EXHIBIT 10.01
CARGO CONNECTION LOGISTICS HOLDING, INC.
600 Bayview Avenue
Inwood, New York 11096
Telephone: 516-239-7000
Fax: 516-239-2508
August 29, 2007
Mr. Mack Fulmer
c/o Fleet Global Services, Inc.
119 Gatlin Avenue
Orlando, Florida 32806
Dear Mr. Fulmer:
This sets forth the terms on which Cargo Connection Logistics Holding,
Inc., a Florida corporation ("Cargo") will acquire all of the issued and
outstanding shares of capital stock of Fleet Global Services, Inc., a Florida
corporation ("Fleet") (such purchase being referred to herein as the
"Transaction"). Cargo intends to close the Transaction as soon as practicable.
Cargo and Fleet are sometimes individually referred to herein as a "Party" or
are collectively referred to as the "Parties".
1. Purchase Price. Cargo will purchase all of the issued and outstanding
capital stock of Fleet for an aggregate purchase price consisting of the
following (the "Purchase Price"): (a) $1,000,000 in cash (the "Cash Component"),
(b) 270,000,000 shares of common stock of Cargo (the "Common Stock"), and (c)
such number of shares of Common Stock, valued at the closing price per share of
the Common Stock on the Closing Date of the Transaction, as equals ten percent
(10%) of the net earnings before interest, taxes, depreciation and amortization
("EBITDA") of Fleet's business for the two (2) years ending on the first and
second anniversary of the closing of the Transaction (the "Earn Out Payment"),
up to a maximum number of shares equal to one-third of the outstanding shares of
the Common Stock as of the Closing Date (the "Stock Component"), provided, that
Cargo may elect to issue shares of preferred stock of Cargo bearing
substantially the same rights, powers and preferences as shares of Common Stock,
as the Stock Component issued within 120 days thereafter based on financial
information maintained by Cargo. Fleet understands and agrees that any Common
Stock issued pursuant to this Transaction may be subject to a "lock-up" period
reasonably acceptable to Cargo, and Fleet shall execute and deliver all such
definitive documentation representing such lock-up agreement as may be
reasonably required by Cargo.
2. Due Diligence. Consummation of the Transaction is contingent upon
Cargo's completing, and being satisfied with the results of, a due
diligence review of Fleet. The purpose of such a review is to provide Cargo with
information with regard to the business, operations and financial condition (the
"Business") of Fleet. To assist Cargo in conducting this review, Fleet will
provide, or cause to be provided, all information with respect to itself as
Cargo may reasonably request and/or as is customary in this kind of transaction,
including audited year-end and unaudited
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internally-prepared interim financial statements. In addition, Fleet's
auditors, counsel, officers and directors and other agents or representatives
will be made available to discuss with Cargo at reasonable times any aspect of
Fleet's Business or the Transaction which Cargo may deem relevant.
3. Conditions. Consummation of the Transaction is subject to the
following conditions:
(a) the execution of mutually acceptable definitive documentation
that contains such representations, warranties, covenants and
other terms as are customary, which definitive documentation the
Parties agree to use their best efforts to negotiate, execute and
consummate by September 30, 2007 or, if practicable, any earlier
date;
(b) approval of the Transaction by the board of directors of Cargo
and the board of directors and shareholders of Fleet;
(c) the consent to the Transaction and the granting of any waivers by
any necessary third parties;
(d) receipt by Cargo from the accountants of Fleet of a report
indicating that there are no material weaknesses with respect to
the internal controls of Fleet;
(e) the absence of material adverse change in the Business of Fleet
since the date hereof;
(f) the absence of any pending or threatened litigation which would
prevent the closing of the Transaction or materially adversely
affect the Business of either Party;
(g) the receipt by Cargo of financial statements and/or other
information requested by Cargo, including certified audit
workpapers as may be available to Fleet, that sufficiently
demonstrates the financial condition of Fleet, including its
earnings and cash flow;
(h) compliance with the requirements of paragraph 8 below;
(i) the purchase of all the issued and outstanding capital stock of
Fleet by MF prior to the closing of the Transaction;
(j) the closing of a financing transaction by Cargo of an aggregate
amount of at least $1,500,000;
(k) the forgiveness of all intercompany debt of Fleet to Fulmer
Logistics Corporation ("Fulmer") and its affiliates (in the
amount of $2,743,663 as of July 31, 2007), or any replacement
thereof;
(l) settlement of the pending litigation between Cargo Connection
Logistics, Inc. and Fleet for the amount of $56,000, payable by
Fleet or its stockholders to Cargo out of the proceeds of the
Cash Component;
(m) receipt by Cargo of audited financial statements of Fleet for the
fiscal years ended December 31, 2006 and 2005, and all additional
information required to be filed by Cargo with the SEC;
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(n) the execution and delivery of the employment agreements referred
to in paragraph 9; and
(o) MF to be granted one (1) seat on the Board of Directors of Cargo.
4. Expenses. Whether or not the Transaction is completed, each Party
will bear its own expenses relating to the Transaction, including without
limitation its legal representation and accounting fees incurred in connection
herewith and the Transaction.
5. Brokers. Each Party hereto agrees to indemnify and hold harmless the
other from and against and in respect to any claim for finders fees or brokerage
claims relating to the Transaction or the consummation thereof, based in any way
on agreements, arrangements or understandings claimed to have been made by the
indemnifying party with any third party.
6. Confidentiality.
(a) Neither the Parties, Fulmer Logistics Corporation, nor any of
their respective directors, officers, employees, members,
partners, representatives, subsidiaries, affiliates, agents and
advisors shall disclose or use, and each of them shall direct its
representatives not to disclose or use, any Confidential
Information (as defined below) with respect to the other Party or
the Transaction in any manner other than in connection with the
evaluation of the Transaction. For purposes of this paragraph,
"Confidential Information" means any information about the
Parties, whether or not marked "confidential" or identified as
such by either of the Parties; provided that it does not include
information that is (i) or becomes generally available to or
known by the public other than as a result of improper disclosure
by a Party, (ii) obtained by a Party from a source other than the
other Party, which is not bound by a duty of confidentiality, or
(iii) required to be disclosed by law, rule, regulation or
judicial process. If the Transaction is abandoned or is not
otherwise consummated, then each Party shall either destroy or
return any Confidential Information received from the other Party
promptly upon request.
(b) Neither the Party that receives Confidential Information (a
"Recipient") nor its directors, officers, employees, members,
partners, representatives, subsidiaries, affiliates, agents and
advisors ("Representatives"), will disclose to any person the
existence of this Agreement, the fact that any investigations,
discussions or negotiations are taking place between the parties
concerning the Transaction or any of the terms, conditions or
other facts with respect to any such Transaction, including the
status thereof, except if required by law or in connection with
financing activities. Recipient agrees to be responsible for any
breach of this Agreement by its Representatives. The term
"person" as used in this Agreement will be interpreted broadly to
include, without limitation, any corporation, company,
governmental agency or body, entity, partnership, group or
individual.
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(c) The Confidential Information will be used by Recipient solely
for the purpose of evaluating the Transaction. Except for the
limited right to use as set forth in the immediately preceding
sentence, no right or license of any kind, either express or
implied, under any mask work, patent, copyright, trade secret or
Confidential Information is granted hereunder. Information
furnished by a Party shall remain the exclusive property of such
Party. Each Party shall own all right, title and interest in and
to all methods, compounds, ideas and technology (including all
intellectual property rights therein) derived or developed by or
on behalf of Recipient from Confidential Information disclosed by
such Party.
7. No Shop. Fleet agrees that it will not, and it will not permit its
representatives, including officers, directors, stockholders or agents, to
negotiate directly or indirectly with or furnish any information relating to any
potential acquisition, merger or a sale of Fleet or Fleet's business or assets
to any party other than Cargo until the earlier of: (a) ninety (90) days after
the date hereof or (b) the termination by either Party in writing of the
negotiations relating to the Transaction.
8. Conduct Until Closing. Fleet agrees that during the period from the
date hereof through the Closing Date: (a) its business will be operated only in
the ordinary course, (b) it will not dispose of any of its assets used in
connection with its Business other than in the ordinary course of business and
(c) it will not make any distribution or any other payment to its security
holders (except as contemplated hereby), officers, directors or its or their
affiliates, other than salary and management fees paid in the ordinary course of
business consistent with past practice, unless with prior written consent of
Cargo.
9. Employees. Fleet agrees to use its reasonable commercial efforts to
retain for the benefit of Cargo all employees necessary to Fleet's operations.
In connection with the closing of the Transaction, Cargo shall enter into
employment agreements with the following persons ("Key Employees") for a minimum
of two (2) years and on other terms reasonably acceptable to Cargo, which shall
include non competition covenants for the term thereof plus an additional two
years: (a) MF at an annual salary of $200,000.00 and (b) Cassandra Everett at an
annual salary of $100,000.00.
10. Miscellaneous. This Agreement may be executed in counterparts, each of
which shall be deemed an original and all of which shall constitute one and the
same instrument. This Agreement shall be interpreted under the laws of the State
of New York, without regard to its conflicts of law principles. The parties
hereto irrevocably and unconditionally consent to the exclusive jurisdiction of
the courts of the State of New York with respect to any dispute relating hereto.
If the above accurately sets forth our understanding with respect to
the proposed Transaction, please sign where indicated below.
[THIS SPACE IS LEFT BLANK INTENTIONALLY. SIGNATURE PAGE FOLLOWS]
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CARGO CONNECTION LOGISTICS
HOLDING, INC.
By: /s/ Jesse Dobrinsky
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Name: Jesse Dobrinsky
Title: President
Accepted and agreed as of
the date first above written:
FLEET GLOBAL SERVICES, INC.
By: /s/ Mack Fulmer
-----------------------------
Name: Mack Fulmer
Title: President
/s/ Mack Fulmer
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Mack Fulmer
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