EXHIBIT 10.1
MEMBERSHIP INTEREST PURCHASE AGREEMENT
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THIS AGREEMENT is effective as of the 23rd day of April, 2004, by and
among B2 NETWORKS, LLC, a Nevada limited-liability company ("Seller" or
"Company"), TELECOMMUNICATION PRODUCTS, INC. ("Buyer").
A. The current ownership of the Company is as follows:
Xxxx X. Xxxx, 100%, represented by One Thousand (1,000) Shares, constituting all
of the Shares currently outstanding.
B. Seller desires to sell an interest in Company which, after issuance, will
equal a twenty percent (20%) membership interest (which will equal 250 Shares)
("Membership Interest") to Buyer and Buyer desires to acquire the Membership
Interest in Company from Seller on the terms hereinafter set forth.
C. Seller desires to grant an option to Telecommunication Products Inc. to
acquire up to a total of 49% of total outstanding shares subject to further
agreement between the parties.
NOW, THEREFORE, in consideration of the mutual promises, covenants and
representations hereinafter contained, and subject to the conditions hereinafter
set forth, it is agreed as follows:
1. Sale and Transfer of Interest. Subject to the terms and conditions set
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forth in this Agreement, Seller will transfer and convey the Membership Interest
to Buyer, and Buyer will acquire the Membership Interest from Seller, upon
payment of the Consideration (as defined hereinbelow) at Closing.
2. Consideration. For and in consideration of Seller's transfer of the
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Membership Interest hereunder, Buyer shall pay the sum of Five Hundred Thousand
Dollars ($500,000) and 1,666,667 shares of TCPD.OB stock (hereinafter
collectively referred to as the "Consideration").
3. Post-Closing Status of Ownership. At Closing, upon payment of the
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Consideration, ownership of the Company shall be as follows:
(a) Xxxx X. Xxxx - 1,000 Shares/80%
(b) Telecommunication Products, Inc. - 250 Shares/20%
4. Representations of Seller. Seller represents and warrants to Buyer
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as follows:
(a) Seller is the owner, beneficially and of record, of the Membership
Interest, free and clear of all liens, encumbrances, security agreements,
equities, options, claims, charges, and restrictions, and Buyer will receive at
Closing good and absolute title thereto free of any liens, charges or
encumbrances thereon.
(b) Seller has full power to transfer the Membership Interest to Buyer
without obtaining the consent or approval of any other person (other than Trust,
the current sole member and manager of Company) or governmental authority and
there is no existing impediment to the sale and transfer of such Membership
Interest from Seller to Buyer.
(c) The Company is duly organized and validly existing under and by virtue
of, and is in good standing under, the laws of the State of Nevada.
(d) Attached hereto as Exhibit "C-1" is a true and correct copy of certain
financial information concerning the Company, as follows:
(i) Company's Balance Sheet as of April 2004
(ii) Company's Profit and Loss Statement for 2003 and YTD Xxxxx
00, 0000
(x) Attached hereto as Exhibit "C-2" is a true and correct copy of
Company's Articles of Organization filed January 8, 2003.
The representations and warranties of Seller contained in this Agreement shall
survive the Closing hereof and shall continue in full force and effect.
5. Representations of Buyer. Buyer represents and warrants to
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Seller as follows:
(a) Buyer has not requested nor relied upon any financial or other
information concerning the Company other than as provided in Section 4 above.
(b) Seller has made no representations to Buyer concerning
revenues, income, sale, expenses and/or profits of the Company, other than set
forth in the Exhibits referenced in Section 4 above.
(c) Buyer is entering into this Agreement based upon Buyer's own
investigation and knowledge of the business without reliance upon, and makes no
reliance upon, any statements, assertions, or documents or reports from Seller
other than as incorporated in this Agreement.
(d) Buyer makes the following "Investment Representations" upon
which Seller is relying:
(i) Buyer is acquiring the Membership Interest for investment
for Buyer's own account, not as a nominee or agent, and not with a view to, or
for resale in connection with, any distribution thereof.
(ii) Buyer understands that the Membership Interest to be
purchased has not been registered under the 1933 Act on the ground that the sale
provided for in this Agreement and the issuance of securities hereunder is
exempt from registration under the 1933 Act pursuant to Section 4(2) thereof
which depends upon, among other things, the bona fide nature of the investment
intent as expressed herein.
(iii) Buyer is experienced in evaluating and investing in
recently organized companies such as the Company, is able to fend for itself in
the transactions contemplated by this Agreement, has such knowledge and
experience in financial business matters as to be capable of evaluating the
merits and risks of his investment, and has the ability to bear the economic
risks of his investment. Buyer has had an opportunity to discuss the Company's
business, management and financial affairs with the Company's management and to
review the Company's facilities.
(iv) Buyer understands that the Membership Interest may not
be sold, transferred, or otherwise disposed of without registration under the
1933 Act or pursuant to an exemption therefrom, and that in the absence of an
effective registration statement covering the Membership Interest or an
available exemption from registration under the 1933 Act, the Membership
Interest must be held indefinitely. In particular, Buyer is aware that the
Membership Interest may not be sold pursuant to Rule 144 promulgated under the
1933 Act unless all of the conditions of that Rule are met. Among the
conditions for use of Rule 144 is the availability of current information to the
public about the Company. Such information is not now available and the
Company has no present plans to make such information available.
(v) Buyer has a preexisting business or personal relationship
with the Company or one of its directors, officers or controlling persons, or by
reason of Buyer's business or financial experience or the business or financial
experience of his or its professional advisor(s) who are unaffiliated with and
who are not compensated by Company or any affiliate or selling agent of Company,
directly or indirectly, Buyer has, or could be reasonably assumed to have, the
capacity to protect Buyer's own interests in connection with the purchase of the
Membership Interest pursuant to this Agreement.
(vi) The aggregate purchase price of the Membership Interest
acquired hereunder by Buyer does not exceed twenty percent (20%) of Buyer's net
worth on the date hereof (as "net worth" is used in Regulation D promulgated
under the 1933 Act).
(vii) The Company has made available to Buyer at a reasonable time
prior to the date hereof the opportunity to ask questions and receive answers
concerning the terms and conditions of this offering and to obtain any
additional information which the Company possesses or can acquire without
unreasonable effort or expense that is necessary to verify the accuracy of any
information provided to Buyer.
6. Adoption of Amended and Restated Operating Agreement. Buyer
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and Seller agree to execute the form of Amended and Restated Operating Agreement
attached hereto as Exhibit "B" effective as of the Closing Date and to be bound
by the terms and conditions thereof from and after such date, to be evidenced by
execution of an Agreement to be Bound to Operating Agreement in the form
attached as Exhibit "B-1".
7. Closing. The closing of the transactions hereunder (the "Closing')
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shall be consummated upon the execution of this Agreement and the delivery:
(a) By Seller to Buyer of:
(i) The Assignment in the form attached hereto and incorporated herein as
Exhibit "A-1"; and
(ii) Evidence of a twenty percent (20%) Membership Interest in the Company
in the form of a Membership Certificate in the form attached hereto as Exhibit
"A-2"; and
(b) By Buyer to Seller of the Consideration in the form of Cash dollar
payments included in Consideration, Section 2.0, to be made to B2 Networks LLC
by Telecommunication Products, Inc per the following schedule; US$50,000 upon
signature, US$90,000 On or before May 14th, 2004, US$90,000 On or before June
14th, 2004, US$90,000 On or before July 14th, 2004, US$90,000 On or before
August 16th, 2004, US$90,000 On or before September 17,2004.
(c) A duly and properly executed board resolution for issue of a stock
certificate in the name of Seller for 1,666,667 Shares of TCPD.OB upon
signature. The actual Stock Certificate will be issued no later than May 9th,
2004.
(d) A duly and properly executed board resolution for issue of a stock
certificate in the name of the seller for Four hundred and Fifty Thousand Shares
(450,000) of Series A Preferred Stock at a par value of One Dollar ($1.00) per
share to act as security for the remainder of total cash consideration
($450,000) outstanding after initial down payment.
The actual Stock Certificate will be issued no later than May 9th, 2004.
The Closing shall take place on the effective date of this Agreement as set
forth on page 1 hereof.
8. Miscellaneous.
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(a) Notices. Any and all notices or demands by any party hereto to any
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other party, required or desired to be given hereunder shall be in writing and
shall be validly given or made if served personally, delivered by a nationally
recognized overnight courier service or if deposited in the United States Mail,
certified, return receipt requested, postage prepaid, addressed as follows:
If to Buyer: Telecommunication Products Inc
0000 Xxxxxxxx Xxxx, Xxxxx X,
Xxxxxxx Hills C A 90210
Attn: CEO Xxxxxx Xxxxxxx
If to Seller: B2 Networks LLC
0000 X Xxxxxx Xxx Xxxx
Xxxxx 0000
Xxx Xxxxx, Xxxxxx 00000
Attn: Xxxx X. Xxxx
Any party hereto may change its address for the purpose of receiving notices or
demands as hereinabove provided by a written notice given in the manner
aforesaid to the other party(ies). All notices shall be as specific as
reasonably necessary to enable the party receiving the same to respond thereto.
(b) Governing Law. The laws of the State of Nevada applicable to
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contracts made in that state, without giving effect to its conflict of law
rules, shall govern the validity, construction, performance and effect of this
Agreement.
(c) Consent to Jurisdiction. Each party hereto consents to the jurisdiction
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of the courts of the State of Nevada in the event any action is brought for
declaratory relief or enforcement of any of the terms and provisions of this
Agreement.
(d) Attorneys' Fees. Unless otherwise specifically provided for herein,
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each party hereto shall bear it's own attorneys' fees incurred in the
negotiation and preparation of this Agreement and any related documents. In the
event that any action or proceeding is instituted to interpret or enforce the
terms and provisions of this Agreement, however, the prevailing party shall be
entitled to its costs and attorneys' fees, in addition to any other relief it
may obtain or be entitled to.
(e) Interpretation. In the interpretation of this Agreement, the
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singular may be read as the plural, and vice versa, the neuter gender as the
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masculine or feminine, and vice versa, and the future tense as the past or
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present, and vice versa, all interchangeably as the context may require in order
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to fully effectuate the intent of the parties and the transactions contemplated
herein. Syntax shall yield to the substance of the terms and provisions hereof.
Paragraph headings are for convenience of reference only and shall not be used
in the interpretation of the Agreement. Unless the context specifically states
to the contrary, all examples itemized or listed herein are for illustrative
purposes only, and the doctrine of inclusio unius exclusio alterius shall not be
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applied in interpreting this Agreement.
(f) Entire Agreement. This Agreement sets forth the entire
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understanding of the parties, and supersedes all previous agreements,
negotiations, memoranda, and understandings, whether written or oral. In the
event of any conflict between any exhibits or schedules attached hereto, this
Agreement shall control.
(g) Modifications. This Agreement shall not be modified, amended or changed
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in any manner unless in writing executed by the parties hereto.
(h) Waivers. No waiver of any of the provisions of this Agreement shall be
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deemed, or shall constitute, a waiver of any other provision, whether or not
similar, nor shall any waiver constitute a continuing waiver, and no waiver
shall be binding unless evidenced by an instrument in writing and executed by
the party making the waiver.
(i) Invalidity. If any term, provision, covenant or condition of this
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Agreement, or any application thereof, should be held by a court of competent
jurisdiction to be invalid, void or unenforceable, that provision shall be
deemed severable and all provisions, covenants, and conditions of this
Agreement, and all applications thereof not held invalid, void or unenforceable,
shall continue in full force and effect and shall in no way be affected,
impaired or invalidated thereby.
(j) Binding Effect. This Agreement shall be binding on and inure to
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the benefit of the heirs, personal representatives, successors and permitted
assigns of the parties hereto.
(k) Counterparts. This Agreement may be executed in any number of
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counterparts, each of which shall be deemed an original and all of which
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together shall constitute one and the same instrument. Delivery of an executed
counterpart of a signature page to this Agreement by facsimile shall be
effective as delivery of a manually executed counterpart of this Agreement in
person.
(l) Negotiated Agreement. This is a negotiated Agreement. All parties have
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participated in its preparation. In the event of any dispute regarding its
interpretation, it shall not be construed for or against any party based upon
the grounds that the Agreement was prepared by any one of the parties.
(m) Arbitration. Any controversy, claim, dispute or
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interpretations which are in any way related to the Agreement that are not
settled informally in mediation shall be resolved by arbitration, administered
by the American Arbitration Association under its Commercial Arbitration Rules,
and the judgment on the award rendered by the arbitrator may be entered in any
court having jurisdiction of and shall be final and binding on all the parties.
In the event of any controversy, claim, dispute or interpretation, the following
procedures shall be employed:
(i) If the dispute cannot be settled informally through
negotiations, the parties first agree, in good faith, to settle the dispute by
mediation administered by the American Arbitration Association under its
Commercial Mediation Rules before resorting to arbitration or some other dispute
resolution procedure. The mediation shall take place in Las Vegas, Nevada
within sixty (60) days of initiating the mediation.
(ii) At any time after the mediation, any party shall
serve a Notice and Demand for Arbitration in writing on the other party(ies) to
this Agreement and a copy of the demand shall be sent to the American
Arbitration Association.
(iii) The party upon whom the demand is served shall
file a response within ten (10) days from the service of the Notice and Demand
for Arbitration. The response shall be served upon the other party(ies) and a
copy sent to the American Arbitration Association.
(iv) Within ten (10) days after the American Arbitration
Association sends the list of proposed arbitrators, all parties to the
arbitration shall select their arbitrator and communicate their selection to the
American Arbitration Association.
(v) Unless otherwise agreed in writing by all parties, the arbitration
shall be held in Las Vegas, Nevada. The arbitration hearing shall be held
within ninety 90 days after the appointment of the arbitrator.
(vi) The arbitrator is authorized to award to any party whose
claims are sustained, such sums or other relief as the arbitrator shall deem
proper and such award may include reasonable attorney's fees, professional fees
and other costs expended to the prevailing party(ies) as determined by the
arbitrator.
(n) Time of Essence: Time is of the essence of this Agreement and all of
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its provisions.
IN WITNESS WHEREOF, the parties have executed this Agreement effective the
day and year above-written.
"BUYER" "SELLER"
Telecommunication Products, Inc. B2 Networks, LLC
/S/ XXXXXX X. RUSSELL_____________________ _/S/ XXXX X. BELL________
BY: XXXXXX X XXXXXXX BY: XXXX X. XXXX,
CEO SOLE MANAGER
ASSIGNMENT
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FOR VALUE RECEIVED, the undersigned hereby assigns and transfers unto
Telecommunication Products, Inc., all right, title and interest in and to a
Twenty percent (20%) membership interest (the "Interest") in B2 Networks LLC, a
Nevada limited-liability company (the "Company"), and does hereby irrevocably
constitute and appoint any representative of the Company as attorney to transfer
the Interest on the books of the Company, with full power of substitution in the
premises.
DATED as of the _____ day of _____________, 2004.
By: XXXX X. XXXX, SOLE MANAGER
EXHIBIT "A-2"
MEMBERSHIP CERTIFICATE
OF
B2 NETWORKS, LLC,
A NEVADA LIMITED-LIABILITY COMPANY
Member: TELECOMMUNICATION PRODUCTS, INC.
Capital Account: Six Hundred Thousand and no/100 Dollars ($600,000)
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KNOW ALL MEN BY THESE PRESENTS: That TELECOMMUNICATION PRODUCTS, INC.
("Subscriber") has contributed a cash contribution and an assignment of shares
of stock in TCPD.OB to the Company's capital with a value in the agreed upon
amount of Six Hundred Thousand and no/100 Dollars ($600,000) to B2 Networks,
LLC, a Nevada limited-liability company (the "Company"), entitling Subscriber to
an ownership interest in the Company (the "Interest") of 250 Shares as of the
date hereof.
Without limited the last sentence of the first paragraph above, Subscriber
confirms that the Interest represented by this certificate has not been
registered under the Securities Act of 1933 (the "Act") or under the securities
laws of any state or other jurisdiction ("Blue Sky Laws"). The Interest has been
acquired for investment and may not be sold or transferred in the absence of (i)
an effective registration statement covering the Interest under the Act and, if
requested by the Company an opinion of counsel satisfactory to the Company to
the effect that all requirements under the Blue Sky Laws applicable to the sale
or transfer have been complied with, or (ii) an exemption from registration
under the Act and, if required by the Company a favorable opinion of counsel
satisfactory to the Company as to the availability of such exemption and to the
effect that all requirements under the Blue Sky Laws applicable to the sale or
transfer have been complied with.
Any sale, assignment, transfer, pledge or other disposition of the Interest
is further restricted by, and subject to, the terms and provisions of the
Operating Agreement of the Company. A copy of said Operating Agreement is on
file at the Registered Office or Records Office of the Company. By acceptance
of this Membership Certificate, the holder hereof warrants that the holder has
executed the Operating Agreement and agrees to be bound thereby.
IN WITNESS WHEREOF, the undersigned, being the Sole Manager of the Company
does hereby execute this Membership Certificate as of the ___ day of
________________, 2004.
Xxxx X. Xxxx, Manager
ACCEPTANCE
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B2 NETWORKS, LLC, a Nevada limited-liability company (the "Company"), being
authorized to issue a Certificate of Membership ("Certificate") to
TELECOMMUNICATION PRODUCTS, INC. ("Member"), hereby acknowledges receipt of a
cash contribution and an assignment of shares of stock in TCPD.OB to the
Company's capital with a value in the agreed upon amount of Six Hundred Thousand
and no/100 Dollars ($600,000) as of the date hereof.
Dated this ___ day of _________________, 2004.
By: Xxxx X. Xxxx, Manager
EXHIBIT "B-1"
CONFIRMATION OF AGREEMENT TO BE BOUND TO
OPERATING AGREEMENT
The undersigned, TELECOMMUNICATION PRODUCTS, INC., is a party to that
certain Membership Interest Purchase Agreement ("Agreement") of even date
herewith whereby it is acquiring 250 shares (the "Shares") of B2 NETWORKS, LLC
(the "Company"). As a condition to the consummation of the transactions
contemplated by the Agreement, the undersigned agrees to affirm that it is bound
by and a party to that certain Operating Agreement by and among the Company and
its Members dated effective the date hereof. Pursuant to this instrument, the
undersigned hereby acknowledges that he has received a copy of the Operating
Agreement, reviewed and understand the terms and conditions thereof, is already
a party to the Agreement and agrees that it shall be bound by and a party to
said Operating Agreement with respect to any and all shares being acquired
pursuant to the Membership Interest Purchase Agreement of even date herewith
(and any shares after the date hereof).
DATED as of the _______ day of ______________ 2004.
Telecommunication Products, Inc.
By: Xxxxxx Xxxxxxx, CEO
