STOCK PURCHASE AGREEMENT
Exhibit
10.a
STOCK
PURCHASE AGREEMENT
THIS
STOCK
PURCHASE AGREEMENT, made and entered into as of October
17,2007, by and among High Point Transport, Inc., a Florida corporation,
(“HPTI”), Xxxxxxx Xxxxxxx, Xx. (“Xx. Xxxxxxx”) the sole stockholder
of Xxxxxx Freight Systems, Inc., a Michigan corporation, (“CFSI”), and CFSI for
the purpose of its representations, warranties and deliverables set forth
herein.
W
I T
N E S S E T H :
WHEREAS,
HPTI is planning to acquire
one or more trucking companies and in preparing so to do has filed a
registration statement under the Securities Exchange Act of 1934, as amended,
on
Form 10-SB; and
WHEREAS,
CFSI is a trucking company
with its headquarters office located in 00000 Xxxxx X. Xxx Xxxx., Xxxxxxxx
Xxxxxxxx, Xxxxxxxx; and
WHEREAS,
HPTI desires to acquire CFSI
as a going concern by purchase of all of CFSI’s issued and outstanding equity
securities (“CFSI’s Securities”) and thereafter to operate the business so
acquired; and
WHEREAS,
Xx. Xxxxxxx desires to sell
all of CFSI’s Securities that he owns to HPTI and for CFSI to be acquired by
HPTI, as contemplated by this Agreement; and
NOW,
THEREFORE, for valuable
consideration, the receipt and sufficiency of which the parties acknowledge,
the
parties agree as follows:
ARTICLE
I
PRELIMINARY
MATTERS
Section
1.01. Recitals. The parties acknowledge the
recitals herein above set forth in the preamble are correct, and are, by this
reference, incorporated herein and are made a part of this
Agreement.
Section
1.02. Exhibits
and Schedules. Exhibits (which are documents to be executed and
delivered at the Closing by the party identified therein or in the provision
requiring its delivery) and Schedules (which are attachments setting forth
information about a party identified therein or in the provision requiring
its
attachment) referred to herein and annexed hereto are, by this reference,
incorporated herein and made a part of this Agreement, as if set forth fully
herein.
Section
1.03. Use of
words and phrases. Natural persons may be identified by last
name, with such additional descriptors as may be desirable. The words
“herein,” “hereby,” “hereunder,” “hereof,” “herein before,” “hereinafter” and
any other equivalent words refer to this Agreement as a whole and not to any
particular Article, Section or other subdivision hereof. The words,
terms and phrases defined herein and any pronoun used herein shall include
the
singular, plural and all genders. The word “and” shall be construed
as a coordinating conjunction unless the context clearly indicates that it
should be construed as a copulative conjunction.
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Section
1.04. Accounting
terms. All accounting terms not otherwise defined herein shall
have the meanings assigned to them under generally accepted accounting
principles unless specifically referenced to regulatory accounting
principles.
Section
1.05. Calculation
of time lapse or passage; Action required on holidays. When a
provision of this Agreement requires or provides for the calculation of the
lapse or passage of a time period, such period shall be calculated by treating
the day on which the event which starts the lapse or passage occurs as zero;
provided, that this provision shall not apply to any provision which specifies
a
certain day for action or payment, e.g. the first day of each calendar
month. Unless otherwise provided, the term “month” shall mean a
period of thirty days and the term “year” shall mean a period of 360 days,
except that the terms “calendar month” and “calendar year” shall mean the actual
calendar period indicated. If any day on which action is required to
be taken or payment is required to be made under this Agreement is not a
Business Day (Business Day being a day on which national banks are open for
business where the actor or payor is located), then such action or payment
shall
be taken or made on the next succeeding Business Day.
Section
1.06. Use of
titles, headings and captions. The titles, headings and captions
of articles, sections, paragraphs and other subdivisions contained herein are
for the purpose of convenience only and are not intended to define or limit
the
contents of said articles, sections, paragraphs and other
subdivisions.
ARTICLE
II
TERMS
OF THE TRANSACTIONS
Section
2.01. Stock purchase
transaction. In accordance with the terms of this Agreement, on
the Closing Date, HTPI shall purchase from Xx. Xxxxxxx and Xx. Xxxxxxx shall
sell to HTPI all of CFSI’s Securities.
Section
2.02. Consideration. The purchase price for CFSI’s
Securities, shall be
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(a)
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One
million dollars ($1,000,000) by bank check or bank to bank wire transfer,
in accordance with the instructions of Xx. Xxxxxxx;
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(b)
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A
guaranteed promissory note of HTPI in the principal amount of one
million
dollars ($1,000,000) having such characteristics as defined in Section
2.03(a).
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(c)
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A
convertible promissory note of HPTI in the principal amount of one
million
dollars ($1,000,000) having such characteristics as defined in Section
2.03(b).
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(d)
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Common
stock of HPTI in such number of shares as is determined by dividing
one
million dollars ($1,000,000) by the price per share at which HPTI
has most
recently sold, or is committed to sell (by conversion or otherwise)
its
common stock prior to the Closing Date to non-affiliated
investors.
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Section
2.03. Promissory notes. The
promissory notes shall have the following characteristics:
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(a)
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The
guaranteed promissory note payable to Xx. Xxxxxxx and delivered
by HPTI
and identified in Section 2.02(b) shall be dated the Closing Date,
bear
interest payable at a rate of ten percent (10%) per annum paid
monthly,
shall be due and
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controllingstockholder
of HTPI, such limited guaranty being secured by a perfected pledge
by Xx.
Xxxxxx of two million shares of HTPI common
stock.
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(b)
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The
convertible promissory note payable to Xx. Xxxxxxx delivered
by HPTI and
identified in Section 2.02(c) shall be dated the Closing Date,
bear
interest at a rate of ten percent (10%) per annum, such accrued
interest
payable monthly during the term of the note, have a term of
one year, be
convertible, by the holder, in whole or in part at any time
prior to and
including the date of maturity into such number of shares of
HPTI’s common
stock as is determined under Section 2.02(d) be secured by
a pledge of and
a second priority security interest in the assets of CFSI and
have its
payment and performance guaranteed by HTPI. The payment such
amount shall be further secured by a limited guaranty of Xxxx
X. Xxxxxx,
controlling stockholder of HTPI, such limited guaranty being
secured by a
perfected pledge by Xx. Xxxxxx of two million shares of HTPI
common
stock.
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Section
2.04. Press
releases. No party will issue a press release regarding the
subject matter of this Agreement and the transaction contemplated hereby, either
before or after closing, without the prior approval thereof by the other party
and its counsel.
Section
2.05. Transaction
costs. Each party shall pay all costs and expenses which it
incurs in connection with this Agreement and the transactions contemplated
hereby; except, HPTI shall pay all fees and reimbursable expenses which Xx.
Xxxxxxx may be obligated to pay (a) Xxxxxxx Associates and (b) Xxxxxxxxx and
Xxxxxx LLP.
ARTICLE
III
CLOSING
OF THE TRANSACTION
Section
3.01. Location,
date and time of the Closing. The Closing of the transaction
contemplated by this Agreement shall take place on October 25, 2007, at 12:00
pm
("Closing Date”). The Closing shall take place at a location agreed
to by the parties. The acts and deliveries which occur on the Closing
Date for the purpose of consummating the transactions contemplated by this
Agreement and the event itself are referred to herein as the
Closing.
Section
3.02. Xx.
Xxxxxxx’x and CSFI’s deliveries at the Closing. At the Closing,
Xx. Xxxxxxx and CFSI will deliver to HTPI:
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(a)
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Certificate
of good standing in CFSI’s state of incorporation and all states in which
it is required to qualify to do business;
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(b)
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Certificates
representing all of CFSI’s Securities; and
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(c)
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Officers’
and Secretary’s and Certificates of CFSI in the form set forth in Exhibits
“A” and “B”, respectively;
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(d)
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A
resignation from any member of
CFSI’s board of directors other than Xx. Xxxxxxx.
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(e)
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A
document reflecting Xx. Xxxxxx’x election as a director of
CFSI.
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(f)
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A
document reflecting the mutual cancellation of Xx. Xxxxxxx’x employment
agreement with CFSI, subject to execution of an employment agreement
as
negotiated pursuant to this Agreement.
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(g)
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An
employment agreement for Xx. Xxxxxxx as negotiated pursuant to
this
Agreement.
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(h)
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The
promissory notes described in Section 2.03.
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(i)
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A
promissory note of HPTI in the principal amount of $303,782.33
and in
replacement of CFSI’s liability to Xx. Xxxxxxx for loans and advances
reflected on the balance sheet of CFSI, payable on or before
April 25,
2008, together with interest paid monthly at ten (10) percent
per annum
beginning the Closing
Date.
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(h)
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The promissory notes described in Section
2.03.
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(i)
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A
promissory note of HPTI in the principal amount of $303,782.33
and in
replacement of CFSI’s liability to Xx. Xxxxxxx for loans and advances
reflected on the balance sheet of CFSI, payable on or before
April 25,
2008, together with interest paid monthly at ten (10) percent
per annum
beginning the Closing
Date.
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Section
3.03. HPTI’s and
Xx. Xxxxxx’x deliveries at the Closing. At the Closing, HPTI and
Xx. Xxxxxx will deliver to Xx. Xxxxxxx:
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(a)
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One
million dollars ($1,000,000) by bank check or bank to bank wire
transfer,
in accordance with the instructions received from Xx. Xxxxxxx not
less
than two business days prior to the Closing Date;
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(b)
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A
guaranteed promissory note of HPTI having such characteristics
as defined
in Section 2.02(b).
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(c)
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A
convertible promissory note(s) of HPTI having such characteristics
as
defined in Section 2.02(c).
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(d)
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Common
stock of HPTI as provided in Section 2.02(d) registered in the
name of Xx.
Xxxxxxx, or at his election jointly with his spouse, provided the
election
together with the name and social security number of his spouse
is
delivered to HPTI not less than five business days prior to the
Closing.
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(e)
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Officers’
and Secretary’s Certificates of HPTI in the form set forth in Exhibits “A”
and “B”, respectively.
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(f)
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Employment
agreement for Xx. Xxxxxxx, including a “no competition” provision, in the
form of Exhibit “H.
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(g)
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A
copy of HPTI’s directors and stockholders’ actions which elects Xx.
Xxxxxxx as a director of HPTI.
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(h)
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Guaranty
of HPTI and of Xx. Xxxxxx of the guaranteed promissory note, together
with
a security and escrow agreement for the pledge by Xx. Xxxxxx of
two
million shares of HPTI common stock;
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(i)
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Guaranty
of HPTI of the convertible promissory note, and
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(j)
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Security
Agreement, together with such financing statement or statements
as
requested by Xx. Xxxxxxx.
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Section 3.04. Closing Memorandum and receipts. As
evidence that all parties deem the Closing to have been completed and the
transactions contemplated by this Agreement to have been consummated, the
parties jointly will execute and deliver a Closing Memorandum, in the form
of
Exhibit “C”, acknowledging such completion and consummation.
Section
3.06. Waiver of
conditions. Notwithstanding Section 12.03, any condition to the
Closing which is to the benefit of any party and which is not satisfied prior
to
or at the Closing will be deemed to be waived by the benefited party or
otherwise satisfied and waived by virtue of that party executing the Closing
Memorandum, except to the extent any such unsatisfied or unperformed condition
is expressly preserved by listing it in the Closing Memorandum for satisfaction
or performance after the Closing.
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Section
3.07. Further
assurances. At any time and from time to time after the Closing,
at the reasonable request of any party and without further consideration, any
other party(ies) shall execute and deliver such other instruments and documents
reasonably desirable or necessary to complete and confirm the transactions
contemplated by this Agreement.
Section
3.08. Conditions
precedent to HPTI’s obligation to Close. All
obligations of HPTI hereunder are subject, at the option of HPTI, to the
fulfillment of each of the following conditions at or prior to the Closing,
and
CFSI shall exert commercially reasonable efforts to cause each such conditions
to be so fulfilled:
(a) All
representations and
warranties of CFSI and of Xx. Xxxxxxx contained herein or in any document
delivered pursuant hereto shall be true and correct in all material respects
when made and shall be deemed to have been made again and given at and as of
the
date of the Closing of the transaction contemplated by this Agreement, and
shall
then be true and correct in all material respects, except for changes in the
ordinary course of business after the date hereof in conformity with the
representations, covenants and agreements contained herein.
(b) All
covenants,
agreements and obligations required by the terms of this Agreement to be
performed by CFSI and of Xx. Xxxxxxx at or before the Closing shall have been
duly and properly performed in all material respects to HPTI’s reasonable
satisfaction.
(c) Since
the date of this
Agreement there shall not have occurred any Material Adverse
Effect. The term “Material Adverse Effect” shall mean any
material adverse change in or the condition or prospects (financial or
otherwise), business, properties or assets of CFSI
(d) All
documents required
to be delivered to HPTI at or prior to the Closing shall have been so
delivered.
(e) The
transaction
contemplated by this Agreement shall have been approved in writing by CFSI’s
board of directors.
(f) CFSI
shall have not
suffered or incurred a material damage, destruction or loss not fully covered
by
insurance and which has a materially adverse affect on its business and
operations.
(g) HPTI
shall have received
a certificate of good standing for CFSI and each subsidiary issued by the
secretary of state of its state of organization and of each state in which
it
and its subsidiary is qualified or required to be qualified to do business
as a
foreign corporation.
(i) HPTI
shall have received
audited financial statements of CFSI for December 31, 2005 and 2006 and
unaudited financial statements for each of the interim quarterly periods ended
subsequent thereto, which interim quarterly period shall not show any materially
adverse results of operation when compared to 2006.
Section
3.09. Conditions
precedent to the CFSI obligation to Close. All obligations of
CFSI at the Closing are subject, at the option of CFSI, to the fulfillment
of
each of the following conditions at or prior to the Closing, and HPTI shall
exert its best efforts to cause each such condition to be so
fulfilled.
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(a) All
representations and
warranties of HPTI contained herein or in any document delivered pursuant hereto
shall be true and correct in all material respects when made and as of the
Closing.
(b) All
obligations required
by the terms of this Agreement to be performed by HPTI at or before the Closing
shall have been duly and properly performed in all material
respects.
(c) All
documents required
to be delivered to CFSI at or prior to the Closing shall have been so
delivered.
ARTICLE
IV
REPRESENTATIONS
AND WARRANTIES OF THE PARTIES
Section
4.01. Representations and warranties of CFSI and Xx.
Xxxxxxx. Each of CFSI and Xx. Xxxxxxx represent and warrant to
HPTI that each of the representations and warranties in this Article IV is
true
and accurate, except for inaccuracies of representations or warranties the
circumstances giving rise to which, individually or in the aggregate, do not
constitute and could not reasonably be expected to have a Material Adverse
Effect of the business, subject further only to such exceptions as are
specifically set forth in the CFSI Disclosure Schedules attached to this
Agreement (the “CFSI Disclosure Schedules” or “Schedules”), which schedule makes
reference to the applicable sections and subsections to which each exception
relates and sets forth sufficient details to identify the nature and scope
of
the matters disclosed; provided, however, that the disclosures in
any section or subsection of the CFSI Disclosure Schedule (and without having
to
refer to the underlying documents being disclosed) shall qualify other sections
or subsections of this Article IV to the extent such disclosure is applicable
to
such other sections or subsections:
(a) Each
of CFSI and its
subsidiary is a duly organized and an existing entity in good standing under
the
laws of its state of incorporation and has full corporate power to execute,
deliver and perform this Agreement.
(b) Each
of CFSI and its
subsidiary is qualified to do business and in good standing in each state and
jurisdiction in which the nature of its activities and ownership of property
require it to be qualified as a foreign corporation.
(c) All
licenses required
for the conduct of CFSI’s and of its subsidiary’s businesses in intra and
interstate commerce are in full force and effect, all such licenses being
transferable as contemplated in this transaction pursuant to this Agreement;
and, there is no proceeding of any nature pending or to the best knowledge
of
CFSI threatened which if determined adversely to CFSI would result in a
revocation, cancellation of or material limitation or restriction on CFSI and
the conduct of its business as it is presently conducted.
(d)
This Agreement has been duly and
validly authorized, executed and delivered by CFSI and constitutes the legal,
valid and binding obligation of CFSI enforceable against it, in accordance
with
its terms, subject, as to enforceability, to bankruptcy, insolvency,
reorganization and other laws of, relating to or affecting stockholders and
creditors rights generally and to general equitable principles.
(e) To
the best knowledge of
CFSI, the execution of this Agreement and consummation of the transactions
contemplated hereby does not conflict with and will not result in any adverse
consequences to or material breach of any agreement, mortgage,
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instrument,
judgment, decree, law or governmental regulation, license, permit or
authorization by CFSI or in the loss, forfeiture or waiver of any rights,
license, authorization or franchise owned by CFSI, from which CFSI benefits
or
which is desirable in the conduct of CFSI’s business.
(f) To
the knowledge of
CFSI, except for such actions as may have been taken, no further action by
or
before any governmental body or authority of the United States of America or
any
state or subdivision thereof or any self-regulatory body to which
CFSI is subject is required in connection with the execution and delivery of
this Agreement by CFSI and the consummation of the transactions contemplated
hereby.
(g) The information CFSI has delivered to HPTI relating to CFSI was,
to the best knowledge of CFSI, on the date reflected in each such item of
information accurate in all material respects and, to the knowledge of CFSI,
such information at the date hereof taken as a whole provides, to the best
knowledge of CFSI, full and fair disclosure of all material information relating
to CFSI and does not, to the knowledge of CFSI omit to state any material
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading.
(h) CFSI
has conducted its
business in the ordinary course for the last three years or since inception,
whichever is less.
(i)
Neither CFSI nor any employee, to
CFSI best knowledge, has since inception given or agreed to give any gift or
similar benefit valued at more than $20 annually to any customer, supplier,
governmental employee or other person who is or may be or have been in a
position to help or hinder CFSI’s business which might subject CFSI to damage or
penalty in civil, criminal or governmental litigation or
proceedings.
(j) CFSI’s
financial
statements delivered to HPTI have been prepared in accordance with generally
accepted accounting principles consistently applied and maintained throughout
the periods indicated, fairly present the financial condition of CFSI in all
material respects at the dates and the results of operations for the periods
indicated, contain all normally recurring adjustments and do not omit to
disclose any contingent, undisclosed or hidden liabilities. CFSI’s
financial records are maintained in accordance with good business
practice.
(k) CFSI
and
its subsidiary have good, marketable and insurable title in accordance with
CFSI’s existing practices to all of their respective properties and assets,
including intangible assets, if any, which either of them owns or uses in their
respective businesses or purport to own, including, without limitation, those
reflected in its books and records and in the balance sheet, both tangible
and
intangible None of the properties and assets are subject to any
mortgage, pledge, lien, charge, security interest, encumbrance, restriction,
lease, license, easement, liability or adverse claim of any nature whatsoever,
direct or indirect, whether accrued, absolute, contingent or otherwise, except
as expressly set forth in the notes to CFSI’s financial statements as securing
specific liabilities or subject to specific capital leases and have arisen
only
in the ordinary course of business. All of the properties and assets
owned, leased or used by CFSI and its subsidiary are in good operating condition
and repair, are suitable for the purposes used, are adequate and sufficient
for
all current operations of Business and Assets and are directly related to CFSI’s
business.
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(l) All
of the material
contracts, agreements, leases, licenses and commitments of CFSI and its
subsidiary (other than those which have been fully performed), copies of all
of
which have been delivered to HPTI, are valid and binding, enforceable in
accordance with their respective terms, in full force and effect and there
is
not there under with respect to any party thereto any existing default or event,
which after the giving of notice or lapse of time or both, would constitute
a
default or result in a right to accelerate or loss of rights and none of such
contracts, agreements, leases, licenses and commitments is, either when
considered singly or in the aggregate with others, unduly burdensome, onerous
or
materially adverse to CFSI’s or its subsidiary’s business, properties, assets,
earnings or prospects or either before or after the Closing, to result in any
material loss or liability.
(m) There
is no claim, legal
action, suit, arbitration, governmental investigation, or other legal or
administrative proceeding, nor any order, decree, judgment or judgment in
progress, pending or in effect or to CFSI’s knowledge threatened, against or
relating to CFSI and its subsidiary, their directors, officers or employees
with
respect to CFSI or its subsidiary’s business or for which CFSI or its subsidiary
may have an indemnity obligation, it properties, assets or business or the
transaction contemplated by this Agreement and CFSI does not know or have any
reason to be aware of any basis for the same, including any basis for a claim
of
sexual harassment or racial or age discrimination.
(n) All
taxes, including
without limitation, income, property, special assessments, sales, use,
franchise, intangibles, employees’ income withholding and social security taxes,
including employer’s contribution, other than those for which a return or
deposit is not yet due and have been disclosed to HPTI, imposed by the United
States or any state, municipality, subdivision, authority, which are due and
payable, and all interest and penalties thereon, unless disputed in good faith
in proper proceedings and reserved for or set aside, have been paid in full
and
all tax returns required to be filed in connection therewith have been
accurately prepared and timely filed and all deposits required by law to be
made
by CFSI with respect to employees’ withholding and social security taxes have
been made. CFSI is not and has no reason to believe that it will be
the subject of an audit by any taxing authority. There is not now in
force any extension of time with respect to the date when tax return was or
is
due to be filed, or any waiver or agreement by CFSI for the extension of time
for the assessment of any tax and CFSI is not a “consenting corporation” within
the meaning of Section 341(f)(1) of the Tax Code.
(o) CFSI
does not have any
employee benefit, pension or profit sharing plans subject to ERISA and no such
plans to which CFSI is obligated or required to make contributions.
(p) None
of CFSI’s employees
are represented by a collective bargaining agent or subject to a collective
bargaining agreement and CFSI considers its relations with its employees as
a
whole to be good. CFSI has disclosed to HPTI all employee salary,
compensation and benefit agreements and no employee has a written employment
agreement.
(q) No
person has guaranteed
any obligation of CFSI, and CFSI has not guaranteed the obligation of any other
person.
(r) CFSI
and its management
have no reason to believe or expect and do not believe or expect that any event
or events will occur which will result in the Business and Assets producing
results of operations which are materially different from CFSI’ recent
operations.
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Section
4.02. HPTI’s
representations and warranties. HPTI represents and warrants to
HPTI that:
(a) HPTI
is a duly
incorporated and existing corporation in good standing under the laws of its
state of incorporation and has full corporate power to execute and deliver
this
Agreement.
(b) This
Agreement has been
duly and validly authorized, executed and delivered by HPTI and constitutes
the
legal, valid and binding obligation of HPTI, enforceable against HPTI in
accordance with its terms subject, as to enforceability, to bankruptcy,
insolvency, reorganization and other laws of, relating to or affecting
shareholders and creditors rights generally and to general equitable
principles.
(c) Except
for such actions
as may have been taken, no further action by or before any governmental body
or
authority of the United States of America or any state thereof is required
in
connection with the execution and delivery of this Agreement by HPTI and the
consummation of the transactions contemplated hereby.
(d) The
information HPTI
have delivered to CFSI was on the date reflected in each such item of
information accurate in all material respects and such information at the date
hereof as a whole did not contain any untrue statement of material fact or
omit
to state any material fact necessary to make the statements therein, in light
of
the circumstances under which they were made, not misleading.
(e) HPTI
acknowledge that
CFSI has given them access to CFSI’s books, records and facilities and that at
the date hereof they are satisfied with the due diligence examination which
they
have made and their Closing of the transaction contemplated by this Agreement
shall be evidence that they remain satisfied therewith and have completed their
due diligence examination to their satisfaction.
(f) The
information and
financial statements included in HPTI’s registration statement and reports filed
under the Securities Exchange Act of 1934, as amended, on the date reflected
in
each element of information and financial statements are accurate in all
material respects and, to the knowledge of HPTI, such information at the date
hereof taken as a whole provides, to the best knowledge of HPTI, full and fair
disclosure of all material information relating to CFSI and does not, to the
knowledge of HPTI omit to state any material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
Section
4.03. Nature and
survival of representation and warranties; Remedies. All
statements of fact contained in this Agreement, any certificate delivered
pursuant to this Agreement, or any letter, document or other instrument
delivered by or on behalf of CFSI or of HPTI, and their respective officers,
pursuant to the terms of this Agreement shall be deemed representations and
warranties made by CFSI or by HPTI, respectively, as the case may be, to each
other under this Agreement. For purposes of this Section 4.03 and
Section 11.01 only, any party or other person seeking to enforce, or claiming
the benefit of, any representation and warranty under this Agreement is called
a
Claimant, and any party or other person against whom a right is claimed is
called a Defendant. All representations and warranties of the parties
shall survive the Closing; provided, however, that all representations and
warranties shall terminate and expire, and be without further force and effect
whatever from and after the one year from the date hereof, and
neither HPTI, or CFSI shall have any liability whatsoever on account
of any inaccurate representation or
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warranty
or for any breach of warranty, unless a Claimant shall, on or prior to the
expiration of such one year period, serve written notice on a Defendant, with
a
copy to the Defendant’s counsel, setting forth in reasonable detail the breach
and any direct, incidental or consequential damages (including amounts) the
Claimant may have suffered as a result of such breach.
Section
4.04 Limitation
of Liability. CFSI and Xx. Xxxxxxx, individually, shall not have
any liability pursuant to Section 4.03 unless and until the aggregate amount
of
such losses exceeds $100,000 (the “Basket”) (whereupon only such losses in
excess of the Basket will be recoverable). In no event will CFSI’s or
Xx. Xxxxxxx’x aggregate liability for losses under Section 4.03 be exceed
$750,000 (the “Cap”).
ARTICLE
V
COVENANTS
OF THE PARTIES
Section
5.01. Conduct of
business prior to Closing.
(a)
From the date hereof to the
Closing, CFSI will conduct its business and affairs only in the ordinary course
and consistent with its prior practice and shall maintain, keep and preserve
its
assets and properties in good condition and repair and maintain insurance
thereon in accordance with present practices, it will use its best efforts
(i)
to preserve its business and organization intact, (ii) to keep available to
HPTI
the services of CFSI’s present employees, agents and independent
contractors, (iii) to preserve for the benefit of HTPI the goodwill of
suppliers, customers, distributors, landlords and others having business
relations with it, and (iv) to cooperate and use reasonable efforts to obtain
the consent of any landlord or other party to any lease or contract with CFSI
where the consent of such landlord or other party may be required by reason
of
the transactions contemplated hereby.
(b) From
the date hereof to
the Closing, CFSI shall not outside the ordinary course of business (i) dispose
of any material assets, (ii) engage in any extraordinary transactions without
HPTI’s prior approval, including but not limited to, directly or indirectly,
soliciting, entertaining, encouraging inquiries or proposals or entering into
negotiation or agreement with any third party for sale of assets by CFSI, sale
of equity securities or merger, consolidation or combination with any company,
(iii) grant any salary or compensation increase to any employee, or (iv) make
any commitment for capital expenditures, other than as disclosed to HPTI and
approved by it.
Section
5.02. Notice of
changes in information. Each party shall give the other party
prompt written notice of any change in any of the information contained in
their
respective representations and warranties made in Article IV, or elsewhere
in
this Agreement, or the exhibits and schedules referred to herein or any written
statements made or given in connection herewith which occurs prior to the
Closing.
Section
5.03. Notice of
extraordinary changes. CFSI shall advise HPTI with respect to any
of the following events outside of ordinary course of business and which are
materially adverse: (i) the entering into and cancellation or breach
of contracts, agreements, licenses, commitments or other understandings or
arrangements to which CFSI is a party, including, without limitation, purchase
orders for any item of inventory and commitments for capital expenditures or
improvements, (ii) any changes in purchasing, pricing or selling policy, or,
any
changes in its sales, business or employee relations in
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general,
and (iii) the filing or commencement of any litigation or governmental or agency
proceedings against CFSI.
Section
5.04. Action to
preserve CFSI’s business and assets. Notwithstanding
anything contained in this Agreement to the contrary, CFSI will not take or
fail
to take any action that, in CFSI’s reasonable judgment, is likely to give rise
to a substantial penalty or a claim for damages by any third party against
CFSI,
or is likely to result in losses, or is otherwise likely to prejudice in any
material respect or unduly interfere with the conduct of its business and
operations in the ordinary course consistent with prior practice, or is likely
to result in a breach by CFSI of any of its representations, warranties or
covenants contained in this Agreement (unless any such breach is first waived
in
writing by HPTI).
Section
5.05. Access to
information and documents. Upon reasonable notice and during
regular business hours, CFSI will give to HPTI, its attorneys, accountants
and
other representatives full access to its personnel (subject to reasonable
approval as to the time thereof) and all properties, documents, contracts,
books
and records and will furnish copies of such documents (certified by officers,
if
so requested) and with such information with respect to its business,
operations, affairs and prospects (financial and otherwise) as it may from
time
to time request, and the party to whom the information is provided will not
improperly disclose the same prior to the Closing. CFSI will afford
HPTI an opportunity to ask questions and receive answers thereto in furtherance
of their due diligence. Any such furnishing of such information or
any investigation shall not affect that party’s right to rely on the other
party’s representations and warranties made in this Agreement or in connection
herewith or pursuant hereto.
Section
5.06. Confidential treatment of information. The
provisions of Exhibit “D” shall be binding upon the parties.
Section
5.07. Cooperation
by the parties. Each party hereto shall cooperate and shall take
such further action as may be reasonably requested by any other party in order
to carry out the provisions and purposes of this Agreement. CFSI
shall cooperate with HPTI, and their independent public accountant, the cost
of
which shall be the responsibility of HPTI, with respect to an audit of CFSI’s
financial statements and review of interim, stub period financial statements
required to enable HPTI to file a registration statement pursuant to the
Securities Act of 1933, as amended. This covenant shall survive the
Closing.
ARTICLE
VII
FEDERAL
INCOME TAX MATTERS
Section
7.01. Federal
income tax treatment. Each party shall be responsible for
obtaining his, her or its own tax advice with respect to and understanding
the
federal income tax consequences of the transactions and the federal income
tax
consequences thereof contemplated by this Agreement and waives any reliance
with
respect thereto on any other party.
ARTICLE
VIII
SECURITIES
LAW MATTERS AND STATUS OF SHARES
Section
8.01. Unregistered shares. HPTI’s common stock delivered to
Xx. Xxxxxxx is not being registered under the Securities Act of 1933, as
amended, (“1933 Act”) and the securities laws of Michigan or any other state of
jurisdiction, and the shares are not transferable, except as permitted under
various exemptions contained in the 1933 Act
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and
applicable state securities law. The provisions contained in the
following sections are intended to ensure compliance with the 1933 Act and
applicable state securities law.
Section
8.02. No
transfers in violation of 1933 Act. Xx. Xxxxxxx will agree at
Closing not to offer, sell, assign, pledge, hypothecate, transfer or otherwise
dispose of HPTI’s shares, except after full compliance with all of the
applicable provisions of the 1933 Act and applicable state securities
law.
Section
8.03. Investment
intent. Xx. Xxxxxxx will represent and warrant to and covenant
with HPTI that he is acquiring HPTI’s shares for his own respective accounts for
investment and not with a view to resale or other distribution; that it
currently has no intention of selling, assigning, transferring, pledging,
hypothecating or otherwise disposing of all or any part thereof at any
particular time, for any particular price, or on the happening of any particular
event or circumstance; and it acknowledges that HPTI is relying on the truth
and
accuracy of the covenants, warranties and representations of CFSI and its
designees in issuing its shares without first registering it under the 1933
Act.
Section
8.04. Investment
legend on certificates. Xx. Xxxxxxx will further agree that the
certificates evidencing HPTI’s shares shall contain the following
legend:
THIS
SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND IS A
“RESTRICTED SECURITY” AS DEFINED UNDER SAID ACT. ACCORDINGLY, NEITHER
THIS SECURITY NOR ANY INTEREST THEREIN MAY BE SOLD, OFFERED FOR SALE, ASSIGNED,
TRANSFERRED, PLEDGED OR HYPOTHECATED, EXCEPT BY BONA FIDE GIFT OR INHERITANCE,
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS SECURITY UNDER
SAID ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER THAT SUCH
REGISTRATION IS NOT REQUIRED.
ARTICLE
IX
TERMINATION
PRIOR TO CLOSING
Section
9.01. Termination
for default. HPTI may, by notice to CFSI given in the manner
provided below on or at any time prior to the Closing Date, terminate this
Agreement if default shall be made by CFSI in the observance or in the due
and
timely performance of any of any material covenants and agreements contained,
made by or imposed upon it, in this Agreement, if the default has not been
fully
cured within fifteen days after receipt of the notice specifying the
default.
Section
9.02. Termination
for failure to Close. If the Closing does not occur on or before
the date provided in Section 3.01, any party, if that party is not then in
default in the observance or in the due or timely performance of any covenants
and conditions under this Agreement, may at any time terminate this Agreement
by
giving written notice to the other parties; provided, that the parties may
extend the Closing date in writing.
Section
9.03. Termination
for loss of bargain. HPTI may, at its option, terminate this
Agreement prior to the Closing if (i) in completion of its due diligence
examination of Business and Assets, it discovers the existence of a material,
adverse variance from its due diligence examination prior to the date of this
Agreement, or (ii) the business or assets of Business and assets have suffered
any material damage, destruction or loss (whether or not covered by insurance),
or (iii) CFSI is prevented by order of court or administrative action from
consummating the transactions contemplated by this Agreement, whether or not
CFSI has exhausted its appeals.
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ARTICLE
X
NOTICES
Section
10.01. Procedure
for giving notices. Any and all notices or other communications
required or permitted to be given under any of the provisions of this Agreement
shall be in writing and shall be deemed to have been duly given when personally
delivered (excluding telephone facsimile and including receipted express courier
and overnight delivery service) or mailed by first class certified U.S. mail,
return receipt requested showing name of recipient, addressed to the proper
party.
Section
10.02. Addresses
for notices. For purposes of sending notices under this Agreement, the
addresses of the parties are as follows:
As
to CFSI and Xx.
Xxxxxxx:
Xxxxxxx Xxxxxxx, Xx., President
Xxxxxx
Freight Systems, Inc.
00000
Xxxxx X. Xxx Xxxxxxxxx
Xxxxxxxx
Xxxxxxxx, XX 00000
Copy
to:
Xxxxxxx X. Xxxxxxxx
Xxxxx
Xxxx PLC
Third
Floor
000
X.
Xxx Xxxxxxxx Xxxxxx
Xxxxxxxxxx,
Xxxxxxxx 00000
As
to
HPTI:
Xxxx X. Xxxxxx, President
Suite
192
0000
Xxxxxxxx Xxxxx Xxxxxxxxx
Xxxxxxxxx,
XX 00000
Copy
to: Xxxxxxx
X. Xxxxxx, Esq.
0000
Xxxx
Xxxxx X Xxxxxx
Xxxxx,
Xxxxxxx 00000-0000
Section
10.03. Change of
address. A party may change its address for notices by sending a
notice of such change to all other parties by the means provided in Section
10.01.
ARTICLE
XI
LEGAL
AND OTHER COSTS
Section
11.01. Party
entitled to recover. In the event that any party (the “Defaulting
Party”) defaults in his or its obligation under this Agreement and, as a result
thereof, the other party (the “Non-Defaulting Party”) seeks to legally enforce
his or its rights hereunder against the Defaulting Party (whether in an action
at law, in equity or in arbitration), then, in addition to all damages and
other
remedies to which the Non-Defaulting Party is entitled by reason of such
default, the Defaulting Party shall promptly pay to the Non-Defaulting Party
an
amount equal to all costs and expenses (including reasonable attorneys’ fees and
expert witness fees) paid or incurred by the Non-Defaulting Party in connection
with such enforcement.
Section
11.02. Interest. In the event the Non-Defaulting
Party is entitled to receive an amount of money by reason of the Defaulting
Party’s default hereunder, then, in a
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dition
to
such amount of money, the Defaulting Party shall promptly pay to the
Non-Defaulting Party a sum equal to interest on such amount of money accruing
at
the rate of 1.5% per month during the period between the date such payment
should have been made hereunder and the date of the actual payments
thereof.
ARTICLE
XII
MISCELLANEOUS
Section
12.01. Effective
date. The effective date of this Agreement shall for all purposes
be the date set forth in first paragraph hereof notwithstanding a later actual
date of execution by any individual party.
Section
12.02. Entire
agreement. This writing constitutes the entire agreement of the
parties with respect to the subject matter hereof, superseding all prior
agreements, understandings, representations and warranties.
Section
12.03. Waivers. No waiver of any provision,
requirement, obligation, condition, breach or default hereunder, or consent
to
any departure from the provisions hereof, shall be considered valid unless
in
writing and signed by the party giving such waiver, and no such waiver shall
be
deemed a waiver of any subsequent breach or default of the same or similar
nature.
Section
12.04. Amendments. This Agreement may not be
modified, amended or terminated except by a written agreement specifically
referring to this Agreement signed by all of the parties hereto and amendment,
modification or alteration of, addition to or termination of this Agreement
or
any provision of this Agreement shall not be effective unless it is made in
writing and signed by the parties.
Section
12.05. Construction. This Agreement has been
negotiated by the parties, section by section, and no provision hereof shall
be
construed more strictly against one party than against the another party by
reason of such party having drafted such provision. The order in
which the provisions of this Agreement appear are solely for convenience of
organization; and later appearing provisions shall not be construed to control
earlier appearing provisions.
Section
12.06. Invalidity. It is the intent of the parties
that each provision of this Agreement shall be interpreted in such a manner
as
to be effective and valid under applicable law. If any provision
hereof shall be prohibited, invalid, illegal or unenforceable, in any respect,
under applicable law, such provision shall be ineffective to the extent of
such
prohibition, invalidity or non enforceability only, without invalidating the
remainder of such provision or the remaining provisions of this Agreement;
and,
there shall be substituted in place of such prohibited, invalid, illegal or
unenforceable provision a provision which nearly as practicable carries out
the
intent of the parties with respect thereto and which is not prohibited and
is
valid, legal and enforceable.
Section
12.07. Multiple
counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be an original and, taken together, shall
be
deemed one and the same instrument.
Section
12.08. Assignment, parties and binding effect. This
Agreement, and the duties and obligations of any party shall not be assigned
without the prior written consent of the other party(ies). This
Agreement shall benefit solely the named parties and no other person shall
claim, directly or indirectly, benefit hereunder, express or implied, as
a
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third-party
beneficiary, or otherwise. Wherever in this Agreement a party is
named or referred to, the successors (including heirs and personal
representative of individual parties) and permitted assigns of such party shall
be deemed to be included, and all agreements, promises, covenants and
stipulations in this Agreement shall be binding upon and inure to the benefit
of
their respective successors and permitted assigns.
Section
12.09. Survival
of representations and warranties. The representations and
warranties made herein shall survive the execution and delivery of this
Agreement and full performance hereunder of the obligations of the representing
and warranting party, subject to the provisions of Section 4.03.
Section
12.10. Jurisdiction and venue. Any action or
proceeding for enforcement of this Agreement and the instruments and documents
executed and delivered in connection herewith which is determined by a court
of
competent jurisdiction not, as a matter of law, which seeks injunctive relief
shall be brought and enforced in the courts of the State of Michigan in and
for
Oakland County, Michigan, and the parties irrevocably submit to the jurisdiction
of each such court in respect of any such action or proceeding.
Section
12.11. Applicable
law. This Agreement and all amendments thereof shall be governed
by and construed in accordance with the law of the State of Michigan applicable
to contracts made and to be performed therein (not including the choice of
law
rules thereof).
IN
WITNESS WHEREOF, the parties hereto
have caused this agreement to be signed by their respective officers thereunto
duly authorized and their respective corporate seals to be hereunto affixed,
the
day and year first above written.
|
[Corporate
Seal]
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||
|
Attest:
|
By:
|
/s/ Xxxx
X. Xxxxxx
|
|
|
Xxxx
X. Xxxxxx, President
|
|
|
/s/ Xxxx
X. Xxxxxx, Secretary
|
||
|
[Corporate
Seal]
|
Xxxxxx
Freight Systems, Inc.
|
|
|
Attest:
|
By:
|
/s/ Xxxxxxx
Xxxxxxx, Xx.
|
|
|
Xxxxxxx
Xxxxxxx, Xx., President
|
|
|
/s/
Xxxxxx
Xxxxxxx
|
||
| Xxxxxx Xxxxxxx, Secretary |
/s/ Xxxxxxx
Xxxxxxx, Xx.
|
|
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Xxxxxxx
Xxxxxxx, Xx.
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