STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "Agreement"), dated as of July 16,
1999, is entered into by and among NE HOLDCO CORP., a Delaware corporation (the
"Purchaser"), Xxxxxx Xxxxxxx and Xxxxxx Xxxxxxxx as trustees (the "Trustees") of
the Xxxxx X. Xxxxxxxx Trust (the "Trust"), Xxxxx Xxxxxxx ("Xxxxx Xxxxxxx"),
Xxxxxx Xxxxxxx ("Xxxxxx Xxxxxxx"), Xxxx Xxxxxxxx ("Xxxx Xxxxxxxx") and Xxxxxx
Xxxxxxxx ("Xxxxxx Xxxxxxxx," collectively with the Trust, Xxxxx Xxxxxxx, Xxxxxx
Xxxxxxx and Xxxx Xxxxxxxx, the "Sellers," and each individually, a "Seller") on
the following terms and conditions:
R E C I T A L S
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WHEREAS, as of the date hereof, there are 1,681,133 shares of issued
and outstanding Common Stock, par value $0.25 per share (the "Common Stock"), of
Networks Electronic Corporation, a California corporation (the "Company");
WHEREAS, as of the date hereof, the Trust owns 790,383 shares of
Common Stock;
WHEREAS, as of the date hereof, Xxxxx Xxxxxxx and Xxxxxx Xxxxxxx own
in the aggregate 82,277 shares of Common Stock;
WHEREAS, as of the date hereof, Xxxx Xxxxxxxx owns 20,881 shares of
Common Stock;
WHEREAS, as of the date hereof, Xxxxxx Xxxxxxxx owns 1,103 shares of
Common Stock;
WHEREAS, as of the date hereof, the Sellers own an aggregate of
894,644 shares of Common Stock, representing approximately 53% of the total
outstanding shares of Common Stock (the "Shares");
WHEREAS, the Purchaser desires to purchase the Shares from the Sellers
and the Sellers desire to sell the Shares to the Purchaser, all on the terms and
subject to the conditions contained herein; and
WHEREAS, concurrently herewith, the Purchaser, NE MERGER CORP., a
Delaware corporation ("Sub"), and the Company are entering into that certain
Agreement and Plan of Merger (as the same may be amended from time to time in
accordance with its terms, the "Merger Agreement"), providing for the merger of
Sub into the Company (the "Merger"), which shall be the surviving corporation,
pursuant to which each share of Common Stock which is issued and outstanding
immediately prior to the effective time (the "Effective Time") of the Merger
(other than shares held by the Company, the Purchaser or Sub, or any direct or
indirect subsidiary of the Company, the Purchaser or Sub) shall be canceled and
extinguished and be converted into and become a right to receive a cash payment
equal to $7.50 per share (subject to adjustment), without interest (except that
any Dissenting Shares (as defined in the Merger Agreement) shall be converted
into and become a right to receive the payment provided for under the California
General Corporation Law).
NOW, THEREFORE, in consideration of the premises and for other good
and valuable consideration given to each party hereto, the receipt of which is
hereby acknowledged, the parties agree as follows.
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1. Purchase and Sale of the Shares. On the terms and subject to the
conditions set forth in this Agreement, the Sellers agree to sell and deliver
the Shares to the Purchaser, free and clear of any mortgage, pledge, lien,
security interest or other encumbrance (each, a "Lien") or Restriction created
by or binding upon the Sellers or the Shares, and the Purchaser agrees to
purchase and acquire the Shares from the Sellers. For purposes of this
Agreement, "Restriction" means, when used with respect to any specified
security, any stockholders or other trust agreement, option, warrant, escrow,
proxy, buy-sell agreement, power of attorney or other contract, agreement or
arrangement which (i) grants to any Person the right to sell or otherwise
dispose of such specified security or any interest therein, or (ii) restricts
the transfer of, or the exercise of any rights or the enjoyment of any benefits
arising by reason of, the ownership of such specified security. For purposes of
this Agreement, "Person" means any individual, corporation, general or limited
partnership, limited liability company, trust, joint venture, association or
unincorporated entity of any kind.
2. Purchase Price. The Shares shall be purchased by the Purchaser from
the Sellers thereof for a purchase price (the "Purchase Price") equal to $7.50
per share.
3. The Closing. The closing (the "Closing") of the purchase and sale of
the Shares shall take place on the second business day following satisfaction or
waiver of each and every one of the conditions set forth in Section 6 and 7
hereof, or such other date and time as the parties shall otherwise agree to,
provided it shall be concurrent with the closing of the Merger. The date of the
Closing is referred to herein as the "Closing Date." At the Closing, each Seller
shall deliver to the Purchaser certificates representing the Shares against
delivery by the Purchaser of payment of the Purchase Price therefore, allocated
among the Sellers based on their respective percentage ownerships of the Shares,
by wire transfer or by immediately available funds, to such accounts as the
Sellers may specify.
4. Representations and Warranties. Each Seller, severally with respect to
itself and the Shares that it has agreed to sell pursuant to this Agreement,
makes the following representations and warranties as of the date hereof. The
representations and warranties contain exceptions set forth in a written
disclosure letter (the "Sellers Disclosure Letter/") /delivered to the Purchaser
concurrently with the execution hereof, which is numbered to correspond to the
various Sections of this Agreement and which also sets forth certain other
information called for by this Agreement.
4.1. Formation, Validity, Powers and Actions of Trusts. If a trust,
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(i) such Seller is a trust duly and validly formed and validly existing under
the laws of the state of California, with adequate trust power and authority to
own its properties and carry on its actions as currently conducted; (ii) Xxxxxx
Xxxxxxx and Xxxxxx Xxxxxxxx, as trustees of the Trust, have all requisite power
and authority to enter into, execute and deliver this Agreement on behalf of the
trust and to consummate on behalf of the Trust the transactions contemplated
hereby.
4.2. Execution, Delivery, and Performance. This Agreement constitutes
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the valid and binding obligations of each Seller, including the Trust, and is
enforceable in accordance with its terms, except as enforceability may be
subject to or limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws relating to or affecting creditors' rights generally.
4.3. No Consents. No consent, authorization, order or approval of, or
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filing or registration with, any governmental authority, commission, board or
other regulatory body of the
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United States or any state or political subdivision thereof (each, a
"Governmental Entity"), is required to be made or obtained by the Sellers or the
Company for or in connection with the sale by the Sellers of the Shares to the
Purchaser as contemplated hereby.
4.4. Title. Each Seller has good and valid title to the Shares it is
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selling pursuant to this Agreement, free and clear of any Liens or Restrictions
and it has the full legal right, power and authority to sell, assign, transfer
and deliver such Shares to the Purchaser and to make the representations,
warranties, covenants and agreements made by such Seller herein; upon the
delivery of and payment for such Shares as contemplated hereby the Purchaser
will acquire good and valid title thereto, free and clear of all Liens or
Restrictions created by or binding upon such Seller. The Shares, in the amounts
set forth in the recitals to this Agreement, constitute all equity or debt
securities issued by the Company held by the Sellers and together with the
remaining 786,489 shares of Common Stock outstanding and no more than 7,323
stock options constitute all shares of issued and outstanding Common Stock, and
none of the Sellers has any right, title or interest in or to any other equity
or debt securities of the Company or any option or right to acquire such equity
or debt securities.
4.5. No Conflicts. The execution, delivery and performance by the
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Sellers of this Agreement will not violate any other agreement to which any of
the Sellers is a party, including, without limitation, any voting agreement,
stockholders agreement or voting trust, or otherwise contravene, conflict with
or result in a violation of, any federal, state, local, municipal, foreign,
international, multi-national or other administrative order, constitution, law,
ordinance, regulation or statute, or give any individual, corporation,
partnership, governmental authority or regulatory body or any other person the
right to prevent the consummation of the sale of the Shares contemplated hereby.
4.6. No Broker. Except for Xxxxxxx & Companies which has been hired
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by the Company, the Sellers have not employed any investment banker, broker,
finder, consultant or intermediary in connection with the transactions
contemplated by this Agreement which would be entitled to any investment
banking, brokerage, finder's or similar fee or commission in connection with
this Agreement or the transactions contemplated hereby.
5. Representations and Warranties of the Purchaser. The Purchaser hereby
represents and warrants to the Sellers as follows:
5.1. Organization, Standing and Corporate Power of the Purchaser. The
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Purchaser is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware, with adequate corporate power and
authority to own its properties and carry on its business as presently
conducted. The Purchaser has the corporate power and authority to enter into,
execute and deliver this Agreement and to consummate the transactions
contemplated hereby.
5.2. Execution, Delivery and Performance by the Purchaser. The
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execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby have been duly authorized by the Board of
Directors of the Purchaser, and the Purchaser has taken all other actions
required by law, its Certificate of Incorporation and its Bylaws in order to
consummate the transactions contemplated by this Agreement. This Agreement
constitutes the valid and binding obligations of the Purchaser and is
enforceable in accordance with
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its terms, except as enforceability may be subject to or limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or
affecting creditors' rights generally.
5.3. Consents. Other than the filing of a Form 4 and Schedule 13D
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under the Exchange Act, no consent, authorization, order or approval of, or
filing or registration with, any Governmental Entity is required to be made or
obtained by the Purchaser for the purchase by the Purchaser of the Shares from
the Sellers as contemplated by this Agreement.
5.4. No Conflicts. The execution, delivery and performance by the
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Purchaser of this Agreement will not violate any other agreement to which the
Purchaser is a party, or otherwise contravene, conflict with or result in a
violation of, any federal, state, local, municipal, foreign, international,
multi-national or other administrative order, constitution, law, ordinance,
regulation or statute, or give any individual, corporation, partnership,
governmental authority or regulatory body or any other person the right to
prevent the consummation of the sale of the Shares contemplated hereby.
5.5. Purchase For Investment. The Purchaser is acquiring the Shares
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for its own account, for investment purposes only, and not with a view to or for
the resale or distribution thereof, in whole or in part. The Purchaser
acknowledges and represents: (i) that it is aware that the Shares are not
registered under the Securities Act and are subject to the restrictions thereof,
including pursuant to Rule 144 promulgated thereunder; (ii) that no federal or
state agency has passed upon the Shares or made any finding or determination as
to the fairness of the Purchaser's investment in the Shares; (iii) that there
are risks of loss associated with the Purchaser's purchase of the Shares; (iv)
that the investment in the Shares is an illiquid investment and the Purchaser
may bear the risk of its investment for an indefinite period of time; and (v)
that it is a sophisticated investor, able to evaluate the risks and merits of
its investment and to bear such financial risk.
5.6. No Broker. The Purchaser has not employed any investment banker,
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broker, finder, consultant or intermediary in connection with the transactions
contemplated by this Agreement which would be entitled to any investment
banking, brokerage, finder's or similar fee or commission in connection with
this Agreement or the transactions contemplated hereby.
6. Conditions to Closing. The respective obligations of each of the
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parties to affect the sale of the Shares by Sellers to Purchaser and to take the
other actions required to be taken by the parties at the Closing under this
Agreement are subject to the satisfaction prior to the Closing of the following
condition: the Trustees shall have obtained approval of the Superior Court of
the State of California of the material terms of this Agreement after a noticed
hearing.
7. Deliveries and Actions At Closing. At the Closing, the following
documents shall be delivered by both the Purchaser and the Sellers and the
following events shall have occurred:
7.1 By Purchaser:
a. Executed Agreement;
b. Purchase Price;
c. Executed Merger Agreement and the concurrent Closing (as
defined in the Merger Agreement) of the Merger with the Closing;
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7.2 By Sellers:
a. Executed Agreement;
b. Stock Certificates evidencing the shares sold.
8. Covenants of the Purchaser. The Purchaser hereby covenants and agrees
as follows:
Reasonable Efforts. Subject to the terms and conditions of this
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Agreement and the Merger Agreement, the Purchaser agrees to use all reasonable
efforts to take, or cause to be taken, all actions, and to do, or cause to be
done, all things necessary, proper or advisable to consummate and make effective
the transactions contemplated by this Agreement and the Merger Agreement. The
Purchaser hereby agrees, while this Agreement is in effect, and except as
contemplated hereby, not to intentionally and knowingly take any action with the
intention and knowledge that such action would make any of its representations
or warranties contained herein untrue or incorrect in any material respect or
have the effect of preventing or disabling it from performing its obligations
under this Agreement.
9. Covenants of the Sellers. The Sellers, jointly and severally, hereby
covenant and agree as follows:
9.1. Additional Shares. The Sellers agree that, they will not
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purchase additional shares of Common Stock of the Company whether in open market
purchases, privately negotiated purchases or by the exercise or conversion of
options or convertible securities held by them between the date of this
Agreement and the Closing Date of the Merger. If ownership of any additional
shares of Common Stock of the Company is acquired or transferred to any Seller,
such Seller hereby agrees, prior to the Closing Date of the Merger, to promptly
notify each other party to this Agreement of the number of additional shares of
Common Stock of the Company acquired by it, if any, after the date hereof, and
hereby agrees to sell any such additional shares of Common Stock of the Company
acquired by it after the date hereof through the Closing Date to the Purchaser
pursuant to the terms of this Agreement, with a provision for additional payment
for such shares by the Purchaser to such Seller at the Purchase Price.
9.2. Reasonable Efforts. Subject to the terms and conditions of this
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Agreement, the Sellers each agree to use all reasonable efforts to take, or
cause to be taken, all actions, and to do, or cause to be done, all things
necessary, proper or advisable to consummate and make effective the transactions
provided for by this Agreement and the Merger Agreement. The Sellers hereby
agree, while this Agreement is in effect, and except as contemplated hereby, not
to intentionally and knowingly take any action with the intention and knowledge
that such action would make any of their representations or warranties contained
herein untrue or incorrect in any material respect or have the effect of
preventing or disabling them from performing their obligations under this
Agreement.
10. Post-Closing Covenants; Termination.
Further Instruments, Termination. The Sellers and the Purchaser agree
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to execute such further documents or instruments and to take such other actions
as are necessary to transfer the Shares to the Purchaser and to otherwise carry
out the transactions provided for by this Agreement. If the Closing Date shall
not have occurred on or prior to September 30, 1999, other than as a result
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of a material breach of this Agreement by any party, hereto, any party may
terminate this Agreement without liability. If the Closing Date shall not have
occurred on or prior to such date as a result of material breach of any
representation, warranty, covenant or obligation by the Sellers (or any of
them), on the one hand, or the Purchaser on the other, the non-breaching party
shall have the right to terminate this Agreement without liability.
11. Survival of Representations and Warranties; Indemnity.
Only the representations and warranties of the Sellers contained in Section
4.4 hereto (with respect to title) shall survive the Closing and the
consummation of the transactions contemplated hereby. No party hereto shall
have any monetary or other liability or obligation to any other party hereto for
breach of any of such first party's representations or warranties contained
herein or in any certificate or other document delivered pursuant hereto, and
the sole consequence of any such breach shall be limited to the failure to
satisfy a condition to the Closing pursuant to Section 6 and 7 and the
termination right provided in Section 10, in each case to the extent applicable
according to such Section's express terms. With respect to a breach of its
representations and warranties contained in Section 4.4 hereto, each Seller
hereby covenants and agrees with the Purchaser that it shall indemnify the
Purchaser and its directors, officers, shareholders and Affiliates, and each of
their successors and assigns and hold them harmless from, against and in respect
of any and all costs, losses, claims, liabilities, fines, penalties (including
interest which may be imposed in connection therewith and court costs and
reasonable fees and disbursements of counsel) incurred by any of them arising
out of any material breach of, or any material inaccuracy in, such
representations and warranties; provided, however, that the liability of each
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Seller to all such indemnified persons shall in no event exceed the proceeds
received by such Seller for the sale of its Shares hereunder. For purposes of
this Agreement, "Affiliate" means, when used with reference to a specified
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Person, any Person that directly or indirectly through one or more
intermediaries controls or is controlled by, or is under common control with,
such specified Person and, in the case of an individual, such Person's spouse,
parents, children, siblings, mothers- and fathers-in-law, sons- and daughters-
in-law, and brothers- and sisters-in-law. For the purposes of this definition,
"control" (including the terms controlled by and under common control with), as
used with respect to any Person, shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of voting securities, by
contract or otherwise.
12. Miscellaneous.
12.1. Successors and Assigns. This Agreement shall be binding upon
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and inure to the benefit of the parties hereto and their respective successors
and assigns. Other than as set forth in the immediately succeeding sentence, no
party may assign any of its rights, or delegate any of its duties or
obligations, hereunder without the prior written consent of the other party, and
any such purported assignment or delegation shall be void ab initio.
Notwithstanding the foregoing, the Purchaser, its Affiliates, and its successors
and assigns, may assign their rights and delegate their duties (i) to any
successor entity resulting from any liquidation, merger, consolidation,
reorganization, or transfer of all or substantially all of the assets or stock
of the Purchaser, or (ii) to any Affiliate of the Purchaser; provided,
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that in either case, any such assignee shall expressly assume all of the
obligations the Purchaser hereunder.
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12.2. Notices. All notices, demands and or her communications
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(collectively, "Notices") given or made pursuant to this Agreement shall be in
writing and shall be deemed to have been duly given if sent by registered or
certified mail, return receipt requested, postage and fees prepaid, by overnight
service with a nationally recognized "next day" delivery company such as Federal
Express or United Parcel Service, by facsimile transmission, or otherwise
actually delivered to the following addresses:
(a) If to the Purchaser:
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c/o GWB (USA), Inc.
Five Xxxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxx
Fax: (000) 000-0000
with a copy to:
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Xxxxxxx, Xxxxxx-Xxxxxxx
000 X. Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxxxx
Fax: (000) 000-0000
If to the Sellers:
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c/o Networks Electronic Corporation
0000 Xx Xxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxx 00000
Fax: (000) 000-0000
with a copy to:
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Troop Xxxxxxx Xxxxxx Xxxxxxx & Xxxxx, LLP
0000 Xxxxxxx Xxxx Xxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxx Xxxxxxxx, Esq.
Fax: 000-000-0000
Any Notice shall be deemed duly given when received by the addressee thereof.
Any of the parties to this Agreement may from time to time change its address
for receiving notices by giving written notice thereof in the manner set forth
above.
12.3. Amendment: Waiver. No provision of this Agreement may be waived
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unless in writing signed by all of the parties to this Agreement, and the waiver
of any one provision of this Agreement shall not be deemed to be a waiver of any
other provision. This Agreement may be
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amended, supplemented or otherwise modified only by a written agreement executed
by all of the parties to this Agreement.
12.4. Limitation on Liability. The liability of the Sellers for any
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breach by the Sellers of this Agreement shall be limited to the actual damages
suffered by the Purchaser or any of its Affiliates under this Agreement and the
Sellers shall not be liable for any consequential or other damages of the
Purchaser or any of its Affiliates, including any damages arising in connection
with the Merger Agreement.
12.5. Jurisdiction. The parties hereto irrevocably submit to the
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non-exclusive jurisdiction of the state and federal courts located in California
the purposes of any suit, action or other proceeding arising out of this
Agreement (and agree not to commence any action, suit or proceeding relating
hereto except in such courts). It is understood that a copy of such process
serviced on such agent will be promptly forwarded by mail to it at its address
set forth in Section 12.2 hereof, but the failure to receive such copy shall not
affect in any way the service of such process. Each of the parties hereto
further irrevocably consents to the service of process of any of the
aforementioned courts in any such action or proceeding by the mailing of copies
thereof by registered or certified mail, postage prepaid, to it at its said
address, such service to become effective upon confirmed delivery. The parties
irrevocably and unconditionally waive any objection to the laying of venue of
any action, suit or proceeding arising out of this Agreement or the transactions
contemplated hereby in the state or federal courts located in California, and
hereby further irrevocably and unconditionally waive and agree not to plead or
claim in any such action, suit or proceeding brought in any such court that such
action, suit or proceeding has been brought in an inconvenient forum.
12.6. Governing Law. This Agreement shall be governed by and
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construed both as to validity and performance and enforced in accordance with
the laws of the State of California without giving effect to the choice of law
principles thereof.
12.7. Counterparts. This Agreement may be executed in any number of
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counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
12.8. Remedies Cumulative. Each of the various rights, powers and
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remedies shall be deemed to be cumulative with, and in addition to, all the
rights, powers and remedies which either party may have hereunder or under
applicable law relating hereto or to the subject matter hereof, and the exercise
or partial exercise of any such right, power or remedy shall constitute neither
an exclusive election thereof nor a waiver of any other such right, power or
remedy.
12.9. Headings. The section and subsection headings contained in
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this Agreement are included for convenience only and form no part of the
agreement between the parties.
12.10. Severability. Whenever possible, each provision of this
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Agreement shall be interpreted in such a manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall be or become
prohibited or invalid under applicable law, such provision shall be ineffective
to the extent of such prohibition or invalidity without invalidating the
remainder of such provision or the remaining provisions of this Agreement.
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12.11. Expenses. Each party shall pay its own costs, expenses,
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including without limitation, the fees and expenses of their respective counsel
and financial advisors .
12.12. Entire Agreement. This Agreement constitutes and embodies the
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entire understanding and agreement of the parties hereto relating to the subject
matter hereof and there are no other agreements or understandings, written or
oral, in effect between the parties relating to such subject matter except as
expressly referred to herein.
12.13. Publicity. Purchaser and Sellers agree that press releases and
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other announcements with respect to the transactions contemplated hereby shall
be subject to mutual agreement; provided, however, that either party may make
such announcement as, in the opinion of its counsel, such party is required to
make pursuant to applicable law, but in such event such party shall, to the
extent practicable, give the other party reasonable prior notice and an
opportunity to comment on the proposed announcement.
12.14. Specific Performance. Each of the parties hereto recognizes
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and acknowledges that a breach by it of any covenants or agreements contained in
this Agreement will cause the other parties to sustain damages for which they
would not have an adequate remedy at law for money damages, and therefore each
of the parties hereto agrees that in the event of any such breach the aggrieved
party or parties shall be entitled to the remedy of specific performance of such
covenants and agreements and injunctive and other equitable relief, without the
posting of bond or other security, in addition to any other remedy to which it
or they may be entitled, at law or in equity.
12.15. No Third Party Beneficiaries. This Agreement is not intended
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to benefit, and shall not run to the benefit of or be enforceable by, any other
person or entity other than the parties hereto and their permitted successors
and assigns.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
SELLERS
By: /s/ Xxxxx Xxxxxxx
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Xxxxx Xxxxxxx
By: /s/ Xxxxxx Xxxxxxx
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Xxxxxx Xxxxxxx
By: /s/ Xxxx Xxxxxxxx
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Xxxx Xxxxxxxx
By: /s/ Xxxxxx Xxxxxxxx
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Xxxxxx Xxxxxxxx
XXXXX X. XXXXXXXX TRUST
By: /s/ Xxxxxx Xxxxxxx
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Xxxxxx Xxxxxxx, Trustee
By: /s/ Xxxxxx Xxxxxxxx
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Xxxxxx Xxxxxxxx, Trustee
PURCHASER
By: /s/ Xxxxxx X. Xxxxx
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Its: Vice President
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EXHIBITS
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EXHIBIT A
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SELLER'S DISCLOSURE LETTER
The following are exceptions to the representations and warranties in paragraphs
4.2, 4.3, 4.4, and 4.5 of the Stock Purchase Agreement being delivered to
purchaser simultaneously with this letter.
Xxxxxx Xxxxxxxx and Xxxxxx Xxxxxxx, Trustees of the Xxxxx X. Xxxxxxxx Trust,
pursuant to Court Order in L.A. Superior Court Case No. BP037966, filed a First
Accounting for the period beginning November 1, 1994 and ending March 25, 1996
and a Revised First Accounting for the same period. Xxxxxxx X.X. Xxxxxxxx, one
of the beneficiaries of the Trust filed objections to each of those accountings.
The case was then assigned to the Xxxxxxxxx Xxxxxx X. Xxxxxxxxx, Judge of the
Superior Court, for hearing on the objections. During the course of the trial
on the objections, a plan was evolved to cause the stock owned by the Trust in
Networks Electronic Corp. to be sold.
Pursuant to that plan Judge Xxxxxxxxx ordered, inter alia, that Networks
Electronic Corp. should retain an investment banker, which it did, and that:
"That before any shareholder vote on any transaction resulting from
the Company's investment banking activities, or before committing to
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any transaction that:
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(i) results in a disposition of the Trust's interest
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(ii) changes the identity of the entity that the Trust is invested
in,
(iii) materially dilutes the Trust's interest in the Company,
(iv) or impairs the marketability of the Trust's shares,
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the Trustees shall obtain the approval of the Court of the material
terms of any such transaction after a noticed hearing."
Since the transaction contemplated in the Stock Purchase Agreement would
constitute a transaction that would meet the definition of subparagraph (i) and
(iv) set forth above, the enforceability of the Stock Purchase Agreement must
necessarily be subject to the court approval described above.
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