Exhibit 10.1
STOCK EXCHANGE AGREEMENT
This STOCK EXCHANGE AGREEMENT (this "Agreement") is dated as of May 27,
2004, by and among Logistical Support, LLC, a California limited liability
company ("LS"), Hill Aerospace & Defense, LLC, a California limited liability
company and its subsidiaries or affiliates ("Hill", and, together with LS, the
"Company") and The Children's Trust of 1988, G. ▇▇▇▇▇ ▇▇▇▇▇▇▇ as trustee
("▇▇▇▇▇▇▇"), ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇▇"), ▇▇▇▇▇▇ Lucan ("Lucan"), ▇▇▇▇ Will
("Will"), Hill Industries, LLC, a California limited liability company
("Industries LLC"), Hill Industries, Inc., a California corporation ("Industries
Inc." and together with Littell, Lebovitz, Lucan, Will and Industries LLC,
"Common Holders"), The Morpheus Trust dated ▇▇/▇/▇▇ ("▇▇▇▇▇▇▇▇▇▇▇ ▇"),
▇▇▇▇▇▇▇▇▇▇ Investments, Ltd. ("Shareholder 2"), The Gateway Real Estate
Investment Trust ("Shareholder 3"), Picasso, LLC ("Shareholder 4"), The Glacier
Trust ("Shareholder 5"), and The ▇▇▇▇▇▇▇▇ Family Trust dated 7/1/03
("Shareholder 6," and, together with the Common Holders, Shareholder 1,
Shareholder 2, Shareholder 3, Shareholder 4 and Shareholder 5, collectively, the
"Sellers") and Bikini Team International, Inc., a Utah corporation ("NewCo" or
"Purchaser"), Tryant Capital, LLC, a Delaware limited liability company
("Tryant") and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ("▇▇▇▇▇▇"). Shareholder 1, Shareholder 2,
Shareholder 3, Shareholder 4, Shareholder 5 and Shareholder 6 shall also be
referred to as "Preferred Holders."
WHEREAS, the Company and the Sellers have determined that it
is in the best interest of the Company and its members to arrange for the sale
of all of the issued and outstanding membership interests of the Company,
including all issued and outstanding shares of common membership interests (the
"Common Stock"), and all issued and outstanding shares of Preferred Membership
Interests (the "Preferred Stock," and, together with the Common Stock, the "Hill
Securities").
NOW, THEREFORE, in consideration of the foregoing and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I
PURCHASE AND SALE OF COMPANY STOCK
Section 1.1 Sale of Stock. Subject to the terms and conditions
herein stated, the Sellers each hereby sell to Purchaser, and the Purchaser
hereby purchases from the Sellers, (i) 1,000 Preferred Stock of Hill, and (ii)
1,000 Preferred Stock of LS, and (iii) all issued and outstanding Common Stock
of LS and Hill.
Section 1.2 Purchase Price. On the Closing Date, Purchaser
shall deliver to the Sellers in accordance with Schedule 1, the following
consideration (the "Purchase Price"):
a. Common Stock Purchase Price.
i. 52,000,000 shares of NewCo common stock (the
"Management Common Stock"), which shall be
restricted shares, and which shall be
subject to a two-year lock-up agreement,
shall be exchanged for all of the Common
Stock.
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b. Preferred Stock Purchase Price. The following
securities shall be referred to herein as the
"Preferred Stock Purchase Securities":
i. 11,200,000 shares of NewCo common stock; and
ii. a five-year warrant to purchase up to
11,363,637 shares of NewCo common stock at
an exercise price of $0.20 per share (the
"Investor Warrants").
Section 1.3 Closing. The closing of the transactions referred
to in Section 1.1 hereof (the "Closing") shall take place as of May 27, 2004, or
at such other time as the parties may agree upon. Such time and date are herein
referred to as the "Closing Date."
Section 1.4 Tax Free Transfers. The transactions referred to
in Sections 1.1 and 1.2 hereof, are intended to qualify for tax free treatment
pursuant to Section 351 of the Internal Revenue Code of 1986, as amended and
applicable California provisions. Immediately following the transfers described
in Sections 1.1 and 1.2 hereof, the Sellers will own in excess of eighty percent
of the total combined voting power of all classes of stock entitled to vote and
in excess of eighty percent of the total number of shares of all other classes
of stock of NewCo.
ARTICLE II
REPRESENTATIONS OF COMPANY
Except as set forth in the Disclosure Schedule, Company hereby
represents and warrants, to the knowledge of ▇▇▇▇▇ ▇▇▇▇▇▇▇ and/or ▇▇▇▇▇
▇▇▇▇▇▇▇▇, as follows:
Section 2.1 Company Stock. All of the membership units of
Company have been duly authorized. The Sellers respectively own the Hill
Securities free and clear of any liens or encumbrances of any type or nature
whatsoever, and each has full right, power and authority to exchange the Hill
Securities that are owned by each hereunder without qualification. There are no
outstanding options, warrants or calls pursuant to which any person has the
right to purchase any membership interests or other securities of Hill or LS,
except for those which will be cancelled on or prior to the Closing Date.
Section 2.2. Corporate Status. Each of Hill and LS is a
limited liability company duly organized, validly existing and in good standing
under the laws of the State of California and is licensed or qualified as a
foreign corporation in all states in which the nature of their respective
businesses or the character or ownership of their respective properties makes
such licensing or qualification necessary.
Section 2.3 Authorization and Validity of Agreement. The
Company has full power and authority (corporate or otherwise) to execute and
deliver this Agreement, to perform its obligations hereunder and to consummate
the transactions contemplated hereby. This Agreement has been duly executed and
delivered by the Company and, assuming the due execution of this Agreement by
Purchaser, is a valid and binding obligation of the Company, enforceable against
the Company in accordance with its terms, except to the extent that its
enforceability may be subject to applicable bankruptcy, insolvency,
reorganization and similar laws affecting the enforcement of creditors' rights
generally and to general equitable principles.
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Section 2.4 Consents and Approvals; No Violations. The
execution and delivery of this Agreement by the Company and the consummation by
the Company of the purchase and sale of the Hill Securities as contemplated
herein and the other transactions contemplated hereby (a) will not violate the
provisions of the Articles of Organization or Operating Agreement of the
Company, (b) will not violate any statute, rule, regulation, order or decree of
any public body or authority by which the Company is bound or by which any of
their respective properties or assets are bound, (c) will not require any filing
with, or permit, consent or approval of, or the giving of any notice to, any
United States governmental or regulatory body, agency or authority on or prior
to the Closing Date (as defined in Section 1.3), and (d) will not result in a
violation or breach of, conflict with, constitute (with or without due notice or
lapse of time or both) a default (or give rise to any right of termination,
cancellation, payment or acceleration) under, or result in the creation of any
Encumbrance upon any of the properties or assets of the Company under, any of
the terms, conditions or provisions of any note, bond, mortgage, indenture,
license, franchise, permit, agreement, lease, franchise agreement or any other
instrument or obligation to which the Company is a party, or by which they or
any of its properties or assets may be bound.
Section 2.5 Financial Statements. To the best of the Company's
knowledge, the financial statements of the Company furnished to the Purchaser,
consisting of unaudited interim financial statements for the period ended
September 30, 2003 are correct and fairly present the financial condition of the
Company as of these dates and for the periods involved; such statements were
prepared in accordance with generally accepted accounting principles
consistently applied, and no material change has occurred in the matters
disclosed therein. These financial statements do not contain any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements made, in light of the circumstances under which they were
made, not misleading.
Section 2.6 Undisclosed Liabilities. Except as set forth on
Schedule 2.6, the Company has no material liabilities of any nature except to
the extent reflected or reserved against in its balance sheets, whether accrued,
absolute, contingent or otherwise, including, without limitation, tax
liabilities and interest due or to become due.
Section 2.7 Interim Changes. Except as set forth in Schedule
2.7, since the dates of its balance sheet, there have been no (i) changes in the
financial condition, assets, liabilities or business of the Company, which in
the aggregate, have been materially adverse; (ii) damages, destruction or loss
of or to the property of the Company, payment of any dividend or other
distribution in respect of the capital stock of the Company or any direct or
indirect redemption, purchase or other acquisition of any such stock; or (iii)
increases paid or agreed to in the compensation, retirement benefits or other
commitments to their employees.
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Section 2.8 Title to Property. The Company has good and
marketable title to all properties and assets, real and personal, proprietary or
otherwise, reflected in its balance sheets, and the properties and assets of the
Company are subject to no mortgage, pledge, lien or encumbrance, except as
reflected in the financial statements of the Company, with respect to which no
default exists.
Section 2.9 Litigation. Except as set forth in Schedule 2.9,
here is no litigation or proceeding pending, or to the knowledge of the Company,
threatened, against or relating to the Company or its properties or business,
except litigation which is not expected to have any material adverse effect on
the Company. Further, no officer, director or person who may be deemed to be an
affiliate of the Company is party to any material legal proceeding which could
have an adverse effect on the Company (financial or otherwise), and none is
party to any action or proceeding wherein any has an interest adverse to the
Company.
Section 2.10 Books and Records. From the date of this
Agreement to the Closing, Sellers will cause Company to (i) give to NewCo and
its representatives full access during normal business hours to all of Company
offices, books, records, contracts and other corporate documents and properties
so that NewCo may inspect and audit them; and (ii) furnish such information
concerning the properties and affairs of Company as NewCo may reasonably
request.
Section 2.11 Tax Returns. Except as set forth in Schedule
2.11, Company has filed all federal and state income or franchise tax returns
that have been required to be filed by it or has received currently effective
extensions of the required filing dates.
Section 2.12 Confidentiality. Until the Closing (and
continuously if there is no Closing), Company,the Sellers and their
representatives will keep confidential any information which they obtain from
NewCo concerning its properties, assets and business. If the transactions
contemplated by this Agreement are not consummated by May 30, 2004, Company, the
Sellers will return to NewCo all written matter with respect to NewCo obtained
by them in connection with the negotiation or consummation of this Agreement.
Section 2.13 Environmental Matters. Company, the Sellers have
no knowledge of any assertion by any governmental agency or other regulatory
authority of any environmental lien, action or proceeding, or of any cause for
any such lien, action or proceeding related to the business operations of
Company or its predecessors. "Hazardous Materials" means any oil or
petrochemical products, PCB's, asbestos, urea formaldehyde, flammable
explosives, radioactive materials, solid or hazardous wastes, chemicals, toxic
substances or related materials, including, without limitation, any substances
defined as or included in the definition of "hazardous substances," "hazardous
wastes," " hazardous materials" or "toxic substances" under any applicable
federal or state laws or regulations. "Hazardous Materials Regulations" means
any regulations governing the use, generation, handling, storage, treatment,
disposal or release of hazardous materials, including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act, the
Resource Conservation and Recovery Act and the Federal Water Pollution Control
Act.
Section 2.14 Access to Information Regarding NewCo. Company,
The Sellers acknowledge that NewCo has delivered them copies of what has been
represented to be documentation containing all material information respecting
NewCo and its present and contemplated business operations, potential
acquisitions, management and other factors, by personal delivery to them and/or
by notification of access to the reports and registration statements of NewCo
that contain such information in the ▇▇▇▇▇ Archives of the Securities and
Exchange Commission at ▇▇▇.▇▇▇.▇▇▇; that they have had a reasonable opportunity
to review such documentation and to discuss it, to the extent desired, with
their legal counsel, directors and executive officers; that they have had, to
the extent desired, the opportunity to ask questions of and receive responses
from the sole director and executive officer of NewCo, and with the legal and
accounting firms of NewCo, with respect to such documentation; and that to the
extent requested, all questions raised have been answered to their complete
satisfaction.
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ARTICLE III
INVESTMENT AND PURCHASER REPRESENTATIONS
Section 3.1. The Purchaser and Tryant hereby represent and warrant to
the Sellers, jointly and severally, that:
(a) Common and Preferred Stock. All of the common stock and
Preferred Stock of the Purchaser have been duly authorized, validly issued,
fully paid and are non-assessable. Upon issuance, the Management Common Stock
and Preferred Stock Purchase Securities shall be duly authorized, validly
issued, fully paid and non-assessable.
(b) Authorization and Validity of Agreement. The Purchaser has
full power and authority (corporate or otherwise) to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by the Purchaser and, assuming the due execution of this Agreement by
each of the Sellers, is a valid and binding obligation of the Purchaser,
enforceable against the Purchaser in accordance with its terms, except to the
extent that its enforceability may be subject to applicable bankruptcy,
insolvency, reorganization and similar laws affecting the enforcement of
creditors' rights generally and to general equitable principles.
(c) Consents and Approvals; No Violations. The execution and
delivery of this Agreement by the Purchaser and the consummation by the
Purchaser of the purchase and sale of the Hill Securities as contemplated herein
and the other transactions contemplated hereby (a) will not violate the
provisions of the Articles of Incorporation or Bylaws of the Purchaser, (b) will
not violate any statute, rule, regulation, order or decree of any public body or
authority by which the Purchaser is bound or by which any of its properties or
assets are bound, (c) will not require any filing with, or permit, consent or
approval of, or the giving of any notice to, any United States governmental or
regulatory body, agency or authority on or prior to the Closing Date (as defined
in Section 1.3), and (d) will not result in a violation or breach of, conflict
with, constitute (with or without due notice or lapse of time or both) a default
(or give rise to any right of termination, cancellation, payment or
acceleration) under, or result in the creation of any Encumbrance upon any of
the properties or assets of the Purchaser under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, license, franchise, permit,
agreement, lease, franchise agreement or any other instrument or obligation to
which the Purchaser is a party, or by which they or any of its properties or
assets may be bound.
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(d) Organization and Good Standing. NewCo is a corporation
duly organized, validly existing and in good standing under the laws of Utah and
is qualified to do business as a foreign corporation in each jurisdiction where
the failure to be so qualified would have a material adverse effect on NewCo.
(e) Capitalization. NewCo's authorized capital stock consists
of 105,000,000 shares of common stock, $0.001 par value per share, 800,000 of
which are issued and outstanding and 5,000,000 shares of preferred stock, 50,000
of which are issued and outstanding as Series A Preferred Stock. As of the
Closing Date, 580,000 shares of the currently issued and outstanding common
stock, and all of the issued and outstanding Series A Preferred Stock, will be
cancelled, and there will be a total of 220,000 shares of common stock remaining
outstanding. All of the issued and outstanding shares of NewCo common stock and
preferred stock were duly authorized for issuance and are validly issued, fully
paid and non-assessable. There are no options, warrants, convertible securities,
any rights of first refusal, any preemptive rights or any other right to acquire
equity securities of NewCo outstanding, except for those which will be cancelled
on or prior to the Closing Date.
(f) Subsidiaries. NewCo does not, directly or indirectly, own
any shares of any capital stock or other equity interest in, has not made any
investment in, and does not control or have any proprietary interest in, any
corporation, partnership, joint venture or other business association or entity.
(g) SEC Documents. NewCo has filed all reports required to be
filed by it under the Securities Act of 1933, as amended (the "Securities Act")
and the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
including pursuant to Section 13(a) or 15(d) thereof, for the three years
preceding the date hereof (or such shorter period as NewCo was required by law
to file such material) (the foregoing materials, including the exhibits thereto,
being collectively referred to herein as the "SEC Reports"). The SEC Documents
constitute all of the documents and reports that NewCo was required to file with
the SEC pursuant to the Exchange Act and the rules and regulations promulgated
thereunder by the SEC since January 24, 2002. As of their respective dates, the
SEC Documents complied in all material respects with the requirements of the
Exchange Act and the rules and regulations promulgated thereunder and none of
the SEC Documents contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The financial statements of NewCo included in the SEC Documents
comply as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto, have been prepared in accordance with generally accepted accounting
principles in the United States ("U.S. GAAP") (except, in the case of unaudited
statements, as permitted by the applicable form under the Exchange Act) applied
on a consistent basis during the periods involved (except as may be indicated in
the notes thereto) and fairly present the financial position of NewCo as of the
dates thereof and its statements of operations, shareholders' equity and cash
flows for the periods then ended (subject, in the case of unaudited statements,
to normal and recurring year-end audit adjustments which were and are not
expected to have a material adverse effect on NewCo, its business, financial
condition or results of operations). Except as and to the extent set forth on
the consolidated balance sheet of NewCo at December 31, 2003, including the
notes thereto, and Schedule 3.1(g) attached hereto, NewCo has no liability or
obligation of any nature (whether accrued, absolute, contingent or otherwise and
whether required to be reflected on a balance sheet or not).
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(h) Financial Statements.
(1) Included in the SEC Documents are the audited balance sheets
of NewCo December 31, 2003 and 2002, and the related consolidated statements of
operations and shareholders' deficit, and cash flows for the years then ended,
and for the period January 1, 2002 through December 31, 2003, together with the
unqualified report thereon (except with respect to continuation as a going
concern) of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Certified Public Accountant ("▇▇▇▇▇▇"),
independent auditor (collectively, "NewCo's Audited Financials").
(2) NewCo's Audited Financials ("NewCo's Financial Statements")
are (i) in accordance with the books and records of NewCo, (ii) correct and
complete, (iii) fairly present the financial position and results of operations
of NewCo as of the dates indicated, and (iv) prepared in accordance with U.S.
GAAP (except that (x) unaudited financial statements may not be in accordance
with U.S. GAAP because of the absence of footnotes normally contained therein,
and (y) interim (unaudited) financials are subject to normal year-end audit
adjustments that in the aggregate will not have a material adverse effect on
NewCo, its business, financial condition or results of operations).
(i) Events Subsequent to Financial Statements. Except as
reflected in the Annual Report on Form 10-KSB for the annual period ended
December 31, 2003, since December 31, 2003:
(1) NewCo has not entered into any transaction or
contract or conducted any business other than seeking a business
combination or other strategic transaction;
(2) NewCo has not failed to pay and discharge its
current liabilities in the ordinary course of business consistent with
past practice;
(3) NewCo has not incurred any indebtedness or
liability or assumed any obligations;
(4) NewCo has not waived or released any right of any
material value;
(5) NewCo has not paid any compensation or benefits
to officers or directors of NewCo;
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(6) NewCo has not made or authorized any amendment in
the Certificate of Incorporation or Bylaws of NewCo, other than the
designation of NewCo's Series B Preferred Stock which forms a part of
the Preferred Stock Purchase Securities; and the proposed amendment to
the Certificate of Incorporation regarding the change of the
corporation's name from "Bikini Team International, Inc." to
"Logistical Support, Inc.".
(7) there has been no material adverse change in the
condition (financial or otherwise) of the properties, assets,
liabilities or business of NewCo.
(j) Public Listing of NewCo. NewCo has never been listed on
any national stock exchange or national market system in the United States or
elsewhere except the NASD OTC Bulletin Board ("OTCBB"), and its common stock is
currently quoted on the OTCBB. Since its last application for quotation on the
OTCBB was approved, NewCo has not received notice from the OTCBB to the effect
that NewCo is not in compliance with the listing or maintenance requirements of
the OTCBB. NewCo is, and has no reason to believe that it will not, in the
foreseeable future, continue to be, in compliance with all such listing and
maintenance requirements.
(k) Litigation. There is no suit, action, proceeding,
investigation, claim or order pending or, to the knowledge of NewCo, threatened
against NewCo (or to the knowledge of NewCo, pending or threatened, against any
of the officers or directors of NewCo with respect to their business activities
on behalf of NewCo), or to which NewCo is otherwise a party, before any court,
or before any governmental department, commission, board, agency, or
instrumentality; nor to the knowledge of NewCo is there any reasonable basis for
any such action, proceeding or investigation.
(l) Governmental Consents. All consents, approvals, orders,
authorizations or registrations, qualifications, designations, declarations or
filings with any U.S., federal or state governmental authority on the part of
NewCo required in connection with the consummation of the transactions
contemplated herein shall have been obtained prior to and be effective as of the
Closing, except that NewCo shall be required to file with the SEC following the
Closing an amendment to its Schedule 13D.
(m) Third Party Consents. All third party consents, approvals,
orders or authorizations required to be obtained by NewCo in connection with the
consummation of the transactions contemplated herein have been obtained.
(n) Books and Records. NewCo has delivered to Company a
complete copy of all corporate minutes and financial records of NewCo from its
inception through the Closing Date, and has disclosed to Company NewCo's current
CCC number as provided by the SEC.
(o) No Disagreements with Accountants and Lawyers. There are
no disagreements of any kind presently existing, or reasonably anticipated by
NewCo to arise, between the accountants and lawyers presently employed by NewCo
and NewCo is current with respect to any fees owed to its accountants and
lawyers.
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(p) Disclosure. The representations and warranties and
statements of fact made by NewCo in this Agreement are accurate, correct and
complete in all material respects and do not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements and information contained herein not false or misleading.
Section 3.2 Investment Representations. The Purchaser hereby represents
to the Company and each Shareholder that:
(a) Purchaser has such knowledge and experience in financial
and business matters so as to be capable of evaluating and understanding, and
has evaluated and understood, the merits and risks of an investment in the
Company and the acquisition of securities of the Company, and Purchaser has been
given the opportunity to (i) obtain information and to examine all documents
relating to the Company and the Company's business, to (ii) ask questions of,
and to receive answers from, the Company concerning the Company, the Company's
business and the terms and conditions of an investment in the Company, and to
(iii) obtain any additional information, to the extent the Company possesses
such information or could acquire such information without unreasonable effort
or expense, necessary to verify the accuracy of any information previously
furnished. All such questions have been answered to Purchaser's full
satisfaction, and all information and documents, records and books pertaining to
an investment in the Company which Purchaser has requested have been made
available to Purchaser.
(b) Purchaser is able to bear the substantial economic risks
of Purchaser's investment in the Company and the purchase of securities of the
Company in that, among other factors, Purchaser can afford to hold securities of
the Company for an indefinite period and can afford a complete loss of
Purchaser's investment in the Company.
(c) No material adverse change in Purchaser's financial
condition has taken place during the past twelve (12) months, and Purchaser will
have sufficient liquidity with respect to Purchaser's net worth for an adequate
period of time to provide for Purchaser's needs and contingencies.
(d) Purchaser is relying solely on Purchaser's own decision or
the advice of Purchaser's own adviser(s) with respect to an investment in the
Company and the acquisition of securities of the Company, and has neither
received nor relied on any communication from the Company, the Company's
officers or the Company's agents regarding any legal, investment or tax advice
relating to an investment in the Company and the acquisition of securities of
the Company.
(e) Purchaser recognizes that investments in the Company
involve substantial risks in that, among other factors: (i) successful operation
of the Company depends on factors beyond the control of the Company; (ii) an
investment in the Company is a speculative investment and involves a high degree
of risk of loss; (iii) the Company is engaged in an industry which is highly
competitive and subject to substantial risks relating to rapid technological
change, fierce competition, uncertain markets and an uncertain customer base;
(iv) retention of key employees is critical to the Company's business; (v) the
Company has a limited amount of working capital available to it; and (vi) there
will be no public market for securities of the Company acquired by Purchaser
hereunder and, accordingly, it may not be possible to liquidate an investment in
the Company in case of immediate need of funds or any other emergency, if at
all. Purchaser has taken full cognizance of, and understands, such risks and has
obtained sufficient information to evaluate the merits and risks of an
investment in the Company and the acquisition of securities of the Company.
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(f) Purchaser confirms that none of the Company's officers nor
any of the Company's agents have made any warranties concerning an investment in
the Company, including, without limitation, any warranties concerning
anticipated financial results, or the likelihood of success of the operations,
of the Company.
(g) Securities of the Company are acquired by Purchaser for
Purchaser's own account, for investment and not with a view to, or in connection
with, any public offering or distribution of the same and without any present
intention to sell the same at any particular event or circumstances. Purchaser
has no agreement or other arrangement with any person to sell, transfer or
pledge any part of securities of the Company which would guarantee Purchaser any
profit or provide any guarantee to Purchaser against any loss with respect to
securities of the Company.
(h) Purchaser understands that no federal, state or other
governmental agency of the United States or any other territory or nation has
passed on or made any recommendation or endorsement of an investment in
securities of the Company.
(i) Purchaser understands that securities of the Company have
not been registered under the United States Securities Act of 1933, as amended
(the "Act") or applicable state or other securities laws, and securities of the
Company are offered and sold under an exemption from registration provided by
such laws and the rules and regulations thereunder; further, Purchaser
understands that the Company is under no obligation to register securities of
the Company or to comply with any applicable exemption under any applicable
securities laws with respect to securities of the Company. Purchaser must bear
the economic risks of an investment in the Company for an indefinite period of
time because it is not anticipated that there will be any market for securities
of the Company and because securities of the Company cannot be resold unless
subsequently registered under applicable securities laws or unless an exemption
from such registration is available. Purchaser also understands that the
exemption provided by Rule 144 under the Act may not be available because of the
conditions and limitations of such Rule, and that in the absence of the
availability of such Rule, any disposition by Purchaser of any portion of
securities of the Company may require compliance with some other exemption under
the Act.
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(j) Purchaser has been informed that legends referring to the
restrictions indicated herein are placed on the certificate(s) evidencing
securities of the Company held by Purchaser.
(k) Purchaser agrees that the foregoing representations and
warranties will survive the sale of securities of the Company to Purchaser, as
well as any investigation made by any party relying on same.
(l) Purchaser is an "accredited investor" as such term is
defined in Regulation D promulgated under the Act.
Section 3.3 Shareholder Investment Representations. The Sellers each
hereby represent to the Purchaser, jointly but not severally, that:
(a) Seller has such knowledge and experience in financial and
business matters so as to be capable of evaluating and understanding, and has
evaluated and understood, the merits and risks of an investment in the Purchaser
and the acquisition of securities of the Purchaser, and Seller has been given
the opportunity to (i) obtain information and to examine all documents relating
to the Purchaser and the Purchaser's business, to (ii) ask questions of, and to
receive answers from, the Purchaser concerning the Purchaser, the Purchaser's
business and the terms and conditions of an investment in the Purchaser, and to
(iii) obtain any additional information, to the extent the Purchaser possesses
such information or could acquire such information without unreasonable effort
or expense, necessary to verify the accuracy of any information previously
furnished. All such questions have been answered to Seller's full satisfaction,
and all information and documents, records and books pertaining to an investment
in the Purchaser which Shareholder has requested have been made available to
Seller.
(b) Seller is able to bear the substantial economic risks of
Seller's investment in the Purchaser and the purchase of securities of the
Purchaser in that, among other factors, Seller can afford to hold securities of
the Purchaser for an indefinite period and can afford a complete loss of
Seller's investment in the Purchaser.
(c) No material adverse change in Seller's financial condition
has taken place during the past twelve (12) months, and Seller will have
sufficient liquidity with respect to Seller's net worth for an adequate period
of time to provide for Seller's needs and contingencies.
(d) Seller is relying solely on Seller's own decision or the
advice of Seller's own advisor(s) with respect to an investment in the Purchaser
and the acquisition of securities of the Purchaser, and has neither received nor
relied on any communication from the Purchaser, the Purchaser's officers or the
Purchaser's agents regarding any legal, investment or tax advice relating to an
investment in the Purchaser and the acquisition of securities of the Purchaser.
11
(e) Securities of the Purchaser are acquired by Seller for
Seller's own account, for investment and not with a view to, or in connection
with, any public offering or distribution of the same and without any present
intention to sell the same at any particular event or circumstances. Seller has
no agreement or other arrangement with any person to sell, transfer or pledge
any part of securities of the Purchaser which would guarantee Seller any profit
or provide any guarantee to Seller against any loss with respect to securities
of the Purchaser.
(h) Seller understands that no federal, state or other
governmental agency of the United States or any other territory or nation has
passed on or made any recommendation or endorsement of an investment in
securities of the Purchaser.
(i) Seller understands that securities of the Purchaser have
not been registered under the United States Securities Act of 1933, as amended
(the "Act") or applicable state or other securities laws, and securities of the
Purchaser are offered and sold under an exemption from registration provided by
such laws and the rules and regulations thereunder; further, Seller understands
that the Purchaser is under no obligation to register securities of the
Purchaser or to comply with any applicable exemption under any applicable
securities laws with respect to securities of the Purchaser. Seller must bear
the economic risks of an investment in the Purchaser for an indefinite period of
time because it is not anticipated that there will be any market for securities
of the Purchaser and because securities of the Purchaser cannot be resold unless
subsequently registered under applicable securities laws or unless an exemption
from such registration is available. Seller also understands that the exemption
provided by Rule 144 under the Act may not be available because of the
conditions and limitations of such Rule, and that in the absence of the
availability of such Rule, any disposition by Shareholder of any portion of
securities of the Purchaser may require compliance with some other exemption
under the Act.
(j) Seller has been informed that legends referring to the
restrictions indicated herein are placed on the certificate(s) evidencing
securities of the Purchaser held by Seller.
(k) Seller agrees that the foregoing representations and
warranties will survive the sale of securities of the Purchaser to Seller, as
well as any investigation made by any party relying on same.
ARTICLE IV
CONDITIONS TO OBLIGATIONS
Section 4.1 Purchaser. The purchase of the Hill Securities by
Purchaser on the Closing Date is conditioned upon the satisfaction or waiver, at
or prior to the consummation of the sale of Hill Securities, of the following
conditions:
(a) Truth of Representations and Warranties. The
representations and warranties of contained in this Agreement shall be true and
correct in all material respects on and as of the Closing Date with the same
effect as though such representations and warranties have been made on and as of
such date (except to the extent that any such representation and warranty is
stated in this Agreement to be made as of a specific date, in which case such
representation and warranty shall be true and correct as of such specified
date).
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(b) Performance of Agreements. Seller and all of the
agreements of Company to be performed at or prior to the Closing Date pursuant
to the terms hereof shall have been duly performed in all material respects.
(c) No Injunction. No court or other government body or public
authority shall have issued an order which shall then be in effect restraining
or prohibiting the completion of the transactions contemplated hereby.
(d) No Litigation. There shall not be any action, suit or
proceeding pending or threatened that seeks to (i) make the consummation of the
transactions contemplated hereby illegal or otherwise restrict or prohibit
consummation thereof or (ii) require the divestiture by Purchaser or any of its
subsidiaries or Affiliates of shares of stock or of any business, assets or
property of any of its subsidiaries or Affiliates, or impose any material
limitation on the ability of any of them to conduct their business or to own or
exercise control of such assets, properties or stock and which, in either case,
in the reasonable, good faith determination of Purchaser has a significant
likelihood of having a material adverse effect on Purchaser.
Section 4.2 Sellers and Company. The sale of the Hill
Securities by Sellers on the Closing Date is conditioned upon the satisfaction
or waiver, at or prior to the consummation of the sale of Hill Securities, of
the following conditions:
(a) Truth of Representations and Warranties. The
representations and warranties of Purchaser contained in this Agreement shall be
true and correct in all material respects on and as of the Closing Date with the
same effect as though such representations and warranties have been made on and
as of such date (except to the extent that any such representation and warranty
is stated in this Agreement to be made as of a specific date, in which case such
representation and warranty shall be true and correct as of such specified
date).
(b) Performance of Agreements. Seller and all of the
agreements of Purchaser to be performed at or prior to the Closing Date pursuant
to the terms hereof shall have been duly performed in all material respects.
(c) No Injunction. No court or other government body or public
authority shall have issued an order which shall then be in effect restraining
or prohibiting the completion of the transactions contemplated hereby.
(d) No Litigation. There shall not be any action, suit or
proceeding pending or threatened that seeks to (i) make the consummation of the
transactions contemplated hereby illegal or otherwise restrict or prohibit
consummation thereof or (ii) require the divestiture by Purchaser or any of its
subsidiaries or Affiliates of shares of stock or of any business, assets or
property of any of its subsidiaries or Affiliates, or impose any material
limitation on the ability of any of them to conduct their business or to own or
exercise control of such assets, properties or stock and which, in either case,
in the reasonable, good faith determination of Purchaser has a significant
likelihood of having a material adverse effect on Purchaser.
13
(e) Due Diligence. The Company shall have completed its due
diligence of NewCo, including without limitation, its capitalization, corporate
books and liabilities, to its reasonable satisfaction.
ARTICLE V
POST-CLOSING COVENANTS
Section 5.1 Audit. The Company shall, as soon as possible,
commence an audit, with an independent certified public accounting firm chosen
by the Company Board, of the Company's 2002 and 2003 fiscal year end income
statements and balance sheets, as well as any other financial statements that
are required to be filed by NewCo, within 60 days of the closing of the
acquisition of the Company by NewCo.
Section 5.2 Consulting Fee. The Purchaser shall issue to
Tryant Capital, LLC a consulting fee in the amount of 525,000 shares of the
common stock of Purchaser, issued immediately after the closing of the
transactions contemplated herein. This fee is paid for services rendered to the
Purchaser in identifying the Company and negotiating the transactions
contemplated herein, as well as arranging for the payment of all currently
outstanding liabilities of the Purchaser (approximately $20,000) and providing
the indemnification set forth in this Agreement. Tryant Capital, LLC shall have
paid all outstanding liabilities of the Purchaser prior to the Closing Date.
Section 5.3 Survival. The representations and warranties of
Articles II and III shall survive the termination of this Agreement indefinitely
(subject to applicable statute of limitations).
Section 5.4 Warrant. The Purchaser shall issue ▇▇▇▇▇ ▇▇▇▇▇▇▇ a
warrant to purchase 9,633,937 shares of common stock at $0.20 per share for a
five-year period promptly after the Closing.
14
ARTICLE VI
MISCELLANEOUS
Section 6.1 Expenses. Except as otherwise provided in this
Agreement, each party to this Agreement will bear its respective fees and
expenses incurred in connection with the preparation, negotiation, execution and
performance of this Agreement and the transactions contemplated herein. If this
Agreement is terminated, the obligation of each party to pay its own fees and
expenses will be subject to any rights of such party arising from a breach of
this Agreement by another party.
Section 6.2 Waiver; Remedies Cumulative. The rights and
remedies of the parties to this Agreement are cumulative and not alternative.
Neither any failure nor any delay by any party in exercising any right, power or
privilege under this Agreement or any of the documents referred to in this
Agreement will operate as a waiver of such right, power or privilege, and no
single or partial exercise of any such right, power or privilege will preclude
any other or further exercise of such right, power or privilege or the exercise
of any other right, power or privilege. To the maximum extent permitted by
applicable law, (a) no claim or right arising out of this Agreement or any of
the documents referred to in this Agreement can be discharged by one party, in
whole or in part, by a waiver or renunciation of the claim or right unless in
writing signed by the other party; (b) no waiver that may be given by a party
will be applicable except in the specific instance for which it is given; and
(c) no notice to or demand on one party will be deemed to be a waiver of any
obligation of that party or of the right of the party giving such notice or
demand to take further action without notice or demand as provided in this
Agreement or the documents referred to in this Agreement.
Section 6.3 Entire Agreement and Modification. This Agreement
supersedes all prior agreements, whether written or oral, between the parties
with respect to its subject matter, and constitutes a complete and exclusive
statement of the terms of the agreement between the parties with respect to its
subject matter. This Agreement may not be amended, supplemented, or otherwise
modified except by a written agreement executed by the party to be charged with
the amendment.
Section 6.4 Assignments, Successors and No Third-Party Rights.
No party may assign any of its rights or delegate any of its obligations under
this Agreement without the prior written consent of the other parties. Subject
to the preceding sentence, this Agreement will apply to, be binding in all
respects upon and inure to the benefit of the successors and permitted assigns
of the parties. Nothing expressed or referred to in this Agreement will be
construed to give any Person other than the parties to this Agreement any legal
or equitable right, remedy or claim under or with respect to this Agreement or
any provision of this Agreement, except such rights as shall inure to a
successor or permitted assignee pursuant to this Section.
Section 6.5 Severability. If any provision of this Agreement
is held invalid or unenforceable by any court of competent jurisdiction, the
other provisions of this Agreement will remain in full force and effect. Any
provision of this Agreement held invalid or unenforceable only in part or degree
will remain in full force and effect to the extent not held invalid or
unenforceable.
15
Section 6.6 Construction. The headings of Articles and
Sections in this Agreement are provided for convenience only and will not affect
its construction or interpretation. All references to "Articles" and "Sections"
refer to the corresponding Articles and Sections of this Agreement.
Section 6.7 Time of Essence. With regard to all dates and time
periods set forth or referred to in this Agreement, time is of the essence.
Section 6.8 Notices. All notices, consents, waivers and other
communications required or permitted by this Agreement shall be in writing and
shall be deemed given to a party when (a) delivered to the appropriate address
by hand or by nationally recognized overnight courier service (costs prepaid);
(b) sent by facsimile or e-mail with confirmation of transmission by the
transmitting equipment, so long as such facsimile or e-mail is followed by a
copy sent by mail; or (c) received or rejected by the addressee, if sent by
certified mail, return receipt requested, in each case to the following
addresses, facsimile numbers or e-mail addresses and marked to the attention of
the person (by name or title) designated below (or to such other address,
facsimile number, e-mail address or person as a party may designate by notice to
the other parties):
if to Purchaser, to it at:
c/o GCH Capital, Ltd.
▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇, #▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
TO THE COMPANY:
Logistical Support, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Section 6.9 Governing Law; Consent to Jurisdiction. (a) The
interpretation and construction of this Agreement, and all matters relating
hereto, shall be governed by the laws of the State of California applicable to
contracts made and to be performed entirely within the State of California.
16
(b) Any proceeding, action, litigation or claim (a "Proceeding")
arising out of or relating to this Agreement or any of the transactions
contemplated herein may be brought in the courts of the State of California,
County of Los Angeles, or, if it has or can acquire jurisdiction, in the United
States District Court for the Central District of California, and each of the
parties irrevocably submits to the exclusive jurisdiction of each such court in
any such Proceeding, waives any objection it may now or hereafter have to venue
or to convenience of forum, agrees that all claims in respect of the Proceeding
shall be heard and determined only in any such court and agrees not to bring any
Proceeding arising out of or relating to this Agreement or any of the
transactions contemplated herein in any other court. The parties agree that
either or both of them may file a copy of this paragraph with any court as
written evidence of the knowing, voluntary and bargained agreement between the
parties irrevocably to waive any objections to venue or to convenience of forum.
Each party hereto hereby consents to process being served in any such action or
proceeding by the mailing of a copy thereof to the address set forth opposite
its name below and agrees that such service upon receipt shall constitute good
and sufficient service of process or notice thereof. Nothing in this paragraph
shall affect or eliminate any right to serve process in any other manner
permitted by law.
Section 6.10 WAIVER OF JURY TRIAL. THE PARTIES HEREBY WAIVE
ANY RIGHT TO TRIAL BY JURY IN ANY PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY OF THE CONTEMPLATED TRANSACTIONS, WHETHER NOW EXISTING OR
HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE. THE
PARTIES AGREE THAT ANY OF THEM MAY FILE A COPY OF THIS PARAGRAPH WITH ANY COURT
AS WRITTEN EVIDENCE OF THE KNOWING, VOLUNTARY AND BARGAINED-FOR AGREEMENT AMONG
THE PARTIES IRREVOCABLY TO WAIVE TRIAL BY JURY AND THAT ANY PROCEEDING
WHATSOEVER BETWEEN THEM RELATING TO THIS AGREEMENT OR ANY OF THE CONTEMPLATED
TRANSACTIONS SHALL INSTEAD BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A
JUDGE SITTING WITHOUT A JURY.
Section 6.11 Execution of Agreement. This Agreement may be
executed in one or more counterparts, each of which will be deemed to be an
original copy of this Agreement and all of which, when taken together, will be
deemed to constitute one and the same agreement. The exchange of copies of this
Agreement and of signature pages by facsimile transmission shall constitute
effective execution and delivery of this Agreement as to the parties and may be
used in lieu of the original Agreement for all purposes. Signatures of the
parties transmitted by facsimile shall be deemed to be their original signatures
for all purposes.
17
ARTICLE VII
INDEMNIFICATION.
Section 7.1 Tryant and ▇▇▇▇▇▇ hereby agree, jointly and
severally, to indemnify and hold harmless the Company and its affiliates and
their respective officers, directors, partners, members, managers, shareholders,
employees and agents ("Indemnified Party") from and against any and all losses,
claims, damages, judgments, penalties, liabilities and deficiencies, and agrees
to reimburse the other for all reasonable out-of-pocket expenses (including
reasonable fees and expenses of legal counsel), in each case promptly as
incurred by the Indemnified Party, to the extent arising out of or in connection
with any material misrepresentation or material breach of any of Tryant's
representations or warranties contained in this Agreement.
Section 7.2 Tryant and ▇▇▇▇▇▇ agree, jointly and severally, to
indemnify Company against any and all debts, liabilities and obligations of
NewCo (whether contingent or otherwise) existing or arising on or before the
date of this Agreement. Following the Closing, Tryant agrees to pay any and all
such pre-existing debts, liabilities and obligations when and as such
liabilities and obligations are discovered or become due, upon demand made by
Company.
[SIGNATURE PAGE FOLLOWS]
18
IN WITNESS WHEREOF, each of the parties have caused this Stock Purchase
Agreement to be executed all as of the day and year first above written.
Logistical Support, LLC,
a California limited liability company Bikini Team International, Inc.
a Utah corporation
By: ________________________ By: _______________________
▇▇▇▇▇▇ Lucan Name:
President Title:
By: ________________________
▇▇▇▇▇ ▇▇▇▇▇▇▇ The Morpheus Trust:
Manager and Chief Executive Officer
Hill Aerospace & Defense, LLC,
a California limited liability company By: _________________
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
By: ▇▇▇▇ Industries, LLC Title: Trustee
Its: Managing Member
▇▇▇▇▇▇▇▇▇▇ Investments, Ltd.:
By: _______________________________
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Managing Member By: _________________
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: Managing Director
The ▇▇▇▇▇▇▇▇ Family Trust
dated 7/1/03:
▇▇▇▇▇▇▇
The Children's Trust of 1988,
G. ▇▇▇▇▇ ▇▇▇▇▇▇▇, as Trustee
By:_________________
Name:
By: __________________________ Title:
Name: G. ▇▇▇▇▇ ▇▇▇▇▇▇▇
The Gateway Real Estate
Investment Trust:
LEBOVITZ
By: _________________
_____________________________ Name: ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Title: Trustee
1
[Stock Exchange Agreement signature page continued]
LUCAN
_____________________________
▇▇▇▇▇▇ Lucan
HILL INDUSTRIES, INC.
_____________________________
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, President
WILL
_____________________________
▇▇▇▇ Will
Tryant Capital, LLC
a Delaware limited liability company
By: _____________________
Name:
Title:
[Stock Exchange Agreement signature page continued]
PICASSO, LLC.
_____________________________
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Title:
THE GLACIER TRUST
_____________________________
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title:
_____________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
