EXHIBIT 10.1
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.
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"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
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2.1 Representations of Xxxxxx
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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
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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
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2 shall be considered representations or warranties of the parties
under the Agreement, for purposes of Article XII of the Agreement.
3. Contingent Payment.
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(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 purpose, 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: /s/ Xxxx X. Xxxx
----------------------------
Its: Chief Financial Officer
XXXXXX ELECTRONICS
CORPORATION,
a Delaware corporation
By: /s/ Xxxxxxx X. Xxxxxx
----------------------------
Its: Senior VP and CFO
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EXHIBIT 1
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ALLONGE NO.1
------------
Los Angeles, California
May 4, 1998
RECITALS
WHEREAS, the undersigned, Xxxxxxxxx Corporation, a Delaware corporation
(the "Company"), issued that certain 7% Convertible Subordinated Note due May 1,
2005, dated April 24, 1995 (the "Note"), in favor of Xxxxxx Electronics
Corporation, a Delaware corporation ("Xxxxxx");
ALLONGE
NOW THEREFORE, the Company hereby agrees with Xxxxxx that, effective as of
the date of this Allonge No. 1 (the "Effective Date"):
1. A new Section 3.1(f) is hereby added to the Note as follows:
If the Company redeems this Note in whole or in part prior to May 4,
2002, the Company shall issue to Xxxxxx warrants to purchase the number
of shares of Common Stock of the Company which would have been issued
by the Company if Xxxxxx had elected to convert the principal amount of
the Note subject to such redemption at the conversion price, as defined
in Section 4.1. The exercise price of the warrants shall be equal to
the conversion price, as defined in Section 4.1, and such warrants
shall expire on May 4, 2002. The form of such warrant is attached
hereto as Exhibit A.
2. Section 4.1 of the Note is hereby amended in its entirely as follows:
4.1 Conversion. The Holder of this Note shall have the right, at his
----------
option, at any time up to and including April 25, 2005 (except that,
with respect to any Note or portion of a Note which shall be called for
redemption pursuant to Section 3.1 or repurchase pursuant to Section
3.2, such right shall terminate, except as provided in Section 3.3, at
the close of business on the fifth Business Day prior to the Redemption
Date fixed for such Note or portion of a Note), to convert, subject to
the terms and provisions of this Section 4, all or any part (but not
less than $1,000,000
or the unpaid principal balance of this Note, whichever is less) of the
principal of this Note into shares of Common Stock of the Company at
$16.97 per share; or, in case an adjustment of such price has taken
place pursuant to the provisions of Section 4.3, then at the price as
last adjusted (such price or adjusted price being referred to herein as
the "conversion price"), upon surrender of the Note, the principal of
which is so to be converted, accompanied by a conversion notice in the
form provided (or separate written notice reasonably satisfactory to
the Company) (hereinafter referred to as the "conversion notice") duly
executed, to the Company at any time during usual business hours and,
if so required by the Company, accompanied by a written instrument or
instruments of transfer in form satisfactory to the Company duly
executed by the Holder or his attorney duly authorized in writing. For
convenience, the conversion of all or any portion of the principal of
any Note into the Common Stock is hereinafter sometimes referred to as
the "conversion" of such Note.
3. Section 4.4 of the Note is hereby amended in its entirety as follows:
4.4 Fractional Shares and Fractional Warrants. No fractional shares or
-----------------------------------------
fractional warrants or scrip representing fractional shares or
fractional warrants shall be issued upon the conversion of any Note or
the issuance of any warrants pursuant to Section 3.1(f) hereof. If the
conversion of any Note or the issuance of any warrants pursuant to
Section 3.1(f) hereof results in a fraction, the Holder shall be paid
an amount equal to such fraction multiplied by the Current Market Price
(determined as provided in Section 4.3(d)).
4. Except as otherwise expressly defined herein, all capitalized terms
used in this Allonge No. 1 shall have the same meaning as defined in
the Note.
The Company hereby authorizes Xxxxxx to attach this Allonge No. 1 to the
front of the Note.
XXXXXXXXX CORPORATION
By:
---------------------------
Name:
---------------------------
Title:
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EXHIBIT A
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[Date of Issuance]
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 NOR UNDER APPLICABLE STATE SECURITIES
LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED
OF UNLESS IT HAS BEEN REGISTERED UNDER SUCH LAWS
OR AN EXEMPTION FROM REGISTRATION IS AVAILABLE
WARRANT TO PURCHASE
COMMON STOCK
OF
XXXXXXXXX CORPORATION
VOID AFTER MAY 4, 2002
THIS CERTIFIES that, for value received, Xxxxxx Electronics Corporation
("Warrant Holder"), is entitled, subject to the terms of Section 1 hereof, to
subscribe for and purchase from Xxxxxxxxx Corporation, a Delaware corporation
(the "Company"), at the price of [the conversion price of the 7% Convertible
Subordinated Note due May 1, 2005, dated April 24, 1995, as adjusted by Allonge
No. 1 thereto in effect on the date of issuance of the Warrant] per share, or in
case an adjustment of such price has taken place pursuant to the provisions of
Section 2 hereof, then at the price as last adjusted (such price or adjusted
price, hereinafter called the "Warrant Price"), up to [the principal amount of
the 7% Convertible Subordinated Note due May 1, 2005, dated April 24, 1995, as
adjusted by Allonge No. 1 thereto, being redeemed, divided by the Warrant Price
in effect on the date of issuance of the Warrant] fully paid, nonassessable
shares of Common Stock, $.01 par value, of the Company ("Common Stock"), or in
case an adjustment in the number of shares of Common Stock has taken place
pursuant to Section 2 hereof, then such adjusted number of shares of Common
Stock, subject, however, to the provisions and upon the terms and conditions
hereinafter set forth, including, without limitation, the provisions of Section
3 hereof.
1. Exercise of Warrant.
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(a) This Warrant shall be exercisable at any time or from time to time
after the date of issuance on or prior to May 4, 2002. This Warrant may be
exercised by the Warrant Holder hereof, in whole or in part (but not for less
than the number of shares of Common Stock determined by dividing $1,000,000 by
the Warrant Price, or the total number of shares of Common Stock subject to the
Warrant, whichever is less), by the completion of the subscription form attached
hereto and by the surrender of this Warrant (properly endorsed) at the principal
executive offices of the Company (or at such other agency or office of the
Company in the United States as it may designate by notice in writing to the
Warrant Holder at the address of the Warrant Holder appearing on the books of
the Company), and by payment to the Company of the Warrant Price, in cash, by
wire transfer in immediately available funds, or by certified or official bank
check, for each share of Common Stock being purchased.
Page 1 or 9
(b) As promptly as practicable after the exercise of rights represented
by the Warrant, the Company shall deliver or cause to be delivered to the
Warrant Holder certificates representing the number of fully paid and
nonassessable shares of Common Stock so purchased. Such exercise shall be
deemed to have been made at the close of business on the date that the Warrant
shall have been exercised with the subscription form duly executed, so that the
rights of the Warrant Holder as such holder shall cease at such time and,
subject to the following provisions of this paragraph, the Warrant Holder shall
be treated for all purposes as having become the record holder of such shares of
Common Stock at such time, and such exercise shall be at the Warrant Price in
effect at such time; provided, however, that no such exercise on any date when
the stock transfer books of the Company shall be closed shall be effective to
constitute the Warrant Holder as the record holder of such shares of Common
Stock on such date, but such exercise shall be effective to constitute the
Warrant Holder as the record holder thereof for all purposes at the close of
business on the next succeeding day on which such stock transfer books are open;
such exercise shall be at the Warrant Price in effect on the date that such
Warrant shall have been exercised, as if the stock transfer books of the Company
had not been closed.
(c) If the Warrant shall be exercised in part, then the Company shall,
upon surrender of the Warrant to the Company, issue a new Warrant entitling the
Warrant Holder to subscribe for and purchase, on the terms hereof, the number of
shares of Common Stock equal to the difference between (i) the number of shares
of Common Stock subject to subscription and purchase pursuant to the Warrant
being surrendered and (ii) the number of shares of Common Stock being purchased
pursuant to such partial exercise.
(d) If the last day for the exercise of the Warrant shall not be a
Business Day, then the Warrant may be exercised on the next succeeding Business
Day.
2. Antidilution Provisions.
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The Warrant Price and the number of shares of Common Stock issuable upon
exercise of the Warrant shall be subject to adjustment from time to time as
follows:
(a) If the Company shall (i) pay a dividend or make a distribution on the
outstanding shares of its Common Stock in shares of its Common Stock, (ii)
subdivide or reclassify the outstanding shares of its Common Stock into a
greater number of shares, or (iii) combine or reclassify the outstanding shares
of its Common Stock into a smaller number of shares, (x) the number of shares of
Common Stock issuable upon exercise of the Warrant at the time of the record
date for such dividend or distribution or the effective date of such
subdivision, combination or reclassification shall be proportionately adjusted
so that the Warrant Holder upon exercise of the Warrant after such time shall be
entitled to receive the number of shares of Common Stock which the Warrant
Holder would have owned or been entitled to receive had the Warrant been
exercised immediately prior to such time and (y) the Warrant Price in effect at
the time of the record date for such dividend or distribution or the effective
date of such subdivision, combination or reclassification shall be adjusted
immediately thereafter so that it shall equal the price determined by
multiplying the Warrant Price in effect immediately prior thereto by a fraction
of which the numerator shall be the number of shares of Common Stock issuable
upon exercise of the Warrant immediately prior to the adjustment in the
preceding clause (x) and of which the denominator shall be the number of shares
of Common Stock issuable upon exercise
Page 2 of 9
of the Warrant immediately after the adjustment in the preceding clause (x).
Any shares of Common Stock issuable in payment of a dividend shall be deemed to
have been issued immediately prior to the time of the record date for such
dividend for purposes of calculating the number of outstanding shares of Common
Stock under subsections (b) and (c) below. Such adjustment shall be made
successively whenever any event specified above shall occur.
(b) If the Company shall fix a record date for the issuance of
rights or warrants (other than this Warrant or replacements thereof) to all
holders of its Common Stock entitling them to subscribe for or purchase shares
of its Common Stock (or securities convertible into shares of its Common Stock)
at a price per share (or having a conversion price per share) less than the
Current Market Price (as defined in subsection (d) below) of a share of Common
Stock on such record date, (i) the Warrant Price shall be adjusted immediately
thereafter so that it shall equal the price determined by multiplying the
Warrant Price in effect immediately prior thereto by a fraction ("Fraction B"),
of which the numerator shall be the number of shares of Common Stock outstanding
on such record date plus the number of shares of Common Stock which the
aggregate offering price of the total number of shares of such Common Stock so
offered for subscription or purchase would purchase at the Current Market Price
per share (determined by multiplying such total number of shares by the exercise
price of such rights or warrants (or by the applicable conversion price in the
case of convertible securities) and dividing the product so obtained by such
Current Market Price), and of which the denominator shall be the number of
shares of Common Stock outstanding on such record date plus the number of
additional shares of Common Stock offered for subscription or purchase (or into
which the convertible securities so offered are initially convertible); and (ii)
the number of shares of Common Stock issuable upon exercise of the Warrant
shall be adjusted immediately thereafter so that such number shall equal the
number of shares of Common Stock issuable upon exercise of the Warrant
immediately prior thereto multiplied by the reciprocal of Fraction B. Shares
of Common Stock owned by or held for the account of Company or its Subsidiaries
shall not be deemed outstanding for the purpose of any such computation. Such
adjustment shall be made successively whenever such a record date is fixed. In
the event that such rights or warrants are not so issued, the Warrant Price then
in effect shall be readjusted to the Warrant Price which would then be in effect
if such record date had not been fixed.
(c) If the Company shall fix a record date for the making of a
distribution to all holders of shares of its Common Stock (i) of shares of any
class of its Capital Stock other than its Common Stock or (ii) of evidences of
its indebtedness or (iii) of other assets (excluding non-extraordinary cash
dividends or distributions, and dividends or distributions referred to in
subsection (a) above) or (iv) of rights or warrants to subscribe for or purchase
its securities (excluding those referred to in subsection (b) above and other
than this Warrant or replacements thereof), than in each such case (x) the
Warrant Price shall be adjusted immediately thereafter so that it shall equal
the price determined by multiplying the Warrant Price in effect immediately
prior thereto by a fraction ("Fraction C"), of which the numerator shall be the
total number of shares of Common Stock outstanding multiplied by the Current
Market Price per share on such record date, less the fair market value (as
determined by the Board of Directors of the Company in good faith, and described
in a resolution of the Board of Directors of the Company) of said shares or
evidences of indebtedness or assets or rights or warrants so distributed, and of
which the denominator shall be the total number of shares of Common Stock
outstanding multiplied by such Current Market Price per share; and (y) the
number of shares of Common Stock issuable
Page 3 of 9
upon exercise of the Warrant shall be adjusted immediately thereafter so that
such number shall equal the number of shares of Common Stock issuable upon
exercise of the Warrant immediately prior thereto multiplied by the reciprocal
of Fraction C. Such adjustment shall be made successively whenever such a record
date is fixed. In the event that such distribution is not so made, the Warrant
Price then in effect shall be readjusted to the Warrant Price which would then
be in effect if such record date had not been fixed.
(d) For the purpose of any computation under subsections (b) and (c)
above, the Current Market Price per share on any date shall be deemed to be the
average of the daily closing prices for the 10 consecutive trading days
immediately preceding such date. The closing price for each day shall be the
last reported sales price regular way or, in case no such reported sale takes
place on such day, the average of the reported closing bid and asked prices
regular way, in either case on the New York Stock Exchange, or, if the Common
Stock is not listed or admitted to trading on such Exchange, on the principal
national securities exchange or national automated quotation system on which the
Common Stock is listed or admitted to trading or quoted or, if not so listed or
admitted to trading or quoted, the average of the closing bid and asked prices
in the over-the-counter market as furnished by any New York Stock Exchange firm
selected from time to time by the Company for that purpose and reasonably
satisfactory to the Warrant Holder. For purposes of this subsection (d), the
term "trading day" shall not include any day on which securities are not traded
on such exchange or in such market.
(e) In any case in which this Section 2 shall require that an adjustment
shall become effective immediately after a record date or an effective date for
an event, the Company may defer until the occurrence of such event issuing to
the Warrant Holder upon exercise of the Warrant after such record date or
effective date and before the occurrence of such event the shares issuable upon
such exercise. If such adjustment results in a reduction of the Warrant Price,
the Company shall return to the Warrant Holder the difference between the amount
previously received by the Company from the Warrant Holder in connection with
such exercise and such lesser amount due as a result of such reduction in the
Warrant Price. If such adjustment results in an increase in the Warrant Price,
the Warrant Holder shall deliver to the Company the difference between such
greater amount due in connection with such exercise as a result of such increase
in the Warrant Price and the amount previously received by the Company in
connection with such exercise.
(f) No adjustment in the Warrant Price shall be required unless such
adjustment would require an increase or decrease of at least 1% in such price;
provided, however, that any adjustment which by reason of this subsection (f) is
not required to be made shall be carried forward and taken into account in any
subsequent adjustment.
Page 4 of 9
(g) Whenever the Warrant Price and number of shares of Common Stock
issuable upon exercise of the Warrant are adjusted as provided in this Section
2, the Company shall promptly provided the Warrant Holder (i) an Officers'
Certificate in the case of any adjustment pursuant to subsection (a) of this
Section 2 or (ii) an Opinion of Counsel in the case of any other adjustment, in
each case setting forth the Warrant Price and number of shares of Common Stock
issuable upon exercise of the Warrant after such adjustment and setting forth a
brief statement of the facts requiring such adjustment and the computation
thereof, which Officers' Certificate or Opinion of Counsel, as the case may be,
shall be prima facie evidence of the correctness of any such adjustment absent
manifest error.
(h) All calculations under this Section 2 shall be made to the
nearest cent or to the nearest one-hundredth of a share, as the case may be.
3. Fractional Shares. No fractional shares or scrip representing
-----------------
fractional shares shall be issued upon the exercise of the Warrant.
4. Mergers, Etc.
-------------
(a) In case of any consolidation with or merger of the Company into
another corporation (other than a merger or consolidation in which the Company
is the continuing corporation), or in case of any sale, lease or conveyance to
another Person of the property of the Company as an entirety or substantially as
an entirety, such successor, leasing or purchasing corporation, as the case may
be, shall execute a supplemental instrument to this Warrant providing that the
Warrant Holder shall have the right thereafter to exercise this Warrant for the
kind and amount of shares of stock, other securities or property, including
cash, receivable upon such consolidation, merger, sale, lease or conveyance by a
holder of the number of shares of Common Stock for which this Warrant might have
been exercised immediately prior to such consolidation, merger, sale, lease or
conveyance.
(b) In case of (i) any reclassification or change of the shares of
Common Stock of the Company issuable upon exercise of this Warrant or (ii) any
consolidation with or merger of another corporation into the Company in which
the Company is the continuing corporation and in which there is a
reclassification or change of the shares of Common Stock issuable upon exercise
of this Warrant (in each case, other than a change in par value, or from par
value to no par value, or as a result of a subdivision or combination subject to
Section 2(a), but including any change in the shares of Common Stock into two or
more classes or series of shares), the Company shall execute a supplemental
instrument to this Warrant providing that the Warrant Holder shall have the
right thereafter to exercise this Warrant for the kind and amount of shares of
stock, other securities or property, including cash, receivable upon such
reclassification, change, consolidation or merger by a holder of the number of
shares of Common Stock for which this Warrant might have been exercised
immediately prior to such reclassification, change, consolidation or merger.
Page 5 of 9
(c) Any supplemental instrument entered into pursuant to this
Section 4 shall (i) where appropriate, state the Warrant Price in terms of one
full share of Common Stock or one full share of the Capital Stock of any
successor, leasing or purchasing corporation and (ii) provide for adjustments,
which shall be as nearly equivalent as may be practicable to the adjustments
provided for in this Warrant. A copy of each such supplemental instrument shall
be promptly provided to each Warrant Holder.
(d) The above provisions of this Section 4 shall similarly apply
to successive reclassifications and changes of shares and to successive
consolidations, mergers, sales or conveyances.
5. Reservation of Shares. The Company covenants that it will at all
---------------------
times reserve and keep available, free from pre-emptive rights, out of its
authorized Common Stock, solely for the purpose of issue upon exercise of the
Warrant as herein provided, such number of shares of Common Stock as shall then
be issuable upon the exercise of the Warrant. The Company covenants that all
shares of Common Stock which shall be so issuable shall be duly and validly
issued and fully paid and nonassessable.
6. Corporate Action.
----------------
(a) Before taking any action which would cause an adjustment
reducing the Warrant Price below the then stated or par value of the shares of
Common Stock issuable upon exercise of the Warrants, the Company will take any
corporate action which may, in the opinion of its counsel, be necessary in order
that the Company may validly and legally issue fully paid and nonassessable
shares of such Common Stock at such adjusted Warrant Price.
(b) The Company covenants that if any shares of Common Stock,
required to be reserved for purposes of exercise of the Warrant hereunder,
require registration with or approval of any governmental authority under any
United States Federal or State Law, or listing upon the New York Stock Exchange
or any other applicable national securities exchange or quotation system, before
such shares may be issued upon exercise, the Company will in good faith and as
expeditiously as possible endeavor to cause such shares to be duly registered,
approved or listed, as the case may be.
7. No Charge. The issuance of certificates for shares of Common Stock
---------
upon the exercise of the Warrant shall be made without charge to the Warrant
Holder for any tax in respect of the issuance of such certificates, and such
certificates shall be issued in the name of the Warrant Holder.
8. Notice. If at any time the Company shall propose:
------
(a) to pay any dividend or make any distribution on shares of its
Common Stock in shares of its Common Stock or to fix a record date for the
making of any other distribution (other than a non-extraordinary cash dividend
or distribution) to all holders of shares of its Common Stock; or
Page 6 of 9
(b) to fix a record date for the issuance of rights or warrants
(other than this Warrant or replacements thereof) to all holders of shares of
its Common Stock entitling them to purchase any additional shares of its Common
Stock or any other securities; or
(c) to effect any reclassification, subdivision or combination of
outstanding shares of its Common Stock; or
(d) to effect any liquidation, dissolution or winding-up of the
Company;
then, and in any one or more of such cases, the Company shall cause notice
thereof to be mailed to the Warrant Holder at the Warrant Holder's last address
known to the Company at least 30 days prior to the date on which (i) the books
of the Company shall close, or a record shall be taken, for such dividend,
distribution or issuance of rights or warrants or (ii) such reclassification,
subdivision, combination, liquidation, dissolution or winding-up shall become
effective, as the case may be.
9. No Stockholder Rights or Liabilities. This Warrant shall not entitle
------------------------------------
the Warrant Holder to any voting rights or other rights as a stockholder of the
Company. No provision hereof, in the absence of affirmative action by the
Warrant Holder to purchase shares of Common Stock, and no mere enumeration
herein of the rights or privileges of the Warrant Holder, shall give rise to any
lability of the Warrant Holder for the Warrant Price or as a stockholder of the
Company, whether such liability is asserted by the Company or by creditors of
the Company.
10. No Impairment. The Company will not, by amendment of its Certificate
-------------
of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of the
terms to be observed or performed under this Warrant by the Company, but will at
all times in good faith assist in carrying out all of the provisions of this
Warrant in order to protect the rights of the Warrant Holder against impairment
of the exercise rights provided for herein.
11. Lost, Stolen, Mutilated or Destroyed Warrant. If this Warrant is lost,
--------------------------------------------
stolen, mutilated or destroyed, the Company may, on such terms as to indemnity
or otherwise as it may in its discretion reasonably impose (which shall, in the
case of a mutilated Warrant, include the surrender thereof), issue a new Warrant
of like denomination and tenor as the Warrant so lost, stolen, mutilated or
destroyed. Any such new Warrant shall constitute an original contractual
obligation of the Company, whether or not the allegedly lost, stolen, mutilated
or destroyed Warrant shall be at any time enforceable by anyone.
Page 7 of 9
12. Notices. All notices, requests and other communications required or
-------
permitted to be given or delivered hereunder shall be in writing, and shall be
delivered, or shall be sent by national overnight courier service or by
certified or registered mail, postage prepaid and addressed, if to the Warrant
Holder, to the Warrant Holder at the address shown on the records of the Company
or at such other address as shall have been furnished to the Company by notice
from the Warrant Holder and, if to the Company, addressed to the Company at 0000
Xxxxx Xxxxxxxx Xxxxxx, Xxxx Xxxxxx, Xxxxxxxxxx 00000, Attention: President, or
at such other address as shall have been furnished to the Warrant Holder by
notice from the Company.
13. Definitions. Except as otherwise expressly defined herein, capitalized
-----------
terms used in this Warrant shall have the same meaning as defined in that
certain 7% Convertible Subordinated Note, dated April 24, 1995, as adjusted by
Allonge No. 1 thereto.
IN WITNESS WHEREOF, XXXXXXXXX CORPORATION, has executed this Warrant on and
as of the day and year first above written.
XXXXXXXXX CORPORATION
By
------------------------
[Title]
[Corporate Seal]
Attest:
_________________________
Secretary
Page 8 of 9
SUBSCRIPTION FORM TO BE EXECUTED
UPON EXERCISE OF THE WARRANT
Date_________________
To Xxxxxxxxx Corporation:
The undersigned, pursuant to the provisions set forth in the within
Warrant, hereby agrees to subscribe for and purchase ______ shares of Common
Stock covered by such Warrant, and herewith tenders $______ in full payment of
the purchase price for such shares.
XXXXXX ELECTRONICS CORPORATION
By
---------------------------
Address
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