Document:

ex10_6.htm

EXHIBIT 10.6

 

 EXECUTION COPY

 

 

WARRANT AGREEMENT

dated as of

March 9, 2012,

by and among

PULSE ELECTRONICS CORPORATION

(formerly known as TECHNITROL, INC.)

 

and

THE HOLDERS FROM TIME TO TIME

 

OF THE WARRANTS ISSUED HEREUNDER

 

  

  

  

 

TABLE OF CONTENTS

 

	 Page
	 
	ARTICLE I
	 
	Definitions
	 
	ARTICLE II
	 
	Issuance and Exercise of Warrants
	 

	
SECTION 2.01.

	
Issuance of Warrants; Manner of Exercise; Vesting

	
6

	
SECTION 2.02.

	
When Exercise Effective

	
7

	
SECTION 2.03.

	
Delivery of Stock Certificates, etc.; Charges, Taxes and Expenses

	
7

 

	ARTICLE III
	 
	Adjustments and Other Rights
	 	 	 
	
SECTION 3.01.

	
Adjustments

	
8

	
SECTION 3.02.

	
Stock Splits, Subdivisions, Distributions of Common Stock, Reclassifications or Combinations

	
8

	
SECTION 3.03.

	
Rights, Options or Warrants Issue

	
9

	
SECTION 3.04.

	
Adjustments for Other Distributions

	
10

	
SECTION 3.05.

	
Adjustment for Cash Dividends

	
11

	
SECTION 3.06.

	
Adjustment for Tender Offer

	
12

	
SECTION 3.07.

	
Statement Regarding Adjustments

	
13

	
SECTION 3.08.

	
De Minimis Adjustments; Rounding of Calculations

	
13

	SECTION 3.09.	Abandoned Dividend or Distribution	13 

 

	ARTICLE IV
	 	 	 
	Consolidation, Merger, Etc.
	 
	
SECTION 4.01.

	
Adjustments for Consolidation, Merger, Sale of Assets, Reorganization, etc

	
14

	
SECTION 4.02.

	
Assumption of Obligations

	
14

	 	 	 
	ARTICLE V
	 	 	 
	Other Dilutive Events
	 	 	 

 

  

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	ARTICLE VI
	 
	No Dilution or Impairment
	 
	ARTICLE VII
	 
	Notices of Corporate Action
	 
	ARTICLE VIII
	 
	Listing of Common Stock
	 
	ARTICLE IX
	 
	Private Placement; Restrictions on Transfer
	 

	
SECTION 9.01.

	
Private Placement Representations

	
17

	
SECTION 9.02.

	
Private Offering by the Company

	
17

	
SECTION 9.03.

	
Restrictive Legends

	
17

	
SECTION 9.04.

	
Transfers to Comply With the Securities Act

	
19

	
SECTION 9.05.

	
Termination of Restrictions

	
19

	
SECTION 9.06.

	
Rule 144

	
20

 

	ARTICLE X
	 
	Reservation of Stock, Etc.
	 
	ARTICLE XI
	 
	Registration and Transfer of Warrant, Etc.

 

	
SECTION 11.01.

	
Warrant Register; Ownership of Warrant

	
21

	
SECTION 11.02.

	
Transfer of Warrant

	
21

	
SECTION 11.03.

	
Replacement of Warrant

	
21

	
SECTION 11.04.

	
Fractional Shares

	
21

	ARTICLE XII
	 	 	 
	 Miscellaneous

 

	
SECTION 12.01.

	
Remedies; Specific Performance

	
22

	
SECTION 12.02.

	
No Rights or Liabilities as Shareholder

	
22

	
SECTION 12.03.

	
Notices

	
22

	
SECTION 12.04.

	
Amendments

	
23

	
SECTION 12.05.

	
Descriptive Headings, Etc

	
23

	
SECTION 12.06.

	
Governing Law

	
23

	
SECTION 12.07.

	
Jurisdiction; Consent to Service of Process

	
23

 

  

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SECTION 12.08.

	
Waiver of Jury Trial

	
24

	
SECTION 12.09.

	
Successors and Assigns

	
24

	
SECTION 12.10.

	
Registration Rights Agreement

	
25

	
SECTION 12.11.

	
Mandatory Exercise Upon Change of Control Transactions

	
25

	
SECTION 12.12.

	
Call Option

	
25

 

SCHEDULES

Schedule A  -- Initial Holders and Initial Number of Shares

EXHIBITS

Exhibit A  -- Form of Warrant

Exhibit B  -- Form of Election to Purchase Shares

Exhibit C  -- Form of Assignment

 

  

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WARRANT AGREEMENT (this “Agreement”) dated as of March 9, 2012, by and among PULSE ELECTRONICS CORPORATION (formerly known as TECHNITROL, INC.), a Pennsylvania corporation (the “Company”), and each holder of Warrants (as defined below) who is or may from time to time become a party hereto (collectively, the “Holders”).

 

WHEREAS, in connection with the execution and delivery of the Third Amendment Agreement dated as of the date hereof, among the Company, the Subsidiaries of the Company party thereto, the lenders party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer (the “Third Amendment Agreement”), relating to the Credit Agreement (as defined herein), and to induce such lenders to enter into the Third Amendment Agreement, the Company has agreed to issue and deliver warrants (the “Warrants”) to purchase up to an aggregate of 2,728,733 shares, subject to adjustment, of its common stock, par value $0.125 per share (“Common Stock”).

 

WHEREAS, the Company and the Holders wish to set forth herein the terms of the Warrants and certain agreements relating to, among other things, the exercise and transfer of the Warrants.

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

 

ARTICLE I

 

Definitions

 

As used in this Agreement, the following terms shall have the following meanings:

 

“Applicable Number of Shares” shall mean, at any date of determination with respect to any Warrant, a number of shares of Common Stock equal to the difference between (a) the Initial Number of Shares with respect to such Warrant to the extent it has vested pursuant to Section 2.01(c), less (b) the number of shares of Common Stock which were previously issued pursuant to the exercise of such Warrant, as determined immediately prior to such date (giving effect to any stock splits or combinations, or any dividends paid or payable in shares of Common Stock, after the issuance of such shares).

 

“Business Day” shall mean any day other than a Saturday or a Sunday or a day on which commercial banking institutions in the City of New York are authorized by law to be closed.  Any reference to “days” (unless Business Days are specified) shall mean calendar days.

 

  

 

  

 

“Call Date” shall have the meaning assigned to it in Section 12.12 of this Agreement.

 

“Call Notice” shall have the meaning assigned to it in Section 12.12 of this Agreement.

 

“Call Option” shall have the meaning assigned to it in Section 12.12 of this Agreement.

 

“Change of Control Transaction” shall mean any transaction described in clause (a) or (b) of Section 4.01 as a result of which at least 50% ownership of the Company is transferred to another person or any transaction described in clause (c) of Section 4.01, in each case that would result in an adjustment pursuant to Section 4.01 to the number of shares of Common Stock issuable pursuant to the exercise of the Warrants.

 

“Commission” shall mean the Securities and Exchange Commission or any successor agency having jurisdiction to enforce the Securities Act.

 

“Common Stock” shall have the meaning assigned to it in the introduction to this Agreement, such term to include any capital stock into which the Common Stock shall have been changed or any capital stock resulting from any reclassification of such Common Stock, and all other capital stock of any class or classes (however designated) of the Company the holders of which have the right, without limitation as to amount, either to all or to a share of the balance of current dividends and liquidating dividends after the payment of dividends and distributions on any shares entitled to preference.

 

“Company” shall have the meaning assigned to it in the introduction to this Agreement, such term to include any corporation or other entity which shall succeed to or assume the obligations of the Company hereunder in compliance with Article IV.

 

“Credit Agreement” shall mean the Credit Agreement dated as of February 28, 2008, as amended and restated as of February 19, 2009, as further amended and restated as of August 5, 2011 and as further amended and restated as of the date hereof (as amended, supplemented or otherwise modified from time to time) among the Company, the subsidiaries of the Company party thereto, the lenders party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer.

 

“Credit Agreement Discharge Date” shall mean the date on which (i) all the outstanding Loan Documents Obligations (including all L/C Disbursements, if any) have been paid in full in cash, (ii) the Lenders have no further commitment to lend under the Credit Agreement and (iii) the L/C Issuers have no further obligation to issue or amend Letters of Credit under the Credit Agreement and no Letter of Credit is outstanding.  Capitalized terms used in this definition have the meanings assigned to them in the Credit Agreement.

 

  

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“Current Market Price” shall mean, on any date specified herein with respect to any security, the average of the daily Market Price during the ten consecutive trading days before such date, except that, if on any such date such security is not listed or admitted for trading on any national securities exchange or quoted in the over-the-counter market, the Current Market Price shall be the Market Price on such date.

 

“Effective Date” shall mean June 28, 2012.

 

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended from time to time, and the rules and regulations thereunder, or any successor statute.

 

“Ex-Date” shall mean with respect to any issuances of or, dividends or distributions on the Common Stock, the first date on which shares of the Common Stock trade on the applicable exchange or in the applicable market, regular way, without the right to receive the issuance, dividend or distribution in question, from the Company or, if applicable, from the seller of the Common Stock on such exchange or market (in the form of due bills or otherwise) as determined by such exchange or market.

 

“Exercise Price” shall mean the Initial Price, as adjusted from time to time as provided herein.

 

“Expiration Date” shall mean the third anniversary of the date of this Agreement.

 

“Fair Value” shall mean, on any date specified herein (i) in the case of cash, the dollar amount thereof, (ii) in the case of a security, the Market Price, and (iii) in all other cases, the fair value thereof (as of a date which is within 20 days of the date as of which the determination is to be made) determined in good faith jointly by the Company and a Majority of the Holders; provided, however, that if such parties are unable to reach agreement within a reasonable period of time, the Fair Value shall be determined in good faith, by an independent investment banking firm selected jointly by the Company and a Majority of the Holders or, if that selection cannot be made within ten days, by an independent investment banking firm selected by the American Arbitration Association in accordance with its rules, and provided further, that the Company shall pay all of the fees and expenses of any third parties incurred in connection with determining the Fair Value.

 

“FINRA” shall mean the Financial Industry Regulatory Authority.

 

“Holder” shall have the meaning assigned to it in the introduction to this Agreement.

 

“Initial Dividend Threshold” shall have the meaning assigned to it in Section 3.05 of this Agreement.

 

“Initial Holders” shall mean the Holders listed on Schedule A.

 

  

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“Initial Number of Shares” shall mean (a) with respect to any Warrant issued to an Initial Holder as of the date hereof, the number of shares of Common Stock set forth on Schedule A hereto opposite such Initial Holder’s name and (b) with respect to any Warrant or Warrants issued in exchange for, or as a result of the transfer of, a Warrant, the number of shares of Common Stock represented by the Warrant so exchanged or transferred (after giving effect to such exchange or transfer), in each case as adjusted from time to time as provided herein and subject to the vesting provisions set forth in Section 2.01(c).

 

“Initial Price” shall mean $0.01.

 

“Majority of the Holders” shall mean, as of any date, the Holders of any Warrants issued pursuant to this Agreement who shall be entitled as of such date, upon exercise of their Warrants, to purchase more than 50% of all shares of Common Stock then issuable under all such Warrants.

 

“Market Price” shall mean, on any date specified herein with respect to any security, an amount equal to (a) the last reported sale price of such security, regular way, on such date or, in case no such sale takes place on such date, the average of the closing bid and asked prices thereof regular way on such date, in either case as officially reported on the principal national securities exchange on which such security is then listed or admitted for trading, (b) if such security is not then listed or admitted for trading on any national securities exchange but is designated as a national market system security by FINRA, the last reported trading price of such security on such date, (c) if there shall have been no trading on such date or if such security is not so designated, the average of the closing bid and asked prices of such security on such date as shown by FINRA automated quotation system, or (d) if such security is not then listed or admitted for trading on any national exchange or quoted in the over-the-counter market, the fair value thereof (as of a date which is within 20 days of the date as of which the determination is to be made) determined in good faith jointly by the Company and a Majority of the Holders; provided, however, that if such parties are unable to reach agreement within a reasonable period of time, the Market Price shall be determined in good faith by an independent investment banking firm selected jointly by the Company and a Majority of the Holders or, if that selection cannot be made within ten days, by an independent investment banking firm selected by the American Arbitration Association in accordance with its rules, and provided further, that the Company shall pay all of the fees and expenses of any third parties incurred in connection with determining the Market Price.

 

“Notice” shall have the meaning assigned to it in Section 2.01(b) of this Agreement.

 

“Offer Expiration Date” shall have the meaning assigned to it in Section 3.06 of this Agreement.

 

“Other Securities” shall mean any capital 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, upon 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 Articles III, IV or V or otherwise.

 

  

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“person” shall mean any individual, firm, partnership, corporation, trust, joint venture, association, joint stock company, limited liability company, unincorporated organization or any other entity or organization, including a government or agency or political subdivision thereof, and shall include any successor (by merger or otherwise) of such entity.

 

“Purchase Price” shall mean an amount equal to the product of (x) the Exercise Price and (y) the number of shares of Common Stock to be issued upon the exercise of a Warrant.

 

“Registration Rights Agreement” means that certain Warrant Shares Registration Rights Agreement, dated as of the date hereof, by and between the Company and the Holders, as may be amended from time to time.

 

“Securities Act” shall mean the Securities Act of 1933, as amended from time to time, and the rules and regulations thereunder, or any successor statute.

 

“Spin-Off” shall have the meaning assigned to it in Section 3.04(b) of this Agreement.

 

“Subsidiary” means with respect to any person, any corporation, association or other business entity of which more than 50% of the outstanding voting securities is owned, directly or indirectly, by, or, in the case of a partnership, the sole general partner or the managing partner or the only general partners of which are, such person or one or more Subsidiaries of such person (or a combination thereof).

 

“Warrants” shall have the meaning assigned to it in the preamble to this Agreement.

 

“Warrant Shares” shall mean (a) any shares of Common Stock (or Other Securities) issued or issuable upon the exercise of Warrants and (b) any shares of Common Stock (or Other Securities) issued subsequent to the exercise of any of the Warrants as a dividend or other distribution with respect to, or resulting from a subdivision of the outstanding shares of Common Stock (or Other Securities) into a greater number of shares by reclassification, stock splits or otherwise, or in exchange for or in replacement of the Common Stock (or Other Securities) issued upon such exercise.

 

  

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ARTICLE II

 

Issuance and Exercise of Warrants

 

SECTION 2.01.  Issuance of Warrants; Manner of Exercise; Vesting.a)Subject to the terms and conditions of this Agreement, the Company hereby issues and delivers to each Initial Holder, a Warrant (each in the form of Exhibit A hereto) to purchase, at the Exercise Price, the Initial Number of Shares of fully paid and nonassessable Common Stock as set forth on Schedule A hereto opposite such Initial Holder’s name.

 

(b)  Subject to subsection (c) below, each Warrant may be exercised by the Holder thereof, in whole or in part, at any time or from time to time on or after the Effective Date and prior to 5:00 p.m., New York City time, on the Expiration Date, for a number of shares of Common Stock not greater than the then-Applicable Number of Shares determined as of the date of exercise, by surrendering such Warrant, properly endorsed, at the principal executive office of the Company, together with the Election to Purchase Shares (the “Notice”) attached hereto as Exhibit B (or a reasonable facsimile thereof), duly completed and executed on behalf of such Holder.  The exercise of any Warrant shall be on a cashless basis, and the Company shall issue to such Holder such number of shares of Common Stock as is computed using the following formula:

 

 

where:

 

X = the number of shares of Common Stock to be issued to such Holder pursuant to this Section 2.01(b);

 

Y = the number of shares of Common Stock covered by the Warrant in respect of which the exercise election is made pursuant to this Section 2.01(b);

 

A = the Market Price of one share of Common Stock; and

 

B = the Exercise Price in effect under such Warrant at the time such exercise is made pursuant to this Section 2.01(b).

 

(c)  Notwithstanding anything to the contrary contained herein, (i) in the event that the Credit Agreement Discharge Date occurs, no further vesting of Initial Number of Shares with respect to any Warrant pursuant to subsection (ii) below shall occur thereafter and, if none of the Initial Number of Shares has vested prior thereto in accordance with subsection (ii) below, the Warrants shall be immediately and automatically canceled and shall have no further force and effect, (ii) (A) in the event that the Credit Agreement Discharge Date does not occur prior to the Effective Date, then, on and as of the Effective Date, 30% of the Initial Number of Shares with respect to each Warrant shall irrevocably vest, (B) in the event that the Credit Agreement Discharge Date does not occur prior to September 28, 2012, then, on and as of September 28, 2012, an additional 15% of the Initial Number of Shares with respect to each Warrant shall irrevocably vest and (C) in the event that the Credit Agreement Discharge Date does not occur prior to December 31, 2012, then, on and as of December 31, 2012, the entire remaining balance of the Initial Number of Shares with respect to each Warrant shall irrevocably vest, and (iii) for purposes of determining the number of shares of Common Stock issuable upon exercise of any Warrant pursuant to Section 2.01, the Applicable Number of Shares shall be determined based only upon the Initial Number of Shares with respect to such Warrant that have vested in accordance with this Section 2.01(c).

 

  

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SECTION 2.02.  When Exercise Effective.  Each exercise of a Warrant shall be deemed to have been effected as of the later to occur of (a) receipt of the Notice and (b) immediately prior to the close of business on the Business Day on which such Warrant shall have been surrendered to the Company as provided in Section 2.01 (notwithstanding that the stock transfer books of the Company may then be closed or certificates representing such shares of Common Stock may not be actually delivered on such date) and at such time of effectiveness the person or persons in whose name or names any certificate or certificates for Warrant Shares of Common Stock (or Other Securities) shall be issuable upon such exercise as provided in Section 2.03 shall be deemed to have become the holder or holders of record thereof for all purposes.

 

SECTION 2.03.  Delivery of Stock Certificates, etc.; Charges, Taxes and Expenses.  b)Subject to Article XI hereof, as soon as practicable after each exercise of any Warrant, in whole or in part, and in any event within three Business Days thereafter, the Company shall cause to be issued in the name of and delivered to the Holder thereof or as the Holder may direct, a certificate or certificates for the number of shares of Common Stock (or Other Securities) to which the Holder shall be entitled upon such exercise plus, in lieu of issuance of any fractional share to which the Holder would otherwise be entitled, if any, a check for the amount of cash equal to the same fraction multiplied by the Market Price per share on the date of Warrant exercise.

 

(b)  In case any such exercise is for less than all of the then-Applicable Number of Shares as of the date of exercise purchasable under any Warrant, the Company shall issue to the applicable Holder a new Warrant in like form for the unexercised portion thereof, which shall include the unexercised portion of the Initial Number of Shares that have vested as of the date of such exercise plus the Initial Number of Shares that have not yet vested as of such date but which shares may vest at a future date.  Any such new Warrants shall be issued in such name or names as the Holder may designate and shall be delivered to such named Person or Persons within a reasonable time, not to exceed three Business Days after the date on which the applicable Warrant has been duly exercised in accordance with the terms of this Agreement.

 

(c)  The Company shall pay all taxes (other than Federal, state or local income taxes), including any documentary stamp taxes, which may be payable in connection with the execution and delivery of this Agreement or the issuance of the Warrants or the Common Stock (or Other Securities) issuable upon the exercise of any Warrant or in connection with any modification of this Agreement or the Warrants and shall hold each Holder harmless without limitation as to time against any and all liabilities with respect to all such taxes.  The obligations of the Company under this Section 2.03(c) shall survive any termination of this Agreement, and any cancellation or termination of the Warrants.  On or prior to the 30th day following the date of this Agreement, the Company shall use commercially reasonable efforts to provide to the Initial Holders an initial unaudited valuation of the Warrants as of the date of this Agreement, as determined by the Company, or to promptly provide such valuation as of a later date if the value of the Warrants as of the date of this Agreement is not reasonably ascertainable.  Within 45 days after providing such initial valuation, the Company shall use commercially reasonable efforts to obtain verbal approval of such valuation, or modification thereto, by its auditors or an independent valuation consultant, which may be an accounting firm, and the Company shall promptly notify the Initial Holders of any such verbal approval or modification that it obtains. Once the Company has received final written confirmation of such valuation, or further modification thereto, by its auditors or such valuation consultant, the Company shall promptly send a copy of such final confirmation or modification to the Initial Holders. The Company further agrees not to take any position with regard to the value of the Warrants as of the date of this Agreement or as of such later date described above in this paragraph, for U.S. Federal income tax purposes, that is inconsistent with the written confirmed final valuation provided to the Initial Holders pursuant to the preceding sentence.  The parties to this Agreement acknowledge that the valuation described in this paragraph is solely for use in connection with U.S. Federal income tax matters.

 

  

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ARTICLE III

 

Adjustments and Other Rights

 

SECTION 3.01.  Adjustments.  The Exercise Price and the number of Warrant Shares issuable pursuant to the exercise of any Warrant shall be subject to adjustment from time to time as provided in Articles IV and V and this Article III; provided that any such adjustment shall be an adjustment with respect to both the Initial Number of Shares that have vested as of the date of such adjustment and the Initial Number of Shares that have not yet vested as of such date but which shares may vest at a future date; provided further that no single event shall cause an adjustment under more than one Section of this Agreement so as to result in duplication.

 

SECTION 3.02.  Stock Splits, Subdivisions, Distributions of Common Stock, Reclassifications or Combinations.  If the Company shall (i) subdivide or reclassify the outstanding shares of Common Stock into a greater number of shares, (ii) pay a dividend or make any distribution to existing holders of the Common Stock, in each case in  Common Stock or (iii) combine or reclassify the outstanding Common Stock into a smaller number of shares, the number of shares of Common Stock issuable upon the exercise of any Warrant at the time of the effective date of such subdivision, combination, reclassification, dividend or distribution shall be proportionately adjusted so that the Holder after such date shall be entitled to purchase the number of shares of Common Stock that such Holder would have owned or been entitled to receive in respect of the shares of Common Stock subject to such Warrant after such date had such Warrant been exercised immediately prior to such date (or, in the case of a dividend or distribution of Common Stock, immediately prior to the record date therefor).  In such event, the Exercise Price in effect at the time of the effective date of such subdivision, combination, reclassification, dividend or distribution shall be adjusted to the number obtained by dividing (x) the product of (1) the number of shares of Common Stock issuable upon the exercise of such Warrant before such adjustment and (2) the Exercise Price in effect immediately prior to the effective date for the subdivision, combination or reclassification giving rise to this adjustment by (y) the new number of shares of Common Stock issuable upon the exercise of such Warrant determined pursuant to the immediately preceding sentence. An adjustment made pursuant to this Section 3.02 shall become effective immediately after the effective date of the applicable event, retroactive to the record date therefor in the case of a dividend or distribution of shares of Common Stock.

 

  

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SECTION 3.03.  Rights, Options or Warrants Issue.   If the Company shall distribute to all or substantially all holders of the Common Stock any rights, options or warrants entitling them for a period of not more than 60 calendar days from the record date of such distribution to subscribe for or purchase shares of Common Stock, at a price per share less than the Current Market Price per share of Common Stock immediately preceding the first public announcement of such distribution, the number of shares of Common Stock issuable upon the exercise of each Warrant shall be increased by multiplying such number as of the time immediately prior to the close of business on the record date for such distribution by a fraction: (i) the numerator of which shall be the sum of (A) the number of shares of Common Stock outstanding immediately prior to the close of business on the record date for such distribution, plus (B) the total number of shares of Common Stock issuable pursuant to such rights, options or warrants, and (ii) the denominator of which shall be the sum of (x) the number of shares of Common Stock outstanding immediately prior to the close of business on the record date for such distribution, plus (y) the number of shares of Common Stock which the aggregate consideration to be received by the Company upon the exercise, conversion or exchange of such rights, options or warrants would purchase at the Current Market Price per share of Common Stock as of the date immediately preceding the first public announcement of such distribution.

 

An adjustment made pursuant to this Section 3.03 shall become effective immediately after the close of business on the record date for such distribution.  To the extent that shares of Common Stock are not delivered after the expiration of such rights, options or warrants, the number of shares of Common Stock issuable upon the exercise of each Warrant shall be decreased to the number that would then be in effect had the increase with respect to the distribution of such rights, options or warrants been made on the basis of delivery of only the number of shares of Common Stock actually delivered.  If such rights, options or warrants are not so distributed, the number of shares of Common Stock issuable upon the exercise of each Warrant shall be decreased to the number that would then be in effect if such record date for such distribution had not occurred.

 

  

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In determining whether any rights, options or warrants entitle the holders thereof to subscribe for or purchase shares of Common Stock at a price per share less than the Current Market Price per share of Common Stock immediately preceding the first public announcement of distribution of such rights, options or warrants, and in determining the aggregate consideration to be received by the Company in respect of such rights, options or warrants, there shall be taken into account any consideration received by the Company for such rights, options or warrants and any amount payable on exercise or conversion thereof, the value of such consideration, if other than cash, to be the Fair Value thereof.

 

SECTION 3.04.  Adjustments for Other Distributions.  i)If the Company shall distribute shares of its capital stock, evidences of its indebtedness, other of its assets or property or rights, options or warrants to acquire its capital stock or other securities, to all or substantially all holders of the Common Stock (excluding (i) dividends, distributions, rights, options or warrants referred to in Section 3.02 or Section 3.03, (ii) dividends or distributions paid exclusively in cash and (iii) spin-offs to which provisions set forth below in clause (b) of this Section 3.04 shall apply), then the number of shares of Common Stock issuable upon the exercise of each Warrant shall be increased by multiplying such number as of the time immediately prior to the close of business on the record date for such distribution by a fraction: (i) the numerator of which shall be the Current Market Price per share of Common Stock as of the date immediately preceding the Ex-Date for such distribution and (ii) the denominator of which shall be (A) the Current Market Price per share of Common Stock as of the date immediately preceding the Ex-Date for such distribution, less (B) the Fair Value of such shares of capital stock, evidences of indebtedness, assets or property or rights, options or warrants distributed with respect to each outstanding share of Common Stock on the Ex-Date for such distribution.

 

If the Fair Value of such shares of capital stock, evidences of indebtedness, assets, property or rights, options or warrants distributed with respect to each outstanding share of Common Stock on the Ex-Date for such distribution is equal to or greater than the Current Market Price per share of Common Stock as of the date immediately preceding the Ex-Date for such distribution, in lieu of the foregoing increase, each Holder shall receive, at the same time and upon the same terms as holders of the Common Stock, the amount and kind of such capital stock, evidences of the indebtedness, other assets or property or rights, options or warrants to acquire the Company’s capital stock or other securities that such Holder would have received if such Holder had exercised its Warrant for all of the then-Applicable Number of Shares (which number shall include, without limitation, the number of shares of Common Stock issuable upon exercise of each such Warrant that have not yet vested as of the date immediately prior to the record date for such distribution but may vest at a later date) as of such date.

 

  

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An adjustment made pursuant to this Section 3.04(a) shall become effective immediately after the close of business on the record date for such distribution.  If such distribution is not so paid or made, the number of shares of Common Stock issuable upon the exercise of each Warrant shall be decreased to the number that would then be in effect if such distribution had not been declared.

 

(b)  Notwithstanding anything to the contrary in Section 3.04(a), if the Company pays any dividend or other distribution on the Common Stock of shares of capital stock of any class or series, or similar equity interest, of or relating to a Subsidiary or other business unit of the Company, where such capital stock or similar equity interest is listed or quoted (or will be listed or quoted upon consummation of the Spin-Off (as defined hereinafter)) on a national or regional securities exchange (a “Spin-Off”), then the number of shares of Common Stock issuable upon the exercise of each Warrant shall be increased by multiplying such number as of the time immediately prior to the close of business on the tenth trading day immediately following, and including, the Ex-Date of the Spin-Off, by a fraction: (i) the numerator of which shall be the sum of (A) the Fair Value of the capital stock or similar equity interest distributed to holders of Common Stock applicable to one share of Common Stock as of the tenth trading day immediately following, and including, the Ex-Date for the Spin-Off, plus (B) the Current Market Price per share of Common Stock as of the tenth trading day immediately following, and including, the Ex-Date for the Spin-Off, and (ii) the denominator shall be the Current Market Price per share of Common Stock as of the tenth trading day immediately following, and including, the Ex-Date for the Spin-Off.

 

The adjustment made pursuant to this Section 3.04(b) shall become effective on the tenth trading day immediately following, and including, the Ex-Date for the Spin-Off; provided that, for purposes of determining the number of shares of Common Stock issuable upon the exercise of each Warrant, in respect of any exercise during the ten trading days immediately following, and including, the Ex-Date for any Spin-Off, references in this Section 3.04(b) to ten trading days shall be deemed replaced with such lesser number of trading days as have elapsed between the Ex-Date for such Spin-Off and the relevant date that such exercise occurred.

 

SECTION 3.05.  Adjustment for Cash Dividends.  If the Company pays or makes any cash dividend or distribution to all or substantially all holders of the Common Stock, other than a regular, quarterly cash dividend that does not exceed $0.025 per share (the “Initial Dividend Threshold”), then the number of shares of Common Stock issuable upon exercise of each Warrant shall be increased by multiplying such number as of the time immediately prior to the close of business on the record date of such dividend or distribution by a fraction: (i) the numerator of which shall be (A) the Market Price per share of Common Stock as of the trading day that immediately precedes the Ex-Date for such dividend or distribution, minus (B) the Initial Dividend Threshold (provided that if the dividend or distribution in question is not a regular, quarterly cash dividend, the Initial Dividend Threshold shall be deemed to be zero), and (ii) the denominator of which shall be (x) the Market Price per share of Common Stock as of the trading day that immediately precedes the Ex-Date for such dividend or distribution, minus (y) the amount in cash per share the Company distributes to holders of the Common Stock.

 

  

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The Initial Dividend Threshold is subject to adjustment in a manner inversely proportional to adjustments with respect to the number of shares of Common Stock issuable upon exercise of each Warrant; provided that no adjustment will be made to the Initial Dividend Threshold for any adjustment to the number of shares of Common Stock issuable upon exercise of each Warrant pursuant to this Section 3.05.

 

If the amount in cash per share the Company distributes to holders of the Common Stock is equal to or greater than the Market Price per share of Common Stock as of the trading day that immediately precedes the Ex-Date for such dividend or distribution, in lieu of the foregoing increase, each Holder shall receive, at the same time and upon the same terms as holders of shares of Common Stock, the amount of cash that such Holder would have received if such Holder had exercised its Warrant for all of the then-Applicable Number of Shares (which number shall include, without limitation, the number of shares of Common Stock issuable upon exercise of each such Warrant that have not yet vested as of the date immediately prior to the record date for such dividend or distribution but may vest at a later date) as of such date.

 

An adjustment made pursuant to this Section 3.05 shall become effective immediately after the close of business on the record date for such dividend or distribution.  If such dividend or distribution is not so paid or made, the number of shares of Common Stock issuable upon the exercise of each Warrant shall be decreased to the number that would then be in effect if such dividend or distribution had not been declared.

 

SECTION 3.06.  Adjustment for Tender Offer.  If the Company or any of its Subsidiaries make a payment in respect of a tender offer or exchange offer for the Common Stock, if the cash and Fair Value of any other consideration included in the payment per share of Common Stock exceeds the Current Market Price per share of Common Stock as of the tenth trading day after the last date on which tenders or exchanges may be made pursuant to such tender or exchange offer (such last date, the “Offer Expiration Date”), then the number of shares of Common Stock issuable upon exercise of each Warrant shall be increased by multiplying such number as of the time immediately prior to the close of business of the tenth trading day after the Offer Expiration Date by a fraction: (i) the numerator of which shall be the sum of (A) the aggregate Fair Value of all cash and any other consideration paid or payable for shares purchased in such tender or exchange offer, plus (B) the product of the number of shares of Common Stock outstanding immediately after the Offer Expiration Date (after giving effect to such tender offer or exchange offer) and the Current Market Price per share of Common Stock as of the tenth trading day after the Offer Expiration Date, and (ii) the denominator of which shall be the product of (x) the number of shares of Common Stock outstanding immediately prior to the Offer Expiration Date (pior to giving effect to such tender offer or exchange offer) and (y) the Current Market Price per share of Common Stock as of the tenth trading day after the Offer Expiration Date.

 

  

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An adjustment made pursuant to this Section 3.06 shall become effective immediately after the close of business on the tenth trading day immediately following the Offer Expiration Date; provided that, for purposes of determining the number of shares of Common Stock issuable upon the exercise of each Warrant, in respect of any exercise during the ten trading days following the Offer Expiration Date, references in this Section 3.06 to ten trading days shall be deemed replaced with such lesser number of trading days as have elapsed between the Offer Expiration Date and the relevant date that such exercise occurred.  In the event that the Company or a Subsidiary of the Company is obligated to purchase shares of Common Stock pursuant to any such tender offer or exchange offer, but the Company or such Subsidiary is prevented by applicable law from effecting any such purchases, or all such purchases are rescinded, then the number of shares of Common Stock issuable upon the exercise of each Warrant shall be adjusted again to be the number that would then be in effect if such tender offer or exchange offer had not been made.  If application of this Section 3.06 to any tender offer or exchange offer would result in a decrease in the number of shares of Common Stock issuable upon exercise of each Warrant, then no adjustment shall be made for such tender offer or exchange offer under this Section 3.06.

 

SECTION 3.07.  Statement Regarding Adjustments.  Whenever the Exercise Price or the number of shares of Common Stock (and Other Securities) into which any Warrant is exercisable shall be adjusted as provided in this Agreement, the Company shall forthwith file at the principal executive office of the Company or with its transfer agent a statement showing in reasonable detail the facts requiring such adjustment and the Exercise Price that shall be in effect and the number of shares of Common Stock (and Other Securities) into which such Warrant shall be exercisable after such adjustment, and the Company shall also cause a copy of such statement to be sent by mail, first class postage prepaid, to each applicable Holder at the address appearing in the Company’s records.

 

SECTION 3.08.  De Minimis Adjustments; Rounding of Calculations.  All adjustment calculations under this Agreement shall be made to the nearest one-hundredth (1/100th) of a cent or to the nearest one-hundredth (1/100th) of a share, as the case may be.  Notwithstanding anything to the contrary contained herein, no adjustment in the Exercise Price or the number of shares of Common Stock (or Other Securities) into which the Warrants are exercisable shall be made if the amount of such adjustment would be less than $0.001 or one-hundredth (1/100th) of a share, but any such amount shall be carried forward and an adjustment with respect thereto shall be made at the time of and together with any subsequent adjustment which, together with such amount and any other amount or amounts so carried forward, shall aggregate $0.001 or one-hundredth (1/100th) of a share, or more.

 

SECTION 3.09.  Abandoned Dividend or Distribution.  If after the date hereof the Company shall take a record of the holders of its Common Stock for the purpose of entitling them to receive a dividend or other distribution (which results in an adjustment to the number of shares of Common Stock issuable upon exercise of the Warrants under the terms of this Agreement) and shall, thereafter, and before such dividend or distribution is paid or delivered to shareholders entitled thereto, legally abandon its plan to pay or deliver such dividend or distribution, then any adjustment made to the number of shares of Common Stock issuable upon exercise of the Warrants by reason of the taking of such record shall be reversed, and any subsequent adjustments, based thereon, shall be recomputed.

 

  

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ARTICLE IV

 

Consolidation, Merger, Etc.

 

SECTION 4.01.  Adjustments for Consolidation, Merger, Sale of Assets, Reorganization, etc.  In case the Company (a) shall consolidate with or merge into any other person and shall not be the continuing or surviving corporation of such consolidation or merger, or (b) shall permit any other person to consolidate with or merge into the Company and the Company shall be the continuing or surviving person but, in connection with such consolidation or merger, the Common Stock or Other Securities shall be changed into or exchanged for stock or other securities of any other person or cash or any other property, or (c) shall transfer all or substantially all of its properties or assets to any other person and shall thereafter distribute any material portion of the proceeds of such transaction to its shareholders generally, or (d) shall effect a capital reorganization or reclassification of the Common Stock or Other Securities (other than a capital reorganization or reclassification of the Common Stock referred to in Section 3.02),  then, and in the case of each such transaction, proper provision shall be made so that, upon the basis and the terms and in the manner provided in this Agreement, the Holder of any Warrant, upon the exercise thereof at any time after the consummation of such transaction, shall be entitled to receive (at the aggregate Purchase Price in effect immediately prior to the time of such consummation for all Common Stock or Other Securities issuable upon such exercise immediately prior to such consummation), in lieu of the Common Stock or Other Securities issuable upon such exercise prior to such consummation, the highest amount of securities, cash or other property to which such Holder would actually have been entitled as a shareholder upon such consummation if such Holder had exercised such Warrant for all of the then-Applicable Number of Shares immediately prior thereto (which number shall include, without limitation, the number of shares of Common Stock issuable upon exercise of each such Warrant that have not yet vested as of such date but may vest at a later date), subject to adjustments (subsequent to such consummation) as nearly equivalent as possible to the adjustments provided for in Articles III, IV and V.

 

SECTION 4.02.  Assumption of Obligations.  Notwithstanding anything contained in this Agreement to the contrary, the Company shall not effect any of the transactions described in clauses (a) through (d) of Section 4.01 unless, prior to the consummation thereof, each person (other than the Company) which may be required to deliver any stock, securities, cash or property upon the exercise of any Warrant, as provided herein, shall assume, by written instrument delivered to each of the Holders, (a) the obligations of the Company under this Agreement (and if the Company shall survive the consummation of such transaction, such assumption shall be in addition to, and shall not release the Company from, any continuing obligations of the Company under this Agreement), (b) the obligations of the Company under the Registration Rights Agreement and (c) the obligation to deliver to the Holders such shares of stock, securities, cash or property as, in accordance with the foregoing provisions of this Article IV, the Holders may be entitled to receive and such person shall have similarly delivered to the Holders an opinion of counsel for such person, which counsel shall be reasonably satisfactory to a Majority of the Holders, stating that this Agreement shall thereafter continue in full force and effect and the terms hereof (including, without limitation, all of the provisions of this Article IV) shall be applicable to the stock, securities, cash or property which such person may be required to deliver upon any exercise of the Warrants or the exercise of any rights pursuant hereto or thereto.

 

  

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ARTICLE V

 

Other Dilutive Events

 

In case any event shall occur as to which the provisions of Article III or Article IV are not strictly applicable or if strictly applicable would not, in the reasonable judgment of a Majority of the Holders, fairly protect the purchase rights represented by the Warrants in accordance with the essential intent and principles of such Articles, then, in each such case, the Company shall, promptly upon receipt of written notification thereof, if the Board of Directors of the Company shall determine in good faith that it would be appropriate to do so, make an adjustment in the application of such provisions, in accordance with the essential intent and principles hereof, so as to preserve, without dilution, the purchase rights represented by the Warrants.

 

ARTICLE VI

 

No Dilution or Impairment

 

The Company shall not, by amendment of its Articles of Incorporation or through any consolidation, merger, reorganization, transfer of assets, 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 this Agreement, 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 Holder of any Warrant against dilution or other impairment in accordance with the terms hereof.  Without limiting the generality of the foregoing, the Company (a) shall 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, free from all taxes, liens, security interests, encumbrances, preemptive rights and charges on the exercise of the Warrants from time to time outstanding, and (b) shall not amend or modify any provision of the Articles of Incorporation or by-laws of the Company in any manner that would adversely affect in any way the rights or powers of the Holder of any Warrant in its capacity as such.

 

  

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ARTICLE VII

 

Notices of Corporate Action

 

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

 

(b) any capital reorganization of the Company, any reclassification or recapitalization of the capital stock of the Company, any consolidation or merger involving the Company and any other person, any transaction or series of transactions in which more than 50% of the voting securities of the Company are transferred to another person, or any transfer, sale or other disposition of all or substantially all the assets of the Company to any other person, or

 

(c) any voluntary or involuntary dissolution, liquidation or winding-up of the Company,

 

the Company shall mail to each Holder of a Warrant a notice specifying (i) the date or expected date on which any such record is to be taken for the purpose of such dividend, distribution or right, and the amount and character of such dividend, distribution or right, and (ii) the date or expected date on which any such reorganization, reclassification, recapitalization, consolidation, merger, transfer, sale, disposition, dissolution, liquidation or winding-up is to take place and the time, if any such time 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 the securities or other property deliverable upon such reorganization, reclassification, recapitalization, consolidation, merger, transfer, dissolution, liquidation or winding-up.  In the case of any action covered by clause (a) above, such notice shall be mailed by the Company at least 10 days prior to the date on which such record is to be taken, and, in the case of any action covered by clause (b) or (c) above, such notice shall be mailed by the Company at least 20 days prior to the date or expected date on which such action is to take place.

 

ARTICLE VIII

 

Listing of Common Stock

 

At any time that the Common Stock is listed on any national securities exchange, the Company shall, at its expense, obtain promptly and maintain the approval for listing on the principal such exchange, upon official notice of issuance, the shares of Common Stock issuable upon exercise of the then outstanding Warrants and maintain the listing of such shares after their issuance; and the Company shall also list on such national securities exchange and shall maintain such listing of, any Other Securities that at any time are issuable upon exercise of the Warrants, if and at the time that any securities of the same class shall be listed on such national securities exchange by the Company.

 

  

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ARTICLE IX

 

Private Placement; Restrictions on Transfer

 

SECTION 9.01.  Private Placement Representations.  Each Holder represents, severally and not jointly, that it is an “accredited investor” within the meaning of Regulation D under the Securities Act and that the Warrants are being or will be acquired for its own account or for one or more separate accounts maintained by it or for the account of one or more pension or trust funds and not with a view toward distributing or reselling such securities or any part thereof in any transaction that would be in violation of the Securities Act, federal securities laws or the securities laws of any state, without prejudice, however, to its rights to sell or otherwise dispose of all or any part of the Warrants under an effective registration statement under the Securities Act and applicable state securities laws, or under an exemption from such registration available under the Securities Act and applicable state securities laws

 

SECTION 9.02.  Private Offering by the Company.  Neither the Company nor anyone acting on its behalf has offered the Warrants for sale to, or solicited any offer to buy any of the same from, or otherwise approached or negotiated in respect thereof with, any person other than the Holders, each of which has been offered the Warrants at a private sale for investment.  Neither the Company nor anyone acting on its behalf has taken, or will take, any action that would subject the issuance or sale of the Warrants to the registration requirements of section 5 of the Securities Act or to the registration requirements of any securities or blue sky laws of any applicable jurisdiction.

 

SECTION 9.03.  Restrictive Legends.  Except as otherwise permitted by this Article IX, each Warrant (including each Warrant issued upon the transfer of any Warrant) shall be stamped or otherwise imprinted with a legend in substantially the following form:

 

“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 THE SECURITIES LAWS OF ANY STATE, AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION TO THE REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH LAWS.  THIS WARRANT AND SUCH SECURITIES MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT IN COMPLIANCE WITH THE CONDITIONS SPECIFIED IN THE WARRANT AGREEMENT (THE “WARRANT AGREEMENT”) DATED AS OF MARCH 9, 2012, BY AND AMONG PULSE ELECTRONICS CORPORATION AND THE HOLDERS FROM TIME TO TIME OF THE WARRANTS ISSUED THEREUNDER PURSUANT TO WHICH THIS WARRANT WAS ISSUED.”

  

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“THIS WARRANT AND THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO THE TERMS AND CONDITIONS OF (1) THE WARRANT AGREEMENT AND (2) A WARRANT SHARES REGISTRATION RIGHTS AGREEMENT DATED AS OF MARCH 9, 2012, BY AND AMONG PULSE ELECTRONICS CORPORATION AND THE HOLDERS FROM TIME TO TIME OF THE WARRANTS, AS EACH SUCH AGREEMENT MAY BE AMENDED, MODIFIED, SUPPLEMENTED, RESTATED OR OTHERWISE CHANGED FROM TIME TO TIME.”

 

Except as otherwise permitted by this Article IX, each certificate for Common Stock (or Other Securities) issued upon the exercise of any Warrant, and each certificate issued upon the transfer of any such Common Stock (or Other Securities), 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 THE SECURITIES LAWS OF ANY STATE, AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION TO THE REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH LAWS.  SUCH SECURITIES MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT IN COMPLIANCE WITH THE CONDITIONS SPECIFIED IN THE WARRANT AGREEMENT (THE “WARRANT AGREEMENT”) DATED AS OF MARCH 9, 2012, BY AND AMONG PULSE ELECTRONICS CORPORATION AND THE HOLDERS FROM TIME TO TIME OF THE WARRANTS ISSUED THEREUNDER.  A COMPLETE AND CORRECT COPY OF THE WARRANT AGREEMENT IS AVAILABLE FOR INSPECTION AT THE PRINCIPAL OFFICE OF PULSE ELECTRONICS CORPORATION OR AT THE OFFICE OR AGENCY MAINTAINED BY PULSE ELECTRONICS CORPORATION AS PROVIDED IN THE WARRANT AGREEMENT AND WILL BE FURNISHED TO THE HOLDER OF SUCH SECURITIES UPON WRITTEN REQUEST AND WITHOUT CHARGE.”

 

“THE SHARES REPRESENTED BY THIS CERTIFICATE ARE ALSO SUBJECT TO THE TERMS AND CONDITIONS OF A WARRANT SHARES REGISTRATION RIGHTS AGREEMENT, DATED AS OF MARCH 9, 2012, BY AND AMONG PULSE ELECTRONICS CORPORATION AND THE HOLDERS FROM TIME TO TIME OF THE WARRANTS AS SUCH AGREEMENT MAY BE AMENDED, MODIFIED, SUPPLEMENTED, RESTATED OR OTHERWISE CHANGED FROM TIME TO TIME.”

 

  

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SECTION 9.04.  Transfers to Comply With the Securities Act.  ii)No Warrant may be exercised and no Warrant or Warrant Share may be sold, transferred or otherwise disposed of (any such sale, transfer or other disposition, a “sale”), except in compliance with this Article IX.

 

(b)  A Holder may exercise a Warrant if it is an “accredited investor” or a “qualified institutional buyer,” as defined in Regulation D and Rule 144A under the Securities Act, respectively, and a Holder may sell any Warrant or any Warrant Shares to any affiliate of such Holder or to a transferee that is an “accredited investor” or a “qualified institutional buyer,” as such terms are defined in such Regulation and such Rule, respectively, provided that (other than in the case any such sale to an affiliate of such Holder) each of the following conditions is satisfied:

 

(i)  with respect to any “accredited investor” that is not an institution, such transferee provides a certification establishing to the reasonable satisfaction of the Company that it is an “accredited investor”;

 

(ii)  such transferee represents that it is acquiring the Warrant and/or Warrant Shares for its own account and not with a view to, or for offer or sale in connection with, any distribution thereof within the meaning of the Securities Act that would be in violation of the securities laws of the United States or any applicable state thereof, but subject, nevertheless, to the disposition of its property being at all times within its control; and

 

(c)  such transferee agrees to be bound by the provisions of this Agreement with respect to any Warrants and Warrant Shares held by it.

 

SECTION 9.05.  Termination of Restrictions.  The restrictions imposed by this Article IX on the exercise or transferability of Warrants and Warrant Shares shall cease and terminate as to any particular Warrants or Warrant Shares (a) when a registration statement with respect to the sale of such securities shall have been declared effective under the Securities Act and such securities shall have been disposed of in accordance with such registration statement, (b) when such securities are sold pursuant to Rule 144 (or any similar provision then in force) under the Securities Act, or (c) when, in the opinion of both counsel for the applicable Holder and counsel for the Company, such restrictions are no longer required or necessary in order to protect the Company against a violation of the Securities Act upon any sale or other disposition of such securities without registration thereunder.  Whenever such restrictions shall cease and terminate as to any Warrants or Warrant Shares, each applicable Holder shall be entitled to receive from the Company, without expense (other than applicable transfer taxes, if any), new securities of like tenor not bearing the applicable legends required by Section 9.03.

 

  

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SECTION 9.06.  Rule 144.  The Company hereby covenants that it shall take all such actions as necessary so that any Holder may freely transfer the Warrants or the Warrant Shares, without registration under the Securities Act, after expiration of a six-month holding period commencing on the date hereof, pursuant to the exemption from the registration requirements under the Securities Act provided by Rule 144.  Without limiting the generality of the foregoing, the Company shall remain subject to the reporting requirements of the Exchange Act, timely file its reports thereunder and otherwise satisfy all requirements for the transfer of the Warrants and the Warrant Shares to be eligible for the exemption from the registration requirement of the Securities Act provided by Rule 144 after a six-month holding period.  Upon the request of any Holder, the Company shall deliver to such Holder a written statement as to whether it has complied with such requirements.

 

ARTICLE X

 

Reservation of Stock, Etc.

 

The Company represents and warrants to each Holder that as of the date of this Agreement, 175,000,000 shares of Common Stock has been authorized for issuance, 41,980,520 shares of Common Stock are issued and outstanding and no shares of preferred stock are issued and outstanding.  The Company shall at all times reserve and keep available, solely for issuance and delivery upon exercise of the Warrants, the number of shares of Common Stock (and Other Securities) from time to time issuable upon exercise of the Warrants.  All Warrants issued pursuant to this Agreement shall be duly authorized, validly issued and free from all taxes, liens, security interests, encumbrances, preemptive rights and charges.  All shares of Common Stock (and Other Securities) issuable upon exercise of any Warrant shall be duly authorized and, when issued upon such exercise, shall be validly issued and, in the case of shares, fully paid and nonassessable with no liability on the part of the holders thereof, and, in the case of all securities, shall be free from all taxes, liens, security interests, encumbrances, preemptive rights and charges.  The transfer agent for the Common Stock, which may be the Company (the “Transfer Agent”), and every subsequent Transfer Agent for any shares of the Company’s capital stock issuable upon the exercise of any of the purchase rights represented by the Warrants, are hereby irrevocably authorized and directed at all times until the Expiration Date to reserve such number of authorized and unissued shares as shall be requisite for such purpose.  The Company shall keep copies of each Warrant on file with the Transfer Agent for the Common Stock and with every subsequent Transfer Agent for any shares of the Company’s capital stock issuable upon the exercise of the rights of purchase represented by the Warrants.  The Company shall supply such Transfer Agent with duly executed stock certificates for such purpose.  All Warrants surrendered upon the exercise of the rights thereby evidenced and not required to be returned to the Holder pursuant hereto shall be canceled.  Subsequent to the Expiration Date, no shares of Common Stock need be reserved in respect of any unexercised Warrant.

 

  

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ARTICLE XI

 

Registration and Transfer of Warrant, Etc.

 

SECTION 11.01.  Warrant Register; Ownership of Warrant.  Each Warrant issued by the Company shall be numbered and shall be registered in a warrant register (the “Warrant Register”) as it is issued and transferred, which Warrant Register shall be maintained by the Company at its principal office or, at the Company’s election and expense, by a warrant agent or the Company’s transfer agent.  The Company shall promptly notify the Holders in writing of the name and address of any warrant agent appointed by the Company or any successor warrant agent.  The Company shall be entitled to treat the registered Holder of any Warrant on the Warrant Register as the owner in fact thereof for all purposes and shall not be bound to recognize any equitable or other claim to or interest in such Warrant on the part of any other person, and shall not be affected by any notice to the contrary, except that, if and when any Warrant is properly assigned in blank, the Company may (but shall not be obligated to) treat the bearer thereof as the owner of such Warrant for all purposes.  Subject to Article IX, a Warrant, if properly assigned (including to an affiliate of the Holder), may be exercised by a new Holder without a new Warrant first having been issued.

 

SECTION 11.02.  Transfer of Warrant.  At any time and from time to time and subject to compliance with Article IX, if applicable, each Warrant and all rights thereunder are transferable in whole or in part, without charge to the Holder thereof, upon surrender of such Warrant with a properly executed Form of Assignment attached hereto as Exhibit C at the principal office of the Company.  Each such transferee shall succeed to all of the rights and obligations of the transferring Holder under this Agreement or in the event that such Warrant is only partially transferred, the transferring Holder and such transferee shall, simultaneously, hold rights and obligations hereunder in proportion to their respective ownership of the Warrants.  Upon any partial transfer, the Company shall at its expense issue and deliver to the Holder a new Warrant of like tenor, in the name of the Holder, which shall be exercisable for a number of shares of Common Stock (or Other Securities) with respect to which rights under such Warrant were not so transferred.

 

SECTION 11.03.  Replacement of Warrant.  On receipt by the Company 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 bond in such reasonable amount as the Company may determine, or, in the case of any such mutilation, on surrender of such Warrant to the Company at its principal office and cancellation thereof, the Company at its expense shall execute and deliver, in lieu thereof, a new Warrant of like tenor.

 

SECTION 11.04.  Fractional Shares.  Notwithstanding any provision of this Agreement, the Company shall not be required to issue fractions of shares upon exercise of any Warrant or to distribute certificates which evidence fractional shares.  In lieu of fractional shares, the Company shall make payment to the applicable Holder, at the time of exercise of any Warrant as herein provided, in an amount in cash equal to such fraction multiplied by the Market Price of a share of Common Stock on the date of such exercise.

 

  

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ARTICLE XII

 

Miscellaneous

 

SECTION 12.01.  Remedies; Specific Performance.  The Company stipulates that there would be no adequate remedy at law to the Holders 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 Agreement and accordingly, the Company agrees that, in addition to any other remedy to which any Holder may be entitled at law or in equity, the Holders shall be entitled to specific performance of the obligations of the Company under this Agreement, without the posting of any bond, in accordance with the terms and conditions of this Agreement in any court of the United States or any State thereof having jurisdiction, and if any action should be brought in equity to enforce any of the provisions of this Agreement, the Company shall not raise the defense that there is an adequate remedy at law.  Except as otherwise provided by law, a delay or omission by any Holder in exercising any right or remedy accruing upon any such breach or threatened breach shall not impair the right or remedy or constitute a waiver of or acquiescence in any such breach.  No remedy shall be exclusive of any other remedy.  All available remedies shall be cumulative.

 

SECTION 12.02.  No Rights or Liabilities as Shareholder.  Nothing contained in this Agreement shall be construed as conferring upon any Holder any rights as a shareholder of the Company or as imposing any obligation on any Holder to purchase any securities or as imposing any liabilities on any Holder as a shareholder of the Company, whether such obligation or liabilities are asserted by the Company or by creditors of the Company.

 

SECTION 12.03.  Notices.  All notices and other communications (and deliveries) provided for or permitted hereunder shall be made in writing by hand delivery, telecopier, any recognized overnight delivery service or first class registered or certified mail, return receipt requested, postage prepaid, addressed: if to the Company, to the Company at its address at:

 

Pulse Electronics Corporation

12220 World Trade Drive

San Diego, California 92128

Attention: Chief Financial Officer

Telephone: (858) 674-8100

Telecopier: (858) 674-8262

if to any Holder, at the address specified in Schedule A hereto or in the assignment instrument pursuant to which it became a party hereto; or as to any party, at such other address as shall be designated by such party in a written notice to the other party.

 

  

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All such notices and communications (and deliveries) shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; when receipt is acknowledged, if telecopied; on the next Business Day, if timely delivered to a recognized overnight delivery service; and five days after being deposited in the mail, if sent first class or certified mail, return receipt requested, postage prepaid; provided, that the exercise of any Warrant shall be effective in the manner provided in Article II.

 

SECTION 12.04.  Amendments.  This Agreement and any term hereof may not be amended, modified, supplemented or terminated, and waivers or consents to departures from the provisions hereof may not be given, except by written instrument duly executed by the Company and a Majority of the Holders; provided, however, that any amendment or modification of the number of shares of Common Stock issuable upon exercise of any Warrant (including, without limitation, any amendment or modification of Section 2.01(c)) or the Exercise Price or the Expiration Date thereof shall only be effective if set forth in a written instrument duly executed by the Company and the Holder of such Warrant; provided further, that any amendment or modification of this Section 12.04 or the definition of “Majority of the Holders” shall only be effective if set forth in a written instrument duly executed by the Company and each Holder.

 

SECTION 12.05.  Descriptive Headings, Etc.  The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning of terms contained herein.  Unless the context of this Agreement otherwise requires: (1) words of any gender shall be deemed to include each other gender; (2) words using the singular or plural number shall also include the plural or singular number, respectively; (3) the words “hereof”, “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and Article, Section and paragraph references are to the Articles, Sections and paragraphs of this Agreement unless otherwise specified; (4) the word “including” and words of similar import when used in this Agreement shall mean “including, without limitation,” unless otherwise specified; (5) “or” is not exclusive; and (6) provisions apply to successive events and transactions.

 

SECTION 12.06.  Governing Law.  This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York.

 

SECTION 12.07.  Jurisdiction; Consent to Service of Process.  c)The Company hereto hereby irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of any New York State court or Federal court of the United States of America sitting in New York City, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State or, to the extent permitted by law, in such Federal court.  Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.  Nothing in this Agreement shall affect any right that any Holder may otherwise have to bring any action or proceeding relating to this Agreement in the courts of any jurisdiction.

 

  

23

  

 

(b)  The Company hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement in any New York State or Federal court.  Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

 

(c)  Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 12.03.  Nothing in this Agreement will affect the right of any party to this Agreement to serve process in any other manner permitted by law; provided that notice of the use of any such alternative means of  service shall be provided to each affected party in the manner provided in Section 12.03.

 

SECTION 12.08.  Waiver of Jury Trial.  EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT.  EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 12.08.

 

SECTION 12.09.  Successors and Assigns.  This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective heirs, successors and permitted assigns (including any permitted transferee of the Warrants).  Any Holder may at any time and from time to time assign to any permitted transferee of its Warrants its rights and obligations under this Agreement.  Any such permitted transferee shall automatically be entitled to receive the benefits of and be conclusively deemed to have agreed to be bound by and to perform all of the terms and provisions of this Agreement as if it were a party hereto (and shall, for all purposes, be deemed a Holder under this Agreement).  If the Company shall so request, any heir, successor or permitted assign (including any permitted transferee) wishing to avail itself of the benefits of this Agreement shall agree in writing to acquire and hold the Warrants subject to all of the terms hereof.  For purposes of this Agreement, “successor” for any entity other than a natural person shall mean a successor to such entity as a result of such entity’s merger, consolidation, sale of substantially all of its assets, or similar transaction.  Except as provided above or otherwise permitted by this Agreement, neither this Agreement nor any right, remedy, obligation or liability arising hereunder or by reason hereof shall be assignable by any Holder or by the Company without the prior written consent of the other parties hereto.

 

  

24

  

 

SECTION 12.10.  Registration Rights Agreement.  Each Holder of a Warrant shall be entitled to all of the benefits under the Registration Rights Agreement and such Holder, by its acceptance of a Warrant, agrees to be bound by and to comply with the terms and conditions of the Registration Rights Agreement applicable to such Holder

 

SECTION 12.11.  Mandatory Exercise Upon Change of Control Transactions.  Notwithstanding anything to the contrary contained herein, in the event that any Change of Control Transaction occurs prior to the Expiration Date, the Company shall have the right to cause each Holder to exercise such Holder’s Warrant for the then-Applicable Number of Shares as of the date of such transaction (which number shall include, without limitation, the number of shares of Common Stock issuable upon exercise of each such Warrant that have not yet vested as of such date but may vest at a later date); provided that the Company must give written notice to each Holder at least 30 days prior to the date of consummation of such transaction, which notice shall specify the expected date on which such transaction is to take place and set forth the facts with respect thereto as shall be reasonably necessary to indicate the cash, securities or other property deliverable upon exercise of such Warrant; provided further that the Company may only cause such Warrants to be exercised concurrently with the consummation of such transaction and each Holder shall be entitled to receive the highest amount of securities, cash or other property to which such Holder would actually have been entitled as a shareholder upon such consummation if such Holder had exercised such Warrant for all of the then-Applicable Number of Shares immediately prior thereto (including, without limitation, the number of shares of Common Stock issuable upon exercise of each such Warrant that have not yet vested as of such date but may vest at a later date), subject to adjustments as provided in this Agreement.

 

SECTION 12.12.  Call Option.  i)At any time after the second anniversary of the date hereof and prior to the Expiration Date, upon written notice from the Company to each Holder (a “Call Notice”), the Company may elect to purchase all (but not less than all) of the Warrants outstanding (the “Call Option”), for cash at a price with respect to each share of Common Stock issuable upon the exercise of each Warrant equal to (i) the Market Price per share of Common Stock as of the date of such Call Notice, less (ii) the Exercise Price per share as of such date; provided that following any Call Notice, each Holder shall have at least 30 days following the date of such Call Notice to deliver to the Company written notice of its election to exercise its Warrant.

 

(b)  Any Call Notice shall include the following:  (i) the Market Price per share of Common Stock as of the date of such Call Notice, (ii) the aggregate price to be paid to each Holder, (iii) the date of the purchase (the “Call Date”), and (iv) a representation and warranty by the Company to each Holder that (A) it has funds available to it in an amount sufficient to make such purchase and (B) there is no undisclosed transaction or development known to it that, if disclosed, could be reasonably expected to result in an increase of the Market Price.

 

  

25

  

 

(c)  The Company shall purchase the unexercised Warrants from each Holder on the Call Date, which shall not be earlier than 31 days and not later than 60 days after the date of the Call Notice.  A Call Notice shall be irrevocable unless otherwise agreed to by a Majority of the Holders.

 

(d)  On the Call Date, each Holder shall surrender its Warrant to the Company without any representation or warranty (other than that such Holder has (i) good and valid title thereto free and clear of liens, claims, encumbrances and restrictions of any kind and (ii) the power and authority to surrender such Warrants), against payment therefor by wire transfer to a bank account designated by such Holder for such purpose.

 

  

26

  

 

IN WITNESS WHEREOF, each party hereto has caused this Agreement to be duly executed as of the date first above written.

 

	 	PULSE ELECTRONICS CORPORATION
	 	 
	  	by	  
	 	 	Name:     Drew A. Moyer
	 	 	Title:       Senior VP and CFO

  

27

  

 

	 	
JPMORGAN CHASE BANK, N.A., as Holder

	 	 
	  	by	  
	 	 	Name:
	 	 	Title:

 

  

28

  

	 	HOLDER:	 
	 	 
	  	by	  
	 	 	Name:
	 	 	Title:
	 	 	 
	 	 by	 
	 	 	Name:
	 	 	Title:

 

  

29

  

SCHEDULE A to

Warrant Agreement

INITIAL HOLDERS AND INITIAL NUMBER OF SHARES

	
Names and Addresses of Initial Holders

	
Initial Number of Shares

	
JPMorgan Chase Bank, N.A.

270 Park Avenue

New York, NY 10017

Attention:  Deborah Winkler

Phone: 212-622-3285

Fax: 917-464-6130

 

	
 

291,065

	
Danske Bank A/S

Homens Kanal 2-12

1092 Copenhagen C, Denmark

Attention: Tom Andersen

Phone: +45 45 14 06 72

Fax: +45 45 14 97 55

 

	
 

333,512

	
Comerica Bank

411 W. Lafayette Street, MC 3205

Detroit, MI 48226

Attention: Sarah R Miller

Phone: 313-222-3647

Fax: 313-222-5706

 

	
 

151,596

	
Bank of America, N.A.

135 S. LaSalle St. 8th Floor

Chicago, IL 60603

Attention: Irina Logovinsky

Phone: 312-828-1678

Fax : 704-208-2773

	
 

291,065

	
RBS Citizens National Association

28 State St. 11th Floor MS1100

Boston, MA 02109

Attention: Joshua Conlon

Phone: 617-994-7084

Cell: 617-571-8785

 

	
 

242,554

	
PNC Bank, National Association

1600 Market Street

Philadelphia, PA 19103

Attention: William H. Stewart, Jr.

Phone: 215-585-1265

Fax:  215-585-8391

 

	
 

90,958

 

  

1

  

 

SCHEDULE A to

Warrant Agreement

 

	
Fifth Third Bank

38 Fountain Square Plaza

MD# 109055

Cincinnati, OH 45202

Attention: Randolph J. Stierer

Phone: 513-579-4350

Fax: 513-534-5047

 

with copy to:

 

Fifth Third Bank

38 Fountain Square Plaza

D 10AT76

Cincinnati, OH 45263

Attention: M. Michelle Knight

Phone: 513-534-1964

Fax: 513-534-6757

 

	
 

151,596

	
Landesbank Baden-Württemberg, New York and/or Cayman Islands Branch

280 Park Avenue, 31st Floor, West Building

New York, NY 10017

Attention: Francois Delangle

Phone: 212-584-1757

Fax: 212-584-1759

 

	
 

242,554

	
Wells Fargo Principal Lending, LLC

2450 Colorado Avenue, Suite 3000 West

Santa Monica, CA 90404

Attention: Jeff Nikora

Phone: 310-453-7375

Fax: 855-813-8309

 

	
 

236,490

	
Bank of China, New York Branch

410 Madison Avenue

New York, NY 10017

Attention: David Hoang

Phone: 646-231-3127

	
 

151,596

	
TD Bank, N.A.

6000 Atrium Way

Mt. Laurel, NJ  08054

Attention: Marcella Brattan

Phone:  856-533-4885

Fax: 856-533-7128

	
 

151,596

 

  

2

  

 

SCHEDULE A to

Warrant Agreement

 

	
Calder & Co.

c/o The Bank of Nova Scotia

One Liberty Plaza, 23rd Floor

New York, NY 10006

Attention: Yasmin Prendergast

Phone: 212-225-5300

 

	
 

242,554

  

3

  

 

FORM OF

WARRANT

 

THIS WARRANT AND ANY SECURITIES ACQUIRED UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION TO THE REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH LAWS.  THIS WARRANT AND SUCH SECURITIES MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT IN COMPLIANCE WITH THE CONDITIONS SPECIFIED IN THE WARRANT AGREEMENT (THE “WARRANT AGREEMENT”) DATED AS OF MARCH 9, 2012, BY AND AMONG PULSE ELECTRONICS CORPORATION AND THE HOLDERS FROM TIME TO TIME OF THE WARRANTS ISSUED THEREUNDER PURSUANT TO WHICH THIS WARRANT WAS ISSUED.

 

THIS WARRANT AND THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO THE TERMS AND CONDITIONS OF (1) THE WARRANT AGREEMENT AND (2) A WARRANT SHARES REGISTRATION RIGHTS AGREEMENT DATED AS OF MARCH 9, 2012 BY AND AMONG PULSE ELECTRONICS CORPORATION AND THE HOLDERS FROM TIME TO TIME OF THE WARRANTS, AS EACH SUCH AGREEMENT MAY BE AMENDED, MODIFIED, SUPPLEMENTED, RESTATED OR OTHERWISE CHANGED FROM TIME TO TIME.

 

PULSE ELECTRONICS CORPORATION

 

COMMON STOCK PURCHASE WARRANT

 

	
No.W-

	
_______, 2012

	  	  
	 	Warrant to Purchase
	 	_______ Shares of Common Stock

 

PULSE ELECTRONICS CORPORATION, a Pennsylvania corporation (the “Company”), for value received, hereby certifies that _________ or its registered assigns (the “Holder”), is entitled to purchase from the Company that number of duly authorized, validly issued, fully paid and nonassessable shares of Common Stock, par value $.125 per share, of the Company (the “Common Stock”) set forth above, at a purchase price per share equal to the Exercise Price, at any time or from time to time on or after June 28, 2012, but prior to 5:00 P.M., New York City time, on March 9, 2015, all subject to the terms, conditions and adjustments set forth in that certain Warrant Agreement dated as of March 9, 2012, by and among the Company and the holders from time to time of the Warrants issued thereunder (the “Warrant Agreement”).  Capitalized terms used herein and not otherwise defined shall have the meanings assigned such terms in the Warrant Agreement.

 

  

  

  

 

SCHEDULE A to

Warrant Agreement

 

This Warrant is one of the Warrants (such term to include any such warrants issued in substitution therefor) referred to and issued under the Warrant Agreement.  The number of shares of Common Stock issuable upon exercise of this Warrant as set forth on the face hereof is subject to certain adjustments as provided in the Warrant Agreement.  The Holder is entitled to certain benefits as set forth in the Warrant Shares Registration Rights Agreement dated as of March 9, 2012, by and among the Company and the holders from time to time of the Warrants (the “Registration Rights Agreement”).  Copies of the Warrant Agreement and the Registration Rights Agreement are available from the Company at no charge upon the request of the Holder.

 

  

5

  

 

SCHEDULE A to

Warrant Agreement

 

IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by its authorized officers as of the date first above written.

 

	 	PULSE ELECTRONICS CORPORATION
	 	 
	  	by	  
	 	 	Name:
	 	 	Title: 

  

6

  

 

EXHIBIT B to

 Warrant Agreement

 

FORM OF ELECTION TO PURCHASE SHARES

 

Date:  _______

 

TO:  Pulse Electronics Corporation (the “Company”)

 

RE:  Election to Purchase [Common Stock]/[Other Securities]

 

The undersigned holder of the attached Warrant (the “Holder”), pursuant to the provisions set forth in the Warrant Agreement dated as of March 9, 2012 (the “Warrant Agreement”) pursuant to which such Warrant was issued, hereby irrevocably surrenders the right to purchase   [Common Stock]/[Other Securities], and a proportionate part of the Warrant and the rights evidenced thereby, in exchange for that number of [Common Stock]/[Other Securities] computed in accordance with the provisions of Section 2.01(b) of the Warrant Agreement; and requests that such [Common Stock]/[Other Securities] be held in the name of the Persons listed below.

 

	
Number of [Non-Voting Common 

Shares]/[Successor  Securities]

	
Name

	
Address

	  	  	  

A new warrant evidencing the remaining Common Stock covered by such Warrant, but not yet vested or subscribed for and purchased, if any, should be issued in the name set forth below.

	
Name and Address of Person 

to be Issued New Warrant:

	  
	  

 

	 	
Holder:

	  
	 	  	  
	 	
By:

	  
	 	  	  
	 	
Name:

	  
	 	  	  
	 	
Title:

	  

 

  

B-1

  

 

EXHIBIT C to

Warrant Agreement

 

FORM OF ASSIGNMENT

 

FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and transfers unto the Assignee named below all of the rights of the undersigned to purchase Common Stock, par value $.125 per share (“Common Stock”), of PULSE ELECTRONICS CORPORATION represented by the Warrant, with respect to the number of shares of Common Stock set forth below:

 

	

Name of Assignee

	 	

Address

	 	

Number of Shares

and does hereby irrevocably constitute and appoint _________ attorney to make such transfer on the books of PULSE ELECTRONICS CORPORATION maintained for that purpose, with full power of substitution in the premises.

 

Dated: ______________, 201_

 

	 	
NAME OF HOLDER1

	 	 
	  	by	  
	 	 	Name:
	 	 	Title: 

1 Name of Holder must conform in all respects to name of holder as specified on the face of the Warrant.

 

 

C-1ex10-6_1.htm

EXHIBIT 10.6(1)

 

EXECUTIVE COPY

 

 

WARRANT SHARES REGISTRATION RIGHTS AGREEMENT

 

dated as of

 

March 9, 2012,

 

by and among

 

PULSE ELECTRONICS CORPORATION (formerly known as TECHNITROL, INC.)

 

and

 

THE HOLDERS FROM TIME TO TIME

OF THE WARRANTS REFERRED TO HEREIN

  

 

 

 

 

Table of Contents

 

	 	 	
Page

	 	 	 
	ARTICLE I
	  	  
	Definitions
	ARTICLE II
	  
	Registration Under the Securities Act
	 

	
SECTION 2.01.

	
Demand Registration

	
5

	
SECTION 2.02.

	
Underwritten Offerings

	
9

	
SECTION 2.03.

	
Expenses

	
9

	
SECTION 2.04.

	
Postponements

	
10

	 	 	 
	ARTICLE III
	  	  
	Holdback Arrangements
	 
	
SECTION 3.01.

	
Restrictions on Sale by Holders of Registrable Securities

	
11

	
SECTION 3.02.

	
Restrictions on Sale by the Company and Others

	
11

	 	 	 
	ARTICLE IV
	  	  	  
	Registration Procedures
	
SECTION 4.01.

	
Obligations of the Company

	
11

	
SECTION 4.02.

	
Seller Information

	
16

	
SECTION 4.03.

	
Notice to Discontinue

	
17

	ARTICLE V
	  	  	  
	Indemnification; Contribution
	 	 	 
	
SECTION 5.01.

	
Indemnification by the Company

	
17

	
SECTION 5.02.

	
Indemnification by Holders

	
18

	
SECTION 5.03.

	
Conduct of Indemnification Proceedings

	
18

	
SECTION 5.04.

	
Contribution

	
19

 

 

i

 

 

	ARTICLE VI
	  	  	  
	General
	 	 
	
SECTION 6.01.

	
Registration Rights to Others

	
20

	
SECTION 6.02.

	
Availability of Information; Rule 144; Rule 144A; Other Exemptions

	
20

	
SECTION 6.03.

	
Amendments and Waivers

	
20

	
SECTION 6.04.

	
Notices

	
21

	
SECTION 6.05.

	
Successors and Assigns

	
21

	
SECTION 6.06.

	
Counterparts

	
22

	
SECTION 6.07.

	
Descriptive Headings, Etc

	
22

	
SECTION 6.08.

	
Severability

	
22

	
SECTION 6.09.

	
Governing Law

	
22

	
SECTION 6.10.

	
Jurisdiction; Consent to Service of Process

	
22

	
SECTION 6.11.

	
Waiver of Jury Trial

	
23

	
SECTION 6.12.

	
Remedies; Specific Performance

	
23

	
SECTION 6.13.

	
Entire Agreement

	
24

	
SECTION 6.14.

	
Further Assurances

	
24

	
SECTION 6.15.

	
No Inconsistent Agreement

	
24

 

 

ii

 

 

WARRANT SHARES REGISTRATION RIGHTS AGREEMENT (this “Agreement”) dated as of March 9, 2012, by and among PULSE ELECTRONICS CORPORATION (formerly known as TECHNITROL, INC.), a Pennsylvania corporation (the “Company”), and each holder of Warrants (as defined below) who is or may from time to time become a party hereto (collectively, the “Holders”).

 

WHEREAS in connection with the execution and delivery of the Third Amendment Agreement dated as of the date hereof, among the Company, the Subsidiaries of the Company party thereto, the lenders party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer (the “Third Amendment Agreement”) and to induce such lenders to enter into the Third Amendment Agreement, the Company has agreed pursuant to a Warrant Agreement dated as of the date hereof among the parties hereto (the “Warrant Agreement”), to issue and deliver warrants (the “Warrants”) to purchase shares of its common stock, par value $0.125 per share (“Common Stock”).

 

WHEREAS, it is a condition to the effectiveness of the Third Amendment Agreement that the Company agrees to provide certain registration rights in respect of the Registrable Securities (as defined below) on the terms and subject to the conditions set forth herein.

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

 

ARTICLE I

 

Definitions

 

As used in this Agreement, the following terms shall have the following meanings:

 

“Affiliate” shall mean, when used with respect to a specified person, another person that directly, or indirectly through one or more intermediaries, controls or is controlled by or is under common control with the person specified.

 

“Blackout Notice” shall have the meaning assigned to it in Section 2.04 of this Agreement.

 

“Blackout Period” shall have the meaning assigned to it in Section 2.04 of this Agreement.

 

  

  

  

 

“Company” shall have the meaning set forth in the preamble to this Agreement.

 

“Common Stock” shall have the meaning set forth in the preamble to this Agreement.

 

“Demand Registration” shall mean a registration required to be effected by the Company pursuant to Section 2.01.

 

“Demand Registration Statement” shall mean a registration statement of the Company which covers the Registrable Securities requested to be included therein pursuant to the provisions of Section 2.01 and all amendments and supplements to such registration statement, including post-effective amendments, in each case including the Prospectus contained therein, all exhibits thereto and all material incorporated by reference (or deemed to be incorporated by reference) therein.

 

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended from time to time, and the rules and regulations thereunder, or any successor statute.

 

“FINRA” shall mean the Financial Industry Regulatory Authority.

 

“Holders” shall have the meaning set forth in the preamble to this Agreement.  The term “Holder” shall include each holder from time to time of any Registrable Securities for so long as it is the registered owner of any Registrable Securities and such of its heirs, successors and permitted assigns (including any permitted transferees of Registrable Securities) who acquire or are otherwise the transferee of Registrable Securities, directly or indirectly, from such Holder (or any subsequent Holder), for so long as such heirs, successors and permitted assigns are the registered owner of any Registrable Securities.  For purposes of this Agreement, a person will be deemed to be a Holder whenever such person holds an option to purchase, or a security convertible into or exercisable or exchangeable for, Registrable Securities, whether or not such purchase, conversion, exercise or exchange has actually been effected and disregarding any legal restrictions upon the exercise of such rights.  Registrable Securities issuable upon exercise of an option or upon conversion, exchange or exercise of another security shall be deemed outstanding for the purposes of this Agreement.

 

“Holders’ Counsel” shall mean one firm of counsel (per registration) to the Holders of Registrable Securities participating in such registration, which counsel shall be selected by the Initiating Holders holding a majority of the Registrable Securities for which registration was requested in the Request.

 

“Initiating Holders” shall mean, with respect to a particular registration, the Holders who initiated the Request for such registration.

 

“Majority Holders” shall mean one or more Holders of Registrable Securities who hold a majority of the Registrable Securities then outstanding.

 

  

2

  

 

“Majority Holders of the Registration” shall mean, with respect to a particular registration, one or more Holders of Registrable Securities who hold a majority of the Registrable Securities to be included in such registration.

 

“Other Securities” shall mean any capital 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, upon 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 the Warrant Agreement.

 

“person” shall mean any individual, firm, partnership, corporation, trust, joint venture, association, joint stock company, limited liability company, unincorporated organization or any other entity or organization, including a government or agency or political subdivision thereof, and shall include any successor (by merger or otherwise) of such entity.

 

“Prospectus” shall mean the prospectus included in a Registration Statement (including, without limitation, any preliminary prospectus and any prospectus that includes any information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A promulgated under the Securities Act) and any such Prospectus as amended or supplemented by any prospectus supplement, and all other amendments and supplements to such Prospectus, including post-effective amendments, and in each case including all material incorporated by reference (or deemed to be incorporated by reference) therein.

 

“Registrable Securities” shall mean any Warrant Shares issued upon exercise of or pursuant to the Warrants and any Other Securities which may be issued with respect to, in exchange for, or in substitution of, any Warrant Shares by reason of any divided, distribution or share split, combination of shares, merger, consolidation, recapitalization, reclassification, reorganization, sale of assets or similar transaction.  As to any particular Registrable Securities, such securities shall cease to be Registrable Securities when (a) a registration statement with respect to the sale of such securities shall have been declared effective under the Securities Act and such securities shall have been disposed of in accordance with such registration statement, (b) such securities are sold pursuant to Rule 144 (or any similar provisions then in force) under the Securities Act, (c) such securities have been otherwise transferred, a new certificate or other evidence of ownership for them not bearing the legend restricting further transfer shall have been delivered by the Company and subsequent public distribution of them shall not require registration under the Securities Act or (d) such securities shall have ceased to be outstanding.

 

“Registration Expenses” shall mean any and all expenses incident to performance of or compliance with this Agreement by the Company and its subsidiaries, including, without limitation (a) all SEC, stock exchange, FINRA and other registration, listing and filing fees, (b) all fees and expenses incurred in connection with compliance with state securities or blue sky laws and compliance with the rules of any stock exchange (including, to the extent requested by any Underwriter, fees and disbursements of counsel in connection with such compliance and the preparation of a blue sky memorandum and legal investment survey), (c) all printers’ fees and costs incurred in printing, distributing, mailing and delivering any Registration Statement, any Prospectus and any other document relating to the performance of or compliance with this Agreement, (d) the fees and disbursements of counsel for the Company, (e) the reasonable fees and disbursements of Holders’ Counsel, (f) the fees and disbursements of all independent public accountants (including the expenses of any audit and/or “cold comfort” letters) and the fees and expenses of other persons, including experts, retained by the Company, (g) the expenses incurred in connection with making road show presentations and holding meetings with potential investors to facilitate the distribution and sale of Registrable Securities, (h) any fees and disbursements of underwriters customarily paid by issuers or sellers of securities, and (i) all internal expenses of the Company (including all salaries and expenses of officers and employees performing legal or accounting duties); provided, however, Registration Expenses shall not include (i) discounts and commissions payable to underwriters, selling brokers, dealer managers or other similar persons engaged in the distribution of any of the Registrable Securities or (ii) the fees and disbursements of counsel (other than Holders’ Counsel) or other professionals or consultants retained by any Holder; provided further, that in any case where Registration Expenses are not to be borne by the Company, such expenses shall not include salaries of Company personnel or general overhead expenses of the Company or auditing fees of the Company or other expenses for the preparation of financial statements or other data normally prepared by the Company in the ordinary course of its business or which the Company would have incurred in any event.

 

  

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“Registration Statement” shall mean any registration statement of the Company which covers any Registrable Securities and all amendments and supplements to any such Registration Statement, including post-effective amendments, in each case including the Prospectus contained therein, all exhibits thereto and all material incorporated by reference (or deemed to be incorporated by reference) therein.

 

“Request” shall have the meaning set forth in Section 2.01(a).

 

“SEC” shall mean the Securities and Exchange Commission, or any successor agency having jurisdiction to enforce the Securities Act.

 

“Securities Act” shall mean the Securities Act of 1933, as amended from time to time, and the rules and regulations thereunder, or any successor statute.

 

“Shelf Registration” shall have the meaning set forth in Section 2.01(a).

 

“Underwriters” shall mean the underwriters, if any, of any offering being registered under the Securities Act pursuant to any Registration Statement.

 

“Underwritten Offering” shall mean a sale of securities of the Company to an Underwriter or Underwriters for reoffering to the public.

 

  

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“Warrant Shares” shall mean (a) any shares of Common Stock (or Other Securities) issued or issuable upon the exercise of any Warrants and (b) any shares of Common Stock (and Other Securities) issued subsequent to the exercise of any of the Warrants as a dividend or other distribution with respect to, or resulting from a subdivision of the outstanding shares of Common Stock (or Other Securities) into a greater number of shares by reclassification, stock splits or otherwise, or in exchange for or in replacement of the Common Stock (or Other Securities) issued upon such exercise.

 

“Warrant Agreement” shall have the meaning set forth in the preamble to this Agreement.

 

“Warrants” shall have the meaning set forth in the preamble to this Agreement.

 

“Withdrawn Demand Registration” shall have the meaning set forth in Section 2.01(a).

 

“Withdrawn Request” shall have the meaning set forth in Section 2.01(a).

 

ARTICLE II

 

Registration Under the Securities Act

 

SECTION 2.01.  Demand Registration. a)Right to Demand Registration.  Subject to Section 2.01(c), at any time and from time to time, the Majority Holders shall have the right to request in writing that the Company register the resale of all or part of the Holders’ Registrable Securities (a “Request”) (which Request shall specify the amount of Registrable Securities intended to be disposed of by such requesting Holders and the intended method of disposition thereof) by filing with the SEC a Demand Registration Statement.  As promptly as practicable, but no later than 15 days after receipt of a Request, the Company shall give written notice of such requested registration to all other Holders of Registrable Securities.  Subject to Section 2.01(b), the Company shall include in a Demand Registration (i) the Registrable Securities intended to be disposed of by the Initiating Holders and (ii) the Registrable Securities intended to be disposed of by any other Holder which shall have made a written request (which request shall specify the amount of Registrable Securities intended to be disposed of by the requesting Holder and the intended method of disposition thereof) to the Company for inclusion thereof in such registration within 20 days after the receipt of such written notice from the Company.  The Company shall, as expeditiously as possible, following a Request, use its best efforts to cause to be filed with the SEC a Demand Registration Statement providing for the registration under the Securities Act of the resale of the Registrable Securities which the Company has been so requested to register by all such Holders, to the extent necessary to permit the disposition of such Registrable Securities in accordance with the intended methods of disposition thereof specified in such Request or further requests (including, without limitation, by means of a shelf registration pursuant to Rule 415 under the Securities Act (a “Shelf Registration”) registering the resale from time to time by the Holders thereof of all of the Registrable Securities upon and following the exercise from time to time of the Warrants, if so requested and if the Company is then eligible to use such a registration method).  The Company shall use its best efforts to have such Demand Registration Statement declared effective by the SEC as soon as practicable thereafter and to keep such Demand Registration Statement continuously effective for the period specified in Section 4.01(b).  A Request may be withdrawn prior to the filing of the Demand Registration Statement by the Majority Holders of the Registration (a “Withdrawn Request”) and a Demand Registration Statement may be withdrawn prior to the effectiveness thereof by the Majority Holders of the Registration (a “Withdrawn Demand Registration”), and such withdrawals shall be treated as a Demand Registration which shall have been effected pursuant to this Section 2.01, unless the Holders of Registrable Securities the resale of which was to be registered under such Registration Statement reimburse the Company for its reasonable out-of-pocket Registration Expenses relating to the preparation and filing of such Demand Registration Statement (to the extent actually incurred), in which case up to two such withdrawals shall not be treated as a Demand Registration effected pursuant to this Section 2.01 (and shall not be counted toward the number of Demand Registrations); provided, however, that if a Withdrawn Request or Withdrawn Registration Statement is made (A) because of a material adverse change in the business, financial condition or prospects of the Company, or (B) because the sole or lead managing Underwriter advises that the amount of Registrable Securities to be sold in such offering be reduced pursuant to Section 2.01(b) by more than 15% of the Registrable Securities the resale of which was to be registered under such Registration Statement, then such withdrawal shall not be treated as a Demand Registration effected pursuant to this Section 2.01 (and shall not be counted toward the number of Demand Registrations), and the Company shall pay all Registration Expenses in connection therewith.  Any Holder requesting inclusion in a Demand Registration may, at any time prior to the effective date of the Demand Registration Statement (and for any reason) revoke such request by delivering written notice to the Company revoking such requested inclusion.

 

  

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(b)  Priority in Demand Registrations.  If a Demand Registration involves an Underwritten Offering, and the sole or lead managing Underwriter, as the case may be, of such Underwritten Offering shall advise the Company in writing (with a copy to each Holder requesting registration) on or before the date five days prior to the date then scheduled for such offering that, in its opinion, the amount of Registrable Securities requested to be included in such Demand Registration exceeds the number which can be sold in such offering within a price range acceptable to the Majority Holders of the Registration (such writing to state the basis of such opinion and the approximate number of Registrable Securities which, in the opinion of such Underwriter, may be included in such offering without causing the price to be below the bottom of such price range), and the Request is not thereafter withdrawn, the Company shall include in such Demand Registration, to the extent of the number which the Company is so advised may be included in such offering, the Registrable Securities requested to be included in the Demand Registration by the Holders allocated pro rata in proportion to the number of Registrable Securities requested to be included in such Demand Registration by each of them.  In the event the Company shall not, by virtue of this Section 2.01(b), include in any Demand Registration all of the Registrable Securities of any Holder requested to be included in such Demand Registration, such Holder may, upon written notice to the Company given within five days of the time such Holder first is notified of such matter, further reduce the amount of Registrable Securities it desires to have included in such Demand Registration, whereupon only the Registrable Securities, if any, that it desires to have included will be so included and the Holders not so reducing shall be entitled to a corresponding pro rata increase in the amount of Registrable Securities to be included in such Demand Registration.

 

  

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(c)  Limitations on Registrations.  The rights of Holders of Registrable Securities to request Demand Registrations pursuant to Section 2.01(a) are subject to the following limitations:  (i) in no event shall the Company be required to effect a Demand Registration (A) before the date that is six months after the date of this Agreement or (B) after March 9, 2016, (ii) in no event shall the Company be required to effect a Demand Registration at a time when the Registrable Securities may be freely sold pursuant to Rule 144 (or any similar provisions then in force) under the Securities Act, (iii) in no event shall the Company be required to effect any Demand Registration within 90 days after the effective date of a Registration Statement filed pursuant to a previous Demand Registration, and (iv) in no event shall the Company be required to effect, in the aggregate, more than three Demand Registrations pursuant to this Section 2.01; provided, however, that such number shall be increased to the extent the Company (x) does not include in what would otherwise be the final registration for which the Company is required to pay Registration Expenses the number of Registrable Securities requested to be registered by the Holders by reason of Section 2.01(b) or (y) terminates a Shelf Registration prior to the time that all Registrable Securities covered by such Shelf Registration have been sold.

 

(d)  Underwriting; Selection of Underwriters.  Notwithstanding anything to the contrary contained in Section 2.01(a), if the Initiating Holders holding a majority of the Registrable Securities for which registration was requested in the Request so elect, the offering of such Registrable Securities pursuant to such Demand Registration shall be in the form of a firm commitment Underwritten Offering and such Initiating Holders may require that all persons (including other Holders) participating in such registration sell their Registrable Securities to the Underwriters at the same price and on the same terms of underwriting applicable to the Initiating Holders. If any Demand Registration involves an Underwritten Offering, the sole or managing Underwriter and any additional investment bankers and managers to be used in connection with such registration shall be selected by the Initiating Holders holding a majority of the Registrable Securities for which registration was requested in the Request subject to the approval of the Company (such approval not to be unreasonably withheld or delayed).

 

(e)  Effective Registration Statement; Suspension.  A Demand Registration Statement shall not be deemed to have become effective (and the related registration will not be deemed to have been effected) (i) unless it has been declared effective by the SEC and remains effective in compliance with the provisions of the Securities Act with respect to the disposition of all Registrable Securities covered by such Demand Registration Statement for the time period specified in Section 4.01(b); (ii) if the offering of any Registrable Securities pursuant to such Demand Registration Statement is unable to proceed as a result of any stop order, injunction or other order or requirement of the SEC or any other governmental agency or court; or (iii) if, in the case of an Underwritten Offering, the conditions to closing specified in an underwriting agreement to which the Company is a party are not satisfied (other than by the sole reason of any breach or failure by the Holders of Registrable Securities) and are not otherwise waived.

 

  

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(f)  Registration of Other Securities.  Whenever the Company shall effect a Demand Registration, no securities other than the Registrable Securities shall be covered by such registration unless the Majority Holders of the Registration shall have consented in writing to the inclusion of such other securities (which consent shall not be unreasonably withheld).

 

(g)  Registration Statement Form. Registrations under this Section 2.01 shall be on such appropriate registration form of the SEC (i) as shall be reasonably selected by the Company and as shall be reasonably acceptable to the Majority Holders of the Registration, and (ii) which shall be available for the sale of Registrable Securities in accordance with the intended method or methods of disposition specified in the requests for registration.  If, at any time that the Company is eligible to use Form S-3 or any successor thereto, the Initiating Holders have requested that the Company file a Shelf Registration Statement on Form S-3 or any successor thereto for a public offering of all or any portion of the Registrable Securities held by such Holders, then the Company shall use its best efforts to effect a Shelf Registration under the Securities Act on Form S-3 or any successor thereto, the number of shares of Registrable Securities requested by the Holders to be included.  The Company agrees to include in any such Registration Statement all information which any selling Holder, upon advice of counsel, shall reasonably request.

 

(h)  Shelf Registration.  If a Demand Registration has been made for a Shelf Registration and the Company has subsequently filed a registration statement pursuant to which such a Shelf Registration has become effective, then the Company shall use its best efforts to keep the Shelf Registration continuously effective through the date on which all of the Registrable Securities covered by such Shelf Registration may be sold pursuant to Rule 144 under the Securities Act (or any successor provision having similar effect); provided, however, that prior to the termination of such Shelf Registration, the Company shall first furnish to each Holder of Registrable Securities participating in such Shelf Registration (i) an opinion, in form and substance reasonably satisfactory to the Majority Holders of the Registration, of counsel for the Company reasonably satisfactory to the Majority Holders of the Registration stating that such Registrable Securities are freely saleable pursuant to Rule 144 under the Securities Act (or any successor provision having similar effect) or (ii) a “No-Action Letter” from the staff of the SEC stating that the SEC would not recommend enforcement action if the Registrable Securities included in such Shelf Registration were sold in a public sale other than pursuant to an effective registration statement.

 

(i)  Other Registrations.  During the period (i) beginning on the date of a Request and (ii) ending on the date that is 90 days after the date that a Demand Registration Statement filed pursuant to such Request has been declared effective by the SEC or, if the Holders shall withdraw such Request or such Demand Registration Statement, on the date of such Withdrawn Request or such Withdrawn Registration Statement, the Company shall not, without the consent of the Majority Holders of the Registration, file a registration statement pertaining to any other securities of the Company (except pursuant to registrations on Forms S-4 or S-8 or any successor form to such forms); provided however that such 90-day period shall be extended to include the duration of any Blackout Periods that may have occurred during such 90-day period.

 

  

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SECTION 2.02.  Underwritten Offerings.  b)If requested by the sole or lead managing Underwriter for any Underwritten Offering effected pursuant to a Demand Registration, the Company shall enter into a customary underwriting agreement with the Underwriters for such offering, such agreement to be reasonably satisfactory in substance and form to the Company and the Majority Holders of the Registration and to contain such representations and warranties by the Company and such other terms as are generally prevailing in agreements of that type, including, without limitation, indemnification and contribution to the effect and to the extent provided in Article V hereof.

 

(b)  Holders of Registrable Securities to be Parties to Underwriting Agreement.  The Holders of Registrable Securities to be distributed by Underwriters in an Underwritten Offering contemplated by Article II hereof shall be parties to the underwriting agreement between the Company and such Underwriters and may, at such Holders’ option, require that any or all of the representations and warranties by, and the other agreements on the part of, the Company to and for the benefit of such Underwriters shall also be made to and for the benefit of such Holders of Registrable Securities and that any or all of the conditions precedent to the obligations of such Underwriters under such underwriting agreement be conditions precedent to the obligations of such Holders of Registrable Securities; provided, however, that the Company shall not be required to make any representations or warranties with respect to written information specifically provided by a selling Holder for inclusion in the Registration Statement.  No Holder shall be required to make any representations or warranties to, or agreements with, the Company other than representations, warranties or agreements regarding such Holder, such Holder’s Registrable Securities and such Holder’s intended method of disposition.

 

(c)  Participation in Underwritten Registration.  Notwithstanding anything herein to the contrary, no person may participate in any Underwritten Offering hereunder unless such person (i) agrees to sell its securities on the same terms and conditions provided in any underwriting arrangements approved by the persons entitled hereunder to approve such arrangement and (ii) accurately completes and executes in a timely manner all questionnaires, powers of attorney, indemnities, custody agreements, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements.

 

SECTION 2.03.  Expenses.  Except as stated herein, the Company shall pay all Registration Expenses in connection with any Demand Registration whether or not such registration shall become effective and whether or not all Registrable Securities originally requested to be included in such registration are withdrawn or otherwise ultimately not included in such registration, except as otherwise provided with respect to a Withdrawn Request and a Withdrawn Demand Registration in Section 2.01(a).

 

  

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SECTION 2.04.  Postponements.  The Company shall be entitled to postpone a Demand Registration and to require the Holders of Registrable Securities to discontinue the disposition of their securities covered by a Shelf Registration during any Blackout Period (as defined below) (i) if the Board of Directors of the Company determines in good faith that effecting such a registration or continuing such disposition at such time would have a material adverse effect upon a proposed sale of any substantial portion of the assets of the Company or a proposed material acquisition of assets by the Company or a merger, reorganization, recapitalization or similar current transaction materially affecting the capital structure or equity ownership of the Company, or (ii) if the Company is otherwise in possession of material information which the Board of Directors of the Company determines in good faith it is not in the best interests of the Company to disclose in a registration statement at such time; provided, however, that the Company may only delay a Demand Registration pursuant to this Section 2.04 by delivery of a Blackout Notice (as defined below) within 10 days of delivery of the request for such Registration under Section 2.01 and may delay a Demand Registration and require the Holders of Registrable Securities to discontinue the disposition of their securities covered by a Shelf Registration only for a reasonable period of time not to exceed 90 days (or such earlier time as the applicable transaction is consummated or no longer proposed or the material information has been made public) (the “Blackout Period”).  There shall not be more than two Blackout Periods in any 12 month period.  The Company shall promptly notify the Holders in writing (a “Blackout Notice”) of any decision to postpone a Demand Registration or to discontinue sales of Registrable Securities covered by a Shelf Registration pursuant to this Section 2.04 and shall include a general statement of the reason for such postponement, an approximation of the anticipated delay and an undertaking by the Company promptly to notify the Holders as soon as a Demand Registration may be effected or sales of Registrable Securities covered by a Shelf Registration may resume.  In making any such determination to initiate or terminate a Blackout Period, the Company shall not be required to consult with or obtain the consent of any Holder, and any such determination shall be the Company’s sole responsibility.  Each Holder shall treat all notices received from the Company pursuant to this Section 2.04 in the strictest confidence and shall not disseminate such information.  If the Company shall postpone the filing of a Demand Registration Statement, the Majority Holders who were to participate therein shall have the right to withdraw the request for registration.  Any such withdrawal shall be made by giving written notice to the Company within 10 days after receipt of the Blackout Notice.  Such withdrawn registration request shall not be treated as a Demand Registration effected pursuant to Section 2.01 (and shall not be counted towards the number of Demand Registrations effected pursuant to Section 2.01(c)), and the Company shall pay all Registration Expenses in connection therewith.

 

  

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ARTICLE III

 

Holdback Arrangements

 

SECTION 3.01.  Restrictions on Sale by Holders of Registrable Securities.  Each Holder of Registrable Securities agrees, by acquisition of such Registrable Securities, if timely requested in writing by the sole or lead managing Underwriter in an Underwritten Offering, not to make any short sale of, loan, grant any option for the purchase of or effect any sale or distribution, of any of the Company’s equity securities (or any security convertible into or exchangeable or exercisable for any of the Company’s equity securities) during the nine business days (as such term is used in Regulation M under the Exchange Act) prior to, and during the time period reasonably requested by the sole or lead managing Underwriter not to exceed 90 days, beginning on the effective date of the applicable registration statement (except as part of such Underwritten Offering or pursuant to registrations on Forms S-4 or S-8 or any successor form to such forms), unless the sole or lead managing Underwriter in such Underwritten Offering otherwise agrees.

 

SECTION 3.02.  Restrictions on Sale by the Company and Others.  The Company agrees that if timely requested in writing by the sole or lead managing Underwriter in an Underwritten Offering, not to make any short sale of, loan, grant any option for the purchase of or effect any sale or distribution of any of the Company’s equity securities (or any security convertible into or exchangeable or exercisable for any of the Company’s equity securities) during the nine business days (as such term is used in Regulation M under the Exchange Act) prior to, and during the time period reasonably requested by the sole or lead managing Underwriter not to exceed 90 days, beginning on the effective date of the applicable registration statement (except as part of such Underwritten Offering or pursuant to registrations on Forms S-4 or S-8 or any successor form to such forms), unless the sole or lead managing Underwriter in such Underwritten Offering otherwise agrees.  The Company will use its best efforts to cause each director or officer of the Company to so agree.

 

ARTICLE IV

 

Registration Procedures.

 

SECTION 4.01.  Obligations of the Company.  Whenever the Company is required to effect a Demand Registration, the Company shall use commercially reasonable efforts to, as expeditiously as practicable:

 

(a)  prepare and file with the SEC (promptly, and in any event within 60 days after receipt of the applicable Request) the requisite Registration Statement to effect such registration, which Registration Statement shall comply as to form in all material respects with the requirements of the applicable form and include all financial statements required by the SEC to be filed therewith, and the Company shall use its best efforts to cause such Registration Statement to become effective; provided, however, that before filing a Registration Statement or Prospectus or any amendments or supplements thereto, or comparable statements under securities or blue sky laws of any jurisdiction, the Company shall (i) provide Holders’ Counsel and any other Inspector (as defined below) with an adequate and appropriate opportunity to participate in the preparation of such Registration Statement and each Prospectus included therein (and each amendment or supplement thereto or comparable statement) to be filed with the SEC, which documents shall be subject to the review and comment of Holders’ Counsel, and (ii) not file any such Registration Statement or Prospectus (or amendment or supplement thereto or comparable statement) with the SEC to which Holder’s Counsel, any selling Holder or any other Inspector shall have reasonably objected on the grounds that such filing does not comply in all material respects with the requirements of the Securities Act or of the rules or regulations thereunder;

 

  

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(b)  prepare and file with the SEC such amendments and supplements to such Registration Statement and the Prospectus used in connection therewith as may be necessary (i) to keep such Registration Statement effective during the periods required herein, and (ii) to comply with the provisions of the Securities Act with respect to the disposition of all Registrable Securities covered by such Registration Statement, in each case until such time as all of such Registrable Securities have been disposed of in accordance with the intended methods of disposition by the seller(s) thereof set forth in such Registration Statement; provided that except with respect to any Shelf Registration, such period need not extend beyond six months after the effective date of the Registration Statement; provided however that such six-month period shall be extended to include the duration of any Blackout Periods that may have occurred during such six-month period; and provided further, that with respect to any Shelf Registration, such period need not extend beyond the time period provided in Section 2.01(h), and which periods, in any event, shall terminate when all Registrable Securities covered by such Registration Statement have been sold or have otherwise ceased to be Registrable Securities (but not before the expiration of the applicable period referred to in Section 4(3) of the Securities Act and Rule 174 thereunder, if applicable);

 

(c)  furnish, without charge, to each selling Holder of such Registrable Securities and each Underwriter, if any, of the securities covered by such Registration Statement, such number of copies of such Registration Statement, each amendment and supplement thereto (in each case including all exhibits), and the Prospectus included in such Registration Statement (including each preliminary Prospectus) in conformity with the requirements of the Securities Act, and other documents, as such selling Holder and Underwriter may reasonably request in order to facilitate the public sale or other disposition of the Registrable Securities owned by such selling Holder (the Company hereby consenting to the use in accordance with applicable law of each such Registration Statement (or amendment or post-effective amendment thereto) and each such Prospectus (or preliminary prospectus or supplement thereto) by each such selling Holder of Registrable Securities and the Underwriters, if any, in connection with the offering and sale of the Registrable Securities covered by such Registration Statement or Prospectus);

 

  

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(d)  prior to any public offering of Registrable Securities, use commercially reasonable efforts to register or qualify all Registrable Securities and other securities covered by such Registration Statement under such other securities or blue sky laws of such jurisdictions as any selling Holder of Registrable Securities covered by such Registration Statement or the sole or lead managing Underwriter, if any, may reasonably request to enable such selling Holder to consummate the disposition in such jurisdictions of the Registrable Securities owned by such selling Holder and to continue such registration or qualification in effect in each such jurisdiction for as long as such Registration Statement remains in effect (including through new filings or amendments or renewals), and do any and all other acts and things which may be necessary or advisable to enable any such selling Holder to consummate the disposition in such jurisdictions of the Registrable Securities owned by such selling Holder; provided, however, that the Company shall not be required to consent to general service of process in any such jurisdiction;

 

(e)  use commercially reasonable efforts to obtain all other approvals, consents, exemptions or authorizations from such governmental agencies or authorities as may be necessary to enable the selling Holders of such Registrable Securities to consummate the disposition of such Registrable Securities;

 

(f)  notify Holders’ Counsel, each Holder of Registrable Securities covered by such Registration Statement and the sole or lead managing Underwriter, if any: (i) when the Registration Statement, any pre-effective amendment, the Prospectus or any prospectus supplement related thereto or post-effective amendment to the Registration Statement has been filed and, with respect to the Registration Statement or any post-effective amendment, when the same has become effective, (ii) of any request by the SEC or any state securities or blue sky authority for amendments or supplements to the Registration Statement or the Prospectus related thereto or for additional information, (iii) of the issuance by the SEC of any stop order suspending the effectiveness of the Registration Statement or the initiation or threat of any proceedings for that purpose, (iv) of the receipt by the Company of any notification with respect to the suspension of the qualification of any Registrable Securities for sale under the securities or blue sky laws of any jurisdiction or the initiation of any proceeding for such purpose, (v) of the existence of any fact of which the Company becomes aware or the happening of any event which results in (A) the Registration Statement containing an untrue statement of a material fact or omitting to state a material fact required to be stated therein or necessary to make any statements therein not misleading, or (B) the Prospectus included in such Registration Statement containing an untrue statement of a material fact or omitting to state a material fact required to be stated therein or necessary to make any statements therein, in the light of the circumstances under which they were made, not misleading, (vi) if at any time the representations and warranties contained in any underwriting agreement in respect of such offering cease to be true and correct in all material respects, and (vii) of the Company’s reasonable determination that a post-effective amendment to a Registration Statement would be appropriate or that there exists circumstances not yet disclosed to the public which make further sales under such Registration Statement inadvisable pending such disclosure and post-effective amendment; and, if the notification relates to an event described in any of the clauses (ii) through (vii) of this Section 4.01(f), (1) each Holder agrees that such Holder will immediately discontinue disposition of Registrable Securities in accordance with Section 4.03 below and (2) the Company shall promptly prepare a supplement or post-effective amendment to such Registration Statement or related Prospectus or any document incorporated therein by reference or file any other required document so that (x) such Registration Statement 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 not misleading, and (y) as thereafter delivered to the purchasers of the Registrable Securities being sold thereunder, such Prospectus shall not include an 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 the light of the circumstances under which they were made not misleading (and shall furnish to each such Holder and each Underwriter, if any, a reasonable number of copies of such Prospectus so supplemented or amended); and if the notification relates to an event described in clause (iii) of this Section 4.01(f), the Company shall take all reasonable action required to prevent the entry of such stop order or to remove it if entered;

 

  

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(g)  make available upon reasonable notice and during normal business hours for inspection by any selling Holder of Registrable Securities, any sole or lead managing Underwriter participating in any disposition pursuant to such Registration Statement, Holders’ Counsel and any attorney, accountant or other agent retained by any such seller or any Underwriter (each, an “Inspector” and, collectively, the “Inspectors”), all financial and other records, pertinent corporate documents and properties of the Company and any subsidiaries thereof as may be in existence at such time (collectively, the “Records”) as shall be necessary, in the opinion of such Holders’ and such Underwriters’ respective counsel, to enable them to exercise their due diligence responsibility and to conduct a reasonable investigation within the meaning of the Securities Act, and cause the Company’s and any subsidiaries’ officers, directors and employees, and the independent public accountants of the Company, to supply all information reasonably requested by any such Inspectors in connection with such Registration Statement, provided, however, that if reasonably requested by the Company, each Holder of such Registrable Securities requesting such information agrees to enter into a confidentiality agreement in customary form and subject to customary exceptions;

 

(h)  if such registration involves an Underwritten Offering, obtain an opinion from the Company’s counsel and a “cold comfort” letter from the Company’s independent public accountants who have certified the Company’s audited financial statements included or incorporated by reference in such Registration Statement, dated the date of the closing under the underwriting agreement), in customary form and covering such matters as are customarily covered by such opinions and “cold comfort” letters delivered to underwriters in underwritten public offerings, which opinion and letter shall be reasonably satisfactory to the sole or lead managing Underwriter, and furnish to each Underwriter a copy of such opinion and letter addressed to such Underwriter;

 

  

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(i)  provide a CUSIP number for all Registrable Securities and provide and cause to be maintained a transfer agent and registrar for all such Registrable Securities covered by such Registration Statement not later than the effectiveness of such Registration Statement;

 

(j)  otherwise use commercially reasonable efforts to comply with all applicable rules and regulations of the SEC and any other governmental agency or authority having jurisdiction over the offering, and make available to its security holders, as soon as reasonably practicable but no later than 90 days after the end of any 12-month period, an earnings statement (i) commencing at the end of any month in which Registrable Securities are sold to Underwriters in an Underwritten Offering and (ii) commencing with the first day of the Company’s next calendar month succeeding each sale of Registrable Securities after the effective date of a Registration Statement, which statement shall cover such 12-month periods, in a manner which satisfies the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder; provided, however, that this requirement will be deemed to be satisfied if the Company timely files complete and accurate information on Forms 10-Q, 10-K and 8-K under the Exchange Act and otherwise complies with Rule 158 under the Securities Act;

 

(k)  use commercially reasonable efforts to cause all such Registrable Securities to be listed on the principal national securities exchange on which the Company’s securities of such class are then listed;

 

(l)  enter into and perform customary agreements (including, if applicable, an underwriting agreement in customary form) and provide officers’ certificates, opinions, 10b-5 statements and other customary closing documents;

 

(m)  cooperate with each selling Holder of Registrable Securities and each Underwriter participating in the disposition of such Registrable Securities and their respective counsel in connection with any filings required to be made with FINRA and make reasonably available its employees and personnel and otherwise provide reasonable assistance to the Underwriters (taking into account the needs of the Company’s businesses and the requirements of the marketing process) in the marketing of Registrable Securities in any Underwritten Offering;

 

(n)  cooperate with the selling Holders of Registrable Securities and the sole or lead managing Underwriter, if any, to facilitate the timely preparation and delivery of certificates not bearing any restrictive legends representing the Registrable Securities to be sold, and cause such Registrable Securities to be issued in such denominations and registered in such names in accordance with the underwriting agreement prior to any sale of Registrable Securities to the Underwriters or, if not an Underwritten Offering, in accordance with the instructions of the selling Holders of Registrable Securities at least three business days prior to any sale of Registrable Securities;

 

  

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(o)  keep each selling Holder of Registrable Securities advised in writing as to the initiation and progress of any registration under Article II hereunder;

 

(p)  upon written request, furnish to each Holder participating in the offering and the sole or lead managing Underwriter, if any, without charge, at least one manually-signed copy of the Registration Statement and any post-effective amendments thereto, including financial statements and schedules, all documents incorporated therein by reference and all exhibits (including those deemed to be incorporated by reference);

 

(q)  if requested by the sole or lead managing Underwriter or any selling Holder of Registrable Securities, promptly incorporate in a prospectus supplement or post-effective amendment such information concerning such Holder of Registrable Securities, the Underwriters or the intended method of distribution as the sole or lead managing Underwriter or the selling Holder of Registrable Securities reasonably requests to be included therein and as is appropriate in the reasonable judgment of the Company, including, without limitation, information with respect to the number of shares of the Registrable Securities being sold to the Underwriters, the purchase price being paid therefor by such Underwriters and with respect to any other terms of the Underwritten Offering of the Registrable Securities to be sold in such offering; make all required filings of such Prospectus supplement or post-effective amendment as soon as notified of the matters to be incorporated in such Prospectus supplement or post-effective amendment; and supplement or make amendments to any Registration Statement if requested by the sole or lead managing Underwriter of such Registrable Securities; and

 

(r)  use commercially reasonable efforts to take all other steps necessary to expedite or facilitate the registration and disposition of the Registrable Securities contemplated hereby.

 

SECTION 4.02.  Seller Information.  The Company may require each selling Holder of Registrable Securities as to which any registration is being effected to furnish to the Company such information regarding such seller and the disposition of such securities as the Company may from time to time reasonably request in writing; provided, however, that such information shall be used only in connection with such Registration.  If any Registration Statement or comparable statement under “blue sky” laws refers to any Holder by name or otherwise as the Holder of any securities of the Company, then such Holder shall have the right to require (i) the insertion therein of language, in form and substance satisfactory to such Holder and the Company, to the effect that the holding by such Holder of such securities is not to be construed as a recommendation by such Holder of the investment quality of the Company’s securities covered thereby and that such holding does not imply that such Holder will assist in meeting any future financial requirements of the Company, and (ii) in the event that such reference to such Holder by name or otherwise is not in the judgment of the Company, as advised by counsel, required by the Securities Act or any similar federal statute or any state “blue sky” or securities law then in force, the deletion of the reference to such Holder.

 

  

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SECTION 4.03.  Notice to Discontinue.  Each Holder of Registrable Securities agrees by acquisition of such Registrable Securities that, (i) upon receipt of any notice from the Company of the happening of any event of the kind described in Section 4.01(f)(ii) through 4.01(f)(vii), such Holder shall forthwith discontinue disposition of Registrable Securities pursuant to the Registration Statement covering such Registrable Securities until such Holder’s receipt of the copies of the supplemented or amended prospectus contemplated by Section 4.01(f) and, if so directed by the Company, such Holder shall deliver to the Company (at the Company’s expense) all copies, other than permanent file copies, then in such Holder’s possession of the Prospectus covering such Registrable Securities which is current at the time of receipt of such notice; provided, that nothing herein shall prevent any such Holder, in connection with any sale of Registrable Securities with respect to which such Holder has entered into a contract for sale prior to such Holder’s receipt of such notice from the Company and for which such Holder has not yet settled, from settling such sale and delivering unlegended shares, if applicable.  If the Company shall give any such notice, the Company shall extend the period during which such Registration Statement shall be maintained effective pursuant to this Agreement (including, without limitation, the period referred to in Section 4.01(b)) by the number of days during the period from and including the date of the giving of such notice pursuant to Section 4.01(f) to and including the date when the Holder shall have received the copies of the supplemented or amended prospectus contemplated by and meeting the requirements of Section 4.01(f).

 

ARTICLE V

 

Indemnification; Contribution

 

SECTION 5.01.  Indemnification by the Company.  The Company agrees to indemnify and hold harmless, to the fullest extent permitted by law, each Holder of Registrable Securities, each person that controls such Holder (within the meaning of the Securities Act), their respective Affiliates, and each of their respective officers, directors, partners, members, shareholders, employees, advisers, attorneys and agents (collectively, “Agents”) with respect to each registration which has been effected pursuant to this Agreement, against any and all losses, claims, damages or liabilities, joint or several, actions or proceedings (whether commenced or threatened) in respect thereof, and expenses (as incurred or suffered and including, but not limited to, any and all expenses incurred in investigating, preparing or defending any litigation or proceeding, whether commenced or threatened, and the reasonable fees, disbursements and other charges of legal counsel) in respect thereof (collectively, “Claims”), insofar as such Claims arise out of or are based upon any untrue or alleged untrue statement of a material fact contained in any Registration Statement or Prospectus (including any preliminary, final or summary prospectus and any amendment or supplement thereto) related to any such registration or any omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading, or any violation by the Company of the Securities Act or any rule or regulation thereunder applicable to the Company and relating to action or inaction required of the Company in connection with any such registration, or any qualification or compliance incident thereto; provided, however, that the Company will not be liable in any such case to the extent that any such Claims arise out of or are based upon any untrue statement or alleged untrue statement of a material fact or omission or alleged omission of a material fact so made in reliance upon and in conformity with written information furnished to the Company by a Holder, Underwriter or other indemnified person hereunder expressly for use therein.  The Company shall also agree to indemnify any Underwriters of the Registrable Securities, their Agents and each person who controls any such Underwriter (within the meaning of the Securities Act) to the same extent as provided above with respect to the indemnification of the Holders of Registrable Securities.  Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of any person who may be entitled to indemnification pursuant to this Article V and shall survive the transfer of securities by such Holder or Underwriter.

 

  

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SECTION 5.02.  Indemnification by Holders.  Each Holder, if Registrable Securities held by it are included in the securities as to which a registration is being effected, agrees to, severally and not jointly, indemnify and hold harmless, to the fullest extent permitted by law, the Company, its directors and officers, each other person who participates as an Underwriter in the offering or sale of such securities and its Agents and each person who controls the Company against any and all Claims, insofar as such Claims arise out of or are based upon any untrue or alleged untrue statement of a material fact contained in any Registration Statement or Prospectus (including any preliminary, final or summary prospectus and any amendment or supplement thereto) related to such registration, or 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, to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with written information furnished to the Company by such Holder expressly for use therein; provided, however, that the aggregate amount which any such Holder shall be required to pay pursuant to this Section 5.02 shall in no event be greater than the amount of the net proceeds received by such Holder upon the sale of the Registrable Securities pursuant to the Registration Statement giving rise to such Claims less all amounts previously paid by such Holder with respect to any such Claims.  Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of any person who may be entitled to indemnification pursuant to this Article V and shall survive the transfer of securities by such Holder or any Underwriter.

 

SECTION 5.03.  Conduct of Indemnification Proceedings.  Promptly after receipt by an indemnified party of notice of any Claim or the commencement of any action or proceeding involving a Claim under this Article V, such indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party pursuant to Article V, (i) notify the indemnifying party in writing of the Claim or the commencement of such action or proceeding; provided, that the failure of any indemnified party to provide such notice shall not relieve the indemnifying party of its obligations under this Article V, except to the extent the indemnifying party is materially and actually prejudiced thereby and shall not relieve the indemnifying party from any liability which it may have to any indemnified party otherwise than under this Article V, and (ii) permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party; provided, however, that any indemnified party shall have the right to employ separate counsel and to participate in the defense of such claim, but the fees and expenses of such counsel shall be at the expense of such indemnified party unless (A) the indemnifying party has agreed in writing to pay such fees and expenses, (B) the indemnifying party shall have failed to assume the defense of such claim and employ counsel reasonably satisfactory to such indemnified party within 20 days after receiving notice from such indemnified party that the indemnified party believes it has failed to do so, or (C) in the reasonable judgment of any such indemnified party, based upon advice of counsel, a conflict of interest shall exist between such indemnified party and the indemnifying party with respect to such claims; it being understood, however, that the indemnifying party shall not, in connection with any one such action or separate but substantially similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances, be liable for the reasonable fees and expenses of more than one separate firm of attorneys (in addition to no more than one firm of local counsel) at any time for all such indemnified parties.  No indemnifying party shall be liable for any settlement of any such claim or action effected without its written consent, which consent shall not be unreasonably withheld.  No indemnifying party shall, without the consent of the indemnified party, which consent shall not be unreasonably withheld, consent to entry of any judgment or enter into any settlement of any claim or action in respect of which indemnification or contribution may be sought hereunder, unless such settlement, (1) includes an unconditional release of the indemnified party from all liability arising out of such action or claim, (2) does not include a statement as to or an admission of fault, culpability or a failure to act, by or on behalf of any indemnified party, and (3) does not provide for any action on the part of any party other than the payment of money damages which is to be paid in full by the indemnifying party.

 

  

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SECTION 5.04.  Contribution.  If the indemnification provided for in Section 5.01 or 5.02 from the indemnifying party for any reason is unavailable to (other than by reason of exceptions provided therein), or is insufficient to hold harmless, an indemnified party hereunder in respect of any Claim, then the indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as a result of such Claim in such proportion as is appropriate to reflect the relative fault of the indemnifying party, on the one hand, and the indemnified party, on the other hand, in connection with the actions which resulted in such Claim, as well as any other relevant equitable considerations.  The relative fault of such indemnifying party and indemnified party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact, has been made by, or relates to information supplied by, such indemnifying party or indemnified party, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such action.  If, however, the foregoing allocation is not permitted by applicable law, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party in such proportion as is appropriate to reflect not only such relative faults but also the relative benefits of the indemnifying party and the indemnified party as well as any other relevant equitable considerations.  Notwithstanding the foregoing, the aggregate amount which any Holder shall be required to pay pursuant to this Section 5.04 shall in no event be greater than the amount of the net proceeds received by such Holder upon the sale of the Registrable Securities pursuant to the Registration Statement giving rise to such Claims less all amounts previously paid by such Holder with respect to any such Claims.

 

  

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ARTICLE VI

 

General

 

SECTION 6.01.  Registration Rights to Others.  The Company represents and warrants that, other than existing obligations to effect registrations on Form S-8 (or any successor form), it is not currently a party to any agreement with respect to its securities granting registration rights to persons other than the Holders.  If the Company shall at any time hereafter provide to any holder of any securities of the Company rights with respect to the registration of the sale of such securities under the Securities Act (not including any such rights which have been previously granted), without the prior written consent of the Majority Holders, (i) such rights shall not be in conflict with or adversely affect any of the rights provided in this Agreement to the Holders and (ii) if such rights are provided on terms or conditions more favorable to such holder than the terms and conditions provided in this Agreement, the Company shall provide (by way of amendment to this Agreement or otherwise) such more favorable terms or conditions to the Holders.

 

SECTION 6.02.  Availability of Information; Rule 144; Rule 144A; Other Exemptions. The Company covenants that it shall use reasonable best efforts to timely file any reports required to be filed by it under the Securities Act or the Exchange Act (including, but not limited to, the reports under Sections 13 and 15(d) of the Exchange Act referred to in subparagraph (c) of Rule 144 under the Securities Act), and that it shall take such further action as any Holder of Registrable Securities may reasonably request, all to the extent required from time to time to enable such Holder to sell Registrable Securities without registration under the Securities Act within the limitation of the exemptions provided by (i) Rule 144 and Rule 144A under the Securities Act, as such rules may be amended from time to time, or (ii) any other rule or regulation now existing or hereafter adopted by the SEC.  Upon the request of any Holder of Registrable Securities, the Company shall deliver to such Holder a written statement as to whether it has complied with such requirements.

 

SECTION 6.03.  Amendments and Waivers.  The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified, supplemented or terminated, and waivers or consents to departures from the provisions hereof may not be given, without the written consent of the Company and the Majority Holders; provided, however, that no such amendment, modification, supplement, waiver or consent to departure shall reduce the percentage of Registrable Securities constituting the Majority Holders without the written consent of all of the Holders of Registrable Securities; and provided further, that nothing herein shall prohibit any amendment, modification, supplement, termination, waiver or consent to departure the effect of which is limited only to those Holders who have agreed to such amendment, modification, supplement, termination, waiver or consent to departure.

 

  

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SECTION 6.04.  Notices.  All notices and other communications provided for or permitted hereunder shall be made in writing by hand delivery, telecopier, any recognized overnight delivery service or first class registered or certified mail, return receipt requested, postage prepaid, addressed to the applicable party at the address set forth below or such other address as may hereafter be designated in writing by such party to the other parties in accordance with the provisions of this Section:

 

	 	
If to the Company:

	 	 
	 	
Pulse Electronics Corporation

	 	
12220 World Trade Drive

	 	
San Diego, California 92128

	 	
Attention: Chief Financial Officer

	 	
Telephone: (858) 674-8100

	 	
Telecopier: (858) 674-8262

if to any Holder, to the address of such person as provided to the Company by such person from time to time in accordance with the Warrant Agreement.

 

All such notices and communications shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; when receipt is acknowledged, if telecopied; on the next business day, if timely delivered to a recognized overnight delivery service; and five days after being deposited in the mail, if sent first class or certified mail, return receipt requested, postage prepaid.

 

SECTION 6.05.  Successors and Assigns.  This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective heirs, successors and permitted assigns (including any permitted transferee of Warrants or Registrable Securities).  Any Holder may at any time and from time to time assign to any permitted (as determined under the Warrant Agreement) transferee of its Warrants or Registrable Securities (other than a transferee that acquires such Registrable Securities in a registered public offering or pursuant to a sale under Rule 144 of the Securities Act (or any successor rule)), its rights and obligations under this Agreement. Any such permitted transferee shall automatically be entitled to receive the benefits of and be conclusively deemed to have agreed to be bound by and to perform all of the terms and provisions of this Agreement as if it were a party hereto (and shall, for all purposes, be deemed a Holder under this Agreement).  If the Company shall so request, any heir, successor or permitted assign (including any permitted transferee) wishing to avail itself of the benefits of this Agreement shall agree in writing to acquire and hold the Registrable Securities subject to all of the terms hereof.  For purposes of this Agreement, “successor” for any entity other than a natural person shall mean a successor to such entity as a result of such entity’s merger, consolidation, sale of substantially all of its assets, or similar transaction.  Except as provided above or otherwise permitted by this Agreement, neither this Agreement nor any right, remedy, obligation or liability arising hereunder or by reason hereof shall be assignable by any Holder or by the Company without the prior written consent of the other parties hereto.

 

  

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SECTION 6.06.  Counterparts.  This Agreement may be executed in one or more counterparts, each of which, when so executed and delivered, shall be deemed to be an original, but all of which counterparts, taken together, shall constitute one and the same instrument.

 

SECTION 6.07.  Descriptive Headings, Etc. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning of terms contained herein.  Unless the context of this Agreement otherwise requires: (a) words of any gender shall be deemed to include each other gender; (b) words using the singular or plural number shall also include the plural or singular number, respectively; (c) the words “hereof”, “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and Article, Section and paragraph references are to the Articles, Sections and paragraphs of this Agreement unless otherwise specified; (d) the word “including” and words of similar import when used in this Agreement shall mean “including, without limitation,” unless otherwise specified; (e) “or” is not exclusive; and (f) provisions apply to successive events and transactions.

 

SECTION 6.08.  Severability.  In the event that any one or more of the provisions, paragraphs, words, clauses, phrases or sentences contained herein, or the application thereof in any circumstances, is held invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision, paragraph, word, clause, phrase or sentence in every other respect and of the other remaining provisions, paragraphs, words, clauses, phrases or sentences hereof shall not be in any way impaired, it being intended that all rights, powers and privileges of the parties hereto shall be enforceable to the fullest extent permitted by law.

 

SECTION 6.09.  Governing Law.  This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York.

 

SECTION 6.10.  Jurisdiction; Consent to Service of Process.  c)The Company hereto hereby irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of any New York State court or Federal court of the United States of America sitting in New York City, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State or, to the extent permitted by law, in such Federal court.  Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.  Nothing in this Agreement shall affect any right that any Holder may otherwise have to bring any action or proceeding relating to this Agreement in the courts of any jurisdiction.

 

  

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(b)  The Company hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement in any New York State or Federal court.  Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

 

(c)  Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 6.04.  Nothing in this Agreement will affect the right of any party to this Agreement to serve process in any other manner permitted by law.

 

SECTION 6.11.  WAIVER OF JURY TRIAL.  EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT.  EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 6.11.

 

SECTION 6.12.  Remedies; Specific Performance.  The Company stipulates that there would be no adequate remedy at law to the Holders 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 Agreement and accordingly, the Company agrees that, in addition to any other remedy to which any Holder may be entitled at law or in equity, the Holders shall be entitled to specific performance of the obligations of the Company under this Agreement, without the posting of any bond, in accordance with the terms and conditions of this Agreement in any court of the United States or any State thereof having jurisdiction, and if any action should be brought in equity to enforce any of the provisions of this Agreement, the Company shall not raise the defense that there is an adequate remedy at law.  Except as otherwise provided by law, a delay or omission by any Holder in exercising any right or remedy accruing upon any such breach or threatened breach shall not impair the right or remedy or constitute a waiver of or acquiescence in any such breach.  No remedy shall be exclusive of any other remedy.  All available remedies shall be cumulative.

 

  

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SECTION 6.13.  Entire Agreement.  This Agreement and the Warrant Agreement are intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein.  There are no restrictions, promises, representations, warranties, covenants or undertakings relating to such subject matter, other than those set forth or referred to herein or in the Warrant Agreement.  This Agreement and the Warrant Agreement supersede all prior agreements and understandings between the Company and the other parties to this Agreement with respect to such subject matter.

 

SECTION 6.14.  Further Assurances.  Each party hereto shall do and perform or cause to be done and performed all such further acts and things and shall execute and deliver all such other agreements, certificates, instruments and documents as any other party hereto reasonably may request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.

 

SECTION 6.15.  No Inconsistent Agreement.  Subject to Sections 2.04 and 6.01, the Company will not hereafter enter into any agreement that restricts, limits or prohibits the exercise of the rights granted to the Holders in this Agreement or the Company’s ability to perform its obligations hereunder.

 

[Signature Pages Follow]

 

  

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first written above.

 

	 	
PULSE ELECTRONIC CORPORATION

	 	 	 	 
	 	 	
by

	 	 	 	 
	 	 	 	Name:	
Drew A. Moyer

	 	 	 	Title:	Senior VP and CFO

 

  

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JPMORGAN CHASE BANK, N.A.,

	 	 	 	 
	 	 	
by

	 	 	 	 
	 	 	 	Name:	 
	 	 	 	Title:	 

 

  

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HOLDER:

	 	 	 	 
	 	 	
by

	 	 	 	 
	 	 	 	Name:	 
	 	 	 	Title:	 

 

	 	 	
by

	 	 	 	 
	 	 	 	Name:	 
	 	 	 	Title:	 

 

 

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