SEPARATION AGREEMENT
This
Separation Agreement is made as of this1st day of June, 2005 by and among, on
the one hand, Logistical Support, Inc., a Utah corporation (the “Company”), Hill
Aerospace and Defense, LLC, a California limited liability company (“HAD”),
Logistical Support, LLC, a California limited liability company (“LS” and
together with the Company and HAD, “Logistical”), and on the other hand, Xx.
Xxxxx Xxxxxxxx (“Xxxxxxxx”), Xxxx Industries, Inc., a California corporation
(“Hill Inc.”) and Hill Industries, LLC, a California limited liability company
(“Hill LLC” and together with Hill Inc, the “Hill Entities”) (collectively, the
“Parties” and each a “Party”).
WITNESSETH:
WHEREAS,
Lebovitz is a member of the Board of Directors of the Company and is a
significant shareholder of the Company; and
WHEREAS,
Lebovitz currently manages one or more of HAD or LS and has access to the
facility, books, records, and other properties of Logistical; and
WHEREAS,
Lebovitz owns and/or controls each of the Hill Entities; and
WHEREAS,
the Company and Lebovitz have determined to separate Lebovitz and the Hill
Entities from Logistical and the business and operations and properties of
Logistical; and
WHEREAS,
the Company, Xx. Xxxxx Xxxxxxx, a Member of the Board of Directors of the
Company and Lebovitz agree that this Separation Agreement and the actions
contemplated hereby and the terms hereof, and the results intended hereby, are
in the best interests of the Company and its shareholders.
NOW,
THEREFORE, the Company, Lebovitz and the Hill Entities intending to be legally
bound, and in consideration of the covenants and promises set forth herein, and
other good and valuable consideration, the receipt of which is hereby
acknowledged, hereby agree as follows:
1. Resignation
and Leave of Absence. Effective
immediately and without any further action on the part of Lebovitz or the
Company, Lebovitz hereby resigns from the Board of Directors of the Company (the
“Board Resignation”). Such Board Resignation is hereby accepted by the Company.
Effective immediately, Lebovitz shall be on a leave of absence from any and all
management and other employment positions he holds with HAD, LS or the Company
(the “LOA”). The Company hereby
approves of the LOA. The Company and Lebovitz hereby agree that such LOA shall
be unpaid and that no salary, sick days, vacation days or other benefits shall
accrue or be due or payable to Lebovitz during such LOA.
1
2. Stock
Purchase.
(a)
Purchases. The
Company hereby agrees, upon the terms and conditions set forth herein, to
purchase from Lebovitz and the Hill Entities $25,000.00 per month of the shares
of common stock of Logistical Support, Inc. (the “Common Stock”) owned by
Lebovitz and/or the Hill Entities, at a price per share of $0.25 (the “Purchase
Price”). Accordingly, commencing on June 15, 2005 and on each calendar month
thereafter for a period of 12 months in total (the “Purchase Period”), the
Company shall tender to Lebovitz and/or the Hill Entities, as applicable the
amount of $25,000, up to an aggregate during the Purchase Period of $300,000.00
(the “Purchase Amount”), provided the conditions of this Section 2 are
satisfied. Within five (5) business days of the date hereof, Lebovitz shall
deliver, or cause the Hill Entities to deliver, to the Company at the Company’s
principal office, stock certificates representing not less than 1,200,000 shares
of Common Stock (the “Purchased Shares”), with stock powers endorsed to the
Company, and with appropriate instructions to the Transfer Agent of the Company
to transfer such shares to the order of the Company, and a request from the
Transfer Agent for an opinion of counsel to remove any restrictive legends on
the certificates. Upon the payment by the Company of the monthly purchase amount
(the “Monthly Purchase Amount”) the Company shall be deemed to own (an
additional) 100,000 of the Purchase Shares. The balance of the Purchased Shares,
until the aggregate of the Monthly Purchase Amount of $300,000.00 has been
tendered, shall be held in trust under this Agreement by the Company. Should
this Agreement be terminated by the Company for any reason, the Company shall be
obligated to return any shares held by it that have not been purchased by
payment of the Monthly Purchase Amount to Lebovitz.
(b) Conditions. The
Company shall have no obligation to purchase the Purchased Shares, or tender
such Monthly Purchase Amount, or any portion thereof, if at the time the Monthly
Payment Amount is to be tendered (i) the certificates representing such shares
are not properly executed, (ii) the stock powers are not duly completed in
blank, (iii) the instructions to the Transfer Agent are incomplete or are
rejected by the Transfer Agent, (iv) an opinion of counsel cannot be obtained to
the satisfaction of the Transfer Agent with respect to the transfer and
re-issuance of the certificates, (v) there shall be, or there shall have been,
an Event of Default under Section 8 of this Agreement, or (vi) for any other
reason that prevents the legal transfer and conveyance of such shares to the
Company, or such conveyance cannot be made without restriction, lien, claim or
encumbrance upon such shares. In addition, each of the representations and
warranties set forth under Section 4 shall be true and correct in all material
respects as of the date of payment by the Company of each Monthly Payment
Amount. In the event any representation or warranty shall be untrue, false, or
misleading at such date, the Company shall have no obligation to tender the
Monthly Purchase Amount and may demand return and repayment of any portion of
the Purchase Amount discovered to have been made while a breach of the
representations and warranties existed or while an Event of Default
existed.
(c)
Assurances. Lebovitz
agrees, and agrees to cause each of the Hill Entities, to take all such steps
requested by the Company as may be necessary or desirable to effect the transfer
of the Purchased Shares as set forth in paragraph (a) above.
2
4. Representations
of Lebovitz and the Hill Entities. Lebovitz
hereby represents and warrants for himself and on behalf of each of the Hill
Entities, as follows:
(a) All of
the Purchased Shares are owned free and clear of all claims, liens and
encumbrances. The Purchased Shares are not subject to any rights of first
refusal or other restrictions on transfer. Lebovitz and each of the Hill
Entities have the full power, right, authority and capacity to enter into this
Agreement and to transfer and sell the Purchased Shares in accordance with the
terms hereof.
(b) Except
for the Sun Aviation case, and except as reported in the Company’s filings with
the Securities and Exchange Commission, Lebovitz and the Hill Entities are not
parties to any lawsuit, investigation or proceeding, governmental or private,
and Lebovitz and the Hill Entities have not been notified of or threatened with
the commencement of such a proceeding.
(c) The Hill
Entities are owned and operated in compliance with all material laws and
regulations applicable to their business. The Hill Entities are operated in good
faith and not in a manner designed to circumvent law or general principals of
good faith and fair dealing. Hill Industries Inc. is not currently in good
standing.
(d) Lebovitz
has no knowledge of any circumstance that would give rise to a claim, proceeding
or investigation against the Company or the Board of the Company, arising from
his conduct as a member of the Board of Directors.
(e) Hill Inc.
is wholly owned by Lebovitz. Lebovitz owns seventy percent of the membership
interests of Hill LLC, including Hill Inc.’s membership interests. All necessary
action on the part of Hill Inc. and Hill LLC has been taken in order for such
entities to enter into this Agreement.
5. Release
and Indemnity.
(a) Release.
Lebovitz, Hill LLC, and Hill Inc. each irrevocably and unconditionally releases
all of the claims described in subsection (ii) of this section 5 that he or it
may now have against the following persons or entities (the “Releasees”): the
Company, HAD and LS, and all of their past and present employees, officers,
directors, stockholders, owners, representatives, assigns, attorneys, agents,
insurers, employee benefit programs (and the trustees, administrators,
fiduciaries and insurers of such programs) and any other persons acting by,
through, under or in concert with any of the persons or entities listed in this
subsection.
(b) Claims
Released. The
claims released include all claims, promises, debts, causes of action or similar
rights of any type or nature Lebovitz, Hill Inc. or Hill LLC has or had which in
any way relate to (i) Lebovitz’s employment with the Company, HAD or LS or the
termination of that employment, such as claims for compensation, bonuses,
commissions, lost wages or unused accrued vacation or sick pay, (ii) the design
or administration of any employee benefit program or Lebovitz’s entitlement to
benefits under any such program, (iii) any claims to attorneys’ fees and/or
other legal costs and (iv) any other claims or demands Lebovitz may, on any
basis, have. The claims released include, but are not limited to, claims arising
under any of the following statutes or common law doctrines:
3
(i) Anti-Discrimination
Statutes, such as the Age Discrimination in Employment Act, which prohibits age
discrimination in employment; the Civil Rights Act of 1991, Title VII of the
Civil Rights Act of 1964, and §1981 of the Civil Rights Act of 1866, which
prohibit discrimination based on race, color, national origin, religion or sex;
the Equal Pay Act, which prohibits paying men and women unequal pay for equal
work; the Americans With Disabilities Act, which prohibits discrimination
against the disabled; the California Fair Employment and Housing Act, which
prohibits discrimination in employment based upon race, color, national origin,
ancestry, physical or mental disability, medical condition, martial status, sex,
or age; and any other federal, state or local laws or regulations prohibiting
employment discrimination.
(ii) Federal
Employment Statutes, such as the Employee Retirement Income Security Act of
1974, which, among other things, protects pension or health plan benefits; and
the Fair Labor Standards Act of 1938, which regulates wage and hour
matters.
(iii) Other
laws, such as any federal, state or local laws restricting an employer’s right
to terminate employees or otherwise regulating employment; any federal, state or
local law enforcing express or implied employment contracts or requiring an
employer to deal with employees fairly or in good faith; and any other federal,
state or local laws providing recourse for alleged wrongful discharge, physical
or personal injury, emotional distress, fraud, negligent misrepresentation,
libel, slander, defamation and similar or related claims. The laws referred to
in this paragraph include statutes, regulations, other administrative guidance
and common law doctrines.
(c) Release
Extends to Both Known and Unknown Claims. This
release covers both claims that Lebovitz, Hill Inc. and Hill LLC knows about and
those Lebovitz, Hill Inc. and Hill LLC do not know about. Lebovitz understands
the significance of this release of unknown claims and his waiver of any
statutory protection against a release of unknown claims. Lebovitz expressly
waives the protection of any such governmental statutes or
regulations.
More
particularly, and without limitation, Lebovitz acknowledges that he has read and
is familiar with and understands the provisions of Section 1542 of the
California Civil Code, which provides:
“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH, IF
KNOWN TO HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE
DEBTOR.”
4
LEBOVITZ
EXPRESSLY WAIVES ANY RIGHT OR CLAIM OF RIGHT HE MAY HAVE UNDER SECTION 1542 OF
THE CALIFORNIA CIVIL CODE.
(d) Ownership
of Claims. Lebovitz
represents that he has not assigned or transferred, or purported to assign or
transfer, all or any part of any claim released by this Agreement for himself or
for any of Hill Inc. or Hill LLC.
(e) Lebovitz’s
Promises. In
addition to the release of claims provided for in this section 5, Lebovitz for
himself and for Hill Inc. and Hill LLC promises never to file or prosecute a
lawsuit, administrative complaint or charge, or other complaint or charge
asserting any claims that are released by this Agreement. Lebovitz represents
that he has not filed or caused to be filed any lawsuit, complaint or charge
with respect to any claim this Agreement releases. Lebovitz further agrees to
request any government agency or other body assuming jurisdiction of any
complaint or charge relating to a released claim to withdraw from the matter or
dismiss the matter with prejudice.
(f) Consequences
of Lebovitz’s Violation of Promises. If
Lebovtiz breaks any of the promises in this Agreement, such as, by way of
example and not by way of limitation, by filing or prosecuting a lawsuit or
charge based on claims that Lebovtiz has released, or if any representation made
by Lebovitz in this Agreement was false when made, Lebovitz will pay reasonable
attorneys’ fees and all other costs incurred as a result of such breach or false
representation, such as, by way of example and not by way of limitation, the
Company’s, HAD’s or LS’ cost of defending any suit brought with respect to a
claim released by him.
(g) Indemnity. Each of
Lebovitz, Hill Inc. and Hill LLC do hereby agree to indemnify and hold harmless
each of the Company, HAD, LS and their respective officers,
directors, employees, agents, representative, attorneys from any all damages,
costs, claims and expenses arising from or related to Lebovitz’s service on the
Company’s Board of Directors, his employment at Logistical, his or the Hill
Entities’ business operations or course of conduct, his shareholding of the
Company, any breach of this Agreement or any of the terms hereof, any Event of
Default as set forth in Section 8 of this Agreement, any misconduct or other
activity which predates the closing of the merger between the Company and Bikini
Team International, Inc. that might call into question any aspect of such
merger, or any other undertaking, activity, omission or action made by or on
behalf or at the direction of Lebovtiz, Hill Inc. or Hill LLC, whenever done,
made or initiated.
(h) Waiver.
The
Company, HAD and LS, and Lebovitz, acknowledge and agree each of them has
determined to waive the statutory 21 day waiting period, and 7 day revocation
period, in order to expedite the effectiveness of this Agreement and the Company
further acknowledges that such waiver creates a risk to the Company of claims by
Lebovitz in the future.
5
6. Voting
Agreement. Lebovitz
hereby agrees to, and shall cause the Hill Entities to, vote any and all shares
of Common Stock of the Company owned by him or the Hill Entities (including any
shares held by the Company under this Agreement as Purchased Shares, not yet
owned by the Company) (i) in favor of Xx. Xxxxx Xxxxxxx’x nomination and
election to the Board of Directors of the Company, and (ii) in favor of any
proposals presented to the shareholders for voting or consent that have been
approved by Xx. Xxxxxxx in his capacity as a director of the Company, whether
such voting or consent is conducted by written consent, special meeting or
annual meeting of shareholders.
7. Business
Covenants.
(a)
Lebovitz
hereby agrees that he shall, during the Purchase Period and for a period of one
year thereafter, maintain in confidence and not utilize the confidential or
proprietary information or other intellectual property of Logistical.
Maintaining such confidential or proprietary information and intellectual
property in confidence shall include refraining from disclosing such proprietary
information or intellectual property to any third party and refraining from
using such proprietary or confidential information or intellectual property for
his own account or the account of the Hill Entities or for any other person or
business entity. The Employee agrees to destroy any copies of the proprietary or
confidential information or intellectual property of Logistical in his
possession
(b) Lebovitz
hereby agrees that he shall not, during the Purchase Period solicit any person
who is employed by or a consultant to the Company or any affiliate or subsidiary
of the Company to terminate such person’s employment by or consultancy to the
Company, such affiliate or subsidiary.
(c) Lebovitz
recognizes and acknowledges the competitive and proprietary nature of the
Company’s business operations. Lebovitz acknowledges and agrees that a business
will be deemed competitive with the Company if it engages in a line of business
in which it performs any of the principal services provided or offered by the
Company or any services designed or marketed primarily to fulfill the same
function, whether or not similar. Lebovitz hereby agrees in consideration of the
Company’s payments for the Purchased Shares, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, as
follows: except with respect to the Hill Entities as currently owned and
operated, Lebovitz for his own account or on behalf of any other, directly or
indirectly, either as principal, agent, stockholder, employee, consultant,
representative or in any other capacity, own, manage, operate or control, or be
concerned, connected or employed by, or otherwise associate in any manner with,
engage in or have a financial interest in any business whose primary line of
business is substantially similar to the Company, specifically in the areas of
aerospace and defense and federal government contracting. Nothing herein shall
prohibit Lebovitz’s continued ownership of his shares of the Company not
purchased hereunder.
6
(d) If any
part of this section should be determined by a court of competent jurisdiction
to be unreasonable in duration, geographic area, or scope, then this section is
intended to and shall extend only for such period of time, in such area and with
respect to such activity as is determined to be reasonable.
8.
Events
of Default. The
occurrence or continuance of any of the following events shall be an Event of
Default hereunder: (i) Lebovitz’s breach of this Agreement, or any covenant,
undertaking or agreement that he or the Hill Entities are obligated to perform
hereunder; (ii) the willful malfeasance or misconduct by Lebovitz in connection
with misappropriating any funds or property of the Company, HAD or LS, whether
now existing or hereafter discovered or arising, or attempting willfully to
obtain any personal profit from any transaction in which Lebovitz has an
interest which is adverse to the interests of the Company, HAD or LS or any
other willful misconduct that discredits or damages the Company, HAD or LS;
(iii) any representation or warranty hereunder shall be discovered to be false
or misleading when made, or at the time of any payment of monies by the Company
hereunder.
9. Company
Undertakings. The
Company agrees to use reasonable efforts during the LOA period to assist
Lebovitz in pursuing any benefits claims he may have with respect to health or
disability insurance coverage provided by the Company during his employment with
the Company. In addition, the Company shall during the LOA period pay for and
provide Lebovitz with health, disability and other insurance benefits available
to employees of the Company on such terms and in such amounts as are available
to other employees of the Company. Nothing herein shall obligate the Company to
provide health or other insurance benefits to Lebovitz as currently provided to
him should the terms of availability of such insurance change after the date
hereof.
10. Legal
Counsel Lebovitz
acknowledges that the Company, HAD and LS has advised him to obtain the services
of an attorney to review this Agreement and to advise him regarding it. Lebovitz
acknowledges he has had an opportunity to consult with an attorney prior to
executing this Agreement.
11. Miscellaneous.
(a) Any
notice, demand, or communication required or permitted under this Agreement
shall be deemed to have been duly given if delivered personally to the party to
whom directed or, if mailed by registered or certified mail, postage and charges
prepaid.
(b) This
Agreement shall be construed and enforced in accordance with the internal laws
of the State of California.
(c) This
Agreement may not be amended except by the prior written agreement of all
Parties.
(d) The
failure of any Party to seek redress for violation of or to insist upon the
strict performance of any covenant or condition of this Agreement shall not
prevent a subsequent act, which would have originally constituted a violation,
from having the effect of an original violation.
7
(e) If any
provision of this Agreement or the application thereof to any Party or
circumstance shall be invalid, illegal or unenforceable to any extent, the
remainder of this Agreement and the application thereof shall not be affected
and shall be enforceable to the fullest extent permitted by law.
(f) The
terms, provisions and agreements herein contained shall be binding upon and
inure to the benefit of the Parties hereto, and their respective spouses, legal
representatives, heirs, successors and assigns.
(g) In the
event of any legal action between the Parties hereto, declaratory or otherwise,
in connection with or arising out of this Agreement or the enforcement hereof,
the most prevailing Party shall be entitled to recover from the less prevailing
Party all actual costs, actual damages and actual expenses, including attorneys’
fees, paralegals’ fees and other professional or consultants’ fees expended of
incurred in connection therewith.
(h) This
Agreement may be executed in counterparts, each of which shall be deemed an
original and all of which shall constitute one and the same instrument.
Signatures on this Agreement that are provided by facsimile transmission shall
be deemed to be the same as original signatures.
REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK
8
IN
WITNESS WHEREOF, the Parties hereto have executed this Separation Agreement as
of the date above first written.
| XXXXX XXXXXXXX: | |
| /s/ Xxxxx Xxxxxxxx | |
| Xxxxx Xxxxxxxx | |
| HILL INDUSTRIES, INC.: | |
| By: Xxxxx Xxxxxxxx | |
| Name: Xxxxx Xxxxxxxx | |
| Title: President | |
| HILL INDUSTRIES LLC: | |
| By: Xxxxx Xxxxxxxx | |
| Name: Xxxxx Xxxxxxxx | |
| Title: Managing Member | |
| LOGISITICAL SUPPORT, INC.: | |
| By: Xxxxx Xxxxxxx | |
| Name: Xxxxx Xxxxxxx | |
| Title: CEO |
9
IN
WITNESS WHEREOF, the Parties hereto have executed this Separation Agreement as
of the date above first written.
| HILL AEROSPACE AND DEFENSE, LLC: | |
| By: Xxxxx Xxxxxxxx | |
| Name: Xxxxx Xxxxxxxx | |
| Title: Managing Member | |
| LOGISTICAL SUPPORT, LLC: | |
| By: Xxxxx Xxxxxxx | |
| Name: Xxxxx Xxxxxxx | |
| Title: Managing Member | |
10
