Exhibit 10(m)
FORM OF PURCHASE AND CONTRIBUTION AGREEMENT
This PURCHASE AND CONTRIBUTION AGREEMENT, dated as of April 28, 2004 (the
"Agreement") by and between Logistics Managements Resources, Inc., a publicly
owned Colorado corporation ("Logistics") and Y2 Ultra-Filter, Inc., a Wyoming
corporation ("Y2").
WHEREAS, pursuant to the terms and conditions set forth within this
Agreement, Y2 desires to irrevocably transfer to Logistics the exclusive
manufacturing rights of all of Y2's "gaming filters" in exchange for Logistics
common stock and options to purchase additional shares of Logistics' common
stock (the "Transaction") following the Closing, as that terms is defined
herein.
NOW THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants, agreements and conditions hereinafter
set forth, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties hereto, the parties,
intending to be legally bound, hereby agree as follows:
ARTICLE I
PURCHASE AND SALE; CONTRIBUTION; MERGER; CLOSING
Purchase and Sale of Rights. Subject to and upon the terms and conditions of
this Agreement, at the closing of the transactions contemplated by this
Agreement (the "Closing"), Y2 shall sell, transfer, convey, assign and deliver
to the Company, and the Company shall purchase from Y2 all of Y2's right, title
and interest in the exclusive, irrevocable, worldwide, marketing, distribution
and sales rights (the "Rights") of all of Y2's filters installed in licensed,
gaming facilities (the "Filters"). The Rights to the Filters are covered in Y2
patent numbers 5,368,635 as filed with the United States Patent and Trademark
Office ("USPTO"), and issued by the USPTO November 29, 1994; patent 5,540,761
issued by the USPTO July 30, 1996; patent 5,647,890 issued by the USPTO July 15,
1997; and patent 5,855,653 issued by the USPTO January 5, 1999.
Purchase Price. Subject to and upon the terms and conditions of this Agreement,
at the Closing, in consideration for the Rights, the Company shall sell, assign,
transfer, convey and deliver:
Twenty-Seven Million (27,000,000)newly issued shares of the Company's common
stock, no par value per share (the "Common Stock") (the "Acquisition Shares");
and A number of options to purchase an additional Nineteen Million (19,000,000)
shares of Common Stock exercisable five (5) years after the Closing, at an
exercise price of $.20 per share (the "Exercise Price") and subject to reduction
as set forth herein (the "Options"). For each One Million Dollars ($1,000,000)
in annual sales generated by sales of gaming filters manufactured pursuant to
the Rights within thirty-six (36) months of the Closing, the Exercise Price of
the options shall be reduced by one cent. Under no circumstances will the
Exercise Price be less than zero.
Allocation of Revenues. Y2 and Logistics covenant and agree that Y2 shall
manage the day-to-day manufacture, sale and other operations of the Filters set
forth in the Rights. All revenues associated with the sale of the Filters shall
be posted to, collected by and be assets of Logistics and Logistics shall
deliver to Y2 fifty percent (50%) of all net revenues (gross revenues less cost
of goods sold) to ▇▇ (▇▇▇ "Revenue Consideration"). The Revenue Consideration
payments shall be made to Y2 by Logistics thirty (30) days after the end of each
quarter.
Incentive Consideration.
a. Y2 Incentive Consideration. (i) Upon the collection of an amount of
$100,000 in net revenues from the Filters, Logistics shall deliver Eight Million
(8,000,000) newly-issued shares of the Company's Common Stock; and (ii) Y2
represents that the net annualized sales associated with the manufacturing
distribution and sale of the Filters (the "Net Sales") may equal or exceed
$24,000,000 within thirty-six months of the Closing (the "Minimum Revenues").
Commencing on the third anniversary of the Closing, for each $1,000,000 that Net
Annualized Sales exceed the Minimum Revenues on a quarterly basis, Logistics
shall issue an option to Y2 to purchase One Million (1,000,000) shares of
Logistics' Common Stock at an exercise price equal to the closing bid price of
the Common Stock on the date of issuance of such option. Under no circumstances
will the Company be required to issue more than Twenty Million (20,000,000)
additional options, under the terms set forth within this Section 1.4(a).; and
b. Midwest Incentive Consideration. If Net Annualized Sales equal or
exceed $100,000,000 during any quarter within the fifth anniversary of the
Closing, Y2 shall have the right to call a number of shares of capital stock
equal to fifty percent (50%) of the issued and outstanding preferred stock of
Logistics held by Midwest Merger Management, LLC, a Kentucky limited liability
company ("Midwest") at a price to be determined by an appraiser or other actuary
located within the State of Kentucky within sixty (60) days of the notice of
Y2's call.
Assumption of Liabilities. As a material inducement to Y2 for transferring,
selling and otherwise assigning the Rights to Logistics, The ▇▇▇▇ Grandchildren
Trust, a trust organized under the laws of the State of Kentucky, a principal
shareholder and affiliate of the Company (the "Trust"), and hereby agrees to
indemnify and hold Y2 harmless from any and all liabilities of Logistics as
exist or the date of Closing.
Closing. The Closing and the delivery of the Acquisition Shares and the Options
shall occur two (2) days after the approval of a proposal to amend Logistics'
articles of incorporation to change the name of Logistics to Affiliated Business
Corporation and to increase the number of common stock Logistics is authorized
to issue to 500,000,000 shares.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF Y2
Except as specifically set forth in the Y2 Disclosure Schedule delivered to
Logistics, Y2 represents and warrants to Logistics that all of the statements
contained in this Article II are true and complete as of the date of this
Agreement (or, if made as of a specified date, as of such date), and will be
true and complete as of the Closing Date as though made on the Closing Date.
2.1 Organization; Qualification of Y2. Y2 (a) is a corporation duly
organized, validly existing and in good standing under the laws of the state of
Wyoming; (b) has all required Permits and full corporate power and authority to
carry on its business as it is now being conducted and to own the properties and
assets it now owns; and (c) is duly qualified to do business as a foreign
corporation and is in good standing in every jurisdiction in which ownership of
property or the conduct of its business requires such qualification or, if Y2 is
not so qualified in any such jurisdiction, it can become so qualified in such
jurisdiction without causing a Y2 Material Adverse Effect. Y2 has heretofore
delivered to Logistics complete and correct copies of the certificate of
incorporation and by-laws of Y2 as presently in effect.
2.2 Subsidiaries and Affiliates. Schedule 2.2 hereof, sets forth, as
of the date hereof, the name and jurisdiction of incorporation of each Y2
Subsidiary and, as of the date hereof, the approximate percent of the
outstanding shares of each Y2 Subsidiary owned by Y2 and as of the date hereof,
each other entity of which, as of the date hereof, Y2 has a direct or indirect
equity ownership interest. Each Y2 Subsidiary (a) is a corporation or limited
liability company duly organized or formed, validly existing and in good
standing under the laws of its state of incorporation; (b) has all required
Permits and full corporate or limited liability company power and authority to
carry on its business as it is now being conducted and to own the properties and
assets it now owns; and (c) is duly qualified to do business as a foreign
corporation or limited liability company in good standing in every jurisdiction
in which ownership of property or the conduct of its business requires such
qualification or, if a Y2 Subsidiary is not so qualified in any such
jurisdiction, it can become so qualified in such jurisdiction without causing a
Y2 Material Adverse Effect. Y2 has heretofore made available to Logistics
complete and correct copies of the Organizational Documents, of each Y2
Subsidiary, as presently in effect.
2.3 Capitalization.
a. The authorized capital stock of Y2 consists of (i) 25,000,000
shares of common stock of which 4,589,999 are treasury stock, par value $0.001
per share (the "Y2 Common Stock"), of which, as of the date hereof,
approximately 13,000,000 shares were issued and outstanding, all of which are
duly authorized, validly issued, fully paid and non-assessable and were not
issued in violation of any preemptive or similar rights of any Person and
(ii) 0 shares of preferred stock, are issued and outstanding.
b. As of the date hereof, (i) there are no securities outstanding
which are convertible into or exercisable or exchangeable for shares of capital
stock of Y2, and (ii) there are no outstanding options, rights, Contracts,
warrants, subscriptions, conversion rights or other agreements or commitments
pursuant to which Y2 may be required to purchase, redeem, issue or sell any
shares of capital stock or other securities of Y2 which would affect Y2's right,
title and interest or ability to transfer the Rights.
c. The issued and outstanding shares of capital stock of, or other
equity interests in, each of the Y2 Subsidiaries that are owned by Y2 or any of
its Subsidiaries have been duly authorized and are validly issued, and, with
respect to capital stock, are fully paid and non-assessable, and were not issued
in violation of any preemptive or similar rights of any Person. All such issued
and outstanding shares or other equity interests that are indicated as owned by
Y2 or one of the Y2 Subsidiaries in Schedule 2.2 are owned beneficially by Y2 or
such Subsidiaries as set forth therein and free and clear of all Liens.
2.4 Authorization of Agreement. Y2 has all requisite corporate power
and authority to execute and deliver this Agreement and each instrument required
hereby to be executed and delivered by it at the Closing, to perform its
obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby. The Board of Directors of Y2 has approved the
Transaction. The execution and delivery by Y2 of this Agreement and each
instrument required hereby to be executed and delivered by them at the Closing
and the performance of its obligations hereunder and thereunder have been duly
and validly authorized by all requisite corporate action on the part of Y2. This
Agreement has been duly executed and delivered by Y2 and, assuming due
authorization, execution and delivery hereof, constitutes the legal, valid and
binding obligation of Y2, enforceable against Y2 in accordance with its terms,
subject to bankruptcy, insolvency, reorganization, moratorium or similar Laws
now or hereafter in effect relating to creditors' rights generally or to general
principles of equity.
2.5 Consents and Approvals; No Violations. None of the execution,
delivery or performance of this Agreement by Y2, or the consummation by Y2 of
any of the transactions contemplated hereby, will (i) conflict with or result in
any breach of any provision of the Organizational Documents of Y2 or any Y2
Subsidiary, (ii) require any Consent of any Governmental Entity, (iii) require
any Consent of any other Person (including consents from parties to loans,
Contracts, leases and other agreements to which Y2 or any affiliate of Y2 is a
party), (iv) result in a violation or breach of, or constitute (with or without
due notice or the passage of time or both) a default (or give rise to any right
of termination, amendment, cancellation or acceleration) under, any of the
terms, conditions or provisions of any Contract, or (v) violate any Law, Order
or Permit applicable to Y2 or any affiliate of Y2 or any of their properties or
assets, excluding from the foregoing clauses (iii), (iv) and (v) such absences
of required consents, violations, breaches or defaults which would not,
individually or in the aggregate, have a Y2 Material Adverse Effect or adversely
affect the Buyers' ability to consummate the Transaction.
2.6 Financial Statements. Y2 commenced operations in September, 1993.
As a condition precedent to the Closing, Y2 shall furnish to the Company
financial statements for the year ended December 31, 2003 (the "Financial
Statements"). The Financial Statements and the notes thereto: (i) shall be
prepared in accordance with generally accepted accounting principles; (ii)
present fairly, in all material respects, the financial position, results of
operations and changes in financial position of the Company as of such dates and
for the period then ended; (iii) are complete, current and in accordance with
the books of account and records of the Company (iv) are reconciled with the
financial statements and the financial records maintained and the accounting
methods applied by the Company for federal income tax purposes; and (v) contain
all entries recommended by the Purchaser's accountants.
2.7 Absence of Certain Changes or Events. December 31, 2003 the
business of Y2 and its Subsidiaries has been carried on only in the ordinary and
usual course consistent with past practice and (ii) there has not occurred any
event, development or change which, individually or in the aggregate, has
resulted in or is reasonably likely to result in a Y2 Material Adverse Effect.
2.8 Litigation. There is no Litigation pending, or to the Knowledge of
Y2, threatened, against or involving Y2 or any Y2 Subsidiary or any of their
respective assets as to which there is a reasonable possibility of an adverse
determination and that, if determined adversely to Y2 or any Y2 Subsidiary,
would reasonably be expected, individually or in the aggregate, to have a Y2
Material Adverse Effect or, as of the date hereof, which in any way may prevent,
enjoin, alter or delay the Transaction.
2.9 Compliance with Laws. Y2 is and since September 1993 has been in
compliance with all applicable Laws, except for violations which do not, and
would not reasonably be expected to have, individually or in the aggregate, a Y2
Material Adverse Effect. Since January , 2004, neither Y2 nor any Y2 Subsidiary
has received any notice or other communication (whether written or oral) from
any Person regarding any actual, alleged, possible or potential violation of or
failure to comply with any Law, except for violations which do not, and would
not reasonably be expected to have, individually or in the aggregate, a Y2
Material Adverse Effect.
2.10 Environmental Matters. Except as is not reasonably likely to result
in a Y2 Material Adverse Effect:
a. Y2: (i) has been and is in compliance with all applicable
Environmental Laws; (ii) has obtained all Permits required for the operation of
its businesses by any applicable Environmental Law (collectively "Environmental
Permits") and all such Environmental Permits are in full force and in effect, no
appeal nor any other action is pending to revoke any such Environmental Permit;
and (iii) is in compliance with all such Environmental Permits, and has filed in
a timely manner all applications to renew such Environmental Permits or to
obtain new Environmental Permits to the extent such applications are currently
required.
b. There has been no Release of any Hazardous Material that would
reasonably be likely to form the basis of any Environmental Claim against Y2 at
the properties owned or leased by ▇▇ (▇▇▇ "Y2 Properties"). To the Knowledge of
Y2, Y2 Properties are not adversely affected by any Release or threatened
Release of a Hazardous Material originating or emanating from any other
property. There were no Releases of Hazardous Materials on properties formerly
owned or operated by Y2, or any predecessors thereof, during the period of such
operation or ownership, that would reasonably be likely to result in an
Environmental Claim against Y2.
c. Y2 has not manufactured, used, generated, stored, treated,
transported, disposed of, released, or otherwise managed any Hazardous Material
at any of the Y2 Properties.
d. Y2 does not have any liability for response or corrective action
for natural resources damage, or any other harm pursuant to any Environmental
Law, (ii) is not subject to, or has Knowledge of, any Environmental Claim
involving Y2, or (iii) does not have any Knowledge of any condition or
occurrence at any of the Y2 Properties which could form the basis of an
Environmental Claim against Y2, or any of the Y2 Properties.
e. The Y2 Properties are not subject to any, Y2 does not have any
Knowledge of any, imminent restriction on the ownership, occupancy, use or
transferability of the Y2 Properties in connection with any (i) Environmental
Law or (ii) Release or threatened Release of any Hazardous Material.
f. There are no conditions or circumstances at the Y2 Properties
that pose a risk to the environment or the health and safety of any Person, or
would require any remedial action.
g. Y2 has not been subject to any inquiry or request for
information related to its disposal, treatment, storage or recycling, or the
arrangement for said activities, of any Hazardous Material or waste, at any
property other than the Y2 Properties.
h. To the Knowledge of Y2, neither Y2 nor any predecessor thereto
has disposed, recycled, treated, stored, or arranged for said activities, at any
property that is listed or proposed for listing on the Federal National
Priorities List, the Federal CERCLIS list, or any list compiled pursuant to
state statutes or Laws that are analogous to the Federal Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C. 9601 et seq.
i. The Y2 Properties do not contain any underground storage tanks,
landfills, electrical equipment containing polychlorinated biphenyls, surface
impoundments, friable asbestos-containing materials, or hazardous waste
treatment, storage or disposal units that either have or require a Permit
pursuant to any Law.
j. Y2 has not received any communications (written or oral) that
alleges that Y2 is not in compliance with any Environmental Law.
k. As used in this Agreement:
(1) "Environmental Claim" means any investigation, notice of
violation, demand, allegation, action, suit, Order, consent decree, penalty,
fine, Lien, proceeding or claim (whether administrative, judicial or private in
nature) arising: (i) pursuant to, or in connection with, an actual or alleged
violation of any Environmental Law; (ii) in connection with any Hazardous
Material or actual or alleged activity associated with any Hazardous Material;
(iii) from any abatement, removal, remedial, corrective or other response action
in connection with any Hazardous Material, Environmental Law or Order; or (iv)
from any actual or alleged damage, injury, threat or harm to health, safety,
natural resources or the environment.
(2) "Environmental Law" means any Law pertaining to: (i) the
protection of health, safety and the indoor or outdoor environment; (ii) the
conservation, management or use of natural resources and wildlife; (iii) the
protection or use of surface water and ground water; (iv) the management,
manufacture, possession, presence, use, generation, transportation, treatment,
storage, disposal, release, threatened release, abatement, removal, remediation
or handling of, or exposure to, any Hazardous Material; or (v) pollution
(including any release to air, land, surface water and ground water); and
includes the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, 42 U.S.C. 9601 et seq., and the Solid Waste Disposal Act, 42
U.S.C. 6901 et seq., the Hazardous Materials Transportation Act, 49 U.S.C.
5101, et seq. The Clean Water Act, 33 U.S.C. 1251 et seq., the Clean Air Act,
42 U.S.C. 7401 et seq., the Toxic Substances Control Act, 15 U.S.C. 2601 et
seq., the Emergency Planning and Community Right to Know Act, 42 U.S.C. 1986,
the Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. 136 et seq.,
the Occupational Safety and Health Act, 29 U.S.C. 651 et seq., any similar
state laws and the regulations related thereto or other Laws.
(3) "Hazardous Material" shall mean any substance, chemical,
compound, product, solid, gas, liquid, waste, by-product, pollutant, contaminant
or material which is hazardous or toxic, and includes asbestos or any substance
containing asbestos, polychlorinated biphenyls, petroleum (including crude oil
or any fraction thereof), and any hazardous or toxic waste, material or
substance regulated under any Environmental Law.
(4) "Release" means any release, spill, emission, leak,
injection, deposit, disposal, discharge, dispersal, leaching, or migration into
the atmosphere, soil, surface water, groundwater or property (indoors or
outdoors).
2.11 Intellectual Property.
a. To the Knowledge of Y2, Y2 owns or otherwise has valid rights to
use all Intellectual Property (as defined in Section 3.11(a)), specifically
including, but not limited to, the Rights and all other Intellectual Property,
material to Y2's business and operations as currently conducted.
b. There is no pending or, to the Knowledge of Y2, threatened (in
writing) claim, suit, arbitration or other adversarial proceeding (collectively,
"Claims") before any court, agency, arbitral tribunal, or registration authority
in any jurisdiction (i) involving any item of material Intellectual Property
owned by ▇▇, (▇▇) alleging that the activities or the conduct of Y2's business
does or will infringe upon, violate or constitute the unauthorized use of the
intellectual property rights of any third party or (iii) challenging the
ownership, use, validity, enforceability or registrability of any material
Intellectual Property by Y2. There are no settlements, forbearances to ▇▇▇,
consents, judgments, or orders or similar obligations (other than license
agreements in the ordinary course of business) which (a) restrict Y2's rights to
use any material Intellectual Property, (b) restrict Y2's business in order to
accommodate a third party's intellectual property rights or (c) permit third
parties to use any Intellectual Property owned by Y2, except for such Claims as
have not resulted, and could not reasonably be expected to result, in a Y2
Material Adverse Effect.
c. To the Knowledge of Y2, no third party is making unauthorized
use of or infringing in any material respect upon any material Intellectual
Property owned by Y2.
d. Y2 has taken commercially reasonable actions to protect each
item of material Intellectual Property owned by any of them, except where the
failure to take such actions has not resulted and could not reasonably be
expected to result in a Y2 Material Adverse Effect.
e. Y2 is not in material violation of any agreement relating to any
Intellectual Property material to its business or operations, except for such
violations as have not resulted, and could not reasonably be expected to result,
in a Y2 Material Adverse Effect. The consummation of the transactions
contemplated hereby will not result in the loss or material impairment of Y2's
rights to own or use any Intellectual Property material to its business or
operations, except where such loss or impairment could not reasonably be
expected to result in a Y2 Material Adverse Effect.
2.12 ERISA Compliance.
a. For purposes of this Agreement, the following terms shall have
the following meanings:
(1) "Employee Benefit Plan" means any "employee pension
benefit plan" (as defined in Section 3(2) of ERISA), any "employee welfare
benefit plan" (as defined in Section 3(1) of ERISA), and any other written or
oral plan, agreement or arrangement (excluding agreements with individual
employees) involving compensation, including without limitation insurance
coverage, severance benefits, disability benefits, deferred compensation,
bonuses, stock options, stock purchase, phantom stock, stock appreciation or
other forms of incentive compensation or post-retirement compensation maintained
or contributed to by the Company, or any ERISA Affiliate with respect to present
or former employees of Y2 or any Company Subsidiary.
(2) "ERISA" means the Employee Retirement Income Security Act
of 1974, as amended.
(3) "ERISA Affiliate" means any entity which is, or at any
applicable time was, a member of (1) a controlled group of corporations (as
defined in Section 414(b) of the Code), (2) a group of trades or businesses
under common control (as defined in Section 414(c) of the Code), or (3) an
affiliated service group (as defined under Section 414(m) of the Code or the
regulations under Section 414(o) of the Code), any of which includes or included
Y2 or any of its Subsidiaries.
b. Y2 has no Employee Benefit Plans.
c. Neither Y2, any of its Subsidiaries, nor any ERISA Affiliate has
ever maintained an Employee Benefit Plan subject to Section 412 of the Code or
Title IV of ERISA.
d. No Employee Benefit Plan is funded by, associated with or
related to a "voluntary employee's beneficiary association" within the meaning
of Section 501(c)(9) of the Code.
2.13 Brokers. No broker, finder, investment banker or other Person is
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of Y2.
2.14 Taxes.
a. Except as set forth in Schedule 2.14, Y2 has (i) duly and timely
filed (including all applicable extensions granted without penalty) all material
Tax Returns required to be filed, and such Tax Returns are true, correct and
complete in all material respects, and (ii) paid in full or made adequate
provision in the financial statements of ▇▇ (▇▇ accordance with GAAP) for all
material Taxes shown to be due on such Tax Returns.
b. Except as set forth herein: (i) Y2 has not requested any
extension of time within which to file any Tax Return in respect of any taxable
period and no request for waivers of the time to assess any Taxes are pending or
outstanding, (ii) with respect to each taxable period of Y2, the federal and
state income Tax Returns of Y2 have been audited by the Internal Revenue Service
or the appropriate state Tax Authorities or the time for assessing and
collecting income Tax with respect to such taxable period has closed and such
taxable period is not subject to review, (iii) all Taxes due with respect to
completed and settled examinations or concluded litigation relating to Y2 have
been paid in full or adequate provision has been made for any such amounts in
the financial statements of ▇▇ (▇▇ accordance with GAAP) and (iv) there are no
material liens for Taxes upon the assets or property of any of Y2 except for
statutory liens for Taxes not yet due.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF LOGISTICS
AND THE TRUST
Logistics, the Trust and Midwest represent and warrant that all of the
statements contained in this Article III are true and complete as of the date of
this Agreement (or, if made as of a specified date, as of such date), and will
be true and complete as of the Closing Date as though made on the Closing Date.
3.1 Organization; Qualification of Logistics. Logistics: (a) is a
corporation duly organized, validly existing and in good standing under the laws
of the state of Colorado; (b) has all required Permits and full corporate power
and authority to carry on its business as it is now being conducted and to own
the properties and assets it now owns; and (c) is duly qualified to do business
as a foreign corporation and is in good standing in every jurisdiction in which
ownership of property or the conduct of its business requires such qualification
or, if Logistics is not so qualified in any such jurisdiction, it can become so
qualified in such jurisdiction without any Logistics Material Adverse Effect.
Logistics has heretofore delivered to Y2 complete and correct copies of the
certificate of incorporation and by-laws of Logistics as presently in effect.
3.2 Subsidiaries. Schedule 3.2 hereof sets forth the name, jurisdiction
of incorporation, capitalization, and the name of each record holder of the
capital stock of each Subsidiary which is part of the Logistics Business and,
for each Subsidiary which is material to the Logistics Business, the
jurisdictions in which each such Subsidiary is qualified to do business, and as
of the date hereof, each entity which is part of Logistics' Business and in
which Logistics or any of its Subsidiaries has a direct or indirect equity
ownership interest and sets forth the approximate percent of outstanding shares
or other equity interests owned by Logistics. Each Logistics Subsidiary (a) is a
corporation duly organized, validly existing and in good standing under the laws
of its state of incorporation; (b) has all required Permits and full corporate
power and authority to carry on its business as it is now being conducted and to
own the properties and assets it now owns; and (c) is duly qualified to do
business as a foreign corporation in good standing in every jurisdiction in
which ownership of property or the conduct of its business requires such
qualification or, if a Logistic Subsidiary is not so qualified in any such
jurisdiction, it can become so qualified in such jurisdiction without any
Logistics Material Adverse Effect. Logistics has heretofore made available to Y2
complete and correct copies of the Organizational Documents, of each Logistics
Subsidiary, as presently in effect.
3.3 Capitalization.
a. As of the date hereof, the authorized capital stock of Logistics
consists of (i) 75,000,000 shares of common stock, par value $.001, per share
(the "Logistics Common Stock"), of which 59,000,000 shares are issued,
outstanding and owned by 308 shareholders, all of which are duly authorized,
validly issued, fully paid and non-assessable and were not issued in violation
of any preemptive or similar rights of any Person; and (ii) 10,000,000 shares of
preferred stock, par value $.001 per share, of which, as of the date hereof,
999,000 Series A are issued and outstanding, 2,000 Series B are issued and
outstanding, 450,000 Series C are issued and outstanding, 950 Series D are
issued and outstanding, and 2,300 Series E are issued and outstanding.
b. Logistics has not issued any additional options or warrants to
purchase shares of the Logistics' Common Stock, hereof, (i) there are currently
1,454,250 shares of Logistics preferred stock outstanding which are convertible
into or exercisable or exchangeable for 82,7282,596 shares of Logistics common
stock, and (ii) there are no outstanding options, rights, Contracts, warrants,
subscriptions, conversion rights or other agreements or commitments pursuant to
which Logistics acquired to purchase, redeem, issue or sell any shares of
capital stock or other securities of Logistics (collectively, "Convertibles").
c. The issued and outstanding shares of capital stock of, or other
equity interest in, each of the Logistics Subsidiaries have been duly authorized
and validly issued, and, with respect to capital stock, are fully paid and non-
assessable, and were not issued in violation of any pre-emptive or similar
rights of any Person. All the issued and outstanding shares or other equity
interests of the Logistics Subsidiaries are owned beneficially as set forth
therein, free and clear of all Liens.
d. Other than a Share Exchange Agreement with ▇▇▇▇▇▇-▇▇▇▇▇▇▇.▇▇▇,
Inc., a Florida corporation (the "Exchange Agreement"), there are no agreements
to which Logistics is party or by which it is bound with respect to the voting
(including without limitation voting trusts, or proxy), registration under the
Securities Act, or sale or transfer (including without limitation agreements
relating to pre-emptive rights, rights of first refusal, co-sale rights or
"drag along" rights) of any securities of Logistics or Logistics Subsidiary.
3.4 Authorization of Agreement. Logistics has all requisite corporate
power and authority to execute and deliver this Agreement and each instrument
required hereby to be executed and delivered by them at the closing, to perform
their obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby. The execution and delivery by Logistics of this
Agreement and each instrument required hereby to be executed and delivered by
them at the closing and the performance of their obligations hereunder and
thereunder have been duly and validly authorized by all requisite corporate
action on the part of Logistics. This Agreement has been duly executed and
delivered by Logistics and, assuming due authorization, execution and delivery
hereof by the buyers, constitutes legal, valid and binding obligations of
Logistics, enforceable against Logistics in accordance with its terms, subject
to bankruptcy, insolvency, reorganization, moratorium or similar Laws now or
hereafter in effect relating to creditors' rights generally or to general
principles of equity.
3.5 Consents and Approvals No Violations. None of the execution,
delivery or performance of this Agreement by Logistics, or the consummation by
Logistics of any of the transactions contemplated hereby will (i) conflict with
or result in any breach of any provision of the Organizational Documents of
Logistics, (ii) require any Consent of any Governmental Entity, (iii) require
any Consent of any other Person (including consents from parties to loans,
Contracts, leases and other agreements to which Logistics, or any affiliate of
Logistics is a party), (iv) or result in a violation or breach of, or constitute
(with or without due notice or the passage of time or both) a default (or give
rise to any right of termination, amendment, cancellation or acceleration)
under, any of the terms, conditions or provisions of any Contract, or (v)
violate any Law, Order or Permit applicable to Logistics or any of their
properties or assets, excluding from the foregoing clauses (iii), (iv) and (v)
such absences of consents, violations, breaches or defaults which would not,
individually or in the aggregate, have Logistics Material Adverse Effect or
adversely affect Logistics' ability to consummate the Transaction.
3.6 Financial Statements. Logistics shall have delivered to Y2 copies of
its Form 10-QSB for the nine months ending September 30, 2003, Form 10-QSB for
the six months ending June 30, 2003, form 10-QSB for the three months ended
March 31, 2003 and Form 10-KSB for the year ending December 31, 2003 (the
"Logistics Financial Statements"). There shall not be any change in Logistics'
financial condition not reported in the Logistics Financial Statements which
would have a Logistics Material Adverse Effect on the Logistics Business or
adversely affect Logistics' ability to consummate the Transaction.
3.7 Absence of Certain Changes or Events. Since December 31, 2003 (i) the
Logistics Business has been carried on only in the ordinary and usual course
consistent with past practice and (ii) there has not occurred any event,
development or change which, individually or in the aggregate, has resulted in
or is reasonably likely to result in a Logistics Material Adverse Effect.
3.8 Litigation. Except as set forth in Logistics' filings with the
Securities and Exchange Commission (the "SEC ") (the "SEC Filings") and the
Logistics Financial Statements, there is no Litigation pending, or to the
Knowledge of Logistics, threatened, against or involving Logistics, any
Logistics Subsidiary or any of their respective assets or the Logistics
Business, which is not a Retained Liability (as defined in the Assignment
Agreement).
3.9 Compliance with Laws. Logistics is in compliance, with respect to the
Logistics Business, with all applicable Laws, except for any violations which
would not reasonably be expected to have Logistics Material Adverse Effect.
Since January 1, 2004, Logistics has not received any notice or other
communication (whether written or oral) from any Person regarding any actual,
alleged, possible or potential violation of or failure to comply with any Law
with respect to the Logistics Business, except in connection with Retained
Liabilities and for violations which do not, and would not reasonably be
expected to have, individually or in the aggregate, a Logistics Material Adverse
Effect.
3.10 Environmental Matters. Except as is not reasonably likely to result
in a Logistics Material Adverse Effect:
a. Logistics and the Logistics Business (i) have been and are in
compliance with all applicable Environmental Laws; (ii) have obtained all
Permits required for the operation of their businesses by any applicable
Environmental Law (collectively "Environmental Permits") and all such
Environmental Permits are in full force and effect, no appeal nor any other
action is pending to revoke any such Environmental Permit; and (iii) are in
compliance with all such Environmental Permits, and have filed in a timely
manner all applications to renew such Environmental Permits or to obtain new
Environmental Permits to the extent such applications are currently required.
b. There has been no Release of any Hazardous Material that would
reasonably be likely to form the basis of any Environmental Claim against
Logistics at the properties owned or leased by Logistics, the Logistics Business
(the "Logistics Properties"). Logistics Properties are not adversely affected by
any Release or threatened Release of a Hazardous Material originating or
emanating from any other property. There were no Releases of Hazardous Materials
on properties formerly owned or operated by Logistics or the Logistics Business,
or any predecessors thereof, during the period of such operation or ownership
that would reasonably be likely to result in an Environmental Claim against
Logistics.
c. Neither Logistics, nor the Logistics Business has manufactured,
used, generated, stored, treated, transported, disposed of, released, or
otherwise managed any Hazardous Material at any of Logistics Properties.
d. Neither Logistics nor the Logistics Business: (i) has any
liability for response or corrective action for natural resources damage, or any
other harm pursuant to any Environmental Law, (ii) is subject to, or has
Knowledge of, any Environmental Claim involving Logistics or any Logistics
Business, or (iii) has any Knowledge of any condition or occurrence at any of
Logistics Properties which could form the basis of an Environmental Claim
against Logistics or any Logistics Business, or any of Logistics Properties.
e. Logistics Properties are not subject to any, and Logistics has
no Knowledge of any, imminent restriction on the ownership, occupancy, use or
transferability of Logistics Properties in connection with any (i) Environmental
Law or (ii) Release or threatened Release of any Hazardous Material.
f. There are no conditions or circumstances at Logistics Properties
that pose a risk to the environment or the health and safety of any Person, or
would require any remedial action.
g. Neither Logistics nor the Logistics Business has been subject to
any inquiry or request for information related to its disposal, treatment,
storage or recycling, or the arrangement for said activities, of any Hazardous
Material or waste, at any property other than Logistics Properties.
h. To the Knowledge of Logistics, neither Logistics nor the
Logistics Business or any predecessor thereto has disposed, recycled, treated,
stored, or arranged for said activities, at any property that is listed or
proposed for listing on the Federal National Priorities List, the Federal
CERCLIS list, or any list compiled pursuant to state statutes or Laws that are
analogous to the Federal Comprehensive Environmental Response, Compensation and
Liability Act, 42 U.S.C. 9601 et seq.
i. Logistics Properties do not contain any underground storage
tanks, landfills, electrical equipment containing polychlorinated biphenyls,
surface impoundments, friable asbestos-containing materials, or hazardous waste
treatment, storage or disposal units that either have or require a Permit
pursuant to any Law.
j. Since January 1, 2004, neither Logistics nor any Logistics
Business has received communication (written or oral) that alleges that
Logistics or any Logistics Business is not in compliance with any Environmental
Law.
3.11 Intellectual Property.
a. To the Knowledge of Logistics, Logistics with respect to the
Logistics Business own or otherwise have the right to use all Intellectual
Property necessary to (a) provide the services currently provided, and currently
planned to be provided, by the Logistics Business, Logistics and its
Subsidiaries to third parties; (b) use, manufacture, copy, modify, market and
distribute the products currently, and currently planned to be, manufactured,
marketed, sold, licensed or otherwise distributed by the Logistics Business,
Logistics and its Subsidiaries; and (c) to operate the internal systems of the
Logistics Business, Logistics and its Subsidiaries that are material to the
business or operations of the Logistics Business, Logistics and its
Subsidiaries, including without limitation, computer hardware systems and
software applications. For purposes of this Agreement, "Intellectual Property"
shall mean any and all of the following: trademarks, service marks, trade names,
Internet domain names, designs, logos, slogans, and general intangibles of like
nature, together with all goodwill, registrations and applications related to
the foregoing; patents and patent applications (including any continuations,
divisions, continuations-in-part, renewals, reissues, and applications for any
of the foregoing), industrial design registrations and applications (including
any renewals thereof); copyrights (including any registrations and applications
therefore ); software; data; documentation; "mask works" (as defined under 17
USC 901) and any registrations and applications for "mask works"; technology,
trade secrets and other confidential information, know-how, proprietary
processes, formulae, algorithms, models and methodologies; and other property of
like nature.
b. To the Knowledge of Logistics, the activities and the conduct of
the Logistics Business do not infringe upon, violate or constitute the
unauthorized use of the intellectual property rights of any third party. There
is no pending or, to the Knowledge of Logistics, threatened (in writing) Claim
before any court, agency, arbitral tribunal, or registration authority in any
jurisdiction (i) involving any item of Intellectual Property owned or used by
Logistics with respect to the Logistics Business, (ii) alleging that the
activities or the conduct of the Logistics Business does or will infringe upon,
violate or constitute the unauthorized use of the intellectual property rights
of any third party or (iii) challenging the ownership, use, validity,
enforceability or registrability of any Intellectual Property by Logistics with
respect to the Logistics Business, except for such Claims as have not resulted
and could not reasonably be expected to result, individually or in the
aggregate, in a Logistics Material Adverse Effect. There are no settlements,
forbearances to ▇▇▇, consents, judgments, or orders or similar obligations
(other than license agreements in the ordinary course of business) which (a)
restrict the rights of Logistics to use any material Intellectual Property with
respect to the Logistics Business, (b) restrict the Logistics Business in order
to accommodate a third party's intellectual property rights or (c) permit third
parties to use any material Intellectual Property owned by Logistics with
respect to the Logistics Business.
c. To the Knowledge of Logistics, no third party is making
unauthorized use of or infringing in any material respect upon any material
Intellectual Property owned by Logistics respect to the Logistics Business.
d. Logistics have taken commercially reasonable actions to protect
each item of material Intellectual Property owned by any of them with respect to
the Logistics Business, except where the failure to take such actions has not
resulted and could not reasonably be expected to result, individually or in the
aggregate, in a Logistics Material Adverse Effect.
e. Logistics is not in violation of any agreement relating to any
Intellectual Property with respect to the Logistics Business, except for such
violations as have not resulted, and could not reasonably be expected to result,
individually or in the aggregate, in a Logistics Material Adverse Effect. The
consummation of the transactions contemplated hereby will not result in the loss
or impairment of the rights of any of Logistics to own, use or enforce any
Intellectual Property used in its business or operations with respect to the
Logistics Business, except where such loss or impairment could not reasonably be
expected to result, individually or in the aggregate, in a Logistics Material
Adverse Effect.
3.12 ERISA Compliance.
a. For purposes of this Agreement, the following terms shall have
the following meanings:
(1) "Employee Benefit Plan" means any "employee pension
benefit plan" (as defined in Section 3(2) of ERISA), any "employee welfare
benefit plan" (as defined in Section 3(1) of ERISA), and any other written or
oral plan, agreement or arrangement (excluding agreements with individual
employees) involving compensation, including without limitation insurance
coverage, severance benefits, disability benefits, deferred compensation,
bonuses, stock options, stock purchase, phantom stock, stock appreciation or
other forms of incentive compensation or post-retirement compensation maintained
or contributed to by the Company, or any ERISA Affiliate with respect to present
or former employees of Logistics or any Company Subsidiary.
(2) "ERISA" means the Employee Retirement Income Security Act
of 1974, as amended.
(3) "ERISA Affiliate" means any entity which is, or at any
applicable time was, a member of (1) a controlled group of corporations (as
defined in Section 414(b) of the Code), (2) a group of trades or businesses
under common control (as defined in Section 414(c) of the Code), or (3) an
affiliated service group (as defined under Section 414(m) of the Code or the
regulations under Section 414(o) of the Code), any of which includes or included
Logistics or any of its Subsidiaries.
b. Logistics has no Employee Benefit Plans
c. Neither Logistics, any of its Subsidiaries, nor any ERISA
Affiliate has ever maintained an Employee Benefit Plan subject to Section 412 of
the Code or Title IV of ERISA.
d. No Employee Benefit Plan is funded by, associated with or
related to a "voluntary employee's beneficiary association" within the meaning
of Section 501(c)(9) of the Code.
3.13 Brokers. No broker, finder, investment banker or other Person is
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of any of Logistics.
3.14 Taxes. Logistics has timely filed all material Tax Returns that it
was required to file, and all such Tax Returns were correct and complete in all
material respects. Each group of corporations with which Logistics has filed (or
was required to file) consolidated, combined, unitary or similar Tax Returns,
has timely filed all material Tax Returns that it was required to file and all
such Tax Returns were true, correct and complete in all material respects.
Logistics has paid all material Taxes (whether or not shown on such Tax Returns)
that were due and payable. All Taxes that Logistics is or was required by law to
withhold or collect have been duly withheld or collected and, to the extent
required, have been paid to the proper taxing authority, except where the
failure to withhold or collect could not reasonably be expected to have
Logistics Material Adverse Effect.
3.15 Undisclosed Liabilities. Logistics does not have any liability
(whether absolute or contingent), except for (a) liabilities shown on the most
recent balance sheet referred to in Section 3.6 (the "Most Recent Balance
Sheet"), (b) liabilities which have arisen since the date of the Most Recent
Balance Sheet in the ordinary course of business, (c) contractual and other
liabilities incurred in the ordinary course of business which are not required
by GAAP to be reflected on a balance sheet, (d) compensation expense in
connection with the issuance of Options and (e) liabilities which would not
reasonably be expected, individually or in the aggregate, to have Logistics
Material Adverse Effect.
3.16 Contracts.
a. Schedule 3.16 lists the following agreements (written or oral)
to which the Logistics Business is a party as of the date of this Agreement:
(1) any agreement, or group of related agreements, which
involves more than $250,000;
(2) any agreement under which the Logistics Business has
incurred, assumed or guaranteed, or may assume or guarantee, indebtedness for
borrowed money (including capitalized lease obligations) of more than $250,000;
(3) any agreement restricting the Logistics Business, from
competing in any manner;
(4) any agreement with an officer or director of the Logistics
Business; and
(5) any agreement under which the consequences of a default or
termination would be reasonably expected to have Logistics Material Adverse
Effect.
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
From the date of execution of this Agreement, to the Closing Date, Y2 and
Logistics covenant and agree as follows:
4.1 Conduct of the Y2 Business. During the period from the date of this
Agreement to the Closing Date (unless Y2 shall otherwise agree in writing and
except as otherwise contemplated by this Agreement), Y2 will conduct the
operations of the Y2 Business in the ordinary course of business consistent with
past practice and shall use all reasonable efforts to preserve intact its
current business organizations, keep available the services of their current
officers and employees, maintain its material contracts and preserve its
relationships with customers, suppliers and others having business dealings with
it. Without limiting the generality of the foregoing, and except as otherwise
contemplated by this Agreement, or as agreed to in writing by the parties with
respect to the Y2 Business agree that:
a. Issuance of Securities. The Parties shall not issue, sell,
grant, dispose of or authorize or propose the issuance, sale or disposition of
(i) any additional shares of capital stock of any class, or any securities or
rights convertible into, exchangeable for, or evidencing the right to subscribe
for any shares of capital stock, or any rights, warrants, options, calls,
commitments or any other agreements of any character to purchase or acquire any
shares of capital stock or any securities or rights convertible into,
exchangeable for, or evidencing the right to subscribe for, any shares of
capital stock, except in the ordinary course of the Y2 business or (ii) any
other securities in respect of, in lieu of, or in substitution for, shares
outstanding on the date hereof.
b. Restructuring. The Parties shall not adopt a plan of complete or
partial liquidation, dissolution, merger, consolidation, restructuring,
recapitalization or other reorganization.
c. Governing Documents. The Parties shall not adopt any amendments
to their Organizational Documents, or alter through merger, liquidation,
reorganization, restructuring or in any other fashion its corporate structure or
ownership of any Y2 Subsidiary.
d. No Acquisitions. The Parties shall not acquire or agree to
acquire (i) by merging or consolidating with, or by purchasing a substantial
portion of the assets of, or by any other manner, any business or any
corporation, limited liability company, partnership, association or other
business organization or division thereof or (ii) any assets that, individually
or in the aggregate, are material to the Parties business. Except it shall be
specifically provided that Logistics shall, without prior written consent from
Y2, acquire all of the issued and outstanding capital stock of
▇▇▇▇▇▇-▇▇▇▇▇▇▇.▇▇▇, Inc., a Florida corporation.
e. No Dispositions. Except in the ordinary course of business
consistent with past practice, neither Y2 nor any Y2 Subsidiary shall sell,
lease, license or otherwise encumber or subject to any Lien or otherwise dispose
of any of its properties or assets with respect to Y2 Business.
f. Capital Expenditures. Y2 shall not commit to make any capital
expenditures with respect to Y2 Business relating to a single project in excess
of $100,000 or in the aggregate in excess of $500,000.
g. Employee Matters. Except as required by Law or in accordance
with this Agreement, the Parties shall not (i) increase the compensation of any
of its respective employees, other than non-officer employees in the ordinary
course of business consistent with past practice as to both frequency and
amount, (ii) amend or enter into any Contract with any of its respective
employees regarding his or her employment, compensation or benefits, other than
offer letters to prospective employees in the ordinary course of business and
stock options permitted by Section 4.2(a), or (iii) adopt any employee benefit
plan as defined in Section 3(3) of ERISA ("Plan"), arrangement or policy which
would become a Plan or amend any Plan.
h. Liens. Y2 shall not create, incur or assume any material Lien on
any of their material assets with respect to the Rights. Except it shall be
specifically provided that Y2, without the prior written consent of Logistics
will negotiate and consummate a financing agreement with Brentwood Capital
Corp., a New York corporation ("Brentwood") in the amount of One Million Dollars
($1,000,000), whereby Brentwood shall have a first lien on certain of the assets
of Y2 including, but not limited to, the Rights.
i. Claims. The Parties shall not settle any material claim, action
or proceeding involving money damages or waive or release any material rights or
claims with respect to Y2 Business, except in the ordinary course of business.
j. Representations and Warranties. The Parties shall not (i) take,
or agree or commit to take any action that would make any representation and
warranty inaccurate in any material respect on the Closing Date, or (ii) omit,
or agree to omit, to take any action necessary to prevent any such
representation or warranty from being inaccurate in any material respect on the
Closing Date; provided, however, that they shall be permitted to take or omit to
take such action which can be cured, and in fact is cured, at or prior to the
Closing Date.
k. Intellectual Property. Y2 shall not transfer or license to any
Person any rights to the Rights and the Filters, other than to Y2 customers in
the ordinary course of business.
l. Contracts. Y2 shall not enter into any Contract which would be
material to the Rights and the Filters.
m. No Agreements. The Parties shall not enter into any Contract to
do any of the foregoing.
ARTICLE V
SALE OF SHARES; BOARD MEMBERSHIP;
VOTING AGREEMENT; STANDSTILL
5.1 Lock-Up. Without the prior written consent of Y2, Logistics shall not
offer to sell, contract to sell, or otherwise sell, dispose of, loan, pledge,
transfer or grant any rights with respect to, or enter into any short sale or
otherwise hedge against (collectively, a "Share Disposition") any Common Stock
on or prior to the first anniversary of the Closing Date; provided, however,
that the provisions of this Section 5.1 shall not prohibit any Share Disposition
in the ordinary course of the business of Logistics, provided that any such
transferee agrees to be bound by the terms of this Agreement, including without
limitation this Section 5.1.
5.2 Rights of First Refusal. Y2 hereby grants to Logistics the
unassignable, irrevocable right of first refusal of Y2's intent to sell,
transfer, or otherwise assign the manufacturing rights of any of Y2's other
filters which are the subject of any issued, pending or applied for patent by
the USPTO (the "Subsequent Rights"). Y2 shall first offer such Subsequent Rights
to Logistics by delivery of a written notice (the "Offer Notice") to Logistics
specifying the type of rights proposed to be sold or transferred, the price to
be paid for such shares and the other material terms and conditions of the
proposed sale. Logistics shall have the right to purchase all but not less than
all of the Rights specified in the Offer Notice, which right may be exercised
only by delivery to Y2 within 10 business days after the Offer Notice shall have
been delivered to Y2 of a written notice (the "Acceptance Notice) setting forth
its acceptance of Y2's offer. In the event that Logistics does not deliver an
Acceptance Notice to Y2 by the close of business on the tenth business day
following Y2's delivery of an Offer Notice (the "Last Acceptance Day"), Y2 (or
Y2's Subsidiaries or Y2 and its affiliates) shall be free to sell or transfer
the Subsequent Rights specified in the Offer Notice for a period of 90 days
after the Last Acceptance Day to one or more Persons; provided, however, that
any Rights not sold within such 90 day period shall thereafter be offered to
Logistics in accordance with this Section 5.2 In the event that Logistics
delivers an Acceptance Notice prior to the Last Acceptance Day, the closing of
the purchase of Subsequent Rights by Y2 shall take place 30 days after the date
of completion of due diligence by Logistics.
5.3 Board Designees.
a. After the Closing, the Board of Directors of Logistics (the
"Board"), shall elect, two (2) members of the Board designated by ▇▇ (▇▇▇ "Y2
Designees"). Logistics represents that of the date of this Agreement, there are
currently two (2) members on the Board and Logistics covenants that it will not
increase the number of members of the Board.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Access and Information. Each of the parties will (i) afford to the
other party and its officers, directors, employees, accountants, consultants,
legal counsel, agents and other representatives (collectively, the
"Representatives") full access, at reasonable times upon reasonable prior
notice, to the officers, employees, agents, properties, offices and other
facilities of such party and its Subsidiaries and to their books and records,
(ii) furnish promptly to the other party and its Representatives such
information concerning the business, properties, contracts, records and
personnel of such party and its Subsidiaries (including financial, operating and
other data and information) as may be reasonably requested, from time to time,
by or on behalf of the other party. No investigation by any party hereto shall
affect any representation or warranty in this Agreement of any party hereto or
any condition to the obligations of the parties hereto.
6.2 Reasonable Best Efforts. Upon the terms and subject to the
conditions set forth in this Agreement, each of the parties agrees to use
reasonable best efforts to take, or cause to be taken, all actions, and to do,
or cause to be done, and to assist and cooperate with the other parties in
doing, all things necessary, proper or advisable to consummate and make
effective, in the most expeditious manner practicable, the transactions
contemplated by this Agreement including (i) the obtaining of all necessary
actions or non-actions, waivers or Consents from Governmental Entities and the
making of all necessary registrations and filings and the taking of all steps as
may be necessary to obtain an approval or waiver from, or to the avoid an action
or proceeding by, any Governmental Entity, (ii) the obtaining of all necessary
Consents or waivers from third parties, (iii) the defending of any lawsuits or
other legal proceedings, whether judicial or administrative, challenging this
Agreement or the consummation of the transactions contemplated by this
Agreement, including seeking to have any stay or temporary restraining order
entered by any court or other Governmental Entity vacated or reversed, and (iv)
the execution and delivery of any additional instruments necessary to consummate
the transactions contemplated by, and to fully carry out the purposes of, this
Agreement.
6.3 Publicity. The parties will consult with each other and will mutually
agree upon any press releases pertaining to the Transaction and shall not issue
any such press releases prior to such consultation and agreement, except as may
be required by applicable Law or by obligations pursuant to any listing
agreement with any national securities exchange, in which case the party
proposing to issue such press release shall use its reasonable efforts to
consult in good faith with the other party before issuing any such press
releases.
ARTICLE VII
CLOSING CONDITIONS
7.1 Additional Conditions to the Obligation of Y2. The obligation of Y2
and Newco to complete the Transaction is subject to the satisfaction at or prior
to the Closing Date of the following conditions, any or all of which may be
waived in whole or in part by Y2 to the extent permitted by applicable Law:
a. Representations and Warranties. The representations and
warranties of Logistics contained in Article III of this Agreement shall be true
and correct on the date of this Agreement and on the Closing Date as though made
on and as of the Closing Date (except to the extent that a representation or
warranty expressly speaks as of a specified date or period of time); provided,
however, that for purposes of this Section 7.2(a), such representations and
warranties shall be deemed to be true and correct unless the failure or failures
of such representations and warranties to be so true and correct, without regard
to any materiality qualifiers contained therein, individually or in the
aggregate, results or would reasonably be likely to result in a Logistics
Material Adverse Effect.
b. Performance. Except as would not be reasonably likely to have a
Logistics Material Adverse Effect, Logics shall have performed and complied with
or caused to be performed or complied with their covenants and agreements under
this Agreement to be performed or complied with at or prior to Closing.
c. Officer's Certificate. Y2 shall have received on the Closing
Date a certificate dated the Closing Date and executed by an executive officer
of Logistics certifying to the fulfillment of the conditions specified in
Sections 7.2(a) and (b) hereof.
d. Material Adverse Effect. There shall not have occurred any event
or condition which individually or in the aggregate has resulted in, or is
reasonably likely to result in, a Logistics Material Adverse Effect.
7.2 Additional Conditions to the Obligation of Logistics. The obligation
of Logistics to complete the Transaction is subject to the satisfaction at or
prior to the Closing Date of the following conditions, any and all of which may
be waived in whole or in part by Logistics to the extent permitted by applicable
Law:
a. Representations and Warranties. The representations and
warranties of Y2 set forth in Article II of this Agreement shall be true and
correct on the date of this Agreement and on the Closing Date as though made on
and as of the Closing Date (except to the extent that a representation or
warranty expressly speaks as of a specified date or period of time); provided,
however, that for purposes of this Section 7.3(a), such representations and
warranties shall be deemed to be true and correct unless the failure or failures
of such representations and warranties to be so true and correct, without regard
to any materiality qualifiers contained therein, individually or in the
aggregate, results or would reasonably be likely to result in a Y2 Material
Adverse Effect.
b. Performance. Except as would not be reasonably likely to have a
Y2 Material Adverse Effect, Y2 shall have performed and complied with or caused
to be performed or complied with its respective covenants and agreements under
this Agreement to be performed or complied with at or prior to the Closing.
c. Officer's Certificate. Logistics shall have received on the
Closing Date a certificate dated the Closing Date and executed by an executive
officer of Y2 certifying to the fulfillment of the conditions specified in
Sections 7.3(a) and (b) hereof.
d. Material Adverse Effect. There shall not have occurred any event
or condition which individually or in the aggregate has resulted in, or is
reasonably be likely to result in a Y2 Material Adverse Effect.
ARTICLE VIII
TERMINATION, AMENDMENT AND EXPENSES
8.1 Termination. This Agreement may be terminated at any time prior to
the Closing Date:
a. by mutual written consent of Y2 and Logistics;
b. by either Y2 or Logistics:
(1) if there shall be any Order of a Court or Governmental
Entity having jurisdiction over a party hereto which is final and non-appealable
permanently enjoining, restraining or prohibiting the consummation of the Merger
or issuance of the Acquisition Shares, unless the party relying on such Order
has not complied with its obligations under Section 7.1(b); or
(2) if the Closing shall not have been consummated before May
1, 2004 (the "Termination Date"); provided, however, that the right to terminate
this Agreement under this Section shall not be available to any party whose
failure to fulfill any obligation under this Agreement has been a cause of; or
resulted in, the failure of the Effective Time to occur on or before the
Termination Date.
c. by Logistics:
(1) upon a material breach of any covenant or agreement on the
part of Y2 set forth in this Agreement, or if any representation or warranty is
or becomes inaccurate in a manner such that the conditions set forth in Section
7.3(a) would not be satisfied (a "Terminating Y2 Breach"); provided that, if
such Terminating Y2 Breach is curable by Y2 through the exercise of its
reasonable efforts, provided it continues to exercise such reasonable efforts,
Logistics may not terminate this Agreement under this Section 8.1(c)(i) until
April 15, 2004; or
(2) if there has occurred a Y2 Material Adverse Effect.
d. by Y2:
(1) upon a material breach of any contract or agreement on the
part of Logistics set forth in this Agreement, or if any representation or
warranty is or becomes inaccurate in a manner such that the conditions set forth
in Section 7.2(a) would not be satisfied (a "Terminating Logistics Breach");
provided that, if such Terminating Logistics Breach is curable by Logistics
through the exercise of its reasonable efforts, provided Logistics continues to
exercise such reasonable efforts, Y2 may not terminate this Agreement under this
Section 8.1(d)(i) until April 15, 2004; or
(2) if there has occurred an Logistics Material Adverse Effect.
8.2 Effect of Termination. In the event of termination of this Agreement
and the abandonment of the Transaction pursuant to this Article VIII, written
notice thereof shall as promptly as practicable be given to the other parties to
this Agreement, and this Agreement shall terminate and the transactions
contemplated hereby shall be abandoned, without further action by any of the
parties hereto except as provided in this Section 8.2. If this Agreement is
terminated as provided herein, this Agreement shall forthwith become void and
have no effect except that (i) the obligations of the parties set forth in the
Confidentiality Agreement shall remain in effect and (ii) no party shall be
relieved from any liabilities or damages arising out of a willful and material
breach of any provision of this Agreement.
8.3 Amendment. This Agreement may be amended by the parties hereto at any
time prior to the Effective Time. This Agreement may not be amended except by an
instrument in writing signed by the parties hereto.
8.4 Waiver. At any time prior to the Effective Time, any party hereto may
(a) extend the time for the performance of any of the obligations or other acts
of the other party hereto, (b) waive any inaccuracies in the representations and
warranties of the other party contained herein or in any document delivered
pursuant hereto and (c) waive compliance by the other party with any of the
agreements or conditions contained herein. Any such extension or waiver will be
valid only if set forth in an instrument in writing signed by the party or
parties to be bound thereby.
8.5 Expenses. All expenses incurred by the parties hereto will be borne
solely and entirely by the party which has incurred such expenses, provided that
any legal, accounting, investment banking or similar fees and expenses of
Logistics or any Logistics Subsidiary in connection with the Transaction shall
be paid by The Company.
ARTICLE IX
DEFINITIONS AND INTERPRETATION
9.1 Certain Definitions. For purposes of this Agreement, except as
otherwise provided or unless the context clearly requires otherwise:
a. "Acquisition Shares" shall mean the shares of Logistics Common
Stock received by Y2 pursuant to the Transaction.
b. "Logistics Business" shall mean the business of Logistics as set
forth within its SEC filings and future business operations contemplated with
respect to such business.
c. "Logistics Material Adverse Effect" shall mean a material
adverse effect on the business, operations, condition (financial or otherwise)
or results of operations of the Logistics Business, other than any such effect
arising out of, attributable to or resulting from (i) any change in conditions
in U.S., European or Asian economies (including in currency exchange rates), and
(ii) any change in conditions affecting the industries in which the Logistics
Business operates.
d. "Logistics Shares" shall mean a Subsidiary of Logistics.
e. "Y2 Disclosure Schedule" shall mean the disclosure schedule
prepared by Y2 and delivered to Logistics concurrently with the execution of
this Agreement.
f. "Y2 Material Adverse Effect" shall mean a material adverse
effect on the business, operations, condition (financial or otherwise) or
results of operations of Y2 and the Y2 Subsidiaries taken as a whole, other than
any such effect arising out of; attributable to or resulting from (i) any change
in conditions in U.S., European or Asian economies (including in currency
exchange rates), and (ii) any change in conditions affecting the industries in
which Y2 and its Subsidiaries operate,
g. "Logistics Disclosure Schedule" shall mean the disclosure
schedule prepared by Logistics and delivered to Y2 concurrently with the
execution of this Agreement.
h. "Consent" shall mean any consent, registration, approval,
authorization, waiver or similar affirmation by or of; or filing with or
notification to, a Person pursuant to any Contract, Law, Order or Permit (as
such terms are defined below).
i. "Contract" shall mean any written or oral agreement,
arrangement, commitment, contract, indenture, instrument, lease, license or
other obligation of any kind or character, that is binding on any Person or its
capital stock, properties or business.
j. "Dispose" (and with correlative meaning, "Disposition") shall
mean pay, discharge, settle or otherwise dispose.
k. "Due Date" shall mean, with respect to any Tax Return or
payment, the date on which such Tax Return is due to be filed with or such
payment is due to be made to the appropriate Tax Authority pursuant to
applicable law, giving effect to any applicable extensions of the time for such
filing or payment.
l. "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
m. "Governmental Entity" shall mean a court, arbitral tribunal,
administrative agency or commission or other governmental or other regulatory
authority or agency.
n. "Knowledge" - an individual will be deemed to have "knowledge"
of a particular fact or other matter if such individual is actually aware of
such fact or other matter. An entity (other than an individual) will be deemed
to have "Knowledge" of a particular fact or other matter if any individual who
is currently serving as an executive officer of such entity
o. "Law" shall mean any federal, state, local or foreign law,
statute, ordinance, rule, regulation, order, judgment or decree, administrative
or judicial decision, and any other executive or legislative proclamation.
p. "Lien" shall mean any mortgage, pledge, security interest,
attachment, encumbrance, lien or charge of any kind (including any agreement to
give any of the foregoing) or right of others of whatever nature; provided,
however, that the term "Lien" shall not include (i) statutory liens for Taxes,
which are not yet due and payable or are being contested in good faith by
appropriate proceedings, (ii) statutory or common law liens to secure landlords,
lessors or renters under leases or rental agreements confined to the premises
rented, (iii) deposits or pledges made in connection with, or to secure payment
of; worker's compensation, unemployment insurance, old age pension or other
social security programs mandated under applicable Laws, (iv) statutory or
common law liens in favor of carriers, warehousemen, mechanics and materialmen,
to secure claims for labor, materials or supplies and other like liens, and (v)
restrictions on transfer of securities imposed by applicable state and federal
securities Laws.
q. "Litigation" shall mean any action, arbitration, cause of
action, claim, complaint, criminal prosecution, demand letter, governmental or
other administrative or other proceeding, whether at law or at equity, before or
by any federal, state or foreign court, tribunal, or agency or before any
arbitrator.
r. "Order" shall mean any administrative decision or award, decree,
injunction, judgment, order, quasi-judicial decision or award, ruling, or writ
of any federal, state, local or foreign or other Governmental Entity.
s. "Organizational Documents" shall mean (a) the articles or
certificate of incorporation and the by-laws of a corporation or other
equivalent organizational documents; (b)the partnership agreement and any
statement of partnership of a general partnership; (c) the limited partnership
agreement and the certificate of limited partnership; (d) any charter or similar
document adopted or filed in connection with the creation, formation, or
organization of a Person, and (e) any amendment to any of the foregoing.
t. "Permit" shall mean any federal, state, local or foreign
governmental approval, authorization, certificate, license, permit or exemption
to which any Person is a party or that is or may be binding upon or inure to the
benefit of any Person or its securities, properties or business.
u. "Person" shall mean any individual, corporation, limited
liability company, partnership, joint venture, trust, association, rganization,
Governmental Entity or other entity.
v. "Post-Closing Period" shall mean any taxable period beginning
after the Closing Date.
w. "Pre-Closing Period" shall mean any taxable period that ends on
or prior to the Closing Date.
x. "Securities Act" shall mean the Securities Act of 1933, as
amended.
y. "Subsidiary" with respect to any party shall mean any
corporation, limited liability company, partnership, or other business
association or entity, at least a majority of the voting securities or economic
interests of which is directly or indirectly owned or controlled by such party
or by any one or more of its Subsidiaries.
z. "Tax Authority" shall mean the Internal Revenue Service and any
other state, local or foreign governmental authority responsible for the
administration of Taxes.
aa. "Tax Claim" shall mean a notice of deficiency, proposed
adjustment, assessment, audit, examination, suit, dispute or other claim with
respect to Taxes or a Tax Return.
bb. "Tax Returns" will mean any declaration, return, report,
schedule, certificate, statement or other similar document (including relating
or supporting information) required to be filed with a Governmental Entity, or
where none is required to be filed with a Governmental Entity, the statement or
other document issued by a Governmental Entity in connection with any Tax,
including, without limitation, any information return, claim for refund, amended
return or declaration of estimated Tax.
cc. "Taxes" will mean any and all federal, state, local, foreign,
provincial, territorial or other taxes, imposts, tariffs, fees, levies or other
similar assessments or liabilities and other charges of any kind, including
income taxes, ad valorem taxes, excise taxes, withholding taxes, stamp taxes or
other taxes of or with respect to gross receipts, premiums, real property,
personal property, windfall profits, sales, use, transfers, licensing,
employment, social security, workers' compensation, unemployment, payroll and
franchises imposed by or under any Law; and such terms will include any
interest, fines, penalties, assessments or additions to tax resulting from,
attributable to or incurred in connection with any such tax or any contest or
dispute thereof.
dd. "Transaction" shall mean the transactions described in Article I.
9.2 Interpretation.
a. When a reference is made in this Agreement to a section or
article, such reference shall be to a section or article of this Agreement
unless otherwise clearly indicated to the contrary.
b. Whenever the words "include", "includes" or "including" are used
in this Agreement, they shall be deemed to be followed by the words "without
limitation."
c. The words "hereof", "herein" and "herewith" and words of similar
import shall, unless otherwise stated, be construed to refer to this Agreement
as a whole and not to any particular provision of this Agreement, and article,
section, paragraph, exhibit and schedule references are to the articles,
sections, paragraphs, exhibits and schedules of this Agreement unless otherwise
specified.
d. The plural of any defined term shall have a meaning correlative
to such defined term, and words denoting any gender shall include all genders.
Where a word or phrase is defined herein, each of its other grammatical forms
shall have a corresponding meaning.
e. A reference to any party to this Agreement or any other
agreement or document shall include such party's successors and permitted
assigns.
f. A reference to any legislation or to any provision of any
legislation shall include any amendment, modification or re-enactment thereof;
any legislative provision substituted therefore and all regulations and
statutory instruments issued thereunder or pursuant thereto.
g. The parties have participated jointly in the negotiation and
drafting of this Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the parties, and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any provision of this
Agreement.
ARTICLE X
GENERAL PROVISIONS
10.1 Survival of Representations. The representations and warranties in
this Agreement shall survive the Effective Time for a period of 24 months. This
Article 10.1 shall not limit any covenant or agreement of the parties which by
its terms shall survive the Effective Time.
10.2 Notices. Any notice, request, instruction or other document to be
given hereunder by any party to another party shall be in writing and shall be
deemed given when delivered personally, upon receipt of a transmission
confirmation (with a confirming copy sent by overnight courier) if sent by
facsimile or like transmission, and on the next business day when sent by
Federal Express, United Parcel Service, Express Mail, or other reputable
overnight courier, to the party at the following addresses (or such other
addresses for a party as shall be specified by like notice):
a. If to Logistics:
Logistics Management Resources, Inc.
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Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Levy & Boonshoft, P.C.
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Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇▇-▇▇▇▇
b. If to Y2, to:
Y2 Ultra-Filter, Inc.
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Facsimile: (307) -587-8896
With a copy to:
Y2 Ultra-Filter, Inc.
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Att: ▇▇▇ ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
10.3 Entire Agreement No Assignment Governing Law. This Agreement: (a)
constitutes the entire agreement and supersedes all other agreements and
understandings, both written and oral, between the parties with respect to the
subject matter hereof; (b) shall not be assigned by any party (by operation of
law or otherwise) without the prior written consent of the other parties, and
(c) shall be governed by and be construed in accordance with the laws of the
State of Colorado without giving effect to the principles of conflicts of laws
thereof.
10.4 Parties in Interest. This Agreement shall be binding upon and inure
solely to the benefit of each party hereto and their respective successors and
assigns, and nothing in this Agreement, express or implied, is intended to
confer upon any other person any rights or remedies of any nature whatsoever
under or by reason of this Agreement.
10.5 Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be deemed an original, but all of
which together shall constitute one and the same instrument.
10.6 Headings. The section and other headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
10.7 Severability. In case any term, provision, covenant or restriction
contained in this Agreement is held to be invalid, illegal or unenforceable in
any jurisdiction, the validity, legality and enforceability of the remaining
terms, provisions, covenants or restrictions contained herein, and of such term,
provision, covenant or restriction in any other jurisdiction, shall not in any
way be affected or impaired thereby.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
Y2, ULTRA-FILTER, INC.
By:_________________________
LOGISTICS MANAGEMENT RESOURCES, INC.
By:_________________________
▇▇▇▇▇▇▇ ▇▇▇▇▇, Secretary
THE ▇▇▇▇ GRANDCHILDREN TRUST
By:_________________________
W. ▇▇▇▇▇▇▇ ▇▇▇▇, Trustee
MIDWEST MERGER MANAGEMENT, LLC
By:_________________________
▇▇▇▇▇▇▇ ▇▇▇▇▇, Secretary