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CUSIP NO. 431155 10 0 13D PAGE 6
Exhibit 7.1 Stock Purchase and Escrow Agreement
3248
STOCK PURCHASE AND ESCROW AGREEMENT
THIS STOCK PURCHASE AND ESCROW AGREEMENT (the "Agreement") is entered
into and effective as of November 20, 1996 by and between EFM VENTURE GROUP,
INC., a California corporation ("EFM"), COMPLETE SECURITY SERVICE DEFINED
BENEFITS PENSION TRUST ("CSS") with EFM and CSS also being collectively referred
to herein as the "SELLERS", XXXXX X. XXXXXXXX and his designees collectively
referred to herein as "XXXXXXXX", and HIGHTEC, INC., a Delaware corporation
("HIGHTEC" or the "COMPANY").
1. RECITALS
This Agreement is entered into with reference to and in contemplation
of the following facts, circumstances and representations:
1. The SELLERS desire to sell a collective total of 6,793,243
shares of common stock of HIGHTEC (the "Shares") to the BUYER
and the BUYER desires to purchase said Shares.
2. There are a total of 7,992,050 shares of the COMPANY's common
stock issued and outstanding.
3. The COMPANY desires that this transaction be consummated.
4. The parties hereto agree to the sale, retention and release of
the Shares in accordance with the terms and conditions set
forth herein in this Agreement.
2. SALE AND PURCHASE OF SHARES
2.1 PURCHASE PRICE: The purchase price for the Shares shall be ONE
HUNDRED SIXTY THOUSAND DOLLARS ($160,000.00) and shall be payable in the form of
a Promissory Note and as more specifically described below in Paragraph 2.3.
2.2 ALLOCATION OF PURCHASE PRICE: The purchase price shall be allocated
on a pro-rata basis between the SELLERS with EFM selling a total of 3,203,596 of
the Shares and CSS selling a total of 3,589,647 of the Shares. Notwithstanding
this pro-rata ownership of the Shares, the disposition of the purchase price
funds pursuant to Paragraph 3.7 shall be done in accordance with the specific
direction of the SELLERS.
2.3 PROMISSORY NOTE: XXXXXXXX shall execute a Promissory Note (the
"Note") payable to the SELLERS in the form of the attached Exhibit "A". the Note
shall be all due and payable in ninety (90) days from the closing of the
transaction and shall bear interest at the rate off ten percent (10%) per annum.
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2.4 PRIVATE SALE ACKNOWLEDGMENT: The parties acknowledge and agree that
the sale of the Shares is being undertaken as a private sale pursuant to Section
4 of the Securities Act of 1933, as amended, and is not being transacted via a
broker-dealer and/or in the public market place.
2.5 NATURE OF SHARES: XXXXXXXX acknowledges and agrees that the Shares
are considered "restricted shares" and can only be sold in the public market
place in accordance with the conditions and limitations of SEC Rule 144 and only
after the expiration of the statutory restricted period.
2.6 REPRESENTATIONS AND WARRANTIES OF XXXXXXXX: XXXXXXXX hereby
represents and warrants to SELLERS as follows with respect to its purchase of
the Shares:
1. That it is financially responsible, able to meet
its obligations and acknowledges that this investment
will be speculative.
2. That it has had experience in the business of
investments in one or more of the following:
(i) investment experience with securities such
as stock and bonds; (ii) ownership of interests
in partnerships, new ventures and start-up companies;
(iii) experience in business and financial dealings;
and that it can protect its own interest in an
investment of this nature and does not have an
"Investor Representative", as that term is defined
in Regulation D of the Securities Act of 1933 and
does not need such an Investor Representative.
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3. That it is capable of bearing the high degree of economic
risks and burdens of this investment, including but not
limited to the possibility of complete loss of all its
investment capital and the lack of a liquid market, such
that it may not be able to liquidate readily the investment
whenever desired or at the then current asking price.
4. That it has had access to the information regarding
the financial conditions of the COMPANY, including
but not limited to the COMPANY's SEC Form 10-KSB for
the fiscal year ending June 30, 1996 and SEC Form
10-QSB for the period ending September 30, 1996, and
it was able to request copies of such information, ask
questions of and receive answers from the COMPANY
regarding such information and any other information
it desires concerning the Shares, and all such questions
have been answered to its full satisfaction.
5. That at no time was it presented with or solicited by any
leaflet, public promotional meeting, circular, newspaper or
magazine article, radio or television advertisement or any
other form of general advertising.
6. The Shares are not being purchased with a view to or for the
resale or distribution thereof and it has no present plans
to enter into any contract, undertaking, agreement or
arrangement for such resale or distribution.
2.7 REPRESENTATIONS AND WARRANTIES OF SELLERS: The SELLERS hereby
represent and warrant to XXXXXXXX as follows with respect to their sale of the
Shares:
1. That the SELLERS are the owners, beneficially and of record,
of all of the Shares free and clear of all liens,
encumbrances claims, charges and restrictions.
2. That the SELLERS have full power to transfer the Shares to
XXXXXXXX without obtaining the consent or approval of any
other person or governmental authority.
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3. That the Shares are validly authorized and issued, fully
paid, and nonassessable, and the Shares have been so issued
in full compliance with all federal and state securities
laws.
2.8 REPRESENTATIONS AND WARRANTIES OF COMPANY: The COMPANY hereby
represents and warrants to both XXXXXXXX and the SELLERS as follows with respect
to the Shares:
1. That the Shares are validly authorized and issued by the
COMPANY, they are fully paid and non-assessable and that the
Shares have been issued in full compliance with all federal
and state securities laws.
2. That the Shares have a restrictive legend imposed thereon
identifying them as "restricted shares" which are subject to
the conditions and limitations of SEC Rule 144 with respect
to the sale of the Shares in the public market place.
3. That the COMPANY has not received a notice of any
assignment, lien, encumbrance, claim or charges against
the Shares.
2.9 REPRESENTATIONS, WARRANTIES AND COVENANTS OF COMPANY AND XXXXXXXX:
The COMPANY and XXXXXXXX collectively and individually hereby represent and
warrant to the SELLERS as follows and further agree as follows that until such
time as payment for the Shares is made in full:
1. That they will cause to be filed any and all reports and
filings required to be filed by the COMPANY pursuant to
Section 13 or 15(d) of the Securities and Exchange Act of
1934.
2. That any shares to be issued by the COMPANY in addition to
the Shares are to be issued for cash only and such issuance
shall be supported by a legal opinion from XXXXXXX X. XXX,
ESQ.
3. That they hereby agree to indemnify the SELLERS, hold them
harmless and defend them with respect to any claim, demand,
arbitration, litigation or judgment resulting from the
issuance of any such additional shares.
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4. That the issuance of any additional shares in excess of
twenty five percent (25%) of the presently issued and
outstanding shares shall require the written consent of the
SELLERS.
2.10 CORPORATE AUTHORITY: The officers or representatives of the
corporate parties executing this Agreement represent that they have been
authorized to execute this Agreement pursuant to resolutions of their respective
Boards of Directors.
2.11 OPTION TO PURCHASE COMPANY SUBSIDIARY: The COMPANY hereby grants
to the SELLERS the option to purchase all of the outstanding and issued shares
(the "Navmatic Shares") of its wholly owned subsidiary NAVMATIC CORPORATION, a
Nevada corporation ("NAVMATIC") for a total cash price of TEN THOUSAND DOLLARS
($10,000.00). This option shall be exercisable for a period of two (2) years
from the close of escrow.
2.12 DISPOSITION OF NAVMATIC SHARES: The Navmatic Shares are to be
delivered to the below described ESCROW HOLDER upon execution of this Agreement.
The retention, release and payment for the Navmatic Shares shall be in
accordance with the same terms and conditions as set forth below in Paragraphs
3.8 and 3.9.
2.13 DISPOSITION OF COMPANY SHARES RETAINED BY SELLERS: The SELLERS
agree that with respect to those shares of the COMPANY not sold to XXXXXXXX and
retained by the SELLERS (the "Retained Shares") shall be deposited with the
ESCROW HOLDER. The Retained Shares shall be subject to an agreement separate and
apart from this Agreement which shall limit the amount and timing of the sale of
the Retained Shares.
3. ESCROW TERMS AND CONDITIONS
3.1 APPOINTMENT OF ESCROW HOLDER: The SELLERS, XXXXXXXX and the
COMPANY hereby appoint XXXXXXX X. XXX, ESQ. of San Diego, California as the
ESCROW HOLDER for this Agreement.
3.2 DELIVERY OF SHARES: Upon execution of this Agreement, the SELLERS
shall deliver to the ESCROW HOLDER the HIGHTEC share certificates representing
the Shares (the "Certificates") along with properly endorsed and signature
guaranteed stock powers.
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3.3 DELIVERY OF NOTE: Further upon execution of this Agreement,
XXXXXXXX shall deliver to the ESCROW HOLDER the signed Note as described in
Exhibit "A".
3.4 DELIVERY OF OFFICERS AND DIRECTORS RESIGNATIONS: Still further upon
execution of this Agreement, the SELLERS and the COMPANY shall cause to be
delivered to the ESCROW HOLDER the resignations of all of the present officers
and directors of the COMPANY.
3.5 DISPOSITION OF SHARES: The parties agree that the Shares shall be
retained and released by the ESCROW HOLDER in accordance with the following
instructions, terms and conditions:
1. RETENTION OF SHARES: XXXXXXXX hereby grants a security
interest in the Shares for the benefit of the SELLERS
and directs the ESCROW HOLDER to retain the Shares as
and for the security for the payment of the Note.
2. VOTING RIGHTS: Notwithstanding the retention of the
Shares by the ESCROW HOLDER, XXXXXXXX shall have all
of the voting rights associated with the Shares.
3. RELEASE OF SHARES: Upon the payment of the purchase
price into the Client Trust Account of the ESCROW HOLDER,
the Certificates shall be released to XXXXXXXX.
4. FAILURE TO PAY NOTE WHEN DUE: In the event XXXXXXXX fails to
pay the Note in full by its due date, then and in that event
the SELLERS shall have the sole option to cancel the
transaction and direct the ESCROW HOLDER to return their
respective Shares. The SELLERS shall have the further sole
option to extend the payment due date or otherwise modify
the payment terms of the Note.
3.6 FUNDS FOR PAYMENT OF NOTE: Until such time as the Note is paid in
full, XXXXXXXX and the COMPANY agree that all funds obtained by the COMPANY from
the sale of any equity or debt securities, from loans or other financing and
from the sale of its products and services (the "Funds") shall be deposited in
the Client Trust Account of the ESCROW HOLDER.
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3.7 DISPOSITION OF FUNDS: Upon receipt of a sufficient amount of the
Funds to pay the principal and accumulated interest on the Note (the "pay-off"),
the COMPANY shall direct the ESCROW HOLDER to establish a credit for the benefit
of parties to be designated by the COMPANY (the "Payees"). The Payees shall then
have the right to direct the application of their credit to the pay-off and the
distribution of the remainder, if any, of the Funds.
3.8 RETENTION OF FUNDS FOR EXERCISE OF OPTION TO PURCHASE NAVMATIC
SHARES: The ESCROW HOLDER is directed to retain $10,000.00 of the Funds which
are to be released to the COMPANY in the event the SELLERS exercise their option
to purchase the Navmatic Shares. In the event the SELLERS fail to exercise their
option, the $10,000.00 is to be released to the XXXXXXXX.
3.9 SPECIAL PAYMENT PROVISIONS FOR NAVMATIC SHARES: The ESCROW HOLDER
is further directed to retain still an additional portion of the Funds for the
benefit of the COMPANY as and for the payment of the unpaid principal and
interest of that certain Promissory Note in the principal amount of $5,000.00
payable to the COMPANY by CSS which shall be credited to the purchase price of
the Navmatic Shares in the event the SELLERS exercise their option to purchase
said shares.
3.10 PAYMENT OF ESCROW FEES: The SELLERS agree to pay all fees and
expenses charged and incurred by the ESCROW HOLDER for the preparation of this
Agreement and related documents and in carrying out his duties and obligations
pursuant to this Agreement (collectively the "Escrow Fees"). The Escrow Fees are
to be paid to the ESCROW HOLDER from the funds deposited with the ESCROW HOLDER
pursuant to Paragraph 3.7.
3.11 OBLIGATIONS OF ESCROW HOLDER: The obligations of the ESCROW HOLDER
shall be governed by and subject to the following provisions and conditions:
1. The ESCROW HOLDER shall not be required to give
security nor shall the ESCROW HOLDER be responsible
for the acts, omissions, faults, errors, fraud,
failure or misconduct of any agent whom it may
reasonably employ in the exercise of the powers
conferred upon the ESCROW HOLDER hereunder, nor for
any loss occasioned by the acts, omissions, or
defaults by the ESCROW HOLDER, unless such acts,
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omissions or defaults constitute a breach of trust knowingly
and intentionally committed by the ESCROW HOLDER.
2. The ESCROW HOLDER shall not in any way be bound or affected
by any notice of modification or of cancellation of this
Agreement unless such notice is in writing and signed by all
parties hereto, nor shall the ESCROW HOLDER be bound by any
modification hereof unless the same shall be satisfactory to
him.
3. The ESCROW HOLDER may act in reliance upon any document,
instrument or signature believed by him to be genuine and
the ESCROW HOLDER may assume that any person purporting to
give any notice or instruction in accordance with the
provisions hereof has been duly authorized to do so.
4. This Agreement sets forth exclusively the ESCROW HOLDER's
duties with respect to any and all matters pertinent hereto.
The ESCROW HOLDER shall not be bound by the provisions of
any agreement other than the terms of this Agreement.
5. In the event that the ESCROW HOLDER shall be uncertain
as to its duties or rights hereunder, or should it
receive instructions, claims or demands from any other
parties hereto or from third parties with respect to
the Shares held hereunder which, in his opinion, are
in conflict with any provisions of this Agreement,
it shall be entitled to refrain from taking any action
(other than to keep safely the Shares) until it shall
be directed or otherwise in writing by all of the parties
hereto, and the said third parties, if any, or by final
order, or judgment of a court of competent jurisdiction.
6. The ESCROW HOLDER shall not be required to institute, defend
or intervene in any legal action to enforce the terms and
conditions of this Agreement, nor to take any other action
until the ESCROW HOLDER has been indemnified to his
satisfaction against all expenses and liabilities incurred
and to be incurred by the ESCROW HOLDER.
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7. The ESCROW HOLDER shall not be liable for anything
done or permitted by him to be done in good faith.
3.12 INDEMNIFICATION OF ESCROW HOLDER: The SELLERS, XXXXXXXX and the
COMPANY jointly and severally, release, indemnify and hold harmless the ESCROW
HOLDER from all costs, charges, claims, demands, damages, losses and expenses
resulting from the ESCROW HOLDER's compliance in good faith with this Agreement.
4. COOPERATION, ARBITRATION, INTERPRETATION,
MODIFICATION AND ATTORNEY FEES
4.1 COOPERATION OF PARTIES: The parties further agree that they will do
all things necessary to accomplish and facilitate the purpose of this Agreement
and that they will sign and execute any and all documents necessary to bring
about and perfect the purposes of this Agreement.
4.2 ARBITRATION: The parties hereby submit all controversies, claims
and matters of difference arising out of this Agreement to arbitration in San
Diego, California according to the rules and practices of the American
Arbitration Association from time to time in force. This submission and
agreement to arbitrate shall be specifically enforceable. The Agreement shall
further be governed by the laws of the State of California.
4.3 INTERPRETATION OF AGREEMENT: The parties agree that should any
provision of this Agreement be found to be ambiguous in any way, such ambiguity
shall not be resolved by construing such provisions or any part of or the entire
Agreement in favor of or against any party herein, but rather by construing the
terms of this Agreement fairly and reasonable in accordance with their generally
accepted meaning.
4.4 MODIFICATION OF AGREEMENT: This Agreement may be amended or
modified in any way at any time by an instrument in writing stating the manner
in which it is amended or modified and signed by each of the parties hereto. Any
such writing amending or modifying this Agreement shall be attached to and kept
with this Agreement.
4.5 ATTORNEY FEES: If any legal action or any arbitration or other
proceeding is brought for the enforcement of this Agreement, or because of an
alleged dispute, breach, default or misrepresentation in connection with any of
the provisions of the Agreement, the successful or prevailing party shall be
entitled to recover reasonable attorneys' fees and other costs
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incurred in that action or proceeding, in addition to any other relief to which
it may be entitled.
4.6 ENTIRE AGREEMENT: This Agreement constitutes the entire Agreement
and understanding of the parties hereto with respect to the matters herein set
forth, and all prior negotiations, writings and understandings relating to the
subject matter of this Agreement are merged herein and are superseded and
canceled by this Agreement.
4.7 COUNTERPARTS: This Agreement may be signed in one or more
counterparts.
4.8 FACSIMILE TRANSMISSION SIGNATURES: A signature received pursuant
to a facsimile transmission shall be sufficient to bind a party to this
Agreement.
EFM VENTURE GROUP, INC.
DATED: November 20, 1996 BY: /s/ XXXXX X. XXXXX
___________________________
XXXXX X. XXXXX
President
COMPLETE SECURITY
SERVICE DEFINED BENEFITS
PENSION TRUST
DATED: November 20, 1996 BY: /s/ XXXXXXX X. XXXXXXXX
___________________________
XXXXXXX X. XXXXXXXX
Trustee
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DATED: November 20, 1996 /s/ XXXXX XXXXXXXX
___________________________
XXXXX XXXXXXXX
HIGHTEC, INC.
DATED: November 20, 1996 BY: /s/ XXXXXXX X. XXXXXXXX
___________________________
XXXXXXX X. XXXXXXXX
President
ACCEPTANCE BY ESCROW HOLDER
I, XXXXXXX X. XXX, III, ESQ., do hereby accept this appointment as
ESCROW HOLDER herein and agree to abide by the terms and directions set forth in
this Agreement.
ESCROW HOLDER
DATED: November 20, 1996 /s/ XXXXXXX X. XXX, III
__________________________
XXXXXXX X. XXX, III
