EXHIBIT 10.2


 


MASTER
AGREEMENT


 


THIS MASTER AGREEMENT (the “Agreement”) is made and
entered into effective as of November 16, 2007, by and among Ballistic Recovery
Systems, Inc., a Minnesota corporation (“BRS”),  Head Lites Corporation, a Minnesota corporation
(“HLC”), Advanced Tactical Fabrication, Inc., a Minnesota corporation (the “Company”),
and Gary Lesley, Chief Executive Officer, a director and 89% shareholder of the
outstanding securities of HLC (“Lesley”).


 


INTRODUCTION


 


A.            BRS, HLC and Lesley entered into a non-binding letter of
intent on September 14, 2007 (the “Letter of Intent”) pursuant to which the
parties thereto proposed to establish the Company for, among other things, the
purpose of acquiring certain assets beneficially owned by HLC and operating
such assets as a subsidiary of BRS.


 


B.            The Letter of Intent contains a series of transactions related
to the Company (collectively referred to herein as the “Transaction”),
including, but not limited to: formation of the Company; contributions to the
Company by its shareholders; loans to the Company by BRS; and acquisition of
certain assets of HLC by the Company pursuant to the terms of the Asset
Purchase Agreement (as defined in Section 4.1 hereto).


 


C.            The purpose of this Agreement is to outline those various
transactions and documents that must be executed in connection with the
Transaction.


 


AGREEMENT


 


NOW, THEREFORE,  in
consideration of the foregoing facts and premises hereby made a part of this
Agreement, the mutual promises of the parties contained herein, the mutual
benefits to be gained by the performance of this Agreement and the Ancillary
Agreements (as defined herein), and for other good and valuable consideration
the receipt and sufficiency of which are hereby acknowledged, the parties hereto,
intending to be legally bound, hereby agree as follows:


 


Article 1

Closing


 


1.1           Closing.
The closing of the Transactions described herein shall take place at the
offices of Maslon Edelman Borman & Brand, LLP on or prior to November 16,
2007 (the “Closing”), or at such other time or in such other manner as may be
mutually agreed to by the parties.


 


1.2           Closing
Deliveries. On the Closing Date, the parties shall execute and deliver the “Ancillary
Documents” as defined herein.


 


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Article 2

Corporate Formation


 


2.1           Company
Formation. Prior to the Closing, BRS shall incorporate the Company as a
Minnesota corporation by executing, or causing to be executed, delivered and/or
filed, as appropriate,  the following documents:


 


(a)           Articles
of Incorporation, a form of which is attached as Exhibit 2.1(a)
(filed and accepted by the Minnesota Secretary of State);


 


(b)           Bylaws,
a form of which is attached as Exhibit 2.1(b);


 


(c)           Subscription
Agreement of BRS, a form of which is attached as Exhibit 2.1
(c), pursuant to which BRS would contribute
(i) $648,400 in cash and (ii) agree to commit up to $450,000 as secured senior
loans to the Company in exchange for an 90% interest in the Company.


 


(d)           Subscription
Agreement of HLC, a form of which is attached as Exhibit
2.1(d), pursuant to which HLC would enter
into the agreements contemplated by the Transaction in exchange for a 10%
interest in the Company.


 


(e)           Organizational
written actions of Shareholders and Directors, a form of which is attached as Exhibit 2.1 (e).


 


Article 3

Secured Loan


 


3.1           Loan
Commitment. Contemporaneous with the Closing, BRS agrees that it will
provide up to $450,000 in senior secured loans to the Company for the purpose
of the Company’s establishment of operations in North Carolina. Such senior
secured loans will be in denominations of $300,000 (the “Operations Loan”) and
$150,000 (the “Transition Loan” together with the Operations Loan, the “Loans”).
The Loans will be evidenced by the form of Senior Secured Notes issued by the
Company, forms of which are attached as Exhibits 3.1 (a) and
3.1 (b), respectively  (the “Secured Senior Notes”). The Senior Secured Notes will
bear interest of at least 100 basis points above the cost of such funds to BRS,
will have a approximately 36 month terms, and will be secured by all of the
assets of the Company pursuant to a Security Agreement , a form of which is attached
as Exhibit 3.1(c).


 


Article 4

HLC Asset Purchase


 


4.1           Asset
Purchase Agreement. At Closing, the Company, HLC, Lesley and Art Petrie shall
enter into an Asset Purchase Agreement, the form of which is attached as Exhibit 4.1, that provides for the purchase by the Company
of certain assets of HLC (the “Asset Purchase Agreement”). The Asset Purchase
Agreement shall also provide, in addition to the representations, warranties, conditions,
covenants and indemnities contained therein, that HLC and each of its
shareholders shall be subject to a five year non-competition agreement with the
Company in connection with the Transaction.


 


4.2           Lesley
Consulting Agreement. At Closing, the Company and Lesley shall enter into a
five year Consulting Agreement, a form of which is attached as Exhibit 4.2, pursuant to which Lesley would provide certain
consulting services to the Company (the “Consulting Agreement”).


 


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4.3           Management
Fees. In consideration of BRS’ payment of administrative expenses on behalf
of the Company, the Company shall pay an annual management fee to BRS in an
amount equal to 2.5% of the Company’s gross revenues during the applicable
fiscal year. The annual management fee will be paid in cash within 30 days
following the end of the applicable fiscal year. The annual management fee for
the fiscal year ending September 30, 2008 will be prorated accordingly.


 


4.4           Ancillary
Agreements. The Articles of Incorporation of the Company, the Bylaws of the
Company, the Subscription Agreements for the Company of each of BRS and HLC,
the Organizational Minutes of the Company, the Senior Secured Notes, the
Security Agreement, the Asset Purchase Agreement, the Consulting Agreement and
any and all such other related agreements reasonably required by BRS to
complete the Transaction shall be know as the “Ancillary Agreements”.


 


4.5           HLC
Corporate Name Change. In addition
to other covenants contained in the Ancillary Agreements, HLC agrees that at Closing
and as a condition to Closing, it shall change its corporate name to one
dissimilar to “Head Lites Corporation” and reasonably acceptable to BRS.


 


4.6           HLC
Audit Costs. The Company shall pay 50% of the fees of an independent audit
firm, not to exceed $20,000, in connection with the audit of the historical
financial statements of HLC. HLC and Lesley shall be responsible for the
remainder of the audit costs and shall use their best efforts to cause the
audit to be completed in a timely manner.


 


Article 5

Representations and Warranties


 


To induce the parties to enter into this Agreement and
the Ancillary Agreements and engage in the other transactions contemplated
herein, the parties hereby represent and warrant as follows:


 


5.1           Representations
and Warranties of BRS. BRS hereby represents and warrants to each of HLC
and Lesley as follows:


 


(a)           Organization;
Good Standing, Etc. BRS is a corporation duly organized, validly existing
and in good standing under the laws of Minnesota, and has the requisite power
and authority to carry on its business as it is now being conducted.


 


(b)           Authorization.
This Agreement and all other Ancillary Documents to which BRS is a party, have
been, or shall be as of the Closing, duly authorized by all necessary action on
behalf of BRS, have been duly executed and delivered by authorized officers,
are valid and binding agreements on the part of BRS and are enforceable against
BRS in accordance with their respective terms.


 


5.2           Representations
and Warranties of HLC and Lesley. HLC and Lesley hereby represent and
warrant to BRS and the Company as follows:


 


(a)           Organization;
Good Standing, Etc. HLC is a corporation duly organized, validly existing
and in good standing under the laws of the State of Minnesota, and has the
requisite power and authority to carry on its business as it is now being
conducted.


 


(b)           Authorization.
This Agreement and the Ancillary Documents relating to the Closing have been,
or shall be as of the Closing, (i) duly authorized by all necessary company
action on behalf of HLC,  (ii) shall have
been approved by all of the HLC shareholders,  (iii) have been duly executed and delivered by
authorized officers of HLC and by Lesley,  (iv) are valid and binding agreements on the
part 


 


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of HLC and Lesley and (v) are enforceable against HLC and Lesley in
accordance with their respective terms.


 


(c)           Capitalization
of HLC. There are 500,000 shares of HLC capital stock authorized of which 15,337
shares of HLC Common Stock are outstanding (the “HLC Shares”). Other than the
HLC shares, there are no other securities issued by HLC, including but not
limited to stock options, convertible debt,  warrants or other convertible securities
convertible into capital stock of the Company. All of outstanding capital stock
of HLC is owned as follows:  Gary Lesley owns
13,689 HLC Shares, and Art Petrie owns 1,648 HLC Shares.


 


(d)           No
Conflict. Neither the execution and the delivery of this Agreement,  the Ancillary Agreements, or the consummation
or performance of the Transaction will directly or indirectly (with or without
notice or lapse of time):  (i)
contravene, conflict with or result in a violation of or default under any
provision of the charter documents of HLC or any agreement to which HLC is a
party, or any resolution adopted by the shareholders or directors of HLC;  (ii) contravene, conflict with or result in a
violation of or default under, or give any governmental body or other person
the right to challenge the Transaction or to exercise any remedy or obtain any
relief under, any legal requirement or any order to which HLC is subject; or
(iii) contravene, conflict with or result in a violation or breach of or
default under any provision of, or give any person the right to declare a
default or exercise any remedy under, or to accelerate the maturity or
performance of, or to cancel, terminate or modify any contract or other
arrangement to which HLC is a party or by which HLC is bound. HLC will not be
required to give any notice to or obtain any consent from any person in order
for HLC to consummate the Transaction. The assets purchased pursuant to the
Asset Purchase Agreement will be free and clear of all liens and encumbrances
at Closing.


 


(e)           No
Brokers or Finders. No Person has or will have, as a result of any
contractual undertaking by HLC, Lesley or Petrie, any right, interest or valid
claim against HLC, Lesley or Petrie, BRS or the Company for any commission, fee
or other compensation as a finder or broker, or in any similar capacity, in
connection with the Transaction.


 


(f)            Absence
of Restrictive Agreements. There are no agreements or other obligations by
which HLC is bound, which restrict the ability of HLC to enter into this
Agreement, to form, organize or operate the Company, or to perform the Transaction.


 


Article 6

General Provisions


 


6.1           Oral
Changes, Waivers, Etc. Neither this Agreement nor any provision hereof may
be changed, waived, discharged or terminated orally, but only pursuant to a
written statement signed by the party against which enforcement of the change,
waiver, discharge or termination is sought.


 


6.2           Governing
Law; Jurisdiction and Venue. This Agreement and the rights of the parties
hereunder shall be governed by, interpreted and enforced in accordance with the
laws of the State of Minnesota without regard to conflicts-of-law principles.


 


6.3           Binding
Effect. Except as herein otherwise specifically provided, this Agreement
shall be binding upon and inure to the benefit of the parties and their legal
representatives, heirs, administrators, executors, successors and permitted
assigns.


 


6.4           Severability.
If any provision of this Agreement or the application of such provision to any
Person or circumstances, shall be held invalid, the remainder of the Agreement,
or the application of such 


 


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provision to Persons or circumstances other than those
to which it is held invalid, shall not be affected thereby.


 


6.5           Further
Assurances. Each party hereby agrees to execute and deliver such additional
documents and instruments and to perform such additional acts as may be
necessary or appropriate to effectuate, carry out and perform all of the terms,
provisions and conditions of this Agreement and the  Transactions.


 


6.6           No
Third-Party Beneficiary. This Agreement is made solely and specifically
among and for the benefit of the parties hereto and their respective successors
and assigns, and other than as specifically set forth herein, no other Person
will have any rights, interest or claims hereunder or be entitled to any
benefits under or on account of this Agreement as a third-party beneficiary or
otherwise.


 


Signature Page Follows


 


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IN WITNESS WHEREOF, the undersigned have set their
hands to this Master Agreement to be effective as of the date first set forth
above.


 


 


	
   

  	
   

  	
  BRS:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Ballistic Recovery Systems, Inc.,

  	
   

  
	
   

  	
   

  	
  a Minnesota corporation

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/
  Larry Williams

  	
   

  
	
   

  	
   

  	
  Larry Williams, Chief Executive Officer

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  HLC:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Head Lites Corporation

  	
   

  
	
   

  	
   

  	
  a Minnesota corporation

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/
  Gary Lesley

  	
   

  
	
   

  	
   

  	
  Gary Lesley, Chief Executive Officer

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  The Company:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Advanced Tactical Fabrication, Inc.,

  	
   

  
	
   

  	
   

  	
  a Minnesota corporation

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/
  Larry Williams

  	
   

  
	
   

  	
   

  	
  Larry Williams, Chief Executive Officer

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/
  Gary Lesley

  	
   

  
	
   

  	
   

  	
  Gary Lesley

  	
   

  



 


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