MEMBERSHIP INTEREST PURCHASE AGREEMENT
Exhibit
10.1
THIS
MEMBERSHIP INTEREST PURCHASE AGREEMENT (this “Agreement”),
is made
as of March 23, 2007 (the “Effective
Date”),
by and
among Cem Esin, an individual (“Esin”),
Xxxxxxxx
Xxxxx, an individual (“Xxxxx”),
Xxxx
Xxxxx, an individual (“Xxxxx”),
Xxxx X.
Xxxxxxx, an individual (“Madison”
and
together with Esin, Xxxxx and Xxxxx, the “Sellers”),
and
Xxxxx Networks, Inc., a Nevada corporation (the “Buyer”).
A. The
Sellers
are the owners of all of the membership interests, and are the sole members,
of
Alarmco, LLC, a California limited liability company (“Alarmco”).
B. The
Buyer
desires to purchase all outstanding membership interests in Alarmco (the
“Membership
Interests”)
from the
Sellers and the Sellers desire to sell all outstanding Membership Interests
in
Alarmco to the Buyer.
C. The
Buyer,
the Sellers and Pro Sat, LLC, a California limited liability company
(“Pro
Sat”),
are
parties to that certain Membership Interests Purchase Agreement, dated January
31, 2007 (the “Pro
Sat Agreement”),
pursuant
to which the Buyer intends to purchase all of the outstanding membership
interests of Pro Sat from the Sellers.
D. In
consideration of the representations, warranties and covenants herein contained,
the parties hereto agree as follows.
1. Purchase
of the Membership Interests.
At the
Closing (as defined) and subject to and upon the terms and conditions of
this
Agreement, the Sellers hereby agree to sell, transfer, convey, assign and
deliver to the Buyer, and the Buyer hereby agrees to purchase, acquire and
accept from the Sellers, all outstanding Membership Interests in consideration
for the payment to each of the Sellers of their pro rata portion of the Purchase
Price (as defined). The Buyer’s obligation hereunder with regard to each Seller
is contingent and conditioned upon each Seller fulfilling its respective
conditions and obligations hereunder.
2. Purchase
Price.
The
purchase price to be paid by the Buyer for the Membership Interests shall
be
1,000 shares of the Buyer’s Common Stock (the “Purchase
Price”)
to be
issued to the Seller pro rata based on their relative Membership
Interests.
3. The
Closing.
(a) Unless
this
Agreement is earlier terminated in accordance with Section 10, subject to
the
satisfaction or waiver of each of the conditions set forth in Section 7,
the
closing of the transactions contemplated by this Agreement (the “Closing”),
shall
take place at the offices of Xxxxxxxxx Law Group PLLC in Raleigh, North Carolina
commencing at 9:00 a.m. local time on the date of the closing of the transaction
contemplated by the Pro Sat Agreement, or at such other place and time as
shall
be mutually agreed upon by the Buyer and the Sellers (the “Closing
Date”).
All
transactions at the Closing shall be deemed to take place simultaneously,
and no
transaction shall be deemed to have been completed and no documents or
certificates shall be deemed to have been delivered until all other transactions
are completed and all other documents and certificates are
delivered.
(b) At
the
Closing, (i) each Seller shall execute and deliver such documents as are
necessary to effect a transfer of his Membership Interests to the Buyer and
(ii)
the Buyer shall issue to the Sellers their pro rata portion of the Purchase
Price.
4. Tax
Consequences.
The Buyer
makes no representations or warranties to any Seller regarding the tax treatment
of the sale of the Membership Interests, or any of the tax consequences to
any
Seller of this Agreement, the sale of the Membership Interests or any of
the
other transactions or agreements contemplated hereby. Each Seller acknowledges
that it is relying solely on its own tax advisors in connection with this
Agreement, the sale of the Membership Interests and the other transactions
and
agreements contemplated hereby.
5. Representations
and Warranties of the Sellers.
The
Sellers, jointly and severally, hereby represent and warrant to the Buyer
that
the statements contained in this Section 5 are true and correctas as of the
Effective Date.
(a) The
Sellers
are the sole owners, of record and beneficially, of, and hereby transfers
to the
Buyer good, valid and marketable title to, the Membership Interests, free
and
clear of all security interests, liens, rights, claims and obligations of
any
kind, except as set forth in the Operating Agreement of Alarmco.
(b) This
Agreement constitutes a valid and binding agreement of each of the Sellers,
enforceable against each Seller in accor-dance with its terms except as and
to
the extent that the same may be affected by bankruptcy or other insolvency
laws affecting
the rights of creditors generally.
(c)
The
Membership Interests represent 100% of the outstanding membership interests
of
each Alarmco. Other than this Agreement there are no outstanding options,
warrants or other agreements or rights to purchase, or to cause Alarmco to
issue
or sell, any other equity interests.
6. Pre-Closing
Covenants.
(a) Closing
Efforts.
Each of
the parties shall use its reasonable best efforts to take all actions and
to do
all things necessary, proper or advisable to consummate the transactions
contemplated by this Agreement, including using its reasonable best efforts
to
ensure that (i) its representations and warranties remain true and correct
in
all material respects through the Closing Date and (ii) the conditions to
the
obligations of the other Party to consummate the transactions contemplated
by
this Agreement are satisfied.
(b) Operation
of Alarmco.
Except as
contemplated by this Agreement, from the Effective Date to the Closing, each
of
the Sellers shall cause Alarmco to conduct its operations in the ordinary
course
of business and in compliance with all applicable laws and regulations and,
to
the extent consistent therewith, use its reasonable best efforts to preserve
intact its current business organization, keep its physical assets in good
working condition, keep available the services of its current officers and
employees and preserve its relationships with customers, suppliers and others
having business dealings with it. Without limiting the generality of the
foregoing, prior to the Closing, each of the Sellers shall cause Alarmco
not to,
without the written consent of the Buyer which consent shall not be unreasonably
withheld:
i. issue
or
sell any stock or other securities of Alarmco or any subsidiary or any options,
warrants or other rights to acquire any such stock or other securities (except
pursuant to the conversion or exercise of options, warrants or other convertible
securities outstanding on the date hereof);
ii. declare,
set
aside or pay any dividend or other distribution (whether in cash, stock or
property or any combination thereof) in respect of its capital
stock;
iii. create,
incur or assume any indebtedness (including obligations in respect of capital
leases); assume, guarantee, endorse or otherwise become liable or responsible
(whether directly, contingently or otherwise) for the obligations of any
other
person or entity; or make any loans, advances or capital contributions to,
or
investments in, any other person or entity;
iv. enter
into,
adopt or amend any employee benefit plan or any employment or severance
agreement or increase in any manner the compensation or fringe benefits of,
or
materially modify the employment terms of, its directors, officers or employees,
generally or individually, or pay any bonus or other benefit to its directors,
officers or employees or hire any new officers or any new
employees;
v. acquire,
sell, lease, license or dispose of any assets or property (including any
shares
or other equity interests in or securities of any subsidiary or any corporation,
partnership, association or other business organization or division thereof),
other than purchases and sales of assets in the ordinary course of
business;
vi. mortgage
or
pledge any of its property or assets or subject any such property or assets
to
any security interest;
vii. discharge
or
satisfy any security interest or pay any obligation or liability other than
in
the ordinary course of business;
viii. amend
its
certificate of formation, operating agreement or other organizational documents
in a manner that could have an adverse effect on the transactions contemplated
by this Agreement;
ix. change
its
accounting methods, principles or practices, except insofar as may be required
by a generally applicable change in U.S. generally accepted accounting
principles, or make any new elections, or changes to any current elections,
with
respect to taxes that affect Alarmco;
x. make
or
commit to make any capital expenditure in excess of $10,000 per item or $50,000
in the aggregate;
xi. institute
or
settle any legal proceeding;
xii. take
any
action or fail to take any action permitted by this Agreement with the knowledge
that such action or failure to take action would result in (i) any of the
representations and warranties of the Sellers set forth in this Agreement
becoming untrue or (ii) any of the conditions to the Closing set forth in
Section 7 not being satisfied; or
xiii. agree
in
writing or otherwise to take any of the foregoing actions.
(c) Exclusivity.
The
Sellers shall not, directly or indirectly, (1) initiate, solicit, encourage
or
otherwise facilitate any inquiry, proposal, offer or discussion with any
party
(other than the Buyer) concerning any merger, reorganization, consolidation,
recapitalization, business combination, liquidation, dissolution, share
exchange, sale of stock, sale of material assets or similar business transaction
involving Alarmco, (2) furnish any non public information concerning the
business, properties or assets of Alarmco, to any party (other than the Buyer)
or (3) engage in discussions or negotiations with any party (other than the
Buyer) concerning any such transaction.
7. Conditions
to Closing.
The
obligation of the Buyer to consummate the transactions contemplated by this
Agreement to be consummated at the Closing is subject to the satisfaction
of the
following conditions:
(a) the
representations and warranties of the Sellers set forth in in this Agreement
shall be true and correct in all respects, in each case as of the Effective
Date
and as of the Closing as though made as of the Closing;
(b) the
Sellers
shall have performed or complied with in all material respects the agreements
and covenants required to be performed or complied with under this Agreement
as
of or prior to the Closing;
(c) no
legal
proceeding shall be pending or threatened wherein an unfavorable judgment,
order, decree, stipulation or injunction would (1) prevent consummation of
the
transactions contemplated by this Agreement, (2) cause the transactions
contemplated by this Agreement to be rescinded following consummation or
(3)
affect adversely the right of the Buyer to own, operate or control the
Membership Interests, or to conduct the business of Alarmco as currently
conducted, following the Closing, and no such judgment, order, decree,
stipulation or injunction shall be in effect;
(d) the
closing
of the transactions contemplated by the Pro Sat Agreement; and
(e) the
Buyer in
its sole discretion, shall be satisfied with the results of its business,
legal
and financial due diligence review of the Seller.
8. Additional
Documents.
From and
after the date of this Agreement, each of the parties shall, at the request
of
the other, prepare, execute and deliver to the others such addi-tional documents
and instruments and take such action as the other may deem reasonably necessary
to further evidence or effect any of the transactions contemplated herein.
All
costs and expenses rea-sonably and necessarily incurred by either party in
connection with the preparation of any such documents and instruments or
the
taking of any such action shall be borne by the party requesting the
same.
9. Indemnification.
(a) Survival.
All
representations, warranties, covenants and obligations in this Agreement
and any
other certificate or document delivered pursuant to this Agreement shall
survive
the Closing. The right to indemnification, reimbursement or other remedy
based
upon such representations, warranties, covenants and obligations shall not
be
affected by any investigation (including any environmental investigation
or
assessment) conducted with respect to, or any actual knowledge acquired (or
capable of being acquired) by the Buyer at any time, whether before or after
the
execution and delivery of this Agreement or the Closing Date, with respect
to
the accuracy or inaccuracy of or compliance with any such representation,
warranty, covenant or obligation. The waiver of any condition based upon
the
accuracy of any representation or warranty, or on the performance of or
compliance with any covenant or obligation, will not affect the right to
indemnification, reimbursement or other remedy based upon such representations,
warranties, covenants and obligations.
(b) Indemnification.
Each of
the Sellers will indemnify and hold harmless the Buyer, and any director,
officer, member, manager, employee, agent, consultant, advisor, accountant,
financial advisor, legal counsel or other representative of the Buyer
(collectively, the “Buyer
Indemnified Persons”),
and will
reimburse the Buyer Indemnified Persons for any loss, liability, claim, damage,
expense (including costs of investigation and defense and reasonable attorneys’
fees and expenses) or diminution of value, whether or not involving a
third-party claim (collectively, “Damages”),
arising
from or in connection with: (i) any breach of any representation or warranty
made by the Seller in this Agreement or any other certificate, document,
writing
or instrument delivered by Seller pursuant to this Agreement or (ii) any
breach
of any covenant or obligation of the Seller in this Agreement or in any other
certificate, document, writing or instrument delivered by the Seller pursuant
to
this Agreement.
10. Termination.
(a) Termination
of Agreement.
The
parties may terminate this Agreement prior to the Closing, as provided
below:
i. the
parties
may terminate this Agreement by mutual written consent;
ii. the
Buyer
may terminate this Agreement by giving written notice to the Sellers in the
event the Sellers are in breach of any representation, warranty or covenant
contained in this Agreement; or
iii. this
Agreement shall automatically terminate upon the effective termination of
the
Pro Sat Agreement.
(b) Effect
of
Termination.
If either
Party terminates this Agreement pursuant to Section 9.1, all obligations
of the
Parties hereunder shall terminate without any liability of either Party to
the
other Party (except for any liability of a Party for willful breaches of
this
Agreement).
11. Entire
Agreement.
This
Agreement constitutes the entire agreement between the parties with respect
to
the pur-chase and transfer of the Membership Interests, and all prior agreements
and under-standings of every kind between the parties regarding the purchase
and
transfer of the Membership Interests are superseded by this Agreement and
are
hereby terminated.
12. Severability.
The
invalidity or unenforce-ability of any provision of this Agreement shall
not
affect the validity or-enforceability of any other provision.
13. Modification.
No
provision of this Agreement, including any provision
of
this Section, may be modified, deleted or amended in any manner
except by
an
agreement in writing executed by both of the parties.
14. No
Assignment.
Neither this
Agreement nor any interest herein may be assigned by any party without the
consent of the others; provided that the Buyer may assign some or all of
its
rights, interests and/or obligations hereunder to one or more affiliates
of the
Buyer.
15. Benefit.
This
Agreement shall be binding on and inure to the parties and their respective
personal representatives, heirs, successors and assigns.
16. Construction. This Agreement
is
executed and delivered and is intended to be performed in the State of North
Carolina and shall be construed and enforced in accordance with the laws
of such
state, other than its rules with respect to choice of law.
17. Counterparts.
This
Agreement may be executed in more than one counterpart, each of which shall
be
deemed an original.
18. Headings.
The
underlined headings provided herein are for convenience only and shall not
affect the interpre-tation of this agreement.
[Remainder
of Page Intentionally Left Blank.]
IN
WITNESS
WHEREOF, the undersigned have caused this Agreement to be validly executed
and
delivered as of the date first written above.
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THE
BUYER:
Xxxxx
Networks, Inc.
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By:
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___________________
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Xxxxxx
X. Xxxxx, President
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ESIN
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By:
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___________________
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Cem
Xxxx
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XXXXX:
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By:
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___________________
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Xxxxxxxx
Xxxxx
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XXXXX
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By:
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___________________
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Xxxx
Xxxxx
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Madison
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By:
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___________________
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Xxxx
X. Xxxxxxx
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