[THIS DOCUMENT IS A COPY OF THE CURRENT REPORT ON FORM 8-K DATED MARCH 16, 1998
FILED ON APRIL 1, 1998 PURSUANT TO A RULE 201 TEMPORARY HARDSHIP EXEMPTION]
ASSET PURCHASE AGREEMENT
THIS AGREEMENT is made as of the 6th day of March, 1998, by and between
KENCO XXXXXXXX INC., a Delaware corporation ("Kenco"), and KENCO PRODUCTS, INC.,
a Delaware corporation (the "Purchaser"). There are numerous other defined terms
which are capitalized in this Asset Purchase Agreement (the "Agreement"), all of
which are defined in the substantive provisions of this Agreement or in Article
1, below.
RECITALS
The Purchaser desires to acquire from Kenco the Acquired Assets subject to
the Assumed Liabilities, excluding the Excluded Assets and the Retained
Liabilities.
A. Xxxxxx Xxxxxx ("Xxxxxx"), one of the Guarantors and a principal owner
of the Purchaser, has been acting as general manager in charge of operating the
business of Kenco for more than the past year, is aware of the history of
operating losses of Kenco, and, therefore, has a significant amount of
information regarding the business and assets which are subject of this
Agreement, including (without limitation) the Acquired Assets, the Assumed
Liabilities, the Excluded Assets, and the Retained Liabilities.
B. Kenco desires to sell the Acquired Assets subject to the Assumed
Liabilities;
C. Kenco desires to lease to the Purchaser, and the Purchaser
desires to lease from Kenco, the Leased Assets on the terms and conditions
described herein and set forth in the Lease;
D. Kenco is willing to act as inventory warehouseman for the
Purchaser on the terms and conditions described herein and set forth in the
Warehouse Agreement; and
E. The Guarantors are willing to guarantee the obligations of the
Purchaser under the Lease and the Warehouse Agreement pursuant to the
Guaranty.
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt, adequacy and sufficiency of which are hereby acknowledged, the parties
hereto covenant and agree as follows:
ARTICLE 1
ARTICLE 1 DEFINITIONS
Unless otherwise defined in the substantive provisions of this Agreement,
the following terms will have the meanings ascribed to them in this Article 1.
1.1 "Acquired Assets" means the assets being acquired pursuant hereto by
the Purchaser, including (without limitation) the assets described in Exhibit A.
1.2 "Acquisition" means the purchase by the Purchaser and the sale by
Kenco of the Acquired Assets, subject to the Assumed Liabilities, the Lease and
the Warehouse Agreement.
1.3 "Assumed Liabilities" means those liabilities described in
Exhibit B.
1.4 "Change of Control" means any of the following: (i) the sale, lease,
transfer, conveyance or other disposition of, in one or a series of related
transactions, of all or substantially all of the assets of the Purchaser to any
Person (as such term is used in Section 13(d)(3) of the Securities Exchange Act
of 1934) (each an "Acquiring Person"), (ii) the adoption of a plan relating to
the liquidation or dissolution of the Purchaser, (iii) the consummation of any
transaction (including, without limitation, any merger or consolidation) the
result of which is that any "person" (other than either of the Guarantors)
becomes the "beneficial owner" (as each such term is defined in Rule 13d-3 and
Rule 13d-5 under the Exchange Act), directly or indirectly, of more than 20% of
the voting stock of the Purchaser, or (iv) the sale or other disposition by the
Guarantors of their equity ownership position in the Purchaser by more than 20%.
1.5 "Closing" has the meaning set forth in Section 3.3, below.
1.6 "Closing Date" has the meaning set forth in Section 3.3, below.
1.7 "Closing Documents" means this Agreement and the exhibit agreements
and other related agreements required to be executed and delivered under this
Agreement.
1.8 "Employment Agreement" means the Employment Agreement between the
Purchaser and Xxxxxx Xxxxxx in the form of Exhibit H.
1.9 "Environmental Law or Laws" means all applicable federal, state, local
and foreign laws, statutes, ordinances, codes, rules, standards and regulations,
now or hereafter in effect, and in each case as amended or supplemented from
time to time, and any applicable judicial or administrative interpretation
thereof, including any applicable judicial or administrative order, consent
decree, order or judgment, imposing liability or standards of conduct for or
relating to the regulation and protection of human health, safety, the
environment and natural resources (including ambient air, surface water,
groundwater, wetlands, land surface or subsurface strata, wildlife, aquatic
species and vegetation). Environmental Laws include, but are not limited to, the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980
(42 U.S.C. xx.xx. 9601 et seq.) ("CERCLA"); the Hazardous Materials
Transportation Authorization Act of 1994 (49 U.S.C. xx.xx. 5101 et seq.); the
Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. xx.xx. 136 et
seq.); the Solid Waste Disposal Act (42 U.S.C. xx.xx. 6901 et seq.); the Toxic
Substance Control Act (15 U.S.C. xx.xx. 2601 et seq.); the Clean Air Act (42
U.S.C. xx.xx. 7401 et seq.); the Federal Water Pollution Control Act (33 U.S.C.
xx.xx. 1251 et seq.); the Occupational Safety and Health Act (29 U.S.C. xx.xx.
651 et seq.); and the Safe Drinking Water Act (42 U.S.C. xx.xx. 300(f) et seq.),
each as from time to time amended, and any and all regulations promulgated
thereunder, and all analogous state, local and foreign counterparts or
equivalents and any transfer of ownership notification or approval statutes.
1.10 "Environmental Liabilities" means any and all liabilities for
the violation of, or remediation under, any Environmental Laws.
1.11 "Exchange Act" means Securities Exchange Act of 1934.
1.12 "Excluded Assets" means those assets described on Exhibit C.
1.13 "Excluded Liabilities" means those liabilities described on
Exhibit D.
1.14 "GAAP" means generally accepted accounting principles
consistently applied in the United States.
1.15 "Guarantors" means Colfax Group, Inc., a Delaware corporation,
and Xxxxxx Xxxxxx, jointly and severally.
1.16 "Guaranty" means the guaranty of obligations of the Purchaser
to be executed by the Guarantors in the form attached as Exhibit E.
1.17 "Hazardous Materials" means any substance, material or waste which is
regulated by or forms the basis of liability now or hereafter under, any
Environmental Laws, including any material or substance which is (a) defined as
a "solid waste," "hazardous waste," "hazardous material," "hazardous substance,"
"extremely hazardous waste," "restricted hazardous waste," "pollutant,"
"contaminant," "hazardous constituent," "special waste," "toxic substance" or
other similar term or phrase under any Environmental Laws, or (b) petroleum or
any fraction or by-product thereof, asbestos, polychlorinated biphenyls (PCB's),
or any radioactive substance.
1.18 "Inventory" means the personal property identified on Exhibit
1 to the Warehouse Agreement.
1.19 "IRC" means the Internal Revenue Code of 1986, as amended.
1.20 "Knowledge" means actual knowledge without independent
investigation.
1.21 "Lease" means the lease of the Owned Facilities by Kenco to
the Purchaser in the form attached as Exhibit G.
1.22 "Lender" means Fidelity Funding, Inc., the Purchaser's primary
lender relating to the Transaction.
1.23 "Liability or Liabilities" means direct or indirect indebtedness,
liability, claim, loss, damage, deficiency, obligation or responsibility, known
or unknown, asserted or unasserted, fixed or unfixed, liquidated or
unliquidated, secured or unsecured, accrued, absolute, contingent or otherwise
which affects or could affect the Acquired Assets, including any liability for
Taxes.
1.24 "KPI Common Stock" means the $.01 par value common stock of
the Purchaser.
1.25 "KPI Preferred Stock" means the preferred stock to be issued to Kenco
by the Purchaser in accordance with the Certificate of Designations of Series A
Senior Preferred Stock, attached as Exhibit J.
1.26 "Ordinary Course of Business" or "Ordinary Course" means the ordinary
course of business consistent with past custom and practice of Kenco (including
with respect to quantity and frequency).
1.27 "Owned Facilities" means the real property and associated fixtures
owned by Kenco located at 00000 Xxxxxx Xxxx 0, Xxxxxxxxxx, Xxxxxxx 00000.
1.28 "Permits" means all licenses, permits, orders and approvals of any
federal, state or local governmental or regulatory bodies that are material to
or necessary for the conduct of the business of Kenco.
1.29 "Person" means any individual, corporation, partnership, limited
liability company, joint venture, trust, association, unincorporated
organization, agency, other entity or groups of entities, or governmental body.
1.30 "Security Agreement" means the Security Agreement between
Purchaser and Kenco attached as Exhibit F.
1.31 "Security Interest" means any mortgage, pledge, security interest,
encumbrance, charge, claim, or other lien, other than: (a) mechanic's,
materialman's and similar liens; (b) liens for Taxes not yet due and payable or
for Taxes that the taxpayer is contesting in good faith through appropriate
proceedings; (c) liens arising under worker's compensation, unemployment
insurance, social security, retirement and similar legislation; (d) liens
arising in connection with sales of foreign receivables; (e) liens on goods in
transit incurred pursuant to documentary letters of credit; (f) purchase money
liens and liens securing rental payments under capital lease arrangements; and
(g) other liens arising in the Ordinary Course of Business and not incurred in
connection with the borrowing of money.
1.32 "Tax" means any federal, state, local or foreign income, gross
receipts, capital stock, franchise, profits, withholding, social security,
unemployment, disability, real property, personal property, stamp, excise,
occupation, sales, use, transfer, value added, ad valorem, alternative, minimum,
estimated, net worth, self-employment, Medicaid, or other tax, including any
interest, penalty or addition thereto, whether disputed or not.
1.33 "Transaction" means the transactions contemplated by this
Agreement and the other Closing Documents.
1.34 "Warehouse Agreement" means the agreement between Kenco and the
Purchaser for the storage and sale of Inventory, in the form attached as Exhibit
I.
ARTICLE 2
ACQUISITION OF ACQUIRED ASSETS
2.1 Purchase and Sale. At the Closing and subject to the terms and
conditions stated herein, Kenco agrees to sell, assign, convey and transfer to
the Purchaser, and the Purchaser agrees to purchase from Kenco, the Acquired
Assets together with all of the properties, rights and goodwill associated
therewith of every kind and description, tangible and intangible, personal or
mixed, as more particularly described in Exhibit A to this Agreement, subject to
the Assumed Liabilities described in Exhibit B to this Agreement. Kenco's sale,
conveyance, assignment and transfer of the Acquired Assets shall be free and
clear of all Security Interests.
2.2 Excluded Assets. The Purchaser shall not purchase the
Excluded Assets described in Exhibit C.
ARTICLE 3
PURCHASE PRICE AND CLOSING
3.1 Purchase Price for Acquired Assets.
(a) The Purchaser shall pay the total amount of: (1) $1,125,000
in immediately available funds; (2) 2,000 shares of KPI Preferred Stock; and (3)
the Purchaser will assume the Assumed Liabilities (the total of (1), (2) and (3)
being the "Purchase Price") to Kenco for the purchase of the Acquired Assets.
The Purchase Price shall be payable to Kenco at the Closing.
3.2 Allocation of the Purchase Price.
(a) The Purchase Price shall be allocated among the Acquired
Assets as set forth on Schedule 3.2.
(b) The parties agree that they will not take any tax or other
position inconsistent with any allocation of the Purchase Price set forth on
Schedule 3.2.
(c) The Purchaser and Kenco each covenant with the other that it
will promptly give written notice to the other of any inquiry or challenge of
such allocation by any federal, state or local tax authority.
3.3 Closing of the Purchase. The closing of the Transaction (the
"Closing") shall take place at Kenco's offices in Middlebury, Indiana, or at
such other place as selected by the parties on March 6, 1998 at 10:00 a.m. or at
such other time as the parties may agree, but no later than March 20, 1998 (the
"Closing Date").
3.4 Sales and Similar Taxes. The Purchaser shall pay any sales,
use, personal property or similar tax payable as a result of its acquisition
of the Acquired Assets.
ARTICLE 4
REPRESENTATIONS OF KENCO
As an inducement to the Purchaser to enter into this Agreement and to
complete the Transaction, and with the knowledge that the Purchaser will rely
thereon, Kenco represents and warrants to the Purchaser that all of the
representations and warranties in this Article 4 are true, correct and complete
as of the date of this Agreement and will be correct and complete as of the
Closing Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement throughout this Article 4), except as
set forth in the Schedules attached to this Agreement which may be revised by
Kenco at any time or times prior to Closing and which Schedules, as the same may
be so revised, will be initialed by the parties at the Closing.
4.1 Due Organization and Qualification. Kenco is a corporation duly
organized, validly existing and in good standing under the laws of the state of
its incorporation, and has the corporate power and lawful authority to carry on
its business as now being conducted.
4.2 Title to Property. Kenco has good, valid and marketable title to all
real and personal property included in the Acquired Assets (tangible and
intangible), in each case subject to no Security Interest, option, right of
first refusal, or other restriction of any kind or character (except such
Security Interest which will be released at the Closing following payment to the
holder of such Security Interest).
4.3 Authority of Kenco; Consents. (a) Kenco has full power and
authority to execute and deliver this Agreement and the other Closing
Documents and to carry out the Transaction; and Kenco has taken all requisite
corporate action to authorize the execution, delivery and performance of the
Closing Documents.
(b) This Agreement and the other Closing Documents are valid and
binding agreements of Kenco enforceable in accordance with their terms.
(c) To the Knowledge of Kenco, and based on the representations
by Xxxxxx to Kenco contained in Section 5.4: (A) no consent, authorization or
approval of, or declaration, filing or registration with, any governmental or
regulatory authority or any consent, authorization or approval of any other
third party is required to enable Kenco to enter into and perform its
obligations under this Agreement and the other Closing Documents except as will
be obtained at or prior to the Closing; and (B) neither the execution and
delivery of this Agreement and the other Closing Documents, nor the consummation
of the Transaction will:
(1) Be in violation of the Certificate of Incorporation,
Bylaws or any other organizational document of Kenco, or constitute a breach of
any evidence of indebtedness or agreement to which Kenco is a party;
(2) Result in the creation or imposition of any Security
Interest on any of the Acquired Assets under any agreement or commitment to
which Kenco or the Acquired Assets are bound;
(3) Conflict with or result in the breach of any writ,
injunction or decree of any court or governmental instrumentality;
(4) Violate any statute, law or regulation of any
jurisdiction as such statute, law or regulation relates to the Acquired
Assets; or
(5) Violate or cause any revocation of, or limitation on,
any Permit.
4.4 Compliance with Laws. To the Knowledge of Kenco, and based on the
representations of Xxxxxx to Kenco contained in Section 5.4, Kenco is not in
violation of, nor has Kenco violated, any applicable order, judgment,
injunction, award or decree relating to the Acquired Assets. To the Knowledge of
Kenco, Kenco has not violated nor is it in violation of any federal, state,
local or foreign law, ordinance or regulation or any other requirement of any
governmental or regulatory body, court or arbitrator applicable to the Acquired
Assets.
4.5 Litigation. There are no outstanding orders, judgments, injunctions,
awards or decrees of any court, governmental or regulatory body or arbitration
tribunal against or involving the Acquired Assets or the Assumed Liabilities.
The Purchaser is aware of the litigation in which Kenco or its affiliates are
involved as described on Schedule 4.5 hereto and, with respect to such
litigation, Kenco will indemnify and hold harmless Purchaser against any and all
liabilities which may accrue to Purchaser from such litigation.
4.6 Broker's or Finder's Fees. No agent, broker, Person or firm acting on
behalf of Kenco is, or will be, entitled to any commission or broker's or
finder's fees from any of the parties hereto, or from any Person controlling,
controlled by or under common control with any of the parties hereto, in
connection with the Transaction.
ARTICLE 5
REPRESENTATIONS OF THE PURCHASER AND THE GUARANTORS
As an inducement to Kenco to enter into this Agreement and to complete the
Transaction and with the knowledge that Kenco will rely thereon, the Purchaser
and the Guarantors, jointly and severally, represent and warrant to Kenco that
all of the representations and warranties in this Article 5 are true, correct
and complete as of the date of this Agreement and will be correct and complete
as of the Closing Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement throughout this Article 5).
5.1 Due Incorporation and Qualification of the Purchaser. The Purchaser is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware, and has the corporate power and lawful authority
to carry on its business as now being conducted. On or before the Closing Date,
the Purchaser will be duly qualified or otherwise authorized as a foreign
corporation to transact business and will be in good standing in the State of
Indiana.
5.2 Authority of the Purchaser and the Guarantors; Consents. (a) The
Purchaser and the Guarantors each have full power and authority to execute and
deliver this Agreement and the other Closing Documents and to carry out the
Transaction; and the Purchaser and the Corporate Guarantor each has taken all
requisite corporate action to authorize the execution, delivery and performance
of the Closing Documents.
(b) This Agreement and the other Closing Documents are valid and
binding agreements of the Purchaser and each of the Guarantors, enforceable in
accordance with their terms.
(c) To the Knowledge of the Purchaser and each of the Guarantors:
(A) no consent, authorization or approval of, or declaration, filing or
registration with, any governmental or regulatory authority or any consent,
authorization or approval of any other third party is required to enable the
Purchaser and the Guarantors to enter into and perform their respective
obligations under this Agreement and the other Closing Documents except as will
be obtained at or prior to the Closing; and (B) neither the execution and
delivery of this Agreement and the other Closing Documents, nor the consummation
of the Transaction will, with respect to the Purchaser and the Guarantors,
individually:
(1) Be in violation of the Certificate of Incorporation,
Bylaws or any other organizational documents of it, or constitute a breach of
any evidence of indebtedness or agreement to which it is a party;
(2) Cause a default under any mortgage or deed of trust or
other lien, charge or encumbrance to which any of its property is subject to
under any contract to which it is a party, or permit the termination of any such
contract by another Person;
(3) Result in the creation or imposition of any Security
Interest on any of its property or assets (except the Acquired Assets) under any
agreement or commitment to which it is bound;
(4) Accelerate, or constitute an event entitling, or which
would upon notice or lapse of time or both, entitle the holder of any
indebtedness to accelerate the maturity of any such indebtedness.
(5) Conflict with or result in the breach of any writ,
injunction or decree of any court or governmental instrumentality;
(6) Violate any statute, law or regulation of any
jurisdiction as such statute, law or regulation relates to it; or
(7) Violate or cause any revocation of, or limitation
on, any Permit.
5.3 KPI Preferred Stock. The KPI Preferred Stock upon issuance and the KPI
Common Stock issuable upon conversion of the KPI Preferred Stock, will be duly
authorized, fully paid and non-assessable and not subject to any preemptive
rights.
5.4 Existing Operations. Xxxxxx Xxxxxx has acted as general manager in
charge of operating the business of Kenco for more than a year and in connection
with such operations, and represents and warrants to Kenco, to the best of his
Knowledge, that: (A) no consent, authorization or approval of, or declaration,
filing or registration with, any governmental or regulatory authority or any
consent, authorization or approval of any other third party is required to
enable Kenco to enter into and perform its obligations under this Agreement and
the other Closing Documents except as will be obtained at or prior to the
Closing; (B) neither the execution and delivery of this Agreement and the other
Closing Documents nor the consummation of the Transaction thereby will violate
or cause any revocation of, or limitation on, any Permit; (C) Kenco is not in
violation of, nor has Kenco violated, any applicable order, judgment,
injunction, award or decree relating to the Acquired Assets; and (D) Kenco has
not violated, nor is it in violation, of any federal, state, local or foreign
law, ordinance or regulation or any other requirement of any governmental or
regulatory body, court or arbitrator applicable to the Acquired Assets including
Environmental Laws.
5.5 Broker's or Finder's Fees. No agent, broker, Person or firm acting on
behalf of the Purchaser or the Guarantors is, or will be, entitled to any
commission or broker's or finder's fees from any of the parties hereto, or from
any Person controlling, controlled by or under common control with any of the
parties hereto, in connection with the Transaction, except Cascade Capital,
Inc., which acted as a broker for the Purchaser and whose commission and fees
related to the transactions contemplated by this Agreement and the other Closing
Documents will be paid entirely by the Purchaser.
ARTICLE 6
REGULATORY COMPLIANCE
6.1 Bulk Sales Compliance. The Purchaser hereby waives compliance by Kenco
with the provisions of the bulk sales law of the State of Indiana, if applicable
to the transfer of the Inventory pursuant to the Warehouse Agreement. Kenco
agrees to indemnify and hold the Purchaser harmless from any liability, other
than Liabilities which comprise part of the Assumed Liabilities, incurred as a
result of the failure to so comply.
6.2 Xxxx-Xxxxx-Xxxxxx Act. The parties have concluded that provisions of
the Xxxx-Xxxxx-Xxxxxx Act, 15 U.S.C. xx.xx. 18a, relating to antitrust review by
the federal government, and any similar state statute, are inapplicable to the
transaction contemplated hereunder.
6.3 The WARN Act. The parties have concluded that the provisions of the
WARN Act, 29 U.S.C. xx.xx. 2101, et seq., and any similar state statute,
relating to notice to employees, are inappropriate to the transactions
contemplated hereunder. Kenco agrees to indemnify and hold the Purchaser
harmless from any liability, other than Liabilities which comprise part of the
Assumed Liabilities, incurred as a result of the failure to so comply with the
WARN Act to the extent applicable.
6.4 COBRA. Kenco will continue to comply with the provisions of
COBRA, Pub. L. No. 99-272, 99th Cong., 2d Sess. (1987), and any similar state
statute, relating to continuation of health benefits to employees of Kenco
whose termination dates occurred on or before the Closing Date.
ARTICLE 7
[SECTION INTENTIONALLY OMITTED]
ARTICLE 8
[SECTION INTENTIONALLY OMITTED]
ARTICLE 9
[SECTION INTENTIONALLY OMITTED]
ARTICLE 10
ACTIONS TO BE TAKEN AT THE CLOSING
In addition to the signature and delivery of this Agreement, the following
actions shall be taken at the Closing, each of which shall be conditioned on
completion of all the others and all of which shall be deemed to have taken
place simultaneously:
10.1 Transfer Documents. The following documents will be
delivered, as fully executed, at Closing:
(a) Kenco shall deliver to the Purchaser an Assignment and Xxxx
of Sale attached as Exhibit K conveying the Acquired Assets. Within five (5)
Business Days after the Closing, Kenco shall deliver to Purchaser executed
assignments in form satisfactory for filing with the U.S. Patent and Trademark
Office to assign the patents and trademarks included in the Acquired Assets.
(b) Kenco shall deliver to the Purchaser duly executed titles to
all vehicles, machinery and equipment included in the Acquired Assets (provided
such vehicles, machinery and equipment are titled) free and clear of any
Security Interests.
10.2 The Purchase Price. The Purchaser shall deliver to Kenco the
Purchase Price.
10.3 Lease. The Purchaser and Kenco will enter into the Lease,
attached as Exhibit G.
10.4 Warehouse Agreement. The Purchaser and Kenco will enter into
the Warehouse Agreement attached as Exhibit I.
10.5 Security Agreement. The Purchaser and Kenco will enter into
the Security Agreement attached as Exhibit F.
10.6 Guaranty. The Guarantors will execute and deliver to Kenco
the Guaranty attached as Exhibit E.
10.7 Employment Agreement. The Purchaser and Xxxxxx Xxxxxx will
execute and deliver to each other and to Kenco (third party beneficiary
thereof) the Employment Agreement attached as Exhibit H.
10.8 Employees. The Purchaser shall deliver to Kenco a list of
employees, if any, who will not be hired by the Purchaser immediately after
the Closing.
ARTICLE 11
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
11.1 Survival of Representations and Warranties. All of the
representations and warranties of the parties contained in this Agreement shall
survive the Closing for a period of one year after the Closing Date.
11.2 Good Faith Efforts to Settle Disputes. Each of the parties agrees
that, prior to commencing any litigation against the other concerning any matter
with respect to which such party intends to claim a right of indemnification in
such proceeding, such parties shall meet in a timely manner and attempt in good
faith to negotiate a settlement of such dispute during which time such parties
shall disclose to the others all relevant information relating to such dispute.
11.3 Fees and Expenses. Notwithstanding any other provision in this
Article 11, if any dispute or controversy arises between any of the parties to
this Agreement, the prevailing party in such dispute shall, in addition to any
other remedies the prevailing party may obtain in such dispute, be entitled to
recover from the other party all of its reasonable legal fees and out-of-pocket
costs incurred by such party in enforcing or defending its rights hereunder.
ARTICLE 12
[SECTION INTENTIONALLY OMITTED]
ARTICLE 13
CERTAIN ADDITIONAL AGREEMENTS
13.1 Public Statements; Confidentiality of Information. (a) No party will
make any public disclosure (including, without limitation, disclosure to Kenco's
employees or customers) of this Agreement or the Acquisition without the prior
consent of the other party hereto, which consent shall not be unreasonably
withheld, provided, however, that the foregoing shall not preclude any party
from making any disclosure which, in the opinion of its counsel, is required to
be made under applicable federal and state securities laws.
(b) Subject to the obligation of Xxxxxxxx Controls, Inc., the
parent of Kenco, as a public company to issue appropriate public announcements
of material events, and subject to this Section 13.1 hereof, each party will
maintain the confidentiality of all non-public information obtained from any
other party.
13.2 Employee Matters. Purchaser will assume any payable, vacation and
payroll related liabilities excluding the obligations for long-term
disabilities. Purchaser will have in place a full benefits package for the Kenco
Employees hired by it, including health and life insurance with full and
continuous coverage following the Closing and will advise Kenco at the Closing
the names of any employees who will not be hired by the Purchaser.
13.3 Capitalization; Insider Investment. Purchaser has authorized
25,000,000 shares of capital stock, includig 20,000,000 shares of common stock,
$.01 par value per share, and 5,000,000 shares of preferred stock, $.01 par
value per share. On or before the Closing Date, the Guarantors and other persons
selected by the Guarantors shall have purchased 1,100,000 shares on or before
the Closing Date and, within 60 days after the Closing shall have purchased an
additional 900,000 shares at a price or prices of not less than 22 1/2(cent) per
share. In addition, Purchaser may sell up to an additional 500,000 shares of its
common stock on or before May 31, 1998 at a price or prices not less than 22
1/2(cent) per share. Purchaser has designated an additional 500,000 shares of
its common stock (the "Option Plan Shares") for the grant and exercise of stock
options under an employee stock option plan, of which not more than 250,000
shares may be issued at a price or prices not less than 22 1/2(cent) per share.
For so long as Kenco or its successors or assigns owns the KPI Preferred Stock,
the remaining 250,000 Option Plan Shares shall not be issued at a per share
price or prices less than the greater of $1.333 or fair market value per share.
13.4 Retention of Records. Following the Closing, the Purchaser will
retain all records relating to Kenco's operations prior to the Closing for not
less than six years, and will provide Kenco and its representatives access to
and (if requested by Kenco) copies of such records during normal business hours.
At Kenco's request, the Purchaser will turn over to Kenco the originals of all
records relating to Kenco's operations prior to the Closing, although the
Purchaser will be entitled to make and retain copies thereof as the Purchaser
may deem necessary or appropriate.
13.5 Expenses. Each party shall pay its own costs and expenses, including
the fees and disbursements of its respective counsel, in connection with the
negotiation, preparation and execution of this Agreement and the completion of
the Transaction whether or not the Transaction is completed.
13.6 Waivers and Consents. All waivers and consents given hereunder shall
be in writing. No waiver by any party hereto of any breach or anticipated breach
of any provision hereof by any other party shall be deemed a waiver of any other
contemporaneous, preceding or succeeding breach or anticipated breach, whether
or not similar, on the part of the same or any other party.
13.7 Notices. Except as otherwise provided herein, whenever it is provided
herein that any notice, demand, request, consent, approval, declaration or other
communication shall or may be given to or served upon any of the parties by any
other parties, or whenever any of the parties desires to give or serve upon any
other parties any communication with respect to this Agreement, each such
notice, demand, request, consent, approval, declaration or other communication
shall be in writing and shall be deemed to have been validly served, given or
delivered (a) upon the earlier of actual receipt or five Business Days after
deposit in the United States Mail, registered or certified mail, return receipt
requested, with proper postage prepaid, (b) one Business Day after deposit with
a reputable overnight courier with all charges prepaid or (c) when delivered, if
hand-delivered by messenger, all of which shall be addressed to the party to be
notified and sent to the address indicated below, or to such other address as
may be substituted by notice given as herein provided.
If to the Purchaser:
Kenco Products, Inc.
c/o Xxxxxx Xxxxxx
00000 Xxxxxx Xxxx 0
Xxxxxxxxxx, XX 00000
With a copy to:
Xxxxxx Xxxxxx, Esq.
Xxxxxx & Tutor, P.A.
000X Xxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
If to Kenco:
Xxxxxx X. Xxxxxxx
Chief Financial Officer
c/o Aptek Xxxxxxxx, Inc.
000 X.X. 00xx Xxxxxx
Xxxxxxxxx Xxxxx, XX 00000
With a copy to:
Xxxxxx Xxxxxx, Esq.
Friedlob Xxxxxxxxx Xxxxxx Xxxxxxx & Xxxxxxxxxxx, LLC
0000 Xxxxxxx Xxxxx, Xxxxx 000
Xxxxxx, XX 00000
The giving of any notice required hereunder may be waived in writing by the
party entitled to receive such notice. Failure or delay in delivering copies of
any notice, demand, request, consent, approval, declaration or other
communication to any Person designated herein to receive copies shall in no way
adversely affect the effectiveness of such notice, demand, request, consent,
approval, declaration or other communication.
13.8 Further Assurances. From and after the date of this Agreement, each
of the parties hereto will cooperate with each other and will use its best
efforts to obtain all necessary waivers and consents from third parties. Kenco,
at any time and from time to time on and after the Closing, upon request by the
Purchaser and without further consideration, shall take or cause to be taken
such actions and execute, acknowledge and deliver, or cause to be executed,
acknowledged and delivered, such transfers, conveyances and assurances as may be
reasonably requested by the Purchaser for the better conveying, transferring,
assigning, delivering, assuring and confirming the Acquired Assets to the
Purchaser. Specifically, within five (5) Business Days after the Closing, Kenco
shall deliver to Purchaser executed assignments in form satisfactory for filing
with the U.S. Patent and Trademark Office to assign the patents and trademarks
included in the Acquired Assets.
13.9 Entire Agreement. This Agreement, including all Schedules, Exhibits
and Exhibit Agreements hereto, and the other Closing Documents constitute the
entire agreement of the parties with respect to the subject matter hereof and
may not be modified, amended or terminated except by a written instrument
specifically referring to this Agreement signed by each of the parties hereto or
as otherwise provided in this Agreement.
13.10 Construction. In the event of an ambiguity or a question of intent
or interpretation arises, this Agreement shall be construed as if drafted
jointly by the parties and no presumption or burden of proof shall arise
favoring or disfavoring any party by virtue of the authorship of any of the
provisions of this Agreement. Any reference to any federal, state, local or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" means including without limitation. Where appropriate to avoid
any ambiguity and to encompass the broadest meaning, the word "and" shall mean
"and/or," and the word "or" shall mean "and/or." The parties intend that the
each representation, warranty and covenant contained herein shall have
independent significance. If any party has breached any representation, warranty
or covenant contained herein in any respect, the fact that there exists another
representation, warranty or covenant relating to the same subject matter,
regardless of the relative levels of specificity, which the party has not
breached shall not detract from or mitigate the fact that the party is in breach
of the first representation, warranty or covenant.
13.11 No Rights of Third Parties. All conditions of the obligations of the
parties hereto, and all undertakings herein, except as otherwise provided herein
or by a written consent, are solely and exclusively for the benefit of the
parties hereto and their successors and assigns, and no other Person shall have
standing to require satisfaction of such conditions or to enforce such
undertakings in accordance with their terms or be entitled to assume that any
party hereto will refuse to complete the Transaction contemplated hereby in the
absence of strict compliance with any or all thereof, and no other Person shall,
under any circumstances, be deemed a beneficiary of such conditions or
undertakings, any or all of which may be freely waived in whole or in part, by
mutual consent of the parties hereto at any time, if in their sole discretion
they deem it desirable to do so.
13.12 Headings. The Article and Section headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
13.13 Applicable Law; Jurisdiction. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED
IN ANY OF THE CLOSING DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS AGREEMENT AND THE RELATED DOCUMENTS
AND THE OBLIGATIONS SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF MICHIGAN APPLICABLE TO CONTRACTS MADE
AND PERFORMED IN THAT STATE AND ANY APPLICABLE LAWS OF THE UNITED STATES OF
AMERICA. THE PURCHASER AND EACH GUARANTOR HEREBY CONSENTS AND AGREES THAT THE
STATE OR FEDERAL COURTS LOCATED IN OAKLAND COUNTY, MICHIGAN SHALL HAVE EXCLUSIVE
JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES AMONG THE PURCHASER,
THE GUARANTORS, AND KENCO PERTAINING TO THIS AGREEMENT OR ANY OF THE OTHER
CLOSING DOCUMENTS OR TO ANY MATTER ARISING OUT OF OR RELATING TO THIS AGREEMENT
OR ANY OF THE OTHER CLOSING DOCUMENTS, PROVIDED, THAT NOTHING IN THIS AGREEMENT
SHALL BE DEEMED OR OPERATE TO PRECLUDE KENCO FROM BRINGING SUIT OR TAKING OTHER
LEGAL ACTION IN ANY OTHER JURISDICTION TO REALIZE ON THE COLLATERAL OR ANY OTHER
SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN
FAVOR OF KENCO. THE PURCHASER AND EACH GUARANTOR EXPRESSLY SUBMITS AND CONSENTS
IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH
COURT, AND THE PURCHASER AND EACH GUARANTOR HEREBY WAIVES ANY OBJECTION WHICH
SUCH PERSON MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR
FORUM NON CONVENIENS AND HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR
EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT. THE PURCHASER AND EACH
GUARANTOR HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER
PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH
SUMMONS, COMPLAINTS AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED
MAIL ADDRESSED TO SUCH PERSON AT THE ADDRESS SET FORTH HEREIN AND THAT SERVICE
SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF SUCH PERSON'S ACTUAL
RECEIPT THEREOF OR FIVE DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPERApplicable
Law; Jurisdiction. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ANY OF THE CLOSING
DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE, THIS AGREEMENT AND THE RELATED DOCUMENTS AND THE OBLIGATIONS SHALL
BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF MICHIGAN APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THAT STATE AND
ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. THE PURCHASER AND EACH
GUARANTOR HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS LOCATED IN
OAKLAND COUNTY, MICHIGAN SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE
ANY CLAIMS OR DISPUTES AMONG THE PURCHASER, THE GUARANTORS, AND KENCO PERTAINING
TO THIS AGREEMENT OR ANY OF THE OTHER CLOSING DOCUMENTS OR TO ANY MATTER ARISING
OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE OTHER CLOSING DOCUMENTS,
PROVIDED, THAT NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE
KENCO FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION
TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO
ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF KENCO. THE PURCHASER AND
EACH GUARANTOR EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN
ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND THE PURCHASER AND EACH
GUARANTOR HEREBY WAIVES ANY OBJECTION WHICH SUCH PERSON MAY HAVE BASED UPON LACK
OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS AND HEREBY
CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED
APPROPRIATE BY SUCH COURT. THE PURCHASER AND EACH GUARANTOR HEREBY WAIVES
PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH
ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINTS AND OTHER
PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO SUCH PERSON AT
THE ADDRESS SET FORTH HEREIN AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED
UPON THE EARLIER OF SUCH PERSON'S ACTUAL RECEIPT THEREOF OR FIVE DAYS AFTER
DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE PREPAID.
13.14 Waiver of Jury Trial. BECAUSE DISPUTES ARISING IN CONNECTION WITH
COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN
EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND FEDERAL
LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR
DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO
ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF
ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER SOUNDING IN
CONTRACT, TORT OR OTHERWISE, AMONG KENCO AND THE PURCHASER OR ANY GUARANTOR
ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP
ESTABLISHED AMONG THEM IN CONNECTION WITH, THIS AGREEMENT OR ANY OF THE OTHER
CLOSING OR RELATED DOCUMENTS OR THE TRANSACTIONS RELATED THERETO.
13.15 Parties in Interest. This Agreement may not be transferred,
assigned, pledged or hypothecated by any party hereto except with the written
consent of the other parties, which consent will not be unreasonably withheld.
This Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and permitted assigns.
13.16 Counterparts and Facsimile Signatures. This Agreement may be
executed in two or more counterparts, all of which taken together shall
constitute one instrument. Execution and delivery of this Agreement by exchange
of facsimile copies bearing the facsimile signature of a party shall constitute
a valid and binding execution and delivery of this Agreement by such party. Such
facsimile copies shall constitute enforceable original documents.
13.17 Severability. In case any provision in this Agreement shall be held
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions hereof will not in any way be affected or impaired
thereby.
13.18 Corporate Authority. The undersigned have executed this
Agreement with all requisite corporate authority.
13.19 Time of Essence. Time shall be of the essence hereof.
IN WITNESS WHEREOF, the parties hereto have caused their names to be
hereunto subscribed, all as of the day and year first above written.
"The Purchaser"
KENCO PRODUCTS, INC.
By /s/Xxxxxx Xxxxxx
-------------------------
Xxxxxx Xxxxxx, President
"Kenco"
KENCO XXXXXXXX, INC.
By /s/Xxxxxx Xxxxxx
------------------------------------
Xxxxxx X. Xxxxxxx, Chief Financial
Officer
The undersigned persons have signed this Agreement for the purpose of
making the representations contained in Article 5 herein and agreeing to the
provisions contained in Sections 13.12 and 13.13.
"Guarantors"
COLFAX GROUP, INC.
By /s/Xxxxxx Xxxxxx
----------------------------
Xxxxxx Xxxxxx, President
/s/Xxxxxx Xxxxxx
-----------------------------
Xxxxxx Xxxxxx, Individually
