claim for indemnification
under Sections 8(a), (b) or (c) above, the Person claiming
indemnification under such paragraphs (the "indemnified Person")
shall promptly notify the Person against whom indemnification is
sought (the "indemnifying Person") of such complaint, notice,
claim or action, and such indemnifying Person shall have the
right to investigate and defend any such loss, claim, damage,
liability or action. The indemnified Person shall have the right
to employ separate counsel in any such action and to participate
in the defense thereof but the fees and expenses of such counsel
7
shall not be at the expense of the indemnifying Person,
provided, however, that an indemnified Person shall have the
right to retain its own counsel, with the fees and expenses to be
paid by the indemnifying Person, if (a) the indemnifying Person
fails promptly to defend or (b) representation of such
indemnified Person by the counsel retained by the indemnifying
Person would be inappropriate due to actual or reasonably likely
differing interests between such indemnified Person and any other
party presented by such counsel in such proceeding. In no event
shall an indemnifying Person be obligated to indemnify any Person
for any settlement of any claim or action effected without the
indemnifying Person's prior written consent.
9. Rule 144 Reporting. With a view to making
available to the Holders the benefits of certain rules and
regulations of the SEC which may permit the sale of the
Registrable Securities to the public without registration, the
Company shall:
(a) Make and keep public information available, as
those terms and understood and defined in SEC Rule 144 or
any similar or analogous rule promulgated under the
Securities Act;
(b) File with the SEC, in a timely manner, all reports
and other documents required of the Company under the
Securities Act and the Exchange Act;
(c) So long as a Holder owns any Registrable
Securities, furnish to such Holder forthwith upon request:
a written statement by the Company as to its compliance with
the reporting requirements of said Rule 144 of the
Securities Act, and of the Exchange Act (at any time after
it has become subject to such reporting requirements); a
copy of the most recent annual or quarterly report of the
Company; and such other reports and documents as a Holder
may reasonably request in availing itself of any rule or
regulation of the SEC allowing it to sell any such
securities without registration.
10. Consent to be Bound. Each subsequent holder of
Warrants or Registrable Securities must consent in writing to be
bound by the terms and conditions of this Agreement in order to
acquire the rights granted pursuant to this Agreement.
11. Amendments. The provisions of this Agreement may be
amended, and the Company may take any action herein prohibited or
omit to perform any act herein required to be performed by it,
only if the Company has obtained the written consent of the
holders of a majority of the Registrable Securities.
12. Form S-3. The Company shall use its best efforts to
qualify and remain qualified to register securities on Form S-3
under the Securities Act. The holders of the Registrable
Securities shall have the right to request any number of
registrations on Form S-3, but not more than one (1) registration
on Form S-3 in any six-month period (such requests shall be in
writing and shall state the number of shares of Registrable
Securities desired to be registered). The Company shall not be
required to effect a registration pursuant to this Section 12 if,
8
in the good faith judgment of the Company, such registration will
hinder or interfere with a concurrent or proposed security
issuance of, or acquisition by, the Company or if the holder or
holders requesting registration propose to dispose of Registrable
Securities having an aggregate disposition price (before
deduction of underwriting discounts and expenses of sale) of less
than $500,000. This Section shall not be interpreted to restrict
the Company from acquiring its own shares or to require the
Company to sell its own shares. The Company shall give notice to
all holders of the Registrable Securities of the receipt of a
request for registration pursuant to this Section 12 and shall
provide a reasonable opportunity for other holders to participate
in the registration. Subject to the foregoing, the Company will
use its best efforts, in each case, to effect promptly the
registration of all shares of the Registrable Securities on
Form S-3 to the extent requested by the holder or holders thereof
for purposes of disposition.
13. Assignability of Registration Rights. Subject to
Section 10 hereof, the registration rights set forth in this
Agreement are assignable to each assignee as to each Warrant or
each share of Registrable Securities conveyed in accordance
herewith who agrees in writing to be bound by the terms and
conditions of this Agreement. The term "seller" as used in this
Agreement refers to a holder of the Registrable Securities
selling such shares.
14. Rights Which May Be Granted to Subsequent Investors.
The Company shall not grant subsequent registration rights to
third parties superior to the registration rights granted
pursuant to this Agreement so long as any of the registration
rights under this Agreement remain in effect.
15. Damages. The Company recognizes and agrees that each
holder of Registrable Securities will not have an adequate remedy
if the Company fails to comply with the terms and provisions of
this Agreement and that damages will not be readily
ascertainable, and the Company expressly agrees that, in the
event of such failure, it shall not oppose an application by any
holder of Registrable Securities or any other Person entitled to
the benefits of this Agreement requiring specific performance of
any and all provisions hereof or enjoining the Company from
continuing to commit any such breach of this Agreement.
16. Representations and Warranties of the Company. The
Company represents and warrants to the Holders as follows:
(a) The execution, delivery and performance of this
Agreement by the Company have been duly authorized by all requi
site corporate action and will not violate any provision of law,
any order of any court or other agency of government, the
Articles of Incorporation or Bylaws of the Company or any
provision of any indenture, agreement or other instrument to
which it or any or its properties or assets is bound, conflict
with, result in a breach of or constitute (with due notice or
lapse of time or both) a default under any such indenture,
agreement or other instrument or result in the creation or
imposition of any lien, charge or encumbrance of any nature
whatsoever upon any of the properties or assets of the Company.
9
(b) This Agreement has been duly and validly executed
and delivered by the Company and constitutes the legal, valid and
binding obligation of the Company, enforceable in accordance with
its terms.
17. Miscellaneous.
(a) All notices, requests, demands and other
communications provided for hereunder shall be in writing and
mailed (by first class registered or certified mail, postage
prepaid), telegraphed, sent by express overnight courier service
or electronic facsimile transmission (with a copy by mail), or
delivered to the applicable party at its address provided in the
Credit Agreement (if to any holder of Warrants or Registrable
Securities who is not a party to the Credit Agreement, at such
holder's address for notice as set forth in the books and records
of the Company), or, as to each of the foregoing, at such other
address as shall be designated by such Person in a written notice
to the other parties complying as to delivery with the terms of
this subsection (a). All such notices, requests, demands and
other communications shall, when mailed, telegraphed or sent,
respectively, be effective (i) three (3) days after being
deposited in the mails or (ii) one (1) day after being delivered
to the telegraph company, deposited with the express overnight
courier service or sent by electronic facsimile transmission,
respectively, addressed as aforesaid.
(b) This Agreement shall be governed by and construed
in accordance with the laws of the State of New Hampshire.
(c) This Agreement may be executed in two or more coun
terparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
(d) If any provision of this Agreement shall be held
to be illegal, invalid or unenforceable, such illegality,
invalidity or unenforceability shall attach only to such
provision and shall not in any manner affect or render illegal,
invalid or unenforceable any other provision of this Agreement,
and this Agreement shall be carried out as if any such illegal,
invalid or unenforceable provision were not contained herein.
[SIGNATURE PAGE FOLLOWS]
10
IN WITNESS WHEREOF, the parties hereto have caused this
Registration Rights Agreement to be duly executed as of the date
first set forth above.
WPI GROUP, INC.
By:/s/Xxxx X. Xxxxxx
-------------------- ----------------------
Witness Xxxx X. Xxxxxx
Vice President/Chief
Financial Officer
LENDERS:
FLEET BANK-NH
By:/s/Xxxx X. Xxxxx
-------------------- ----------------------
Witness Xxxx X. Xxxxx
Senior Vice President
BANK OF NEW HAMPSHIRE
By:/s/Xxxxx X. XxXxxx
-------------------- ---------------------
Witness Xxxxx X. XxXxxx
Vice President
SOVEREIGN BANK
By:/s/Xxxxxx X. Xxxxxxxx
--------------------- ----------------------
Witness Xxxxxxx X. Xxxxxxxx
Senior Vice President
FSC CORP., as Assignee of
BankBoston, N.A.
By:/s/Xxxx X. Xxxxxx
----------------------- -----------------------
Witness Xxxx X. Xxxxxx
KEY CORPORATE CAPITAL INC.
By:/s/Xxxxxxxxx Xxxxxxxxxx
----------------------- ------------------------
Witness Xxxxxxxxx Xxxxxxxxxx
Vice President
11
