exv4w2



 



Exhibit 4.2



     THIS WARRANT AND ANY SECURITIES ACQUIRED UPON THE EXERCISE OF THIS WARRANT
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“1933 ACT”), OR ANY STATE SECURITIES LAWS AND NEITHER THE SECURITIES NOR ANY
INTEREST THEREIN MAY BE OFFERED, SOLD, ASSIGNED, PLEDGED, TRANSFERRED OR
OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER SUCH ACT OR SUCH LAWS OR AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT
AND SUCH LAWS.







WMS INDUSTRIES INC.



COMMON STOCK PURCHASE WARRANT








     This certifies that, for good and valuable consideration, WMS Industries
Inc., a Delaware corporation (the “Company”), grants to HASBRO, INC. (“Hasbro”
or the “Warrantholder”), the right to subscribe for and purchase from the
Company 250,000 validly issued, fully paid and nonassessable shares (the
“Warrant Shares”) of the Company’s Common Stock, par value $0.50 per share (the
“Common Stock”), at the purchase price per share of $35.04 (the “Exercise
Price”), from time to time after vesting of the Warrant and before 5:00 PM
Eastern Standard Time on September 14, 2013 (the “Expiration Date”), all
subject to the terms, conditions and adjustments herein set forth.


     1. Duration and Exercise of Warrant; Limitation on Exercise; Payment of
Taxes.


          1.1. Vesting. The Warrant shall vest upon the earlier of:


                    1.1.1. with respect to 20% of the 250,000 Warrant Shares per year
commencing January 1, 2007 and continuing on each anniversary of January 1,
2007; or


                    1.1.2. with respect to 100% of the 250,000 Warrant Shares, or such portion
thereof as are then unvested, upon the earlier to occur of:


                         (a) delivery of notice from Hasbro and Hasbro International,
Inc. to WMS Gaming Inc. (“WMS Gaming”) of waiver of the “Extension
Royalty Requirement”, as such term is defined in that certain
License Agreement and License Agreement Summary dated September 1,
1997, as amended (the “License Agreement”), between Hasbro and
Hasbro International, Inc., on the one hand, and WMS Gaming, on the
other; or


 







 


                         (b) extension of the License Agreement by WMS Gaming for the
Second Extension Term (as such term is defined in the License
Agreement).


          1.2. Duration and Exercise of Warrant. Subject to the terms and
conditions set forth herein, the Warrant may be exercised, in whole or in part,
by the Warrantholder by:


                    1.2.1. the delivery of this Warrant to the Company, with a duly executed
Exercise Form attached as Exhibit A hereto specifying the number of Warrant
Shares to be purchased, prior to the Expiration Date; and


                    1.2.2. the delivery of payment to the Company, for the account of the
Company, by cash, by wire transfer of immediately available funds or by
certified or bank cashier’s check, of the Exercise Price for the number of
Warrant Shares specified in the Exercise Form in lawful money of the United
States of America. The Company agrees that such Warrant Shares shall be deemed
to be issued to the Warrantholder as the record holder of such Warrant Shares
as of the close of business on the date on which this Warrant shall have been
surrendered and payment made for the Warrant Shares as aforesaid.


          1.3. Conversion of Warrant.


                    1.3.1 Right to Convert. In addition to, and without limiting, the other
rights of the Warrantholder hereunder, the Warrantholder shall have the right
(the “Conversion Right”) to convert this Warrant or any part hereof into
Warrant Shares at any time and from time to time to the extent that this
Warrant has vested and prior to the Expiration Date. Upon exercise of the
Conversion Right, the Company shall deliver to the Warrantholder, without
payment by the Warrantholder of any Exercise Price or any cash or other
consideration, that number of Warrant Shares computed using the following
formula:



	 	X= Y (A-B)

—

A






	 	 	 
	Where:	 	
X= The number of Warrant Shares to be issued to the Holder
	 	 	 
	 	 	
Y= The number of Warrant Shares purchasable pursuant to this
Warrant or such lesser number of Warrant Shares as may be
selected by the Warrantholder
	 	 	 
	 	 	
A= The Fair Market Value (as defined in Section 6.1.6 of one Warrant Share
as of the Conversion Date
	 	 	 
	 	 	
B= The Exercise Price





                    1.3.2 Method of Conversion. The Conversion Right may be exercised
by the Warrantholder by the surrender of this Warrant to the Company, together
with a written statement (the “Conversion Statement”) specifying that the
Warrantholder intends to exercise the


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Conversion Right and indicating the number of Warrant Shares to be acquired
upon exercise of the Conversion Right. Such conversion shall be effective upon
the Company’s receipt of this Warrant, together with the Conversion Statement,
or on such later date as is specified in the Conversion Statement (the
“Conversion Date”) and, at the Warrantholder’s election, may be made contingent
upon the closing of the consummation of the sale of Common Stock pursuant to a
Registration Statement (as defined in Section 8.1 below). Certificates for the
Warrant Shares so acquired shall be delivered to the Holder within a reasonable
time, not exceeding three (3) Business Days after the Conversion Date. If
applicable, the Company shall, upon surrender of this Warrant for cancellation,
deliver a new Warrant evidencing the rights of the Warrantholder to purchase
the remaining Warrant Shares which new Warrant shall in all other respects be
identical to this Warrant. A “Business Day” is a day other than Saturday,
Sunday or a day on which national banks are authorized by law to close in the
State of Illinois.


          1.4. Warrant Shares Certificate. A stock certificate or certificates for
the Warrant Shares specified in the Exercise Form shall be delivered to the
Warrantholder within three (3) Business Days after receipt of the Exercise Form
and receipt of payment of the purchase price. If this Warrant shall have been
exercised only in part, the Company shall, at the time of delivery of the stock
certificate or certificates, deliver to the Warrantholder a new Warrant
evidencing the rights to purchase the remaining Warrant Shares, which new
Warrant shall in all other respects be identical to this Warrant.


          1.5. Payment of Taxes. The issuance of certificates for Warrant Shares
shall be made without charge to the Warrantholder for any stock transfer or
other issuance tax or other incidental expense of issuance; provided, however,
that the Warrantholder shall be required to pay any and all taxes which may be
payable in respect of any transfer involved in the issuance and delivery of any
certificate in a name other than that of the Warrantholder as reflected upon
the books of the Company.


     2. Warrantholder Representations and Warranties; Restrictions on Transfer;
Restrictive Legends.


          2.1. The Warrantholder represents and warrants that:


                    2.1.1. The Warrantholder (i) is acquiring the Warrants, and (ii) upon
exercise of the Warrants will acquire the Warrant Shares (the Warrants and
Warrant Shares collectively are referred to herein as the “Securities”) for its
own account for investment only and not with a view towards, or for resale in
connection with, the public sale or distribution thereof, except pursuant to
sales registered or exempted under the 1933 Act.


                    2.1.2. The Warrantholder is an “accredited investor” as that term is
defined in Rule 501(a)(3) of Regulation D under the 1933 Act.


                    2.1.3. The Warrantholder understands that the Securities are being offered
and sold to it in reliance on specific exemptions from the registration
requirements of the United States federal and state securities laws and that
the Company is relying upon the truth and accuracy of, and the Warrantholder’s
compliance with, the representations, warranties, agreements, acknowledgments
and understandings of Warrantholder set forth herein in order to


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determine the availability of such exemptions and the eligibility of
Warrantholder to acquire the Securities.


                    2.1.4. The Warrantholder has been furnished with all materials relating to
the business, finances and operations of the Company and materials relating to
the offer and sale of the Securities that have been requested by the
Warrantholder.


                    2.1.5. The Warrantholder understands that no United States federal or
state agency or any other government or governmental agency has passed on or
made any recommendation or endorsement of the Securities or the fairness or
suitability of the investment in the Securities nor have such authorities
passed upon or endorsed the merits of the offering of the Securities.


                    2.1.6. The Warrantholder understands that (i) the Securities have not been
and are, except as provided in Section 8 hereof, not being registered under the
1933 Act or any state securities laws, and may not be offered for sale, sold,
assigned, pledged or transferred or otherwise disposed of unless (A)
subsequently registered thereunder, (B) the Warrantholder shall have delivered
to the Company an opinion of counsel, in form and substance reasonably
acceptable to the Company, to the effect that such Securities to be sold,
assigned or transferred may be sold, assigned or transferred pursuant to an
exemption from such registration, or (C) the Warrantholder provides the Company
with reasonable assurance that such Securities can be sold, assigned or
transferred pursuant to Rule 144 promulgated under the 1933 Act (or a successor
rule thereto) (“Rule 144”); and (ii) any sale of the Securities made in
reliance on Rule 144 may be made only in accordance with the terms of Rule 144
and further, if Rule 144 is not applicable, any resale of the Securities under
circumstances in which the seller (or the person through whom the sale is made)
may be deemed to be an underwriter (as that term is defined in the 1933 Act)
may require compliance with some other exemption under the 1933 Act or the
rules and regulations of the Securities and Exchange Commission thereunder


                    2.1.7. The Warrantholder shall not sell, assign or otherwise transfer,
pledge or hypothecate all or part of this Warrant without the prior written
consent of the Company; provided that (x) any such sale, assignment or other
transfer by the Warrantholder of the Warrant in its entirety to an entity owned
or controlled by the Warrantholder (but only for so long as it remains so owned
or controlled and such entity agrees (i) to be bound by the terms and
conditions of this Warrant pursuant to an agreement reasonably acceptable to
the Company (“Assumption Agreement”) and (ii) to transfer this Warrant back to
the Holder if it ceases to be owned or controlled by the Holder), and (y) any
such sale, assignment or other transfer by the Warrantholder of the Warrant in
its entirety to the successor to the Warrantholder or substantially all of
Warrantholder’s assets or business in connection with (i) the merger,
consolidation or reorganization of the Warrantholder or (ii) the sale,
assignment, transfer or other disposition of all or substantially all of the
Warrantholder’s assets or business in one or more related transactions,
provided that any transferee described in this clause (y) executes an
Assumption Agreement, may be effected without any such consent.


                    2.1.8. Except as otherwise agreed to by the Company, each Warrant shall be
stamped or otherwise imprinted with a legend in substantially the following
form:


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                    THIS WARRANT AND ANY SECURITIES ACQUIRED UPON THE
EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
STATE SECURITIES LAWS AND NEITHER THE SECURITIES NOR
ANY INTEREST THEREIN MAY BE OFFERED, SOLD, ASSIGNED,
PLEDGED, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER SUCH ACT OR SUCH LAWS OR AN EXEMPTION FROM
REGISTRATION UNDER SUCH ACT AND SUCH LAWS.


Except as otherwise agreed to by the Company, each stock certificate for
Warrant Shares issued upon the exercise of any Warrant and each stock
certificate issued upon the direct or indirect transfer of any such Warrant
Shares shall be stamped or otherwise imprinted with a legend in substantially
the following form:


                    THE SECURITIES REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND
NEITHER THE SECURITIES NOR ANY INTEREST THEREIN MAY BE
OFFERED, SOLD, ASSIGNED, PLEDGED, TRANSFERRED OR
OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT OR SUCH LAWS OR
AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT AND SUCH
LAWS.


                    2.1.9 Except with respect to the restrictions set forth in Section 2.1.7
above, the restrictions imposed under this Section 2 upon the transferability
of the Warrant and the shares of Common Stock acquired upon the exercise of
this Warrant shall cease when (i) the Warrant Shares have been sold pursuant to
a registration statement that is effective under the 1933 Act, (ii) the Company
is presented with an opinion of counsel reasonably satisfactory to the Company
that such restrictions are no longer required in order to insure compliance
with the 1933 Act or with a Securities and Exchange Commission (“Commission”)
“no-action” letter stating that future transfers of such securities by the
transferor or the contemplated transferee would be exempt from registration
under the 1933 Act, or (iii) such securities may be transferred in accordance
with Rule 144(k). When such restrictions terminate, the Company shall, or
shall instruct its transfer agent to, promptly, and without expense to the
holder issue new securities in the name of the holder not bearing the legends
required under this Section 2.


                    2.1.10
At the Warrantholder’s option, this Warrant may be exchanged for
one or more other Warrants representing the right to purchase a like aggregate
number of shares of Common Stock upon surrender of such Warrant(s) to the
Company as is represented by this Warrant; provided, however, that this Warrant
shall not be exchanged for other Warrants unless each such new Warrant
represents the right to purchase at least 50,000 shares of Common Stock.
Whenever this Warrant is so surrendered to the Company for exchange, the
Company shall


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execute and deliver the Warrants which the Warrantholder is entitled to
receive. All Warrants issued upon any registration of transfer or exchange of
Warrants shall be the valid obligations of the Company, evidencing the same
rights, and entitled to the same benefits, as the Warrants surrendered upon
such registration of transfer or exchange. No service charge shall be made for
any exchange of this Warrant.


     3. Company Representations and Warranties.


     The Company hereby represents and warrants as follows:


          3.1. All Warrant Shares that are issued upon the exercise of this Warrant
will, upon issuance, be validly issued, fully paid, and nonassessable, not
subject to any preemptive rights, and free from all taxes, liens, security
interests, charges, and other encumbrances with respect to the issue thereof,
other than taxes with respect to any transfer occurring contemporaneously with
such issue.


          3.2. During the period within which this Warrant may be exercised, the
Company will at all times have authorized and reserved, and keep available free
from preemptive rights, a sufficient number of shares of Common Stock to
provide for the exercise of the rights represented by this Warrant.


          3.3. This Warrant has been duly authorized and executed by the Company and
is a valid and binding obligation of the Company enforceable in accordance with
its terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium or other laws of general application affecting the enforcement of
creditors’ rights.


          3.4. The execution, delivery and/or performance by the Company of this
Warrant shall not, by the lapse of time, the giving of notice or otherwise,
constitute a violation of any applicable law or a breach of any provision
contained in the Company’s Certificate of Incorporation or Bylaws or contained
in any agreement, instrument or document to which the Company is a party or by
which it is bound.


          3.5. No consent, approval, authorization or other order of any court,
regulatory body, administrative agency or other governmental body is required
for the valid issuance of the Warrant or for the performance of any of the
Company’s obligations hereunder, except in connection with listing of the
Warrant Shares on the New York Stock Exchange, which listing will be effected
in accordance with the rules and regulations of the New York Stock Exchange and
in connection with the registration of the Warrant Shares under the 1933 Act.


          3.6. The Company, at its expense, will take all such action as may be
necessary to assure that the Common Stock issuable upon the exercise of this
Warrant may be so issued without violation of any applicable law or regulation,
or of any requirements of any domestic securities exchange or automated
quotation system upon which any capital stock of the Company may be listed or
quoted, as the case may be. Such action by the Company may include, but not be
limited to, causing such shares to be duly registered or approved, listed or
quoted on relevant domestic securities exchanges or automated quotation
systems.


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     4. Loss or Destruction of Warrant.


     Upon receipt by the Company of evidence reasonably satisfactory to it of
the loss, theft, destruction or mutilation of this Warrant and, in the case of
loss, theft or destruction, of such indemnification as the Company may require,
and, in the case of such mutilation, upon surrender and cancellation of this
Warrant, the Company will execute and deliver a new Warrant of like tenor.


     5. Ownership of Warrant.


     The Company may deem and treat the person in whose name this Warrant is
registered as the holder and owner hereof (notwithstanding any notations of
ownership or writing thereon made by anyone other than the Company) for all
purposes and shall not be affected by any notice to the contrary.


     6. Certain Adjustments.


          6.1. The number of Warrant Shares purchasable upon the exercise of this
Warrant and the Exercise Price shall be subject to adjustment as follows:


                    6.1.1. Stock Dividends, etc. If at any time after the date of the
issuance of this Warrant (i) the Company shall fix a record date for the
issuance of any stock dividend payable in shares of Common Stock or (ii) the
number of shares of Common Stock shall have been increased by a subdivision or
split-up of shares of Common Stock, then, on the record date fixed for the
determination of holders of Common Stock entitled to receive such dividend or
immediately after the effective date of such subdivision or split up, as the
case may be, the number of shares to be delivered upon exercise of this Warrant
will be increased so that the Warrantholder will be entitled to receive the
number of shares of Common Stock that such Warrantholder would have owned
immediately following such action had this Warrant been exercised in full
immediately prior thereto, and the Exercise Price will be adjusted as provided
below in Section 6.1.5.


                    6.1.2. Combination of Stock. If the number of shares of Common Stock
outstanding at any time after the date of the issuance of this Warrant shall
have been decreased by a combination of the outstanding shares of Common Stock,
then, immediately after the effective date of such combination, the number of
shares of Common Stock to be delivered upon exercise of this Warrant will be
decreased so that the Warrantholder thereafter will be entitled to receive the
number of shares of Common Stock that such Warrantholder would have owned
immediately following such action had this Warrant been exercised in full
immediately prior thereto, and the Exercise Price will be adjusted as provided
below in Section 6.1.5.


                    6.1.3. Reorganization, Merger, etc. If any capital reorganization of the
Company, any recapitalization or reclassification of the Common Stock, any
consolidation of the Company with or merger of the Company with or into any
other person, or any sale or lease or other transfer of all or substantially
all of the assets of the Company to any other person (each, a “Transaction”),
shall be effected in such a way that the holders of Common Stock shall be
entitled to receive stock, other securities or assets (whether such stock,
other securities or assets are issued or distributed by the Company or another
person) with respect to or in exchange for


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Common Stock, then, upon exercise of this Warrant, the Warrantholder shall
have the right to receive the kind and amount of stock, other securities or
assets receivable upon such Transaction by a holder of the number of shares of
Common Stock that such Warrantholder would have been entitled to receive upon
exercise of this Warrant had this Warrant been exercised in full immediately
before such Transaction. This section shall apply to successive
reorganizations, reclassifications, recapitalizations, consolidations, mergers,
sales and transfers and to the stock or securities of any other corporation
that are at the time receivable upon the exercise of this Warrant.


                    6.1.4. Carryover. Notwithstanding any other provision of this Section
6.1, no adjustment shall be made to the number of shares of Common Stock to be
delivered to the Warrantholder (or to the Exercise Price) if such adjustment
represents less than 1% of the number of shares to be so delivered, but any
lesser adjustment shall be carried forward and shall be made at the time and
together with the next subsequent adjustment which together with any
adjustments so carried forward shall amount to 1% or more of the number of
shares to be so delivered.


                    6.1.5. Exercise Price Adjustment. Whenever the number of Warrant Shares
purchasable upon the exercise of this Warrant is adjusted as provided in this
Section 6, the Exercise Price payable upon the exercise of this Warrant shall
be adjusted by multiplying such Exercise Price immediately prior to such
adjustment by a fraction, of which the numerator shall be the number of Warrant
Shares purchasable upon the exercise of the Warrant immediately prior to such
adjustment, and of which the denominator shall be the number of Warrant Shares
purchasable immediately thereafter.


                    6.1.6. Antidilution Provisions.


                         (a) Definitions. For purposes of this Section 6.1.6 the following
definitions shall apply:


     “Common Stock Equivalents” shall mean Convertible Securities and rights
entitling the holder thereof to receive directly, or indirectly, additional
shares of Common Stock without the payment of any consideration by such holder
for such additional shares of Common Stock or
Common Stock Equivalents.


     “Common Stock Outstanding” shall mean the aggregate of all Common Stock
outstanding and all Common Stock issuable upon conversion of all outstanding
Convertible Securities and exercise of all options.


     “Convertible Securities” means evidences of indebtedness, shares of stock
or other securities which are convertible into or exchangeable for, with or
without payment of additional consideration, shares of Common Stock, either
immediately or upon the arrival of a specified date or the happening of a
specified event or both.


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     “Current Exercise Price” shall mean the Exercise Price immediately before
the occurrence of any event, which, pursuant to Section 6.1.6, causes an
adjustment to the Exercise Price.


     “Fair Market Value” means with respect to a share of Common Stock at any
date:


          (i) If shares of Common Stock are being sold pursuant to a public offering
under an effective registration statement under the 1933 Act which has been
declared effective by the Commission and Fair Market Value is being determined
as of the closing of the public offering, the “per share price to public”
specified for such shares in the final prospectus for such public offering;


          (ii) If shares of Common Stock are then listed or admitted to trading on
any national securities exchange or traded on any national market system and
Fair Market Value is not being determined as of the date described in clause
(i) of this definition, the closing price for the trading day immediately
preceding such date;


          (iii) If no shares of Common Stock are then listed or admitted to trading
on any national securities exchange or traded on any national market system or
being offered to the public pursuant to a registration described in clause (i)
of this definition, the average of the reported closing bid and asked prices
thereof on such date in the over-the-counter market as shown by the Nasdaq
Stock Market or, if such shares are not then quoted in such system, as
published by the National Quotation Bureau, Incorporated or any similar
successor organization, and in either case as reported by any member firm of
the New York Stock Exchange selected by the Company and reasonably acceptable
to the Warrantholder;


          (iv) If no shares of Common Stock are then listed or admitted to trading
on any national exchange or traded on any national market system, if no closing
bid and asked prices thereof are then so quoted or published in the
over-the-counter market and if no such shares are being offered to the public
pursuant to a registration described in clause (i) of this definition, the fair
value of a share of Common Stock shall be as determined by an investment bank
selected by Company with the approval of the Warrantholder (which approval
shall not be unreasonably withheld or delayed), the costs of such investment
banker to be paid by the Company.


                         (b) Adjustments to Exercise Price. The Exercise Price in effect from time
to time shall be subject to adjustment in certain cases as follows:


          (i) In case the Company shall at any time after the issue date of this
Warrant issue or sell any Common Stock or Common Stock Equivalent without
consideration, or for a consideration per share less than the then Fair Market
Value, then, and thereafter successively upon each such issuance or sale, the
Current Exercise Price shall simultaneously with such issuance or sale be
adjusted to an Exercise Price (calculated to the nearest cent) determined by
multiplying the Current Exercise Price in effect immediately prior to such
issuance or sale by a fraction, the numerator of which shall be the number of
shares of Common Stock Outstanding on such date of sale or issuance plus the
number of shares of Common Stock which the aggregate


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consideration received for the issuance or sale of such additional shares would
purchase at the Fair Market Value and the denominator of which shall be the
number of shares of Common Stock Outstanding immediately after the issuance or
sale.


               For the purposes of this subsection, the following provisions shall also
be applicable:


                    (A) Cash Consideration. In case of the issuance or sale of additional
Common Stock or Common Stock Equivalents for cash, the consideration received
by the Company therefor shall be deemed to be the amount of cash received by
the Company for such shares (or, if such shares are offered by the Company for
subscription, the subscription price, or, if such shares are sold to
underwriters or dealers for public offering without a subscription offering,
the initial public offering price), without deducting therefrom any
compensation or discount paid or allowed to underwriters or dealers or others
performing similar services or for any expenses incurred in connection
therewith.


                    (B) Non-Cash Consideration. In case of the issuance (otherwise than upon
conversion or exchange of Convertible Securities) or sale of additional Common
Stock, options or Convertible Securities for a consideration other than cash or
a consideration, a part of which shall be other than cash, the fair value of
such consideration as determined by the board of
directors of the Company in the good faith exercise of its business judgment,
irrespective of the accounting treatment thereof, shall be deemed to be the
value, for purposes of this section, of the consideration other than cash
received by the Company for such securities.


                    (C) Options and Convertible Securities. In case the Company shall in any
manner issue or grant any options or any Convertible Securities, the total
maximum number of shares of Common Stock issuable upon the exercise of such
options or upon conversion or exchange of the total maximum amount of such
Convertible Securities at the time such Convertible Securities first become
convertible or exchangeable shall (as of the date of issue or grant of such
options or, in the case of the issue or sale of Convertible Securities other
than where the same are issuable upon the exercise of options, as of the date
of such issue or sale) be deemed to be issued and to be outstanding for the
purpose of this section and to have been issued for the sum of the amount (if
any) paid for such options or Convertible Securities and the minimum amount (if
any) payable upon the exercise of such options or upon conversion or exchange
of such Convertible Securities at the time such Convertible Securities first
become convertible or exchangeable; provided that, subject to the provisions of
subsection (D) below, no adjustment or further adjustment of the Exercise Price
shall be made upon the actual issuance of (a) any such Common Stock or
Convertible Securities or upon the conversion or exchange of any such
Convertible Securities or the exercise of such options or (b) any Common Stock
issued or sold pursuant to conversion of any Convertible Securities or exercise
of any Options to the
extent outstanding on the date of issue of this Warrant.


                    (D) Change in Option Price or Conversion Rate. If the exercise price
provided for in any option referred to in subsection (C) above, or the rate at
which any Convertible Securities referred to in subsection (C) are convertible
into or exchangeable for shares of Common Stock shall change at any time (other
than under or by reason of provisions


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designed to protect against dilution), the Current Exercise Price in effect at
the time of such event shall forthwith be readjusted to the Exercise Price that
would have been in effect at such time had such options or Convertible
Securities still outstanding provided for such changed exercise price,
additional consideration or conversion rate, as the case may be, at the time
initially granted, issued or sold. If the exercise price provided for in any
such option referred to in subsection (C), or the additional consideration (if
any) payable upon the conversion or exchange of any Convertible Securities
referred to in subsection (C), or the rate at which any Convertible Securities
referred to in subsection (C) are convertible into or exchangeable for shares
of Common Stock, shall be reduced at any time under or by reason of provisions
with respect thereto designed to protect against dilution and such reduction
would trigger an adjustment under this section, 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 Security, the Current Exercise Price then
in effect hereunder shall, upon issuance of such shares of Common Stock, be
adjusted to such amount as would have obtained had such option or Convertible
Security never been issued and had adjustments been made only upon the issuance
of the shares of Common Stock actually delivered and for the consideration
actually received for such option or Convertible Security and the Common Stock.


                    (E) Termination of Option or Conversion Rights. In the event of the
termination or expiration of any right to purchase Common Stock under any
option or of any right to convert or exchange Convertible Securities, the
Current Exercise Price shall, upon such termination, be changed to the Exercise
Price that would have been in effect at the time of such
expiration or termination had such Option or Convertible Security, to the
extent outstanding immediately prior to such expiration or termination, never
been issued, and the shares of Common Stock issuable thereunder shall no longer
be deemed to be Common Stock Outstanding.


                    (F) Notwithstanding anything to the contrary set forth above, no
adjustment pursuant to this Section 6.1.6 shall be made for the issuance of
stock options or other securities of the Company issued to employees, directors
or consultants of the Company with the approval of, or pursuant to a plan
approved by, the Board of Directors of the Company; provided, however, that for
purposes of this Warrant, “consultant” shall mean (x) individuals who are
natural persons, and (y) provide bona fide services to the Company or its
subsidiaries, and (z) such services are not in connection with the offer or
sale of the Company’s securities in a capital raising transaction and do not
relate to the promotion or maintenance of a market for the Company’s
securities.


          6.2. Notice of Adjustments. Whenever the number of Warrant Shares or the
Exercise Price of such Warrant Shares is adjusted, as herein provided, the
Company shall promptly mail by first class, postage prepaid, to the
Warrantholder, notice of such adjustment or adjustments setting forth in
reasonable detail the number of Warrant Shares and the Exercise Price of such
Warrant Shares after such adjustment, a brief statement of the facts requiring
such adjustment, and the computation by which such adjustment was made.


          6.3. Extraordinary Corporate Events. If the Company, after the date
hereof, proposes to effect (i) any transaction described in Sections 6.1.1,
6.1.2 or 6.1.3 hereof, or (ii) a liquidation, dissolution or winding up of the
Company or (iii) any payment of a dividend or


11







 


distribution with respect to the Common Stock (other than a cash dividend
or distribution), then, in each such case, the Company shall mail to the
Warrantholder a notice describing such proposed action and specifying the date
on which the Company’s books shall close, or a record shall be taken, for
determining the holders of Common Stock entitled to participate in such action,
or the date on which such reorganization, reclassification, consolidation,
merger, sale, transfer, liquidation, dissolution or winding up shall take place
or commence, as the case may be, and the date as of which it is expected that
holders of Common Stock of record shall be entitled to receive securities
and/or other property deliverable upon such action, if any such date is to be
fixed. Such notice shall be mailed to the Warrantholder at least ten days prior
to the record date for any such action. The failure to give notice required by
this Section 6.3 or any defect therein shall be a breach of this Warrant but
shall not affect the legality or validity of the action taken by the Company or
the vote upon any such action. Unless specifically required by this Section 6,
the Exercise Price, the number of shares covered by each Warrant and the number
of Warrants outstanding shall not be subject to adjustment as a result of the
Company being required to give notice pursuant to this Section 6.3.


          6.4. No Impairment. The Company shall not, by amendment of the Charter or
through any reorganization, recapitalization, transfer of assets,
consolidation, merger, dissolution, issuance or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any
of the terms to be observed or performed hereunder by the Company, but shall at
all times in good faith assist in the carrying out of all the provisions of
this Section 6 and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the Warrantholder against
impairment.


     7. Fractional Shares. No fractional shares of Common Stock or scrip shall
be issued to any Warrantholder in connection with the exercise or conversion of
this Warrant. Instead of any fractional shares of Common Stock that would
otherwise be issuable to such Warrantholder, the Company will pay to such
Warrantholder a cash adjustment in respect of such fractional interest in an
amount equal to the product of such fractional interest and the Exercise Price
paid by the holder for its Warrant Shares upon such exercise.


     8. Piggyback Registration Rights.


          8.1. Registration Statements. If at any time the Company proposes to
register for its own account any of its Common Stock under the 1933 Act by
registration on any form other than Form S-4 or S-8 (even if other stockholders
will participate in such registration), it shall each such time give written
notice to the Warrantholder of its intention to do so at least 10 Business Days
prior to the initial filing of a registration statement or statements or
similar documents (the “Registration Statement”) for such registration. Upon
the written request of the Warrantholder, made within 5 Business Days after the
receipt of any such notice (which request shall specify the Warrant Shares
intended to be disposed of by the Warrantholder and the intended method of
disposition), the Company shall use its reasonable best efforts to effect the
registration under the 1933 Act of all the Warrant Shares that the Company has
been so requested to register by the Warrantholder to the extent required to
permit the disposition of such Warrant Shares in accordance with the intended
methods of disposition thereof described as aforesaid; provided, however, that,
in the case of an underwritten offering, prior to the effective date of the
registration statement filed in connection with such registration, immediately
upon


12







 


notification to the Company from the managing underwriter of the price at
which such securities are to be sold, if such price is below the price which
the Warrantholder shall have indicated to be acceptable to the Warrantholder,
the Company shall so advise the Warrantholder of such price, and the
Warrantholder shall then have the right to withdraw its request to have its
Warrant Shares included in such registration statement; provided further, that
if, at any time after giving written notice of its intention to register any
securities and prior to the effective date of the registration statement filed
in connection with such registration, the Company shall determine for any
reason not to register or to delay registration of such securities, the Company
may, at its election, give written notice of such determination to the
Warrantholder and the Company shall be relieved of its obligation to register
any Warrant Shares in connection with such registration (but not from any
obligation of the Company to pay the registration expenses in connection
therewith). The obligations of the Company to effect a registration pursuant
to this Section 8.1 shall continue until all of the Warrant Shares have been
sold or could immediately be sold pursuant to Rule 144(k) promulgated by the
Commission.


          8.2. Underwriter Holdback. If the managing underwriter of any
underwritten offering under this Section 8 shall inform the Company by letter
that, in its opinion, the number of Warrant Shares requested to be included in
such registration would adversely affect such offering, and the Company has so
advised the Warrantholder in writing, then the Company will include in such
registration, to the extent of the number that the Company is so advised can be
sold in (or during the time of) such offering, first, all securities proposed
by the Company to be sold for its own account, second, any holders with
contractual rights senior to the Warrantholder, third, the Warrant Shares
requested to be included in such registration pursuant to this Warrant and,
fourth, all other securities proposed to be registered.


          8.3. Obligations of the Company. In connection with the registration of
the Warrant Shares as contemplated by Section 8 the Company shall:


                    8.3.1. Following receipt of a written request from the Warrantholder under
Section 8.1 to register Warrant Shares with the SEC, prepare and file a
Registration Statement with respect to the securities to be sold by the Company
together with the Warrant Shares to be sold by the Warrantholder, and
thereafter use its reasonable commercial efforts to cause the Registration
Statement to become effective as soon as practicable, which Registration
Statement (including any amendments or supplements thereto and prospectuses
contained therein), in each case, shall not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein,
or necessary to make the statements therein, in light of the circumstances in
which they were made, not misleading:


                    8.3.2. Prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to the Registration Statement and
the prospectus used in connection with the Registration Statement as may be
necessary to keep the Registration Statement effective and to comply with the
provisions of the 1933 Act with respect to the disposition of all Warrant
Shares covered by the Registration Statement until the earlier to occur of (i)
such time as all of such Warrant Shares have been disposed of in accordance
with the intended methods of disposition by the Warrantholder as set forth in
the Registration Statement


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and (ii) the expiration of one year from the date the registration
statement is declared effective by the Securities and Exchange Commission;


                    8.3.3. Furnish to the Warrantholder (without charge to the Warrantholder)
such number of copies of a prospectus, including a preliminary prospectus and
all amendments and supplements thereto and such other documents, as the
Warrantholder may reasonably request in order to facilitate the disposition of
the Warrant Shares; the Company consents to the use of the prospectus and any
amendment or supplement thereto by the Warrantholder in connection with the
offering and the sale of the Warrant Shares covered by the prospectus or any
amendment or supplement thereto;


                    8.3.4. Use its reasonable commercial efforts to (a) register and qualify
the Warrant Shares covered by the Registration Statement under such securities
or Blue Sky laws of such jurisdictions as the Warrantholder reasonably
requests, (b) prepare and file in those jurisdictions all required amendments
(including post-effective amendments) and supplements, (c) take such other
reasonable actions as may be necessary to maintain such registrations and
qualifications in effect at all times the Registration Statement is in effect
and (d) take all other reasonable actions necessary or advisable to enable the
disposition of such securities in all such jurisdictions; provided, however,
that the Company shall not be required in connection therewith or as a
condition thereto to qualify to do business in any jurisdiction where it would
not otherwise be required to qualify but for this Section 8.3.4.


                    8.3.5. In the event of an underwritten offering, enter into and perform
its obligations under an underwriting agreement with the managing underwriter
of such offering, in usual and customary form, including, without limitation,
customary indemnification and contribution obligations, and in the case of any
non-underwritten offering, provide to broker-dealers participating in any
distribution of Warrant Shares reasonable indemnification.


                    8.3.6. Promptly (and in any event within two Business Days) notify the
Warrantholder of the happening of any event of which the Company has knowledge,
as a result of which the prospectus included in the Registration Statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances then existing, not
misleading, and use its reasonable commercial efforts to prepare promptly a
supplement or amendment to the Registration Statement to correct such untrue
statement or omission, and deliver a number of copies of such supplement or
amendment to the Warrantholder as such Warrantholder may reasonably request;


                    8.3.7. Promptly (and in any event within two Business Days) notify the
Warrantholder (and, in the event of an underwritten offering, the managing
underwriters) of the issuance by the Securities and Exchange Commission of any
stop order or other suspension of effectiveness of the Registration Statement,
and use its reasonable commercial efforts to obtain the withdrawal of any order
suspending the effectiveness of the Registration Statement;


                    8.3.8. Make available for inspection by the Warrantholder, any underwriter
participating in any disposition pursuant to the Registration Statement, and
any attorney, accountant, or other agent retained by the Warrantholder or
underwriter (collectively,


14







 


the “Inspectors”), all pertinent financial and other records, pertinent
corporate documents and properties of the Company, as shall be reasonably
necessary to enable each Inspector to exercise its due diligence
responsibility, and cause the Company’s officers, directors and employees to
supply all information reasonably requested by any such Inspector in connection
with the Registration Statement;


                    8.3.9. Use its reasonable commercial efforts either to (a) cause all the
Warrant Shares covered by the Registration Statement to be listed on a national
securities exchange and on each additional national securities exchange on
which similar securities issued by the Company are then listed, if any, if the
listing of such Warrant Shares is then permitted under the rules of such
exchange or, (b) if similar securities issued by the Company are not then
listed on a national securities exchange, cause all the Warrant Shares covered
by the Registration Statement to be listed or included for trading on the
exchange or quotation system on which similar securities issued by the Company
are then listed or traded; and


                    8.3.10. Promptly (and in any event within two Business Days) notify the
Warrantholder when the prospectus or any prospectus supplement or
post-effective amendment has been filed, and with respect to the Registration
Statement or any post-effective amendment thereto, when the same has become
effective.


                    8.3.11. Use its best efforts to comply with all applicable rules and
regulations of the Commission, and make available to its securityholders, to
the extent required, as soon as reasonably practicable, an earnings statement
covering the period of at least twelve months, but not more than eighteen
months, beginning with the first month after the effective date of the
Registration Statement, which earnings statement shall satisfy the provisions
of Section 11(a) of the Securities Act;


          8.4. Obligations of the Warrantholder. It shall be a condition precedent
to the obligations of the Company to take any action pursuant to this Warrant
that the Warrantholder shall comply with its obligations under this Warrant,
including this Section 8.4.


                    8.4.1. The Warrantholder shall furnish to the Company such information
regarding itself, the Warrant Shares and the intended method of disposition of
the Warrant Shares as shall be reasonably required to effect the registration
of the Warrant Shares and shall execute such documents and agreements in
connection with such registration as the Company may reasonably request, all in
a timely manner so as to enable the Company to comply with its obligations
hereunder. Concurrent with the notice delivered pursuant to Section 8.1 above,
the Company shall notify the Warrantholder of the information the Company
requires from the Warrantholder (the “Requested Information”) if the
Warrantholder elects to have any of its Warrant Shares included in the
Registration Statement. If within 5 Business Days of the notice delivered by
the Company pursuant to Section 8.1 above, the Company has not received the
Requested Information from the Warrantholder and the Company has properly
notified the Warrantholder in accordance with the preceding sentence, then the
Company may file the Registration Statement without including Warrant Shares.


                    8.4.2. The Warrantholder, by its acceptance of the Warrant Shares agrees
to cooperate with any reasonable request made by the Company in connection with
the


15







 


preparation and filing of any registration statement hereunder which
includes the Warrant Shares.


                    8.4.3. In the event of an underwritten offering, the Warrantholder agrees
to enter into and perform its obligations under any underwriting agreement, in
usual and customary form, including, without limitation, customary
indemnification and contribution obligations, with the managing underwriter of
such offering and take such other actions as are reasonable required in order
to expedite or facilitate the disposition of the Warrant Shares.


                    8.4.4. The Warrantholder agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section 8.3.6,
the Warrantholder will immediately discontinue disposition of Warrant Shares
pursuant to the Registration Statement covering such Warrant Shares until the
Warrantholder’s receipt of the copies of the supplemented or amended prospectus
contemplated by Section 8.3.6 and, if so directed by the Company, the
Warrantholder shall deliver to the Company (at the expense of the Company) or
destroy (and deliver to the Company a certificate of such destruction ) all
copies, other than permanent file copies then in the Warrantholder’s
possession, of the prospectus covering Warrant Shares at the time of receipt of
such notice; and


                    8.4.5. The Warrantholder may not participate in any underwritten
registration hereunder unless the Warrantholder (a) agrees to sell such Warrant
Shares on the basis provided in any underwriting arrangements (b) completes and
executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents reasonably required under the terms of such
underwriting arrangements and (c) agrees to pay the Warrantholder’s pro rata
portion of all underwriting discounts and commissions.


          8.5. Expenses of Registration. All expenses (other than underwriting
discounts and commissions and fees and disbursements of any counsel retained by
the Warrantholder) incurred in connection with registration, filings or
qualifications pursuant to Section 8 including, without limitation, all
registration, listing, filing and qualification fees, printers and accounting
fees, and the fees and disbursements of counsel for the Company shall be borne
by the Company.


          8.6. Indemnification. In the event any Warrant Shares are included in a
Registration Statement under this Agreement:


                    8.6.1. To the extent permitted by law, the Company will indemnify and hold
harmless the Warrantholder, each person, if any, who controls the
Warrantholder, any underwriter (as defined in the Securities Act) for the
Warrantholder, and each person, if any, who controls any such underwriter
within the meaning of the 1933 Act or the Securities Exchange Act of 1934, as
amended (the “Exchange Act”) (each, an “Indemnified Holder”), against any
losses, claims, damages, expenses, liabilities (joint or several)
(collectively, “Claims”) to which any of them may become subject under the 1933
Act, the Exchange Act or otherwise, insofar as such Claims (or actions or
proceedings, whether commenced or threatened, in respect thereof) arise out of
or are based upon any of the following statements, omissions of violations
(collectively a “Violation”): (a) any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement or any
post-effective amendment thereof, or the omission or alleged omission to state
therein a material fact required to be stated therein or


16







 


necessary to make the statements therein not misleading, (b) untrue
statement or alleged untrue statement of a material fact contained in any
preliminary prospectus if used prior to the effective date of such Registration
Statement, or contained in the final prospectus (as amended or supplemented if
the Company files any amendment thereof or supplement thereto with the
Securities and Exchange Commission), or the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading, or (c) any violation or alleged violation by
the Company of the 1933 Act, the Exchange Act, any state securities law, or any
rule or regulation promulgated under the 1933 Act, the Exchange Act, or any
state securities law. Subject to the restrictions set forth in Section 8.6.3,
with respect to the number of legal counsel, the Company shall reimburse
Warrantholder and each such underwriter or controlling person, promptly as such
expenses are incurred and are due and payable, for any legal fees or other
reasonable expenses incurred by them in connection with investigating or
defending any such Claim, whether or not such claim, investigation or
proceeding is brought or initiated by the Company or a third party.
Notwithstanding anything to the contrary contained herein, the indemnification
agreement contained in this Section 8.6(x) shall not apply to a Claim arising
out of or based upon a Violation which occurs solely in reliance upon and in
conformity with information furnished in writing to the Company by any
Indemnified Holder expressly for use in connection with the preparation of the
Registration Statement or any such amendment thereof or supplement thereto; and
(y) shall not apply to amounts paid in settlement of any Claim if such
settlement is effected without the prior written consent of the Company, which
consent shall not be unreasonably withheld.


                    8.6.2. In connection with any Registration Statement in which the
Warrantholder is participating, the Warrantholder agrees to indemnify and hold
harmless, to the same extent and in the same manner set forth in Section 8.6.1,
the Company, each of its directors, each of its officers who sign the
Registration Statement, each person, if any, who controls the Company within
the meaning of the 1933 Act or the Exchange Act, any underwriter and any other
stockholder selling securities pursuant to the Registration Statement or any of
its directors or officers or any person who controls such stockholder or
underwriter (collectively and together with an Indemnified Holder, an
“Indemnified Party”), against any Claim to which any of them may become
subject, under the 1933 Act, the Exchange Act or otherwise, insofar as such
Claim arises out of or is based upon any Violation, in each case to the extent
(and only to the extent) that such Violation occurs solely in reliance upon and
in conformity with written information furnished to the Company by the
Warrantholder expressly for use in connection with such Registration Statement;
and the Warrantholder will reimburse any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such Claim;
provided, however, that the indemnity agreement contained in this Section 8.6.2
shall not apply to amounts paid in settlement of any Claim if such settlement
is effected without the prior written consent of such Warrantholder, which
consent shall not be unreasonably withheld.


                    8.6.3. Promptly after receipt by an Indemnified Party under Section 8.6 of
notice of the commencement of any action (including any governmental action),
such Indemnified Party shall, if a Claim in respect thereof is to be made
against any indemnifying party under Section 8.6, deliver to the indemnifying
party a written notice of the commencement thereof, and the indemnifying party
shall have the right to participate in, and, to the extent the indemnifying
party so desires, jointly with any other indemnifying party similarly noticed,
to


17







 


assume control of the defense thereof with counsel satisfactory to the
Indemnified Parties; provided, however, that an Indemnified Party shall have
the right to retain its own counsel, with the fees and expenses to be paid by
the indemnifying party, if, in the reasonable opinion of counsel for the
Indemnified Party, representation of such Indemnified Party by the counsel
retained by the indemnifying party would be inappropriate due to actual or
potential differing interests between such Indemnified Party and any other
party represented by such counsel in such proceeding. The Company shall pay
for only one legal counsel for the Warrantholder. The failure by an
Indemnified Party to deliver written notice to the indemnifying party within a
reasonable time of the commencement of any such action shall not relieve such
indemnifying party of any liability to the Indemnified Party under Section 8.6,
except to the extent that such failure to notify results in the forfeiture by
the indemnifying party or substantive rights or defenses. The indemnification
required by Section 8.6 shall be made by periodic payments of the amount
thereof during the course of the investigation or defense, as such expense,
loss, damage or liability is incurred and is due and payable.


          8.7. Contribution. To the extent any indemnification by an indemnifying
party is prohibited or limited by law, the indemnifying party agrees to make
the maximum contribution with respect to any amounts for which it would
otherwise be liable under Section 8.6 to the fullest extent permitted by law.


          8.8. Transfer Of Registration Rights. The right to sell Warrant Shares
pursuant to the Registration Statement described herein will automatically be
assigned to each transferee of the Warrant or Warrant Shares permitted under
the terms of this Warrant. In the event that it is necessary, in order to
permit a Warrantholder to sell Warrant Shares pursuant to the Registration
Statement, to supplement or amend the Registration Statement to name such
Warrantholder, such Warrantholder shall upon written notice to the Company, be
entitled to have the Company make such amendment or supplement as soon as
reasonably practicable.


     9. Miscellaneous.


          9.1. Entire Agreement. This Warrant constitutes the entire agreement
between the Company and the Warrantholder with respect to the subject matter
hereof.


          9.2. Binding Effects; Benefits. This Warrant shall inure to the benefit
of and shall be binding upon the Company and the Warrantholder and their
respective heirs, legal representatives, successors and assigns. Nothing in
this Warrant, expressed or implied, is intended to or shall confer on any
person other than the Company and the Warrantholder, or their respective heirs,
legal representatives, successors or assigns, any rights, remedies, obligations
or liabilities under or by reason of this Warrant. Except as otherwise set
forth herein, this Warrant may not be assigned, sold, pledged, transferred or
otherwise disposed of by the Warrantholder without the prior written consent of
the Company.


          9.3. Section and Other Headings. The section and other headings contained
in this Warrant are for reference purposes only and shall not be deemed to be a
part of this Warrant or to affect the meaning of interpretation of this
Warrant.


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          9.4. Pronouns. All pronouns and any variations thereof refer to the
masculine, feminine or neuter, singular or plural, as the context may require.


          9.5. Further Assurances. Each of the Company and the Warrantholder shall
do and perform all such further acts and things and execute and deliver all
such other certificates, instruments and documents as the Company or the
Warrantholder may, at any time and from time to time, reasonably request in
connection with the performance of any of the provisions of this Warrant.


          9.6. Notices. All notices and other communications required or permitted
to be given under this Warrant shall be in writing and shall be deemed to have
been duly given if delivered personally or sent by United States mail or
overnight courier, postage prepaid, to the parties hereto at the following
addresses or to such other address as any party hereto shall hereafter specify
by notice to the other party hereto:



	 	 	 	 	 
	 	 	
(a)
	 	if to the Company, addressed to:
	 	 	 	 	 
	 	 	 	 	WMS Industries Inc.
	 	 	 	 	800 S. Northpoint Blvd.
	 	 	 	 	Waukegan, Il 60085
	 	 	 	 	Attention: Executive Vice President and Chief Financial Officer
	 	 	 	 	 
	 	 	 	 	With a copy to:
	 	 	 	 	 
	 	 	 	 	WMS Industries Inc.
	 	 	 	 	800 S. Northpoint Blvd.
	 	 	 	 	Waukegan, IL 60085
	 	 	 	 	Attention: Vice President, General Counsel and Secretary
	 	 	 	 	 
	 	 	
(b)
	 	if to the Warrantholder, addressed to:
	 	 	 	 	 
	 	 	 	 	Hasbro, Inc.
	 	 	 	 	1011 Newport Avenue
	 	 	 	 	Pawtucket, RI 02862
	 	 	 	 	Attn: General Counsel
	 	 	 	 	 
	 	 	 	 	With a copy to:
	 	 	 	 	 
	 	 	 	 	Hasbro, Inc.
	 	 	 	 	1011 Newport Avenue
	 	 	 	 	Pawtucket, RI 02862
	 	 	 	 	Attn: President, Hasbro Properties Group





Except as otherwise provided herein, all such notices and communications shall
be deemed to have been received on the date of delivery thereof, if delivered
personally, on the next Business


19







 


Day if sent by overnight courier, or on the third Business Day after the
mailing thereof if sent by U.S. mail.


          9.7. Separability. Any term or provision of this Warrant which is invalid
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the terms and provisions of this Warrant or
affecting the validity or enforceability of any of the terms or provisions of
this Warrant in any other jurisdiction.


          9.8. Governing Law. This Warrant shall be deemed to be a contract made
under the laws of Delaware and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to such
agreements made and to be performed entirely within such State.


          9.9. No Rights or Liabilities as Stockholder. Nothing contained in this
Warrant shall be determined as conferring upon the Warrantholder any rights as
a stockholder of the Company or as imposing any liabilities on the
Warrantholder to purchase any securities whether such liabilities are asserted
by the Company or by creditors or stockholders of the Company or otherwise.


     IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
its duly authorized officer.



	 	 	 	 	 	 	 
	 	 	WMS INDUSTRIES INC
	 	 	 	 	 	 	 
	 	 	
By:
	 	/s/ Orrin J. Edidin	 	 
	 	 	 	 	
	 	 
	 	 	 	 	Name: Orrin J. Edidin	 	 
	 	 	 	 	Title: Executive Vice President and Chief Operating Officer	 	 





Dated: September 15, 2003


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Exhibit A



EXERCISE FORM


     (To be executed upon exercise of this Warrant)


     The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant, to purchase                 of the Warrant Shares and
herewith tenders payment for such Warrant Shares to the order of
                in the amount of $               . The undersigned requests
that a certificate for such Warrant Shares be registered in the name of
                and that such certificates be delivered to                 whose
address is                                              .



	 	 	 
	Dated:	 	 
	 	 	








	 	 	 	 	 
	 	 	
Signature	 	 
	 	 	 	 	

	 	 	 	 	 
	 	 	 	 	

	 	 	 	 	(Print Name)
	 	 	 	 	 
	 	 	 	 	

	 	 	 	 	(Street Address)
	 	 	 	 	 
	 	 	 	 	

	 	 	 	 	(City)            (State)            (Zip Code)





Signed in the Presence of:









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