FORM OF PURCHASE AND CONTRIBUTION AGREEMENT

 

 

                                 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 Y2 (the "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 Huff 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 (the "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 Y2, (ii) 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 sue,

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 Y2 (in 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 Y2 (in 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 Hybrid-Systems.com,

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