STOCK SALE AGREEMENT
THIS STOCK SALE AGREEMENT ("AGREEMENT") entered into this 11th day of
September, 1996, by and between CONSOLIDATED FINANCIAL MANAGEMENT, INC., an
Arizona Corporation, ("CFM"), Seller and U.S. TRANSPORTATION SYSTEMS, INC., a
Nevada Corporation (hereinafter to referred to as "USTS") as Buyer.
R E C I T A L S
A. WHEREAS, CFM owns One Hundred Thousand (100,000) shares of Common stock
in the entity known as BANCPRO-TRANSPORTATION, INC., an Arizona corporation,
(hereinafter referred to as the "COMPANY");
B. WHEREAS, USTS desires to purchase all of the One Hundred Thousand Shares
of the COMPANY known as BANCPRO-TRANSPORTATION, INC.
C. WHEREAS, CFM desires to sell all its shares of Common stock it owns in
the COMPANY, in the manner hereinafter set forth.
NOW, THEREFORE, in consideration of the premises contained above, the
covenants and promises contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. Incorporations. Recitals A through C are incorporated herein as though
fully set forth herein.
2. Purchase Price and Sale of Shares of Stock. The purchase
price for the one Hundred Thousand shares of Common stock owned by CFM
shall be:
A. USTS Common Stock: Three Hundred Thousand (300,000) shares of
USTS Common Stock to be issued to CFM and shall be registered with the
SEC within ninety (90) days of the Closing date.
B. Promissory Note: USTS shall issue a Promissory Note (the
"Note") in favor of CMF for the sum of One Million One Hundred Fifty
Thousand ($1,150,000) dollars. (Said Note is attached hereto and
incorporated herein as Exhibit ("A"). The Note shall become fully due
and payable on September 11, 1998. In connection with the Note, the
following instruments shall be executed and delivered by the
respective parties thereto at closing:
(i). As additional security the COMPANY shall execute a
Guarantee, fully guaranteeing the performance of USTS'
obligations under the Note, in the form and content attached
hereto and incorporated herein as Exhibit "B";
(ii). Furthermore, the COMPANY shall execute a Security
Agreement and UCC-1 Financing Statement in which it shall pledge
all assets of the COMPANY and all future assets of the COMPANY as
collateral for performance of the Guarantee and the Promissory
Note, in the form and content attached Hereto and incorporated
herein as Exhibits "C" and "D";
(iii). Furthermore, CFM, USTS and the COMPANY shall execute
a Consulting Agreement in which CFM agrees to act as a consultant
to USTS and the COMPANY, the form and content as attached hereto
and incorporated herein as Exhibit "E".
3. Closing. The closing ("CLOSING") shall take place on September 10th,
1996 at CONSOLIDATED FINANCIAL MANAGEMENT, INC. offices located at
0000 X. Xxxxxx Xxxx, Xxxxx #000, Xxxxxxxxxx,
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Xxxxxxx 00000; so long as all of the terms and conditions of this
AGREEMENT have been satisfied.
4. Representations and Warranties of CFM. CFM represents and warrants to
USTS, as follows:
4.1 Ownership of Shares: CFM is the sole and beneficial holder of
the One Hundred Thousand (100,000) shares, free and clear of any liens
or encumbrances. There are no agreements, arrangements or
understandings to which CFM is a party by which any of the shares are
bound with respect to the acquisition, disposition, voting or pledging
of the shares.
4.2 Approval of AGREEMENT. The execution and delivery of this
AGREEMENT has been authorized and approved where necessary by the
current Shareholders of the COMPANY and current Board of Directors of
the COMPANY and CFM, pursuant to the resolutions of the Shareholders
of the COMPANY, the Board of Directors of CFM, and the Board of
Directors of the COMPANY, the forms of which are hereby attached and
incorporated as Exhibits "F", "G", and "H".
4.3 Capitalization. The authorized capital stock of the COMPANY
consists of One Hundred Thousand (100,000) shares of Common Voting
Stock, no par value, all of which are issued and outstanding. The
100,000 shares represent (100%) percent of the issued and outstanding
shares. All such shares were duly and validly authorized and issued
and are fully paid and nonassessable.
4.4 Financial Statements. The financial statements provided by
CFM to USTS listed as Exhibit "I", are true and
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correct. CFM warrants that the assets transferred into the COMPANY are
One Million Two Hundred Seventy Two Thousand Three Hundred Ninety Four
and 42/100*** ($1,272,394.42) Dollars worth of accounts receivables
formerly owned by CFM. Furthermore, all accounts receivables that have
been transferred were duly owned solely by CFM prior to being
transferred to the COMPANY. Furthermore, the accounts receivable and
all other assets transferred by CFM to the COMPANY are free and clear
of any liens or encumbrances. Attached hereto as Exhibit "J" are all
of the accounts receivables that are currently owned by the COMPANY.
Furthermore, attached hereto as Exhibit "K" is a listing of all of the
personal property owned by the COMPANY.
4.5 Collectability of Receivables. CFM warrants the
collectibility of One Million Two Hundred Fifty Thousand ($1,250,000)
of the accounts receivables listed in Exhibit "J" are one hundred
(100%) percent collectible. CFM shall reimburse to the COMPANY and/or
USTS the dollar amount in excess of Twenty Two Thousand Three Hundred
Ninety Four and 442/100*****($22,394.42) of any of the listed
receivables that become deemed uncollectible. For purposes of this
section, a listed receivable shall be deemed "uncollectible" if it is
not collected by August 14, 1998.
The COMPANY shall notify CFM by August 15, 1998, of any of the accounts
receivables that is deemed uncollectible pursuant to this section 4.5. CFM shall
have until August 31, 1998 to reimburse to the COMPANY the "uncollectible"
accounts receivables. If CFM does not reimburse the COMPANY or USTS by August
31, 1998, then USTS
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shall have the right to deduct the dollar amount of the amount deemed
"uncollectible" from the Promissory Note referenced herein. Furthermore, once
the receivable is either reimbursed to the COMPANY or USTS by CFM, or the
receivable is deducted from the amount of the Promissory Note referenced herein,
then said receivable shall become the property of CFM.
4.6 Payables. CFM warrants that it is responsible and shall
continue to pay the rental company payables incurred prior to
September 1st, 1996 as such amounts become due and payable. The
balance of the rental company's payables as of September 1, 1996 is
Two Hundred Eighty Nine Thousand Six Hundred Fifty Dollars 53/100****
($289,650.53). If the COMPANY and/or USTS pays an obligation of CFM as
provided in this section 4.6 then the COMPANY and/or USTS shall give
CFM written notice for CFM to reimburse the amount paid within 30 days
of the notice to either the COMPANY and/or USTS. If CFM fails to cure
within the thirty (30) day period, then the amount paid by the COMPANY
and/or USTS shall bear interest at the rate of ten (10%) percent per
annum from the date of the notice to CFM until paid. If CFM has not
reimbursed the COMPANY and/or USTS within the 30 day period, USTS
shall have the option to offset the amount it or the COMPANY has paid
against the amount USTS owes on the Promissory Note referenced herein
A listing of the payables are attached hereto and incorporated herein
as Exhibit "L".
4.7 Tax Returns and Audits. The COMPANY was formed on June 27,
1996. Therefore, the COMPANY has not been required to
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file or caused to be filed any tax returns and tax reports to any
State or Federal agency. However, in the event that there is a
determination by any Federal or State taxing authority that there is
income tax or state sales tax or any other tax obligations due by the
COMPANY pertaining to any actions of the COMPANY prior to September 1,
1996, CFM shall indemnify and hold harmless the COMPANY of any such
federal or state tax obligations of the COMPANY.
4.8 Non-Litigation. The COMPANY is not involved in any suit or
legal proceeding. Furthermore, CFM is not aware of any threatened suit
or legal proceeding against the COMPANY.
4.9 Real and Personal Property-Leased/Liened. Set forth on
Exhibit "M" hereto is a description of each lease and lien under which
the COMPANY is the lessee or debtor of any real or personal property.
CFM has delivered to USTS a true correct and complete copy of each
lease or lien identified on Exhibit "M". The premises or property
described in such leases are presently occupied or used by CFM or the
COMPANY as lessee. All rentals or other payments due under such leases
have been paid and there exists no default under the terms of such
leases and no event has occurred which, upon passage of time or the
giving of notice, or both, would result in any event of default or
prevent CFM or the COMPANY from exercising and obtaining the benefits
of such leases or any options or rights contained therein. CFM or the
COMPANY has all right, title and interest of the lessee under the
terms of such leases, free of all liens, restrictions, encumbrances or
rights of
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others of any kind and all such leases are valid and in full force and
effect. There will be no default or basis for termination under any
such lease and no consent of any lessor is required as a result of the
transactions contemplated by this AGREEMENT.
4.10 Arizona and Nevada Requirements. The COMPANY is currently
authorized to do business in the States of Arizona and Nevada as
evidenced by the certificate of good standing from the State of
Arizona attached hereto and incorporated herein as Exhibit "N" and the
corporate qualification certificate from the State of Nevada attached
hereto and incorporated herein as Exhibit "O".
4.11 Authority of CFM. CFM has the full, right, power and
authority to execute this AGREEMENT and any attachments hereto.
5. Representations and warranties of USTS. USTS represents and
warrants to CFM as follows:
5.1 Approval of AGREEMENT. The execution and delivery of this
AGREEMENT has been authorized and approved the Board of Directors of
USTS, the form of which is hereby attached and incorporated as Exhibit
"P" USTS has the right, power, legal capacity, and authority to enter
into, and perform their obligations under this AGREEMENT, and no
approval or consent of any persons other than USTS is necessary in
connection therewith.
5.2 Agreement-Permissible. Neither the execution nor delivery of
this AGREEMENT by USTS nor the performance of any of its obligations
hereunder, will result in a breach or violation of any term or
provision of or constitute a default under any indenture, mortgage or
other agreement or instrument to which USTS
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is a party or by which it is bound.
5.3 Authorization. USTS has the right, power, legal capacity, and
authority to enter into, and perform its obligations under this
AGREEMENT, and no approvals or consents of any persons other than USTS
is necessary in connection therewith.
6. Conditions to USTS's Obligations. All obligations of USTS under
this AGREEMENT are subject to the fulfillment as of the CLOSING date of
each of the following conditions:
6.1 Representations and Warranties. The warranties and
representations made by CFM herein shall be true and correct in all
material respects at the Closing date.
6.2 Performance. Each of the obligations of CFM to be performed
on or before the CLOSING date pursuant to the terms of this AGREEMENT
shall have been duly performed, and USTS shall not have discovered any
material error, misstatement or omission in the representations and
warranties made by them.
6.3 Execution of Attachments. All exhibits to this AGREEMENT have
been duly executed by all parties required for each exhibit.
6.4 Litigation. No suit of any kind shall have been commenced
against the COMPANY or CFM challenging the transactions provided for
under this AGREEMENT shall have been commenced.
7. Conditions to CFM's Obligations. All obligations of CFM under this
AGREEMENT are subject to the fulfillment as of the CLOSING date of each of
the following conditions:
7.1 Representations and Warranties. The warranties
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and representations made by USTS herein shall be true and correct in
all material respects at the CLOSING date.
7.2 Performance. Each of the obligations of USTS to be performed
on or before the CLOSING date pursuant to the terms of this AGREEMENT
shall have been duly performed, and CFM shall not have discovered any
material error, misstatement or omission in the representations and
warranties made by them.
7.3 Execution of Attachments. All exhibits to this AGREEMENT have
been duly executed by all parties required for each exhibit.
7.4 Litigation. No suit or proceeding challenging the
transactions provided for under this AGREEMENT shall have been
commenced.
8. Indemnification.
8.1 USTS shall indemnify and hold harmless CFM against any loss,
damage or expense (including court costs and reasonable attorney's
fees), (collectively "Damages"), suffered by CFM resulting from:
(a) any breach by USTS of this AGREEMENT; and
(b) any inaccuracy in or breach of any representations,
warranties or covenants made herein or in any documents,
certificates or exhibits delivered in accordance with the
provisions of the AGREEMENT by USTS; and
(c) any claim made by a third party alleging facts which, if
true, would entitle CFM to indemnification pursuant to 8(a) or
8(b) above.
8.2 CFM shall indemnify and hold harmless USTS against any loss,
damage or expense (including court costs and reasonable attorney's
fees), (collectively "Damages"), suffered by USTS
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resulting from:
(a) any breach by CFM of this AGREEMENT; and
(b) any inaccuracy in or breach of any representations,
warranties or covenants made herein or in any documents,
certificates or exhibits delivered in accordance with the
provisions of the AGREEMENT by CFM; and
(c) any claim made by a third party alleging facts which, if
true, would entitle USTS to indemnification pursuant to 8(a) or
8(b) above.
8.3 Right to Defend Etc. Within fifteen (15) days after the
written assertion against an indemnified party by a third person of a
claim or liability which would entitle the indemnified party to
damages, the indemnified party shall give written notice of the claim
to the party obligated to indemnify it ("INDEMNIFYING PARTY"). Failure
to give such notice, or delay materially prejudicial to the interests
of the INDEMNIFYING PARTY, shall relieve the INDEMNIFYING PARTY of any
obligation of indemnification with respect to such claim or liability.
Upon receipt of timely notice, the INDEMNIFYING PARTY shall undertake
the responsibility for the defense of such claim, at its own expense.
If, within fifteen (15) days after delivery of the notice of claim by
the indemnified party, the INDEMNIFYING PARTY fails to advise the
indemnified party of its agreement to contest and defend against any
such claim, or if the INDEMNIFYING PARTY does not participate in such
litigation, proceedings, or settlement negotiations, for any reason,
then the indemnified party shall have the right, at the INDEMNIFYING
PARTY's expense, to take such action as it deems appropriate to
defend, contest, settle, or compromise any such claim or liability,
and the INDEMNIFYING PARTY agrees to be bound
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by any and all rulings, judgments, compromises, and settlements
reached by the indemnified party in good faith, in the same manner as
if it had participated therein.
8.4 Payment. Each INDEMNIFYING PARTY agrees to reimburse each
Indemnified party within thirty (30) days after presentation of an
itemized statement of damages incurred by such indemnified party. In
computing the amount of damages due to an Indemnified party under this
Section 8, aggregate amount due shall be reduced by:
(a) any resultant net economic benefit inuring to the Indemnified
party, as determined by the independent Certified Public
Accountants of the Indemnified party; and
(b) the proceeds of any recoveries actually received by the
Indemnified party and not assigned to the INDEMNIFYING PARTY.
9. Termination and Abandonment.
9.1 Mutual Agreement. This AGREEMENT may be terminated and
abandoned at any time prior to the CLOSING date by the mutual written
consent of both parties.
9.2 Failure of CFM's Conditions. This AGREEMENT may be terminated
by USTS if at the CLOSING date the conditions set forth in Section 6
of this AGREEMENT shall not have been met by CFM or waived by USTS.
9.3 Failure of USTS's Conditions. This AGREEMENT may be
terminated by CFM if at the CLOSING date the conditions set forth in
Section 6 of this AGREEMENT shall not have been met by USTS or waived
by CFM.
10. Non-Compete.
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10.1 Non--Competition by CFM and its Directors. CFM and the
following of its Directors, XX Xxxxxx, Xxxxxxxx Xxxxxxxx, Xxxx Xxxxxx
and C. Xxxxxxx Xxxxxxxx, III, agree that they shall not, either
directly or indirectly, carry on or engage in, or have any interest in
any person, firm, corporation or business (whether as an owner,
shareholder (except for less than two percent (2%) of any listed
company traded on the Public Stock Exchange), member, trustee,
security holder, consultant, employee, agent, officer, director,
partner or other participant) that engages in any business activity
which is the same as, or similar to or in competition with the
activity of the COMPANY or any successor as then conducted within any
metropolitan area in which the COMPANY or any successor then does
business for a ten (10) year period subsequent to the Closing date of
this AGREEMENT. To the extent the language of the covenants may
restrict competition to a greater degree than that permitted by such
applicable law, that portion thereof shall be ineffective but the
provisions of the covenants shall nevertheless remain effective with
respect to such portions thereof as shall be permitted by such
applicable law. Attached hereto and incorporated herein as Exhibit
"Q", is the Acknowledgement of Directors of the terms and conditions
that they are bound by pursuant to this section 10.1.
11. Authorization of Use of the Tradename "BANCPRO". USTS acknowledges
that CFM and its parent company, BANCPRO, Inc., are the registered owners
of the tradename BANCPRO. USTS acknowledges that CFM and its parent
company, BANCPRO Inc., have given their
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consent to the COMPANY to include the tradename BANCPRO in the COMPANY'S
corporate name and to use such tradename in all operational activities of
the COMPANY. USTS acknowledges that this AGREEMENT does not give to it or
any other entity it has an ownership interest in any right, title or
interest in the tradename BANCPRO other than the use of "BANCPRO" by the
COMPANY. USTS agrees that it or any other entity it has an ownership
interest in shall not use the tradename BANCPRO in the formation or
creation of any entity or any other use USTS may desire without the express
written consent of CFM and BANCPRO, Inc.
A. USTS acknowledges that its, or any other entity it has an ownership
interest in, unauthorized use of the tradename, "BANCPRO" will have a
materially adverse effect on CFM/BANCPRO, Inc. for which damages may
be difficult to ascertain. USTS thereby agrees that in addition to and
not in lieu of any other rights or remedies that CFM/BANCPRO, Inc. may
have, CFM and/or its parent company BANCPRO, Inc. shall have a right
to an immediate injunction enjoining any such use.
12. Miscellaneous Provisions.
12.1 Entire Agreement and Waiver. This AGREEMENT contains the
entire agreement between the parties hereto and supersedes all prior
and contemporaneous agreements, arrangements, negotiations and
understandings between the parties hereto, relating to the subject
matter hereof. There are no other understandings, statements, promises
or inducements, oral or otherwise, contrary to the terms of this
AGREEMENT. No supplement, modification, or amendment of any term,
provision or condition of this AGREEMENT shall be binding unless
executed in writing by all parties. No waiver of any term, provision,
or condition of this
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AGREEMENT whether by conduct or otherwise, in any one or more
instances, shall be deemed to be, or shall constitute, a waiver of any
other provision hereof, whether or not similar, nor shall such waiver
constitute a continuing waiver, and no waiver shall be binding unless
executed in writing by the party making the waiver.
12.2 Exhibits. All exhibits attached hereto and referred to
herein are an integral part of this AGREEMENT and are incorporated
herein by reference hereby.
12.3 Representations and Warranties. Each or the representations
and warranties contained in this AGREEMENT, in any attachment hereto,
or any certificate delivered in connection herewith, shall be
considered a material warranty and representation which was made as a
substantial inducement to the execution of this AGREEMENT and any
breach of any such representation and warranty shall be considered a
material breach of this AGREEMENT.
12.4 Survival of Representations Warranties, and Covenants. All
statements contained in any exhibit, document, certificate or other
instrument delivered by or on behalf of any party hereto in connection
with the transactions contemplated hereby shall be deemed to be
representations and warranties made pursuant to this AGREEMENT by such
party. The representations, warranties, covenants and agreements
contained in this AGREEMENT shall survive the CLOSING of the
transactions that are the subject matter of this AGREEMENT and any
investigation made by any party or such party's representative shall
not constitute a waiver thereof
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and no such representation, warranty, covenant or agreement shall be
merged into any document or instrument executed or delivered in
connection with this AGREEMENT.
12.5 Interpretations and Definitions. The parties agree that each
party and its counsel have reviewed and revised this AGREEMENT and
that any rule of construction to the effect that ambiguities are to be
resolved against the drafting party shall not apply in the
interpretation of this AGREEMENT. In this AGREEMENT whenever the
context so requires, the gender includes the neuter, feminine and
masculine and the number includes the singular and the plural and the
words "person" and "party" include an individual, corporation,
partnership, firm, trust or association.
12.6 Headings. The subject headings of articles, sections and
paragraphs in this AGREEMENT are included solely for purposes of
convenience and reference only, and shall not be deemed to explain,
modify, limit, amplify, or aid in the meaning, construction or
interpretation of any of the provisions of this AGREEMENT.
12.7 Relationships. Nothing contained in this AGREEMENT shall be
deemed or construed by the parties or by any third person to create
the relationship of principal and agent or of partnership or of joint
venture or any association between or among the parties hereto.
12.8 Parties in Interest. Nothing in this AGREEMENT whether
expressed or implied, is intended to confer any rights or remedies
under or by reason of this AGREEMENT on any persons other
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than the parties to it and their respective heirs, representatives,
successors and permitted assigns, nor is anything in this AGREEMENT
intended to relieve or discharge the obligations or liabilities of any
third persons to any party to this AGREEMENT, nor shall any provision
hereof give any third persons any right of subrogation against or
action over against any party to this AGREEMENT.
12.9 Governing Law. It is the intention of the parties that the
internal laws, and not the laws of conflicts, of the State of Arizona
shall govern the validity of this AGREEMENT, the construction of its
terms and the interpretation of the rights and duties of the parties.
12.10 Remedies Not Exclusive and Waiver. No remedy conferred by
any of the specific provisions of this AGREEMENT is intended to be
exclusive of any other remedy and each and every remedy shall be
cumulative and shall be in addition to every other remedy given
hereunder of now or hereafter existing at law or in equity or by
statute or otherwise. The election of any one or more remedies shall
not constitute a waiver of the right to pursue other available
remedies.
12.11 Attorneys' Fees. In any action at law or in equity to
enforce any of the provisions or rights under this AGREEMENT, the
unsuccessful party to such litigation, as determined by the Court in a
final judgment or decree, shall pay the prevailing party or parties
all costs, expenses and reasonable attorneys' fees incurred herein by
such party or parties (including without limitation such costs,
expenses and fees on any appeal),
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and if such prevailing party shall recover judgment in any such action
or proceeding, such costs, expenses and attorneys' fees shall be
included in as part of such judgment
12.12 Notices. All notices, requests, demands or other
communications ("notices") under this AGREEMENT shall be in writing
and shall be either delivered personally to the party to whom notice
is to be given, mailed by a reputable overnight courier service or
mailed in the United States mail, first class, postage prepaid,
registered or certified, return receipt requested and properly
addressed as follows:
(a) If to CFM, (SELLERS):
XX Xxxxxx, President
Consolidated Financial Management, Inc.
0000 X. Xxxxxx Xxxx, Xxxxx #000
Xxxxxxxxxx, Xxxxxxx 00000
(b) If to USTS, (BUYERS):
Xxxx Margolios, President
U.S. Transportation Systems, Inc.
00 Xxxx Xxxx Xxxxxx, #000
Xxxxxxxx , Xxx Xxxx 00000
Any notice which is personally delivered shall be deemed to be given upon
the date of delivery. Any notice which is mailed by a reputable overnight
courier service shall be deemed to be given on the day following deposit with
such overnight courier service. Any notice which is mailed shall be deemed to be
given three days after the deposit of same into the United States mail, as above
provided. Any person named above may change the address to which notices are
sent to it by giving written notice thereof to all other persons referred to
above in the manner provided above.
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12.13 Time is of the Essence of this AGREEMENT. Time is of the
essence of this AGREEMENT. This AGREEMENT shall be binding upon the
heirs, personal representatives, executors, administrators,
successors, and assigns of the respective parties hereto.
12.14 Severability. Should any part, term or provision of this
Agreement or any document required herein to be executed be declared
invalid, void or unenforceable, all remaining parts, terms and
provisions hereof shall remain in full force and effect and shall in
no way be invalidated, impaired or affected thereby.
12.15 Counterparts. This AGREEMENT may be executed in one or more
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, said parties have hereunto set their hands and seals
the day and year above written.
CONSOLIDATED FINANCIAL MANAGEMENT INC
/s/XX XXXXXX
---------------------------------
BY: XX XXXXXX, President
U.S. TRANSPORTATION SYSTEMS, INC
/s/ XXXXX X XXXXXXX
---------------------------------
BY: XXXXX X XXXXXXX, Executive
Vice President/CFO
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