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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 anyaction (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
