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EXHIBIT 2.2
SETTLEMENT AGREEMENT WITH RELEASES
Settlement Agreement with Releases (this "Agreement") among
KDI/Triangle Corporation, a Michigan corporation (the "Purchaser"), a
wholly-owned subsidiary of Microwave Components Enterprises, Inc., a Michigan
corporation ("Enterprises"), KDI D/H Corporation, a Delaware corporation ("KDI
D/H"), and IDK Tri-El Corp. (f/k/a KDI/triangle Electronics, Inc.), a Delaware
corporation and a wholly-owned subsidiary of KDI D/H (the "Seller").
WHEREAS, pursuant to that certain Asset Purchase Agreement (the "Asset
Purchase Agreement"), dated as of May 31, 1996, as amended, the Seller sold to
the Purchaser substantially all of the assets of the Seller and the Purchaser
purchased such assets and assumed certain obligations of the Seller (defined
terms not otherwise defined herein shall have the defined meanings given to them
in the Asset Purchase Agreement); and
WHEREAS, the Purchaser has objected to the Seller's 6/30/96 Working
Capital Adjustment, and the Seller has denied the validity of such objection;
and
WHEREAS, the Purchaser has made certain claims for indemnification from
the Seller and KDI D/H pursuant to the Agreement (which are in addition to and
separate from the objections to the Working Capital Adjustment), and the Seller
and KDI D/H have denied the validity of such claims; and
WHEREAS, the Seller has accelerated the Twelve-Month Note; and
WHEREAS, the Purchaser has asserted that as between them the Seller is
liable for all potential costs, damages and liabilities of any kind arising out
of or related to the litigation currently styled Hawksworth v. KDI Triangle
Electronics, Inc., et al., N.J. Super. Ct., ▇▇▇▇▇▇ County (MRS-L-3054-96) or any
related litigation (the "Hawksworth Litigation"), and the Seller has denied any
potential liability with respect to the Hawksworth Litigation and has asserted
that it will hold the Purchaser liable for any potential costs, damages and
liabilities it may suffer related to the Hawksworth Litigation; and
WHEREAS, the Purchaser deposited $79,515 (the "Escrow Amount") in
escrow with the Escrow Agent pursuant to Article XIV-A(b)(ii) of the Asset
Purchase Agreement; and
WHEREAS, in order to avoid the uncertainty and expense associated with
the resolution of these disputes, the Purchaser and Enterprises (collectively,
the "Purchasing Parties"), on the one hand, and the Seller and KDI D/H
(collectively, the "Selling Parties"), on the other hand, wish to effect a
settlement of their disputes (the Selling Parties and the Purchasing Parties,
collectively, the "Parties");
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NOW, THEREFORE, for good and valuable consideration the receipt and
sufficiency of which is hereby acknowledged by each of the Parties, the Parties
agree as follows:
1. Terms.
(a) Purchaser Obligations.
(i) Concurrent with the execution of this Agreement,
Purchaser shall wire transfer the Settlement Amount (as
defined below) to the account of KDI D/H Corp. at Star Bank,
Cincinnati, OH, account # 48384- 4379, ABA # ▇▇▇▇▇▇▇▇▇.
"Settlement Amount" means an amount equal to the sum of (A)
$300,000 plus simple interest thereon at the rate of 9.25 per
from July 23, 1996 through the Purchaser Release Date (as
defined below) and (B) the Escrow Amount plus an amount equal
to the interest earned on the Escrow Amount as paid by the
Escrow Agent for such deposits from January 23, 1997 through
the Purchaser Release Date (as defined below).
(ii) The Purchaser hereby (A) assumes effective on
the Purchase Release Date all liability, if any, for all
claims, losses, damages, liabilities and expenses, arising out
of or relating to claims or issues which are or could be
asserted in the Hawksworth Litigation whether arising prior to
or after the Purchaser Release Date excluding any
out-of-pocket costs or expenses incurred or accrued prior to
the Purchaser Release Date and (B) agrees to use its
commercially reasonable efforts, and cause its employees and
agents, to cooperate with the Seller with respect to the
▇▇▇▇▇▇▇ Litigation.
(b) Seller Obligations.
(i) Upon execution of this Agreement, the Seller
shall execute and deliver to the Purchaser's counsel joint
instructions (the "Joint Instructions") substantially in the
form of Exhibit A hereto; provided, however, that the Joint
Instructions shall not be deliverable to the Escrow Agent by
the Purchaser's counsel or be effective prior to the Purchaser
Release Date.
(ii) The Seller agrees (A) effective upon receipt by
the Seller of the Settlement Amount in accordance with Section
1(a)(i) above, that the Six-Month Note and the Twelve-Month
Note shall be fully paid, canceled and discharged and, as soon
as practicable after the
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receipt of such Settlement Amount, to ▇▇▇▇ the Six-Month Note
and the Twelve-Month Note as having been fully paid, canceled
and discharged and to return the Six-Month Note and the Twelve
-Month Note to the Purchaser and (B) to use its commercially
reasonable efforts, and cause its employees and agents, to
cooperate with the Purchaser with respect to the Hawksworth
Litigation.
(iii) The Seller agrees to retain all liability, if
any, for all claims, losses, damages, liabilities and expenses
arising out of or relating to claims or issues which are or
could be asserted in the ▇▇▇▇▇▇▇ Litigation. Without limiting
the generality of the foregoing, (A) the ▇▇▇▇▇▇▇ Litigation
will continue to constitute an Excluded Liability (as defined
in the Asset Purchase Agreement, and (B) Section 13.4 of the
Asset Purchase Agreement is hereby terminated effective as of
the Purchaser Release Date, with one of the results being that
the concept of limitation on set-off contemplated therein will
be of no further force or effect.
2. Representation and Warranties. The Purchasing Parties represent and
warrant to the Selling Parties, and the Selling Parties represent and warrant to
the Purchasing Parties, that they have the full right, power and authority to
enter into this Agreement; they have not assigned, transferred or purported to
assign or transfer to any person or entity any right or claim they had or may
have against one another, except for certain rights assigned by the Purchaser to
Comerica Bank pursuant to that certain Assignment as Collateral Security, dated
July 23, 1996, entered into in connection with that certain Loan Agreement,
dated July 23, 1996, between the Purchaser and Comerica Bank, as to which
Comerica Bank has provided its consent with respect to the transactions
described in this Agreement.
3. Indemnification.
(a) Purchasing Parties. The Purchasing Parties shall defend,
indemnify and save harmless each member of the Selling Group (as defined below)
from any and all claims, losses, damages, liabilities and expenses of any kind
(including without limitation, reasonable attorneys' and experts' fees, costs
and disbursements, whether incurred in an action or proceeding between the
Parties or otherwise) incurred directly or indirectly (i) by reason of the
breach by the Purchasing Parties of this Agreement or (ii) arising out of or in
any way related to the Hawksworth Litigation.
(b) Selling Parties. The Selling Parties agree, to defend,
indemnify and save harmless each member of the Purchasing Group (as defined
below) from any and all claims, losses, damages liabilities and expenses of any
kind (including without
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limitation, reasonable attorneys' and experts' fees, costs and disbursements,
whether incurred in an action or proceeding between the Parties or otherwise)
incurred directly or indirectly by reason of the breach by the Selling Parties
of this Agreement.
4. Non-Concession. This Agreement and the obligations of the Parties
hereunder do not constitute, and are not to be construed as, an admission or
concession of liability by either the Selling Parties or the Purchasing Parties
with respect to the matters set forth above in the Recitals or otherwise, and
each of the Parties expressly deny any liability to one another, except as
expressly set forth herein.
5. Confidentiality. This Agreement and its terms are confidential and
shall not be disclosed to any person or entity, except the Parties may make
disclosures thereof to their respective attorneys, accountants and, with respect
to the Purchasing Parties, to Comerica Bank (the senior lender of the
Purchaser), National City Capital Corporation (significant investor and lender
of Enterprises) and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Mezzanine Fund, L.P. (significant investor
and lender of Enterprises) and except if required to do so by valid court order,
provided that the Party from whom disclosure is sought notifies the other
Parties immediately in writing at the addresses set forth below of any subpoena,
demand or order for disclosure.
6. Releases.
(a) Selling Group. Upon the satisfaction of the Purchaser's
obligations under Sections 1(a)(i) and (ii)(A)hereof (the "Purchaser Release
Date"), for good and valuable consideration, receipt of which is acknowledged,
each of the Selling Parties, on behalf of itself and any of its affiliates, and
each of their respective officers, directors, shareholders, servants, employees,
representatives, agents, and attorneys, if any, and each of their respective
predecessors, heirs, successors and assigns (collectively, the "Selling Group"),
hereby fully, finally and forever releases, acquits and discharges each of the
Purchasing Parties and any affiliates of each of the Purchasing Parties, and
each of their respective officers, directors, shareholders, servants, employees,
representatives, agents and attorneys, if any, and each of their respective
predecessors, heirs, successors and assigns (collectively, the "Purchasing
Group"), from any and all claims, suits, demands, debts, liens, obligations,
accounts, costs, expenses, actions, causes of action, covenants, contracts,
agreements, promises, sums of money, damages, judgments, executions, and
liabilities, of every nature, character and description whatsoever, in law or in
equity, known or unknown, which the Seller or any member of the Selling Group
ever had, now has, or hereafter can, shall or may have for, upon or against any
or all of the members of the Purchasing Group, from the beginning of the world
to the date of this Agreement, except for claims arising out of the breach of
this Agreement; provided, however, that the Purchasing Group shall not be
released with respect to the Assumed Liabilities and any breach of any covenants
in Sections 9.3 and 9.7 of the Asset Purchase Agreement.
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(b) Purchasing Group. Upon the satisfaction of the Seller's
obligations under Sections 1(b)(i) and (ii)(A) hereof, for good and valuable
consideration, receipt of which is acknowledged, each member of the Purchasing
Group, hereby fully, finally and forever releases, acquits and discharges each
member of the Selling Group, from any and all claims, suits, demands, debts,
liens, obligations, accounts, costs, expenses, actions, causes of action,
covenants, contracts, agreements, promises, sums of money, damages, judgments,
executions, and liabilities, of every nature, character and description
whatsoever, in law or in equity, known or unknown, which the Purchaser or any
member of the Purchasing Group ever had, now has, or hereafter can, shall or may
have for, upon or against any or all of the members of the Selling Group from
the beginning of the world to the date of this Agreement, except for claims
arising out of the breach of this Agreement; provided, however, that the Selling
Group shall not be released with respect to any breach of Section 6.26 of the
Asset Purchase Agreement or to any breach by the Seller or KDI D/H of the
Seller's Non-Competition Agreement or the KDI D/H Non-Competition Agreement.
7. Miscellaneous.
(a) Merger. All representations, understandings and agreements
had among the Parties with respect to the subject matter of this Agreement are
merged in this Agreement, which alone fully and completely expresses their
agreement. The terms of this Agreement are contractual and not a mere recital.
This Agreement is executed without reliance on any promise, warranty or
representation by any of the Parties or any representative of any of the Parties
other than those representations expressly set forth herein, and each of the
Parties has carefully read the Agreement, has been advised of its meaning and
consequences by its attorneys, and signs the same of its own free will.
(b) Amendment; Non-Waiver. This Agreement may not be modified,
discharged or terminated except by a writing signed by all Parties hereto. The
failure of any of the Parties to enforce at any time any term, provision or
condition of this Agreement, or to exercise any right herein, shall in no way
operate as a waiver thereof, nor shall any single or partial exercise preclude
any other right or option herein; and no waiver whatsoever shall be valid unless
in writing, signed by the waiving party, and only to the extent therein set
forth.
(c) Successor and Assigns. This Agreement shall be binding
upon and inure to the benefit of the Parties, and each of their respective
predecessors, heirs, assigns, successors and subrogees.
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(d) Headings; No Negative Inference. Headings used herein are
for convenience only and shall not be deemed to affect the meaning of any of its
terms. This Agreement shall be deemed to have been drafted by all of the Parties
and shall not be construed against or in favor of any of them by reason of any
presumption concerning the party drafting this Agreement.
(f) Governing Law; Jurisdiction. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York
as applied to contracts made and to be performed entirely within the State of
New York.
(g) Counterparts. This Agreement may be executed in
counterparts. When each of the Parties have signed and delivered one such
counterpart to the other Parties, each counterpart shall be deemed an original
and, when taken together with the other signed counterpart, shall constitute one
Agreement, which shall be binding upon and effective as to the Parties.
[BALANCE OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the Parties have executed this Agreement effective
as of the date set forth below.
Date: June 18, 1997 KDI/TRIANGLE CORPORATION
Address:
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ -----------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chairman
Date: June 18, 1997 MICROWAVE COMPONENTS ENTERPRISES, INC.
Address:
c/o Merchant Financial, Inc. /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
15450 East Jefferson -----------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
Date: June 18, 1997 KDI D/H CORPORATION
Address:
▇.▇. ▇▇▇ ▇▇▇ /s/ P. ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ -----------------------------------
Name: P. ▇▇▇▇▇ ▇▇▇▇
Title: Vice President
Date: June 18, 1997 IDK TRI-EL CORP.
(f/k/a KDI/triangle Electronics, Inc.)
Address:
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ /s/ P. ▇▇▇▇▇ ▇▇▇▇
-----------------------------------
Name: P. ▇▇▇▇▇ ▇▇▇▇
Title: Vice President
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EXHIBIT A
JOINT INSTRUCTIONS
To: Comerica Bank
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
(313 222-5912)
Dated as of June 18, 1997
These joint instructions are authorized pursuant to Sections 1 and 6 of that
certain Settlement Agreement with Releases (the "Settlement Agreement"), dated
of even date herewith, among KDI/Triangle Corporation, a Michigan corporation, a
wholly-owned subsidiary of Microwave Components Enterprises, Inc., a Michigan
corporation, KDI D/H Corporation, a Delaware corporation ("KDI D/H"), and IDK
Tri-El Corp. (f/k/a KDI/triangle Electronics, Inc.), a Delaware corporation and
a wholly-owned subsidiary of KDI D/H.
Comerica Bank, as Escrow Agent, pursuant to the Asset Purchase Agreement (as
defined in the Settlement Agreement) is hereby instructed to distribute all
amounts held in escrow to KDI/Triangle Corporation; Account # 1850659788; ABA
#▇▇▇▇▇▇▇▇▇.
IDK TRI-EL CORP.
(f/k/a KDI/triangle Electronics, Inc.)
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Name:
Title:
KDI/TRIANGLE CORPORATION
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Name:
Title: