AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization ("the Agreement"), dated as of
the 18th day of November, 1996, by and between Kendrex Systems, Inc., a Nevada
corporation ("Kendrex") and HLHK World Group, Inc., a Nevada corporation
("HLHK") and the shareholders of HLHK ("Shareholders"), with reference to the
following:
X. Xxxxxxx is a Nevada corporation organized on February 23, 1987.
Kendrex has authorized capital stock of 100,000,000 shares, $.001 par
value, of which 31,850,000 shares are issued and outstanding. The common
shares of Kendrex are traded on the OTC Bulletin Board under the symbol
KNDX.
B. HLHK is a privately held corporation organized under the laws of
the State of Nevada on July 8, 1996.
C. The respective Boards of Directors of Kendrex and HLHK have
deemed it advisable and in the best interests of Kendrex and HLHK that
HLHK be acquired by Kendrex, pursuant to the terms and conditions set
forth in this Agreement.
X. Xxxxxxx and HLHK propose to enter into this Agreement which
provides among other things that all of the outstanding shares of HLHK be
acquired by Kendrex, in exchange for shares of Kendrex and such additional
items as more fully described in the Agreement.
E. The parties desire the transaction to qualify as a tax-free
reorganization under Section 368 (a)(1)(B) of the Internal Revenue Code of
1986, as amended.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE 1
THE ACQUISITION
1.01 At the Closing, a total of 1,000 common shares, which represents all
of the outstanding shares of HLHK, shall be acquired by Kendrex in exchange for
6,000,000 restricted post-split common shares of Kendrex and an additional
250,000 restricted post-split common shares of Kendrex pursuant to Rule 701 of
the Securities Act of 1933 as a finder's fee to the consultants of HLHK. The
shares of Kendrex to be issued in this transaction shall be issued as set forth
in Exhibit A to this Agreement.
1.02 At the Closing, the HLHK shareholders will deliver certificates for
the outstanding shares of HLHK, duly endorsed so as to make Kendrex the sole
holder thereof, free and clear of all claims and encumbrances and Kendrex shall
deliver a transmittal letter directed to the transfer agent
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of Kendrex directing the issuance of shares to the shareholders of HLHK as set
forth on Exhibit A of this Agreement.
1.03 Following the reorganization, reverse split of shares as set forth in
paragraph 5.01(d) and cancellation of shares as set forth in paragraph 5.01(c),
there will be a total of 7,020,000 shares, $.001 par value, issued and
outstanding in Kendrex.
ARTICLE 2
THE CLOSING
2.01 The consummation of the transactions contemplated by this Agreement
(the "Closing") shall take place in the offices of HLHK, 0000 Xxxxxxxx Xxxx, Xxx
Xxxxx, Xxxxxx 00000 on November 18, 1996, (the "Closing Date") or at such other
place or date and time as may be agreed to in writing by the parties hereto.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF XXXXXXX
Xxxxxxx hereby represents and warrants to HLHK as follows:
3.01 Kendrex shall deliver to HLHK, on or before Closing, each of the
following:
(a) Financial Statements. Audited financial statements of Kendrex
including, but not limited to, balance sheets and profit and loss
statements from inception to December 31, 1995 and unaudited financial
statements from January 1, 1996 to October 31, 1996, prepared in
accordance with generally accepted accounting principles and which fairly
present the financial condition of Kendrex at the dates thereof. (Schedule
A)
(b) Property. An accurate list and description of all property, real
or personal, owned by Kendrex of a value equal to or greater than
$1,000.00. (Schedule B.)
(c) Liens and Liabilities. A complete and accurate list of all
material liens, encumbrances, easements, security interests or similar
interests in or on any of the assets listed on Schedule A. (Schedule C.) A
complete and accurate list of all debts, liabilities and obligations of
Kendrex incurred or owing as of the date of this Agreement. (Schedule
C.1.)
(d) Leases and Contracts. A complete and accurate list describing
all material terms of each lease (whether of real or personal property)
and each contract, promissory note, mortgage, license, franchise, or other
written agreement to which Kendrex is a party which involves or can
reasonably be expected to involve aggregate future payments or receipts by
Kendrex (whether by the terms of such lease, contract, promissory note,
license, franchise or other written agreement or as a result of a
guarantee of the payment of or indemnity against the failure to pay same)
of $1,000.00 or more annually during the twelve-month period ended
December 31, 1995, or any consecutive twelve-month period thereafter,
except any of said
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instruments which terminate or are cancelable without penalty during such
twelve-month period. (Schedule D.)
(e) Loan Agreements. Complete and accurate copies of all loan
agreements and other documents with respect to obligations of Kendrex for
the repayment of borrowed money. (Schedule E.)
(f) Consents Required. A complete list of all agreements wherein
consent to the transaction herein contemplated is required to avoid a
default thereunder; or where notice of such transaction is required at or
subsequent to closing, or where consent to an acquisition, consolidation,
or sale of all or substantially all of the assets is required to avoid a
default thereunder. (Schedule F.)
(g) Articles and Bylaws. Complete and accurate copies of the
Certificate and Articles of Incorporation and Bylaws of Kendrex together
with all amendments thereto to the date hereof. (Schedule G.)
(h) Shareholders. A complete list of all persons or entities holding
capital stock of Kendrex or any rights to subscribe for, acquire, or
receive shares of the capital stock of Kendrex (whether warrants, calls,
options, or conversion rights), including copies of all stock option plans
whether qualified or nonqualified, and other similar agreements. (Schedule
H.)
(i) Officers and Directors. A complete and current list of all
Officers and Directors of Kendrex. (Schedule I.)
(j) Salary Schedule. A complete and accurate list (in all material
respects) of the names and the current salary rate for each present
employee of Kendrex who received $1,000.00 or more in aggregate
compensation from Kendrex whether in salary, bonus or otherwise, during
the year 1995, or who is presently scheduled to receive from Kendrex a
salary in excess of $1,000.00 during the year ending December 1996,
including in each case the amount of compensation received or scheduled to
be received, and a schedule of the hourly rates of all other employees
listed according to departments. (Schedule J.)
(k) Litigation. A complete and accurate list (in all material
respects) of all material civil, criminal, administrative, arbitration or
other such proceedings or investigations (including without limitations
unfair labor practice matters, labor organization activities,
environmental matters and civil rights violations) pending or, to the
knowledge of Kendrex threatened, which may materially and adversely affect
Kendrex. (Schedule K.)
(l) Tax Returns. Accurate copies of all Federal and State tax
returns for Kendrex for the last fiscal year. (Schedule L.)
(m) Agency Reports. Copies of all material reports or filing (and a
list of the
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categories of reports or filings made on a regular basis) made by Kendrex
under ERISA, EEOC, FDA and all other governmental agencies (federal, state
or local) during the last fiscal year. (Schedule M.)
(n) Banks. A true and complete list (in all material respects), as
of the date of this Agreement, showing (1) the name of each bank in which
Kendrex has an account or safe deposit box, and (2) the names and
addresses of all signatories. (Schedule N.)
(o) Jurisdictions Where Qualified. A list of all jurisdictions
wherein Kendrex is qualified to do business and is in good standing.
(Schedule O.)
(p) Subsidiaries. A complete list of all subsidiaries of Kendrex.
(Schedule P.) The term "Subsidiary" or "Subsidiaries" shall include
corporations, unincorporated associations, partnerships, joint ventures,
or similar entities in which Kendrex has an interest, direct or indirect.
(q) Union Matters. An accurate list and description (in all material
respects) of all union contracts and collective bargaining agreements of
Kendrex, if any. (Schedule Q.)
(r) Employee and Consultant Contracts. A complete and accurate list
of all employee and consultant contracts which Kendrex may have, other
than those listed in the schedule on Union Matters. (Schedule R.)
(s) Employee Benefit Plans. Complete and accurate copies of all
salary, stock options, bonus, incentive compensation, deferred
compensation, profit sharing, retirement, pension, group insurance,
disability, death benefit or other benefit plans, trust agreements or
arrangements of Kendrex in effect on the date hereof or to become
effective after the date thereof, together with copies of any
determination letters issued by the Internal Revenue Service with respect
thereto. (Schedule S.)
(t) Insurance Policies. A complete and accurate list (in all
material respects) and a description of all material insurance policies
naming Kendrex as an insured or beneficiary or as a loss payable payee or
for which Kendrex has paid all or part of the premium in force on the date
hereof, specifying any notice or other information possessed by Kendrex
regarding possible claims thereunder, cancellation thereof or premium
increases thereon, including any policies now in effect naming Kendrex as
beneficiary covering the business activities of Kendrex. (Schedule T.)
(u) Licenses and Permits. A complete list of all licenses, permits
and other authorizations of Kendrex. (Schedule U.)
3.02 Organization, Standing and Power. Kendrex is a corporation duly organized,
validly existing and in good standing under the laws of the State of Nevada with
all requisite corporate power to own or lease its properties and carry on its
businesses as are now being conducted.
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due or to become due, incurred in respect of or measured by Kendrex income or
business prior to the Closing Date.
3.09 Options, Warrants, etc. Except as otherwise described in Schedule H, there
are no outstanding options, warrants, calls, commitments or agreements of any
character to which Kendrex or its shareholders are a party or by which Kendrex
or its shareholders are bound, or are a party, calling for the issuance of
shares of capital stock of Kendrex or any securities representing the right to
purchase or otherwise receive any such capital stock of Kendrex.
3.10 Title to Assets. Except for liens set forth in Schedule C, Kendrex is the
sole unconditional owner of, with good and marketable title to, all assets
listed in the schedules as owned by it and all other property and assets are
free and clear of all mortgages, liens, pledges, charges or encumbrances of any
nature whatsoever.
3.11 Agreements in Force and Effect. Except as set forth in Schedules D and E,
all material contracts, agreements, plans, promissory notes, mortgages, leases,
policies, licenses, franchises or similar instruments to which Kendrex is a
party are valid and in full force and effect on the date hereof and Kendrex has
not breached any material provision of, and is not in default in any material
respect under the terms of, any such contract, agreement, plan, promissory note,
mortgage, lease, policy, license, franchise or similar instrument which breach
or default would have a material adverse effect upon the business, operations or
financial condition of Kendrex.
3.12 Legal Proceedings, Etc. Except as set forth in Schedule K, there are no
civil, criminal, administrative, arbitration or other such proceedings or
investigations pending or, to the knowledge of either Kendrex or the
shareholders thereof, threatened, in which, individually or in the aggregate, an
adverse determination would materially and adversely affect the assets,
properties, business or income of Kendrex. Kendrex has substantially complied
with, and is not in default in any material respect under, any laws, ordinances,
requirements, regulations or orders applicable to its businesses.
3.13 Governmental Regulation. To the knowledge of Kendrex and except as set
forth in Schedule K, Kendrex is not in violation of or in default with respect
to any applicable law or any applicable rule, regulation, order, writ or decree
of any court or any governmental commission, board, bureau, agency or
instrumentality, or delinquent with respect to any report required to be filed
with any governmental commission, board, bureau, agency or instrumentality which
violation or default could have a material adverse effect upon the business,
operations or financial condition of Kendrex.
3.14 Brokers and Finders. Kendrex shall be solely responsible for payment to any
broker or finder retained by Kendrex for any brokerage fees, commissions or
finders' fees in connection with the transactions contemplated herein.
3.15 Accuracy of Information. No representation or warranty by Kendrex contained
in this Agreement and no statement contained in any certificate or other
instrument delivered or to be delivered to HLHK pursuant hereto or in connection
with the transactions contemplated hereby
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(including without limitation all Schedules and exhibits hereto) contains or
will contain any untrue statement of material fact or omits or will omit to
state any material fact necessary in order to make the statements contained
herein or therein not misleading.
3.16 Subsidiaries. Except as listed in Schedule P, Kendrex does not have any
other subsidiaries or own capital stock representing ten percent (10%) or more
of the issued and outstanding stock of any other corporation.
3.17 Consents. Except as listed in Schedule F, no consent or approval of, or
registration, qualification or filing with, any governmental authority or other
person is required to be obtained or accomplished by Kendrex or any shareholder
thereof in connection with the consummation of the transactions contemplated
hereby.
3.18 Improper Payments. Neither Kendrex, nor any person acting on behalf of
Kendrex has made any payment or otherwise transmitted anything of value,
directly or indirectly, to (a) any official or any government or agency or
political subdivision thereof for the purpose of influencing any decision
affecting the business of Kendrex (b) any customer, supplier or competitor of
Kendrex or employee of such customer, supplier or competitor, for the purpose of
obtaining, retaining or directing business for Kendrex or (c) any political
party or any candidate for elective political office nor has any fund or other
asset of Kendrex been maintained that was not fully and accurately recorded on
the books of account of Kendrex.
3.19 Copies of Documents. Kendrex has made available for inspection and copying
by HLHK and its duly authorized representatives, and will continue to do so at
all times, true and correct copies of all documents which it has filed with the
Securities and Exchange Commission and all other governmental agencies which are
material to the terms and conditions contained in this Agreement. Furthermore,
all filings by Kendrex with the Securities and Exchange Commission, and all
other governmental agencies, including but not limited to the Internal Revenue
Service, have contained information which is true and correct, to the best
knowledge of the Board of Directors of Kendrex, in all material respects and did
not contain any untrue statement of a material fact or omit to state any
material fact necessary to make the statements made therein not misleading or
which could have any material adverse effect upon the financial condition or
operations of Kendrex or adversely effect the objectives of this Agreement with
respect to HLHK including, but not limited to, the issuance and subsequent
trading of the shares of common stock of Kendrex to be received hereby, subject
to compliance by the shareholders of HLHK with applicable law.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF
HLHK
HLHK hereby represents and warrants to Kendrex as follows:
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4.01 HLHK shall deliver to Kendrex, on or before Closing, the following:
(a) Financial Statements. Audited financial statements of HLHK
including, but not limited to, balance sheets and profit and loss
statements for the period from inception through November 7, 1996.
(Schedule AA)
(b) Property. An accurate list and description of all property, real
or personal owned by HLHK of a value equal to or greater than $1,000.00.
(Schedule BB.)
(c) Liens and Liabilities. A complete and accurate list of all
material liens, encumbrances, easements, security interests or similar
interests in or on any of the assets listed on Schedule AA. (Schedule CC.)
A complete and accurate list of all debts, liabilities and obligations of
HLHK incurred or owing as of the date of this Agreement. (Schedule CC.1.)
(d) Leases and Contracts. A complete and accurate list describing
all material terms of material leases (whether of real or personal
property) and each contract, promissory note, mortgage, license,
franchise, or other written agreement to which HLHK is a party which
involves or can reasonably be expected to involve aggregate future
payments or receipts by HLHK (whether by the terms of such lease,
contract, promissory note, license, franchise or other written agreement
or as a result of a guarantee of the payment of or indemnity against the
failure to pay same) of $1,000.00 or more annually during the twelve-month
period ended December 31, 1995 or any consecutive twelve-month period
thereafter, except any of said instruments which terminate or are
cancelable without penalty during such twelve-month period. (Schedule DD.)
(e) Loan Agreements. Complete and accurate copies of all loan
agreements and other documents with respect to obligations of HLHK for the
repayment of borrowed money. (Schedule EE.)
(f) Consents Required. A complete list of all agreements wherein
consent to the transaction herein contemplated is required to avoid a
default thereunder; or where notice of such transaction is required at or
subsequent to closing, or where consent to an acquisition, consolidation,
or sale of all or substantially all of the assets is required to avoid a
default thereunder. (Schedule FF.)
(g) Articles and Bylaws. Complete and accurate copies of the
Articles of Incorporation and Bylaws of HLHK, together with all amendments
thereto to the date hereof. (Schedule GG.)
(h) Shareholders. A complete list of all persons or entities holding
capital stock of HLHK or any rights to subscribe for, acquire, or receive
shares of the capital stock of HLHK (whether warrants, calls, options, or
conversion rights), including copies of all stock
8
option plans whether qualified or nonqualified, and other similar
agreements. (Schedule HH.)
(i) Officers and Directors. A complete and current list of all
officers and Directors of HLHK. (Schedule II.)
(j) Salary Schedule. A complete and accurate list (in all material
respects) of the names and the current salary rate or each present
employee of HLHK who received $1,000 or more in aggregate compensation
from HLHK whether in salary, bonus or otherwise, during the year 1995, or
who is presently scheduled to receive from HLHK a salary in excess of
$1,000.00 during the year ending December 31, 1996, including in each case
the amount of compensation received or scheduled to be received, and a
schedule of the hourly rates of all other employees listed according to
departments. (Schedule JJ.)
(k) Litigation. A complete and accurate list (in all material
respects) of all material civil, criminal, administrative, arbitration or
other such proceedings or investigations (including without limitations
unfair labor practice matters, labor organization activities,
environmental matters and civil rights violations) pending or, to the
knowledge of HLHK threatened, which may materially and adversely affect
HLHK. (Schedule KK.)
(l) Tax Returns. Accurate copies of all Federal and State tax
returns for HLHK, if any. (Schedule LL.)
(m) Agency Reports. Copies of all material reports or filings (and a
list of the categories of reports or filings made on a regular basis) made
by HLHK under ERISA, EEOC, FDA and all other governmental agencies
(federal, state or local). (Schedule MM.)
(n) Jurisdictions Where Qualified. A list of all jurisdictions
wherein HLHK is qualified to do business and is in good standing.
(Schedule NN.)
(o) Subsidiaries. A complete list of all subsidiaries of HLHK.
(Schedule OO.) The term "Subsidiary" or "Subsidiaries" shall include
corporations, unincorporated associations, partnerships, joint ventures,
or similar entities in which HLHK has an interest, direct or indirect.
(p) Employee and Consultant Contracts. A complete and accurate list
of all employee and consultant contracts which HLHK may have, other than
those listed in the schedule on Union Matters. (Schedule PP.)
(q) Employee Benefit Plans. Complete and accurate copies of all
salary, stock option, bonus, incentive compensation, deferred
compensation, profit sharing, retirement, pension, group insurance,
disability, death benefit or other benefit plans, trust agreements or
arrangements of HLHK in effect on the date hereof or to become effective
after the date
9
thereof, together with copies of any determination letters issued by the
Internal Revenue Service with respect thereto. (Schedule QQ.)
(r) Insurance Policies. A complete and accurate list (in all
material respects) and description of all material insurance policies
naming HLHK as an insured or beneficiary or as a loss payable payee or for
which HLHK has paid all or part of the premium in force on the date
hereof, specifying any notice or other information possessed by HLHK
regarding possible claims thereunder, cancellation thereof or premium
increases thereon, including any policies now in effect naming HLHK as
beneficiary covering the business activities of HLHK. (Schedule RR.)
(s) Customers. A complete and accurate list (in all material
respects) of the customers of HLHK, including all presently effective
contracts of HLHK to be assigned to HLHK, accounting for the principle
revenues of HLHK, indicating the dollar amounts of gross revenues of each
such customer for the period ended December 31, 1995. (Schedule SS.)
(t) Licenses and Permits. A complete list of all licenses, permits
and other authorizations of HLHK. (Schedule TT.)
4.02 Organization, Standing and Power. HLHK is a corporation duly organized,
validly existing and in good standing under the laws of the State of Nevada with
all requisite corporate power to own or lease its properties and carry on its
business as is now being conducted.
4.03 Qualification. HLHK is duly qualified and licensed as a foreign corporation
authorized to do business in each jurisdiction wherein it conducts business
operations. Such jurisdictions, which are the only jurisdictions in which HLHK
is duly qualified and licensed as a foreign corporation, is shown in Schedule
OO.
4.04 Capitalization of HLHK. The authorized capital stock of HLHK consists of
2,500,000 shares of Common Stock, of which the only shares issued and
outstanding are 1,000 shares issued to the shareholders listed on Schedule HH,
which shares were duly authorized, validly issued and fully paid and
nonassessable. There are no preemptive rights with respect to the HLHK stock.
4.05 Authority. The execution and delivery of this Agreement and consummation of
the transactions contemplated herein have been duly authorized by all necessary
corporate action, including but not limited to duly and validly authorized
action and approval by the Board of Directors, on the part of HLHK. This
Agreement constitutes the valid and binding obligation of HLHK, enforceable
against it in accordance with its terms, subject to the principles of equity
applicable to the availability of the remedy of specific performance. This
Agreement has been duly executed by HLHK and the execution and delivery of this
Agreement and the consummation of the transactions contemplated by this
Agreement shall not result in any breach of any terms or provisions of HLHK's
Articles of Incorporation or Bylaws or of any other agreement, court order or
instrument to which HLHK is
10
a party or bound.
4.06 Absence of Undisclosed Liabilities. HLHK has no material liabilities of any
nature, whether fixed, absolute, contingent or accrued, which were not reflected
on the financial statements set forth in Schedule AA or otherwise disclosed in
this Agreement or any of the Schedules or Exhibits attached hereto.
4.07 Absence of Changes. Since November 7, 1996, there has not been any material
adverse change in the condition (financial or otherwise), assets, liabilities,
earnings or business of HLHK, except for changes resulting from completion of
those transactions described in Section 5.02.
4.08 Tax Matters. All taxes and other assessments and levies which HLHK is
required by law to withhold or to collect have been duly withheld and collected,
and have been paid over to the proper government authorities or are held by HLHK
in separate bank accounts for such payment or are represented by depository
receipts, and all such withholdings and collections and all other payments due
in connection therewith (including, without limitation, employment taxes, both
the employee's and employer's share) have been paid over to the government or
placed in a separate and segregated bank account for such purpose. There are no
known deficiencies in income taxes for any periods and further, the
representations and warranties as to absence of undisclosed liabilities
contained in Section 4.06 includes any and all tax liabilities of whatsoever
kind or nature (including, without limitation, all federal, state, local and
foreign income, profit, franchise, sales, use and property taxes) due or to
become due, incurred in respect of or measured by HLHK income or business prior
to the Closing Date.
4.09 Options, Warrants, etc. Except as otherwise described in Schedule HH, there
are no outstanding options, warrants, calls, commitments or agreements of any
character to which HLHK or its shareholders are a party or by which HLHK or its
shareholders are bound, or are a party, calling for the issuance of shares of
capital stock of HLHK or any securities representing the right to purchase or
otherwise receive any such capital stock of HLHK.
4.10 Title to Assets. Except for liens set forth in Schedule CC, HLHK is the
sole and unconditional owner of, with good and marketable title to, all the
assets listed in the schedules as owned by them and all other property and
assets are free and clear of all mortgages, liens, pledges, charges or
encumbrances of any nature whatsoever.
4.11 Agreements in Force and Effect. Except as set forth in Schedules DD and EE,
all material contracts, agreements, plans, promissory notes, mortgages, leases,
policies, licenses, franchises or similar instruments to which HLHK is a party
are valid and in full force and effect on the date hereof, and HLHK has not
breached any material provision of, and is not in default in any material
respect under the terms of, any such contract, agreement, plan, promissory note,
mortgage, lease, policy, license, franchise or similar instrument which breach
or default would have a material adverse effect upon the business, operations or
financial condition of HLHK.
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4.12 Legal Proceedings, Etc. Except as set forth in Schedule KK, there are no
civil, criminal, administrative, arbitration or other such proceedings or
investigations pending or, to the knowledge of HLHK, threatened, in which,
individually or in the aggregate, an adverse determination would materially and
adversely affect the assets, properties, business or income of HLHK. HLHK has
substantially complied with, and is not in default in any material respect
under, any laws, ordinances, requirements, regulations or orders applicable to
its businesses.
4.13 Governmental Regulation. To the knowledge of HLHK and except as set forth
in Schedule KK, HLHK is not in violation of or in default with respect to any
applicable law or any applicable rule, regulation, order, writ or decree of any
court or any governmental commission, board, bureau, agency or instrumentality,
or delinquent with respect to any report required to be filed with any
governmental commission, board, bureau, agency or instrumentality which
violation or default could have a material adverse effect upon the business,
operations or financial condition of HLHK.
4.14 Broker and Finders. Kendrex shall be solely responsible for payment to any
broker or finder retained by HLHK for any brokerage fees, commissions or
finders' fees in connection with the transactions contemplated herein.
4.15 Accuracy of Information. No representation or warranty by HLHK contained in
this Agreement and no statement contained in any certificate or other instrument
delivered or to be delivered to Kendrex pursuant hereto or in connection with
the transactions contemplated hereby (including without limitation all Schedules
and Exhibits hereto) contains or will contain any untrue statement of a material
fact or omits or will omit to state any material fact necessary in order to make
the statements contained herein or therein not misleading.
4.16 Subsidiaries. Except as listed in Schedule PP, HLHK does not have any other
subsidiaries or own capital stock representing ten percent (10%) or more of the
issued and outstanding stock of any other corporation.
4.17 Consents. Except as listed in Schedule FF, no consent or approval of, or
registration, qualification or filing with, any other governmental authority or
other person is required to be obtained or accomplished by HLHK or any
shareholder thereof, in connection with the consummation of the transactions
contemplated hereby.
4.18 Improper Payments. No person acting on behalf of HLHK has made any payment
or otherwise transmitted anything of value, directly or indirectly, to (a) any
official or any government or agency or political subdivision thereof for the
purpose of influencing any decision affecting the business of HLHK, or (b) any
political party or any candidate for elective political office, nor has any fund
or other asset of HLHK been maintained that was not fully and accurately
recorded on the books of account of HLHK.
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4.19 Copies of Documents. HLHK has made available for inspection and copying by
Kendrex and its duly authorized representatives, and will continue to do so at
all times, true and correct copies of all documents which it has filed with any
governmental agencies which are material to the terms and conditions contained
in this Agreement. Furthermore, all filings by HLHK with governmental agencies,
including but not limited to the Internal Revenue Service, have contained
information which is true and correct in all material respects and did not
contain any untrue statement of a material fact or omit to state any material
fact necessary to make the statements made therein not misleading or which could
have any material adverse effect upon the financial condition or operations of
HLHK or adversely affect the objectives of this Agreement.
4.20 Investment Intent of Shareholders. Each shareholder of HLHK represents and
warrants to Kendrex that the shares of Kendrex being acquired pursuant to this
Agreement are being acquired for his own account and for investment and not with
a view to the public resale or distribution of such shares and further
acknowledges that the shares being issued have not been registered under the
Securities Act and are "restricted securities" as that term is defined in Rule
144 promulgated under the Securities Act and must be held indefinitely unless
they are subsequently registered under the Securities Act or an exemption from
such registration is available.
ARTICLE 5
CONDUCT AND TRANSACTIONS PRIOR TO THE
EFFECTIVE TIME OF THE ACQUISITION
5.01 Conduct and Transactions of Kendrex. During the period from the date hereof
to the date of Closing, Kendrex shall:
(a) Conduct its operations in the ordinary course of business,
including but not limited to, paying all obligations as they mature,
complying with all applicable tax laws, filing all tax returns required to
be filed and paying all taxes due;
(b) Maintain its records and books of account in a manner that
fairly and correctly reflects its income, expenses, assets and
liabilities.
(c) Submit Resolution to Shareholders to approve a 1 for 5 reverse
split of the outstanding shares of Kendrex.
Kendrex shall not during such period, except in the ordinary course of
business, without the prior written consent of HLHK:
(a) Except as otherwise contemplated or required by this Agreement,
sell, dispose of or encumber any of its properties or assets;
(b) Except as set forth in paragraph 5.01(c), declare or pay any
dividends on shares of its capital stock or make any other distribution of
assets to the holders thereof;
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(c) Issue, reissue or sell, or issue options or rights to subscribe
to, or enter into any contract or commitment to issue, reissue or sell,
any shares of its capital stock or acquire or agree to acquire any shares
of its capital stock;
(d) Except as otherwise contemplated and required by this Agreement,
amend its Articles of Incorporation or merge or consolidate with or into
any other corporation or sell all or substantially all of its assets or
change in any manner the rights of its capital stock or other securities;
(e) Except as contemplated or required by this Agreement, pay or
incur any obligation or liability, direct or contingent, of more than
$1,000;
(f) Incur any indebtedness for borrowed money, assume, guarantee,
endorse or otherwise become responsible for obligations of any other
party, or make loans or advances to any other party;
(g) Make any material change in its insurance coverage;
(h) Increase in any manner the compensation, direct or indirect, of
any of its officers or executive employees; except in accordance with
existing employment contracts;
(i) Enter into any agreement or make any commitment to any labor
union or organization;
(j) Make any capital expenditures.
5.02 Conduct and Transactions of HLHK. During the period from the date hereof to
the date of Closing, HLHK shall:
(a) Obtain an investment letter from each shareholder of HLHK in a
form substantially like that attached hereto as Exhibit B.
(b) Conduct the operations of HLHK in the ordinary course of
business.
HLHK shall not during such period, except in the ordinary course of
business, without the prior written consent of Kendrex:
(a) Except as otherwise contemplated or required by this Agreement,
sell, dispose of or encumber any of the properties or assets of HLHK;
(b) Declare or pay any dividends on shares of its capital stock or
make any other distribution of assets to the holders thereof;
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(c) Issue, reissue or sell, or issue options or rights to subscribe
to, or enter into any contract or commitment to issue, reissue or sell,
any shares of its capital stock or acquire or agree to acquire any shares
of its capital stock;
(d) Except as otherwise contemplated and required by this Agreement,
amend its Articles of Incorporation or merge or consolidate with or into
any other corporation or sell all or substantially all of its assets or
change in any manner the rights of its capital stock or other securities;
(e) Except as otherwise contemplated and required by this Agreement,
pay or incur any obligation or liability, direct or contingent, of more
than $1,000;
(f) Incur any indebtedness for borrowed money, assume, guarantee,
endorse or otherwise become responsible for obligations of any other
party, or make loans or advances to any other party;
(g) Make any material change in its insurance coverage;
(h) Increase in any manner the compensation, direct or indirect, of
any of its officers or executive employees; except in accordance with
existing employment contracts;
(i) Enter into any agreement or make any commitment to any labor
union or organization;
(j) Make any material capital expenditures.
(k) Allow any of the foregoing actions to be taken by any subsidiary
of HLHK.
ARTICLE 6
RIGHTS OF INSPECTION
6.01 During the period from the date of this Agreement to the date of Closing of
the acquisition, Kendrex and HLHK agree to use their best efforts to give the
other party, including its representatives and agents, full access to the
premises, books and records of each of the entities, and to furnish the other
with such financial and operating data and other information including, but not
limited to, copies of all legal documents and instruments referred to on any
schedule or exhibit hereto, with respect to the business and properties of
Kendrex or HLHK, as the case may be, as the other shall from time to time
request; provided, however, if there are any such investigations: (1) they shall
be conducted in such manner as not to unreasonably interfere with the operation
of the business of the other parties and (2) such right of inspection shall not
affect in any way whatsoever any of the representations or warranties given by
the respective parties hereunder. In the event of termination of this Agreement,
Kendrex and HLHK will each return to
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the other all documents, work papers and other materials obtained from the other
party in connection with the transactions contemplated hereby, and will take
such other steps necessary to protect the confidentiality of such material.
ARTICLE 7
CONDITIONS TO CLOSING
7.01 Conditions to Obligations of HLHK. The obligation of HLHK to perform this
Agreement is subject to the satisfaction of the following conditions on or
before the Closing unless waived in writing by HLHK.
(a) Representations and Warranties. There shall be no information
disclosed in the schedules delivered by Kendrex which in the opinion of
HLHK would materially adversely affect the proposed transaction and intent
of the parties as set forth in this Agreement. The representations and
warranties of Kendrex set forth in Article 3 hereof shall be true and
correct in all material respects as of the date of this Agreement and as
of the Closing as though made on and as of the Closing except as otherwise
permitted by this Agreement.
(b) Performance of Obligations. Kendrex shall have in all material
respects performed all agreements required to be performed by it under
this Agreement and shall have performed in all material respects any
actions contemplated by this Agreement prior to or on the Closing and
Kendrex shall have complied in all material respects with the course of
conduct required by this Agreement.
(c) Corporate Action. Kendrex shall have furnished minutes,
certified copies of corporate resolutions and/or other documentary
evidence satisfactory to counsel for HLHK that Kendrex has submitted with
this Agreement and any other documents required hereby to such parties for
approval as provided by applicable law.
(d) Consents. Execution of this Agreement by the shareholders of
HLHK and any consents necessary for or approval of any party listed on any
Schedule delivered by Kendrex whose consent or approval is required
pursuant thereto shall have been obtained.
(e) Financial Statements. HLHK shall have been furnished with
audited financial statements of Kendrex including, but not limited to,
balance sheets and profit and loss statements from inception through
December 31, 1995 and unaudited financial statements from January 1, 1996
to October 31, 1996. Such financial statements shall have been prepared in
conformity with generally accepted accounting principles on a basis
consistent with those of prior periods and fairly present the financial
position of Kendrex as of October 31, 1996.
(f) Statutory Requirements. All statutory requirements for the valid
consummation by Kendrex of the transactions contemplated by this Agreement
shall have been fulfilled.
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(g) Governmental Approval. All authorizations, consents, approvals,
permits and orders of all federal and state governmental agencies required
to be obtained by Kendrex for consummation of the transactions
contemplated by this Agreement shall have been obtained.
(h) Changes in Financial Condition of Kendrex. There shall not have
occurred any material adverse change in the financial condition or in the
operations of the business of Kendrex, except expenditures in furtherance
of this Agreement.
(i) Absence of Pending Litigation. Kendrex is not engaged in or
threatened with any suit, action, or legal, administrative or other
proceedings or governmental investigations pertaining to this Agreement or
the consummation of the transactions contemplated hereunder.
(j) Authorization for Issuance of Stock. HLHK shall have received in
form and substance satisfactory to counsel for HLHK a letter instructing
and authorizing the Registrar and Transfer Agent for the shares of common
stock of Kendrex to issue stock certificates representing ownership of
Kendrex common stock to HLHK shareholders in accordance with the terms of
this Agreement and a letter from said Registrar and Transfer Agent
acknowledging receipt of the letter of instruction and stating to the
effect that the Registrar and Transfer Agent holds adequate supplies of
stock certificates necessary to comply with the letter of instruction and
the terms and conditions of this Agreement.
(k) Shareholder Approval. Kendrex shareholders shall have (i)
approved a one for five reverse split of its outstanding shares, prior to
issuance of shares to HLHK under Section 1.01; (ii) approved a change of
the name of Kendrex to HLHK World Group, Inc.; (iii) elected the following
persons to the Board of Directors of Kendrex: Xxxxx Xxx, Xxxxxxx X.
Xxxxxxxx, Xxxx X. Xxxxxxx, E. Xxxxxxx Xxxxxx, and Xxxxx Xxxxxxxxx; and
(iv) approved the Agreement and Plan of Reorganization.
7.02 Conditions to Obligations of Kendrex. The obligation of Kendrex to perform
this Agreement is subject to the satisfaction of the following conditions on or
before the Closing unless waived in writing by Kendrex.
(a) Representations and Warranties. There shall be no information
disclosed in the schedules delivered by HLHK, which in the opinion of
Kendrex, would materially adversely affect the proposed transaction and
intent of the parties as set forth in this Agreement. The representations
and warranties of HLHK set forth in Article 4 hereof shall be true and
correct in all material respects as of the date of this Agreement and as
of the Closing as though made on and is of the Closing, except as
otherwise permitted by this Agreement.
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(b) Performance of Obligations. HLHK shall have in all material
respects performed all agreements required to be performed by it under
this Agreement and shall have performed in all material respects any
actions contemplated by this Agreement prior to or on the Closing and HLHK
shall have complied in all respects with the course of conduct required by
this Agreement.
(c) Corporate Action. HLHK shall have furnished minutes, certified
copies of corporate resolutions and/or other documentary evidence
satisfactory to Counsel for Kendrex that HLHK has submitted with this
Agreement and any other documents required hereby to such parties for
approval as provided by applicable law.
(d) Consents. Any consents necessary for or approval of any party
listed on any Schedule delivered by HLHK, whose consent or approval is
required pursuant thereto, shall have been obtained.
(e) Financial Statements. Kendrex shall have been furnished with
audited financial statements of HLHK including, but not limited to,
balance sheets and profit and loss statements from inception through
November 7, 1996.
(f) Statutory Requirements. All statutory requirements for the valid
consummation by HLHK of the transactions contemplated by this Agreement
shall have been fulfilled.
(g) Governmental Approval. All authorizations, consents, approvals,
permits and orders of all federal and state governmental agencies required
to be obtained by HLHK for consummation of the transactions contemplated
by this Agreement shall have been obtained.
(h) Employment Agreements. Existing HLHK employment agreements will
have been delivered to counsel for Kendrex.
(i) Changes in Financial Condition of HLHK. There shall not have
occurred any material adverse change in the financial condition or in the
operations of the business of HLHK except expenditures in furtherance of
this Agreement.
(j) Absence of Pending Litigation. HLHK is not engaged in or
threatened with any suit, action, or legal, administrative or other
proceedings or governmental investigations pertaining to this Agreement or
the consummation of the transactions contemplated hereunder.
(k) Shareholder Approval. The Kendrex shareholders shall have (i)
approved a one for five reverse split of its outstanding shares, prior to
issuance of shares to HLHK under Section 1.01; (ii) approved a change of
the name of Kendrex to HLHK World Group, Inc.; (iii) elected the following
persons to the Board of Directors of Kendrex: Xxxxx Xxx.
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Xxxxxxx X. Xxxxxxxx, Xxxx X. Xxxxxxx, E. Xxxxxxx Xxxxxx and Xxxxx
Xxxxxxxxx; (iv) approved the Agreement and Plan of Reorganization.
ARTICLE 8
MATTERS SUBSEQUENT TO CLOSING
8.01 Covenant of Further Assurance. The parties covenant and agree that they
shall, from time to time, execute and deliver or cause to be executed and
delivered all such further instruments of conveyance, transfer, assignments,
receipts and other instruments, and shall take or cause to be taken such further
or other actions as the other party or parties to this Agreement may reasonably
deem necessary in order to carry out the purposes and intent of this Agreement.
ARTICLE 9
NATURE AND SURVIVAL OF REPRESENTATIONS
9.01 All statements contained in any written certificate, schedule, exhibit or
other written instrument delivered by Kendrex or HLHK pursuant hereto, or
otherwise adopted by Kendrex, by its written approval, or by HLHK by its written
approval, or in connection with the transactions contemplated hereby, shall be
deemed representations and warranties by Kendrex or HLHK as the case may be. All
representations warranties and agreements made by either party shall survive for
the period of the applicable statute of limitations and until the discovery of
any claim, loss, liability or other matter based on fraud, if longer.
ARTICLE 10
TERMINATION OF AGREEMENT AND ABANDONMENT OF REORGANIZATION
10.01 Termination. Anything herein to the contrary notwithstanding, this
Agreement and any agreement executed as required hereunder and the acquisition
contemplated hereby may be terminated at any time before the Closing as follows:
(a) By mutual written consent of the Boards of Directors of Kendrex
and HLHK
(b) By the Board of Directors of Kendrex if any of the conditions
set forth in Section 7.02 shall not have been satisfied by the Closing
Date.
(c) By the Board of Directors of HLHK if any of the conditions set
forth in Section 7.01 shall not have been satisfied by the Closing Date.
10.02 Termination of Obligations and Waiver of Conditions; Payment of Expenses.
In the event this Agreement and the acquisition are terminated and abandoned
pursuant to this Article 10 hereof, this Agreement shall become void and of no
force and effect and there shall be no liability on the part of any of the
parties hereto, or their respective directors, officers, shareholders or
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controlling persons to each other. Each party hereto will pay all costs and
expenses incident to its negotiation and preparation of this Agreement and any
of the documents evidencing the transactions contemplated hereby, including
fees, expenses and disbursements of counsel.
ARTICLE 11
EXCHANGE OF SHARES; FRACTIONAL SHARES
11.01 Exchange of Shares. At the Closing, Kendrex shall issue a letter to the
transfer agent of Kendrex with a copy of the resolution of the Board of
Directors of Kendrex authorizing and directing the issuance of Kendrex shares as
set forth on Exhibit A to this Agreement.
11.02 Restrictions on Shares Issued to HLHK. Due to the fact that HLHK will
receive shares of Kendrex common stock in connection with the acquisition which
have not been registered under the 1933 Act by virtue of the exemption provided
in Section 4(2) of such Act, those shares of Kemdrex will contain the following
legend:
The shares represented by this certificate have not been
registered under the Securities Act of 1933. The shares have been
acquired for investment and may not be sold or offered for sale in
the absence of an effective Registration Statement for the shares
under the Securities Act of 1933 or an opinion of counsel to the
Corporation that such registration is required.
ARTICLE 12
MISCELLANEOUS
12.01 Construction. This Agreement shall be construed and enforced in accordance
with the laws of the State of California excluding the conficts of laws.
12.02 Notices. All notices necessary or appropriate under this Agreement shall
be effective when personally delivered or deposited in the United States mail,
postage prepaid, certified or registered, return receipt requested, and
addressed to the parties last known address which addresses are currently as
follows:
If to "Kendrex" If to "HLHK"
Kendrex Systems, Inc. HLHK World Group, Inc.
00000 Xxxxxxxxx Xxxx 0000 Xxxxxxxx Xxxx
Xxxxxxx, Xxxxx 00000 Xxx Xxxxx, Xxxxxx 00000
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With copies to:
Xxxxxx X. Xxxxxxx, Esq.
0 Xxxxx Xxxxxx, Xxxxx 000-X
Xxxx Xxxx Xxxx, Xxxx 00000
12.03 Amendment and Waiver. The parties hereby may, by mutual agreement in
writing signed by each party, amend this Agreement in any respect. Any term or
provision of this Agreement may be waived in writing at any time by the party
which is entitled to the benefits thereof, such waiver right shall include, but
not be limited to, the right of either party to:
(a) Extend the time for the performance of any of the obligations of
the other;
(b) Waive any inaccuracies in representations by the other contained
in this Agreement, or in any document delivered pursuant hereto;
(c) Waive compliance by the other with any of the covenants
contained in this Agreement, and performance of any obligations by the
other; and
(d) Waive the fulfillment of any condition that is precedent to the
performance by the party so waiving of any of its obligations under this
Agreement. Any writing on the part of a party relating to such amendment,
extension or waiver as provided in this Section 12.03 shall be valid if
authorized or ratified by the Board of Directors of such party.
12.04 Remedies not Exclusive. No remedy conferred by any of the specific
provisions of this Agreement is intended to be exclusive of any other remedy,
and each and every remedy shall be cumulative and shall be in addition to every
other remedy given hereunder or now or hereafter existing at law or in equity or
by statute or otherwise. The election of any one or more remedies by Kendrex or
HLHK shall not constitute a waiver of the right to pursue other available
remedies.
12.05 Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
12.06 Benefit. This Agreement shall be binding upon, and inure to the benefit
of, the respective successors and assigns of Kendrex and HLHK and its
shareholders.
12.07 Entire Agreement. This Agreement and the Schedules and Exhibits attached
hereto, represent the entire agreement of the undersigned regarding the subject
matter hereof, and supersedes all prior written or oral understandings or
agreements between the parties.
12.08 Each Party to Bear its Own Expense. Kendrex and HLHK shall each bear their
own respective expenses incurred in connection with the negotiation, execution,
closing, and
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performance of this Agreement, including counsel fees and accountant fees.
12.09 Captions and Section Headings. Captions and section headings used herein
are for convenience only and shall not control or affect the meaning or
construction of any provision of this Agreement.
Executed as of the date first written above.
"Kendrex" "HLHK"
Kendrex Systems, Inc., HLHK World Group, Inc.
a Nevada corporation a Nevada corporation
By: /s/ Xxxxx Xxx By: /s/ Xxxxx Xxx
-------------------------- ------------------------------
Xxxxx Xxx, President Xxxxx Xxx, President
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