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SECOND AMENDMENT
TO
STOCK PURCHASE AGREEMENT
This Second Amendment to Stock Purchase Agreement, dated and effective as of May
4, 1998 ("Second Amendment"), is made and entered into by and between Xxxxxx
Electronics Corporation, a Delaware corporation ("Xxxxxx") for itself and as
assignee of Xxxxxx Aircraft Company, a Delaware corporation ("HAC"), and
Xxxxxxxxx Corporation, a Delaware corporation ("Xxxxxxxxx"), with reference to
the following facts:
A. HAC and Xxxxxxxxx entered into a Stock Purchase Agreement dated March 23,
1995 (the "Stock Purchase Agreement"), as amended April 24, 1995 (the
"First Amendment," collectively with the Stock Purchase Agreement, the
"Agreement"), by which Xxxxxxxxx purchased from HAC all of the outstanding
capital stock of Xxxxxx XXX Systems, Inc., a California corporation (now
known as Xxxxxxxxx Communications, Inc. ("WCI")).
B. As partial consideration for the purchase of WCI, Xxxxxxxxx agreed to (i)
deliver the Note (as defined in the Stock Purchase Agreement), and (ii)
make Contingent Payments (as defined in the Stock Purchase Agreement) to
HAC. By the First Amendment, (x) HAC, among other things, assigned all of
its right, title and interest in the Note and the Contingent Payments to
its sole stockholder, Xxxxxx; (y) Xxxxxxxxx agreed to such assignment and
to issue the Note to Xxxxxx and further agreed that all references to HAC
in Exhibit 1.3(c) and Section 4.4 of the Stock Purchase Agreement shall
refer to Xxxxxx; and (z) Xxxxxx accepted and affirmed the representations
of HAC in Section 3.23 of the Stock Purchase Agreement.
C. Upon the closing of the sale by HAC on April 24, 1995, Xxxxxxxxx and
Xxxxxx entered into the Registration Agreement, Xxxxxxxxx issued the Note
to Xxxxxx and all references to "HAC" in Exhibit 1.3(c) and Section 4.4 of
the Agreement were amended to mean "Xxxxxx".
D. Under the terms of its Amended and Restated Credit Agreement, dated as of
April 10, 1996 and as amended to date, among Xxxxxxxxx, NationsBank of
Texas, N.A., as agent and lender, and the financial institutions party
thereto, Xxxxxxxxx has been restricted from paying to Xxxxxx the
Contingent Payments that have accrued since April 28, 1996. As of the date
of this Agreement, the aggregate amount of Contingent Payments, plus
interest thereon, which are accrued and unpaid, as mutually agreed by the
parties, is $1,432,565 (the "Unpaid Contingent Payment").
X. Xxxxxxxxx has asserted various claims against HAC for, among other things,
(i) an adjustment in the Cash Payment under Section 1.6 of the Agreement
due to an alleged reduction in Working Capital below the Base Amount, and
(ii) various alleged breaches of representations and warranties, general
claims of misrepresentation or other claims for indemnification under
Article XII of the Agreement or otherwise under applicable law (all such
claims which have been asserted by Xxxxxxxxx, or which could have been
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asserted by Xxxxxxxxx, at or prior to the Effective Date are referred to
herein as the "Outstanding Xxxxxxxxx Claims").
F. Each of Xxxxxx and HAC has contested the validity of the Outstanding
Xxxxxxxxx Claims and each has denied any liability or obligation to
Xxxxxxxxx with respect to any such Outstanding Xxxxxxxxx Claims.
X. Xxxxxx has claimed that, by virtue of certain transactions effected by
Xxxxxxxxx, the amounts specified in Section 2.2 of Exhibit 1.3 (c) to the
Agreement (the "Mandatory Payment"), plus interest thereon, is owing to
Xxxxxx (the "Outstanding Xxxxxx Claims").
X. Xxxxxxxxx has contested the validity of the Outstanding Xxxxxx Claims and
has denied any liability or obligation to Xxxxxx with respect to such
Outstanding Xxxxxx Claims.
I. Each of Xxxxxx and Xxxxxxxxx now seeks to modify and amend the Agreement
and the Note and to release each other from all claims, whether known or
unknown, arising from or in connection with the Agreement and the sale of
WCI by HAC, except as otherwise provided in this Second Amendment.
NOW THEREFORE, in consideration of the mutual promises contained herein, the
parties agree as follows:
1. Definitions.
"Effective Date" shall mean the date of this Second Amendment.
"Xxxxxxxxx Common Stock" shall mean the common stock, $.01 par value, of
Xxxxxxxxx.
Except as otherwise expressly defined herein, all capitalized terms used
in this Second Amendment shall have the same meaning as defined in the
Agreement.
2. Representations and Warranties
2.1 Representations of Xxxxxx
Xxxxxx represents and warrants to Xxxxxxxxx as follows:
(a) This Second Amendment and the agreements executed in
connection herewith, and the transactions contemplated
hereby and thereby, have been duly authorized by the
Executive Committee of Xxxxxx, and this Second Amendment and
such related agreements are valid and binding obligations of
Xxxxxx, enforceable against Xxxxxx in accordance with the
terms hereof and thereof, except as may be limited by
bankruptcy, insolvency, moratorium or other laws affecting
creditors' rights generally and subject to general
principles of equity.
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(b) Under the Master Separation Agreement dated as of December
16, 1997 by and among General Motors Corporation ("GM"), HE
Holdings, Inc., formerly named "Xxxxxx Aircraft Company"
("HAC"), Delco Electronics Corporation and Xxxxxx
Electronics Corporation, a Delaware corporation formerly
named Xxxxxx Network Systems, Inc., and the related
Assignment, Capital Contribution and Assumption Agreement
between HAC and Xxxxxx dated as of December 16, 1997, or
otherwise in connection with the transactions referred to
in such agreement, Xxxxxx has been assigned, and has
assumed, all rights and obligations of the entity formerly
named "Xxxxxx Electronics Corporation" and of the entity
formerly named "Xxxxxx Aircraft Company" under the
Agreement, the Note and the Registration Agreement,
including any rights or obligations released by this Second
Amendment. Without limiting the generality of the
foregoing, Xxxxxx is the sole owner of the Outstanding
Xxxxxx Claims and has not assigned or otherwise transferred
any of such Outstanding Xxxxxx Claims. Xxxxxx has the legal
right to execute this Second Amendment, as successor to, or
assignee of, the entities formerly known as "Xxxxxx
Electronics Corporation" or "Xxxxxx Aircraft Company."
(c) If the Shares are issued to Xxxxxx in accordance with
Section 3(a) of this Second Amendment, Xxxxxx will acquire
such Shares for its own account for investment, not as a
nominee or agent, and not with a view to the resale or
distribution of such Shares or any part thereof or
participation therein except pursuant to the Registration
Statement provided for in Section 3(b).
2.2 Representations of Xxxxxxxxx
Xxxxxxxxx represents and warrants to Xxxxxx as follows:
(a) This Second Amendment and the agreements executed in
connection herewith, and the transactions contemplated
hereby and thereby, have been duly authorized by the Board
of Directors of Xxxxxxxxx, and this Second Amendment and
such related agreements are valid and binding obligations of
Xxxxxxxxx, enforceable against Xxxxxxxxx in accordance with
the terms hereof and thereof, except as may be limited by
bankruptcy, insolvency, moratorium or other laws affecting
creditors' rights generally and subject to general
principles of equity.
(b) Xxxxxxxxx is the sole owner of the Outstanding Xxxxxxxxx
Claims and has not assigned or otherwise transferred any of
such Outstanding Xxxxxxxxx Claims.
(c) The Note, as amended by Allonge No.1 thereto ("Amended
Note"), is duly authorized and validly issued and the
requisite number of shares of
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Xxxxxxxxx Common Stock have been reserved for issuance upon
conversion of the Amended Note, and upon conversion of all
or part of the Amended Note into Xxxxxxxxx Common Stock in
accordance with the Amended Note, or upon issuance of the
Warrants in accordance with the Amended Note, if such
conversion or issuance occurs, the shares of Xxxxxxxxx
Common Stock, or Warrants therefor, as applicable, issued to
Xxxxxx will be duly authorized, validly issued, fully paid
and nonassessable and will be free of preemptive or other
rights.
(d) If the Shares are issued pursuant to Section 3(a) of this
Second Amendment, they will be duly authorized, validly
issued, fully paid and nonassessable and will be free of
preemptive or other similar rights.
2.3 Indemnification. The representations and warranties in this
Section 2 shall be considered representations or warranties of
the parties under the Agreement, for purposes of Article XII
of the Agreement.
3. Contingent Payment.
(a) Upon execution and delivery of this Second Amendment, the Unpaid
Contingent Payment shall be paid to Xxxxxx by Xxxxxxxxx at
Xxxxxxxxx'x option (i) in cash equal to the Unpaid Contingent
Payment or (ii) as described in the following sentence, in shares of
Xxxxxxxxx Common Stock with a value equal to 111.11 % of the dollar
amount of the Unpaid Contingent Payment. If Xxxxxxxxx elects to pay
the Unpaid Contingent Payment in shares, the number of shares of
Xxxxxxxxx Common Stock which shall be issued to Xxxxxx shall be
equal to 111.11% of the dollar amount of the Unpaid Contingent
Payment divided by $14.76 (such shares, if issued, are referred to
herein as the "Shares").
(b) If Xxxxxxxxx elects to pay the Unpaid Contingent Payment in Shares,
Xxxxxxxxx will (i) deliver to Xxxxxx within 15 business days of the
Effective Date, a certificate for the Shares and (ii) prepare and
file with the SEC, within 30 days after the Effective Date, a
registration statement on Form S-3 covering all the Shares issued to
Xxxxxx (the "Registration Statement"). The Shares shall be
considered "Registrable Securities" for purposes of the Registration
Agreement and the Registration Statement shall be considered a
"Demand Registration" under the Registration Agreement; provided,
however, that Xxxxxx shall continue to be entitled to deliver one
additional Demand Notice (as defined in the Registration Agreement)
with respect to any other Registrable Securities (in additional to
the Shares) which it may hereafter acquire. The parties also agree
that any shares of Xxxxxxxxx Common Stock or other security which
may be issued upon exercise of the Warrants (if issued pursuant to
the Note) shall be considered "Registrable Securities" under the
Registration Agreement.
(c) From and after the Effective Date, no further Contingent Payments,
Mandatory Payments, or any other amounts otherwise required to be
paid under Exhibit 1.3(c) of the Agreement shall be payable by
Xxxxxxxxx, and Exhibit 1.3(c) to the Agreement shall be void and of
no further effect.
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4. Amendments to Agreement.
(a) From and after the Effective Date, Sections 1.3, 8.9 and 12.8 of the
Agreement shall be deleted and shall be void and of no further
effect.
(b) Xxxxxxxxx acknowledges and consents to the transactions referred to
in Section 2.1 (b) of this Second Amendment. All references to
Xxxxxx in the Agreement or any Related Document shall mean Xxxxxx
Electronics Corporation, the party to this Second Amendment.
(c) Sections 12.1(a) and (b) of the Agreement are amended to read as
follows:
"(a) any third party claim which arises out of or relates to any
inaccuracy or misrepresentation in or breach of any
representation or warranty of Xxxxxx in the Second Amendment
or in Sections 3.2, 3.4, 3.6, 3.7 (b), (c), (d) or (e), the
first sentence of Section 3.8(a) or Sections 3.12(b), 3.16 or
3.23 of the Agreement.
(b) the breach or failure by Xxxxxx to perform after the Effective
Date any of its covenants or agreements under the Agreement,
as amended, or any of the Related Documents;"
(d) Sections 12.2(a) and (b) of the Agreement are amended to read as
follows:
"(a) any third party claim which arises out of or relates to any
inaccuracy or misrepresentation in or breach of any
representation or warranty of Xxxxxxxxx in the Agreement, as
amended;
(b) the breach or failure by Xxxxxxxxx to perform after the
Effective Date any of its covenants or agreements under the
Agreement, as amended, or any of the Related Documents;"
(e) Section 13.2 of the Agreement is amended to provide that the
respective addresses for notices under the Agreement shall be as
follows:
If to Xxxxxx: Xxxxxx Electronics Corporation
000 X. Xxxxxxxxx
Xxxx. 000, XX A126
Xx Xxxxxxx, XX 00000
Attention: P. T. Xxxxx,
Vice President - Corporate Development
Fax No. (000) 000-0000
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If to Xxxxxxxxx: Xxxxxxxxx Corporation
0000 X. Xxxxxxxx Xxxxxx
Xxxx Xxxxxx, XX 00000
Attention: X. X. Xxxx, Vice President
CFO & Treasurer
Fax No. (000) 000-0000
5. Amendment to Note. From and after the Effective Date, the Note shall be
amended as set forth in the Allonge No. 1 attached hereto as Exhibit 1 and
incorporated herein by this reference.
6. Mutual Release.
(a) Xxxxxx and its successors and assigns, hereby release (on behalf of
itself, HE, GM and HAC), acquit and forever discharge Xxxxxxxxx and
its successors, assigns, affiliates, subsidiaries, stockholders,
directors, officers, employees, attorneys, consultants,
representatives and agents from any and all manner of actions or
causes of action (in law or in equity), debts, liens, contracts,
agreements, promises, liabilities, obligations, claims (including
without limitation, the Outstanding Xxxxxx Claims), rights, demands,
damages, losses, costs or expenses of any nature whatsoever, known
or unknown, fixed or contingent, which they now have or may
hereafter have against Xxxxxxxxx and its successors, assigns,
affiliates, subsidiaries, stockholders, directors, officers,
employees, attorneys, consultants, representatives, and agents by
reason of any matter, event, action, cause, or thing arising out of,
based upon or relating in any way to the Agreement or the
transactions contemplated therein which arose or have arisen prior
to the Effective Date; provided, however that the foregoing release
shall not apply to (i) this Second Amendment; or (ii) the Note, as
amended hereby, or (iii) the Registration Agreement; or (iv) claims
for indemnification pursuant to Article XII of the Agreement, as
amended by this Second Amendment, that are based on third party
claims against Xxxxxx that are unknown to Xxxxxx as of the Effective
Date.
(b) Xxxxxxxxx and its successors and assigns, hereby release, acquit and
forever discharge Xxxxxx (including for these purposes, HAC, GM and
HE), and its successors, assigns, affiliates, subsidiaries,
stockholders, directors, officers, employees, attorneys,
consultants, representatives, and agents from any and all manner of
action or causes of action (in law or equity), debts, liens,
contracts, agreements, promises, liabilities, obligations, claims
(including, without limitation, the Outstanding Xxxxxxxxx Claims),
rights, demands, damages, losses, costs or expenses of any nature
whatsoever, known or unknown, fixed or contingent, which it now has
or may hereafter have against Xxxxxx and its successors, assigns,
affiliates, subsidiaries, stockholders, directors, officers,
employees, attorneys, consultants, representatives and agents by
reason of any matter, event,
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action, cause or thing arising out of, based upon or relating to the
Agreement or the transactions contemplated therein which arose or
have arisen prior to the Effective Date; provided, however, that the
foregoing release shall not apply to (i) this Second Amendment, or
(ii) the Note, as amended hereby, or (iii) the Registration
Agreement, or (iv) claims for indemnification pursuant to Article
XII of the Agreement, as amended by this Second Amendment, that are
based on third party claims against Xxxxxxxxx that are unknown to
Xxxxxxxxx as of the Effective Date.
(c) It is hereby expressly understood that Section 1542 of the
California Civil Code ("Section 1542") provides as follows:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF
KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.
Xxxxxx, on one hand, and Xxxxxxxxx, on the other hand, expressly waive and
relinquish to the full extent that they may lawfully do so, all rights and
benefits they have or may have under Section 1542 and/or the provisions of all
comparable, equivalent or similar statutes and principles of common law of
California. The parties to this Second Amendment further acknowledge and agree
that this waiver is an essential and material term of this Second Amendment. In
connection with said waiver and relinquishment regarding Civil Code Section
1542, Xxxxxx, on one hand, and Xxxxxxxxx, on the other hand, acknowledge that
they are aware that they or their attorneys may hereafter discover facts
different from or in addition to the facts of which they or their attorneys now
are aware with respect to the subject matter of this Second Amendment. Xxxxxx,
on one hand, and Xxxxxxxxx, on the other hand, and each of them acknowledge that
they have been advised by an attorney at law as to the meaning and effect of,
and understand, Section 1542.
(d) (i) Xxxxxx hereby agrees and covenants, and to the extent allowable
under law agrees and covenants on behalf of its successors,
assigns, affiliates and agents, not to commence, prosecute or
aid in any way any action or other proceeding (whether legal,
equitable or administrative) against Xxxxxxxxx and/or its
successors, assigns, affiliates, subsidiaries, stockholders,
directors, officers, employees, attorneys, consultants,
representatives and agents, based upon or relating in any way
to the Agreement, which is the subject of the release by
Xxxxxx contained herein, either affirmatively or by way of
cross-complaint, defense or counterclaim.
(ii) Xxxxxxxxx hereby agrees and covenants, and to the extent
allowable under law agrees and covenants on behalf of its
successors, assigns, affiliates and agents, not to commence,
prosecute or aid in any way any action or other proceeding
(whether legal, equitable or administrative) against Xxxxxx
and/or its successors, assigns, affiliates, subsidiaries,
stockholders, directors, officers, employees, attorneys,
consultants, representatives and agents, based upon or
relating in any way to the Agreement, which is the subject of
the release by
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Xxxxxxxxx contained herein, either affirmatively or by way of
cross-complaint, defense, or counterclaim.
(e) The parties hereto have entered into this Second Amendment for the
purpose of obtaining the complete and final settlement of the disputes
between them and to avoid the burden, inconvenience and expense of
litigation. Nothing in this Second Amendment shall be construed to
constitute an admission of liability of any kind whatsoever by any
party, or of any unlawful or actionable conduct. Nothing in this
Second Amendment shall be construed to constitute an adjudication of
the merits of any claim or any issue of fact or law between the
parties hereto.
7. Effect of Second Amendment. Except as expressly amended hereby, the
Agreement, the Note and the Registration Agreement are each ratified and
confirmed and shall remain in effect in accordance with their respective
terms. All references in the Agreement or any Related Document to the
Agreement shall mean the Agreement as amended by this Second Amendment.
IN WITNESS WHEREOF, this Second Amendment to Stock Purchase Agreement has been
duly executed by the duly authorized officers of Xxxxxxxxx and Xxxxxx as of the
date first written above.
XXXXXXXXX CORPORATION,
a Delaware corporation
By:
Its:
XXXXXX ELECTRONICS CORPORATION,
a Delaware corporation
By:
Its:
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