Attached files
| file | filename |
|---|---|
| 8-K - Net Element, Inc. | v205159_8k.htm |
| EX-21.1 - Net Element, Inc. | v205159_ex21-1.htm |
| EX-10.28 - Net Element, Inc. | v205159_ex10-28.htm |
EXHIBIT
10.27
Membership Interest Purchase
Agreement
MEMBERSHIP
INTEREST
PURCHASE
AGREEMENT
BETWEEN
NET
ELEMENT, INC.
AND
ENERFUND,
LLC, MZ CAPITAL, LLC,
DMITRY
KOZKO, JAMES CAAN,
SCOTT
CAAN, MARK RYDELL, ROBERT DUVALL,
SCOTT
WALTERS, CARL PAOLI AND STACEY LINDSEY
DATED
AS OF DECEMBER 14, 2010
This
MEMBERSHIP INTEREST PURCHASE
AGREEMENT (the “Agreement”) is made and entered into as of the 14th day of
December, 2010, by and among NET ELEMENT, INC., a corporation organized and
existing under the laws of Delaware (the “Purchaser” or “NET Element”), and
ENERFUND, LLC (“Enerfund”), MZ CAPITAL, LLC (“MZ Capital”), DMITRY KOZKO
(“Kozko”), JAMES CAAN (“James Caan”), Scott Caan (“Scott Caan”), MARK RYDELL
(“Rydell”), ROBERT DUVALL (“Duvall”), SCOTT WALTERS (“Walters”), STACEY LINDSEY
(“Lindsey”) and CARL PAOLI (“Paoli”) (collectively, Enerfund, MZ Capital, and
Kozko are the “Principal Sellers” and the Principal Sellers and James Caan,
Scott Caan, Rydell, Duvall, Walters, Lindsey and Paoli are the
“Sellers”). The Sellers and Net Element are referred to collectively
as the “Parties”.
RECITALS
WHEREAS, the Sellers owns all
units of Openfilm, LLC, a limited liability company organized pursuant to the
laws of the State of Florida, having its place of business at 1450 South Miami
Avenue, Miami Florida, 33130 (“Openfilm”);
WHEREAS, Openfilm has
developed technologies related to the operation of it’s online business (www.openfilm.com) and owns all of the
right, title and interest in all of the intellectual property rights related to
such technologies; and
WHEREAS, Enerfund and its
affiliates have funded substantially all of the development of Openfilm to date,
including funding that was converted into 1,000,000 units of Series A Preferred
Membership Interest (the “Preferred Interest”); and
WHEREAS, the Purchaser, a
company registered with the Securities and Exchange Commission pursuant to the
Securities Act of 1933, desires to purchase 100% of the Sellers’ membership
interests in Openfilm (the “Interests”), and the Sellers desire to sell 100% of
their membership interests in Openfilm to the Purchaser pursuant to the terms of
this Agreement.
AGREEMENT
NOW, THEREFORE, in
consideration of the recitals and of the premises and mutual covenants set forth
herein and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereby agree
that:
ARTICLE
I
PURCHASE OF
INTERESTS
1.1. Purchase and Sale of
Interests. Upon the terms and subject to the conditions of
this Agreement, as of the Effective Date (the “Closing Date”), the Purchaser
shall purchase the Interest for the Purchase Price (as defined below) (the
“Interest Purchase”).
1.2. Purchase
Price. In consideration for the sale of the Interests and in
reliance on the representations and warranties, covenants and agreements of the
Sellers contained herein and the documents contemplated hereby, and subject to
the conditions contained herein, the Purchaser shall purchase the Interests from
the Sellers for One Hundred and Seven Million Two Hundred Thirty-Eight Thousand
Four Hundred and Twenty One (107,238,421) shares of Net Element stock which
shall be distributed to the Sellers in a one for one exchange of the units of
membership interest held by each such Seller on Schedule I hereto.
1
1.3. Closing.
(a) The
sale and purchase of the Interests and the Domains shall occur simultaneously
with the signing and effective delivery of this Agreement.
(b) Prior
to the Closing, parties have delivered to each other the documents required to
be delivered pursuant to Article V of this Agreement.
ARTICLE
II
OTHER
COVENANTS
2.1. Disclosure
Schedules. Prior to the Closing Date, the Sellers shall
deliver to Net Element disclosure schedules (the “Disclosure Schedules”) signed
by the Sellers stating that the Disclosure Schedules were delivered pursuant to
this Agreement and are the Disclosure Schedules referred to in this
Agreement. The Disclosure Schedules will be deemed to constitute an
integral part of this Agreement and to modify, as specified, the
representations, warranties, covenants or agreements of the Sellers contained in
this Agreement.
2.2. Officer Position and
Employment Agreement. As of the Closing Date, James Caan shall
be elected as a Director of Net Element to begin his term January 1,
2011.
2.3. Public
Announcements. Following the Closing, the Sellers shall not
issue or cause the publication of any press release or other public announcement
with respect to this Agreement or the transactions contemplated hereby without
the prior consent of the Purchaser; provided, however, that: nothing herein will
prohibit either party from issuing or causing publication of any such press
release or public announcement to the extent that such party’s counsel
reasonably determines such action to be required by law, or the regulations of
any government agency or the principal exchange, in which case the party making
such determination will, to the greatest extent practicable in light of the
circumstances, use best efforts to allow the other party reasonable time to
comment on such release or announcement in advance of its issuance.
2.4. Preferred
Interest. Enerfund hereby releases all, right, title and
interest to the Preferred Interest in Openfilm, including without limitation the
ownership of 1,000,000 shares of Preferred Interest previously listed on
Schedule A to the Openfilm Operating Agreement.
ARTICLE
III
REPRESENTATIONS
AND WARRANTIES OF THE SELLERS
The
Principal Sellers represent and warrant to the Purchaser that the
representations and warranties made by it in this Article III are correct and
complete as of the date of this Agreement and will be correct and complete as of
the Closing (as though made then and as though the Closing were substituted for
the date of this Agreement throughout this Article II), except as set forth in
the Disclosure Schedules delivered by the Sellers to the Purchaser prior to the
Closing. The Sellers besides the Principal Sellers only represent and warrant
that they have due authority pursuant to Section 3.1 and proper title pursuant
to Section 3.8 hereto.
2
3.1. Authority. Enerfund
and MZ Capital are business entities with the requisite capacity, power and
authority and Kozko, James Caan, Scott Caan, Rydell, Duvall, Walters, Lindsey,
and Paoli are individuals with the requisite capacity, power and
authority: (a) to own and use the properties owned and used by it and (b)
to execute and deliver this Agreement and to consummate the transactions
contemplated hereby.
3.2. Due
Formation. Openfilm is a limited liability company duly
organized, validly existing and in good standing under the laws of the State of
Florida, and Openfilm has the corporate power and authority and all necessary
governmental approvals to own its properties and assets and to carry on its
business as it is now being conducted and are duly qualified to do business and
is in good standing in each of the jurisdictions in which the ownership of its
properties or the conduct of its business requires such qualification, except
for jurisdictions in which the failure to be so qualified would not,
individually or in the aggregate, have a Material Adverse
Effect. Openfilm has delivered or will deliver to Net Element copies
of the certificates of registration and charter or other organizational
documents of Openfilm (the “Organizational Documents”). Such
Organizational Documents are in all material respects complete and correct and
in full force and effect, are the only documents governing the operation and
authority of Openfilm, and Openfilm is not in violation of any of the provisions
of the Organizational Documents. Except as provided in Schedule 3.2
hereto, there are no other Persons in which Openfilm owns, of record or
beneficially, any direct or indirect equity or similar interest or any right
(contingent or otherwise) to acquire the same.
3.3. Capitalization. The
Sellers owns 100% of the issued and outstanding interests in Openfilm, and there
are no other interests, or options, warrants, calls, preemptive rights,
subscriptions or other rights, to acquire interests, in Openfilm and there are
no outstanding contractual obligations of Openfilm to repurchase, redeem or
otherwise acquire any membership interests of Openfilm or to provide funds to
make any investment (in the form of a loan, capital contribution or otherwise)
in any other Person. All the outstanding units of membership interest of
Openfilm are duly authorized validly issued, fully paid and non-assessable and
free of preemptive rights.
3.4. No Violation or
Conflict. The execution and delivery of the Transaction
Agreements do not, and the consummation of the transactions contemplated hereby
and thereby and compliance with the provisions hereof and thereof will not,
conflict with, result in any violation of, or breach or default (with or without
notice or lapse of time, or both) under, or give to others a right of
termination, cancellation or acceleration of any obligation or the loss of a
material benefit under, or result in the creation of any lien, security
interest, charge or encumbrance upon any of the properties or assets of Openfilm
under, any provision of (i) the Organizational Documents, (ii) any loan or
credit agreement, note, bond, mortgage, lease, indenture or other contract,
agreement, instrument, permit, concession, franchise or license applicable to
Openfilm, or (iii) any judgment, order, decree, statute, law, ordinance, rule,
or regulation applicable to the Sellers or Openfilm or any of its respective
properties or assets.
3
3.5. No Undisclosed
Liabilities. Openfilm have no liabilities or obligations of any nature
other than for incidental current expenses incurred in the normal course of
business such as salaries, equipment, maintenance, etc., whether or not accrued,
contingent or otherwise, and there is no existing condition, situation or set of
circumstances that could be expected to result in such a liability or
obligation.
3.6. No Violation of
Law. To the Knowledge of the Sellers, the businesses of
Openfilm are not being conducted in violation of any applicable
Law.
3.7. Litigation;
Proceedings. (a) there are no actions, suits, claims (including worker’s
compensation claims), litigation or other governmental or judicial proceedings
or investigations or arbitrations against Openfilm or any of its properties,
assets or business, or any of Openfilm’s current or former directors or officers
or any other Person whom Openfilm has agreed to indemnify; (b) as of the date
hereof, there are no actions, suits or proceedings pending or threatened,
against the Sellers or Openfilm relating to the transactions contemplated by the
Transaction Agreements; and (c) there are no outstanding orders, judgments,
injunctions, awards or decrees of any governmental entity against the Sellers or
Openfilm, any of its properties, assets or businesses, or any of Openfilm’s
current or former directors or officers or any other Person whom Openfilm has
agreed to indemnify.
3.8. Title to
Assets. The Sellers and Openfilm own and have valid title to
its other tangible assets and properties which they purport to own, free and
clear of any and all Liens, except for Permitted Liens.
3.9. Financial
Statements. As of the date the Sellers deliver the Disclosure
Schedules, the Sellers will have delivered to Net Element the following
financial statements for Openfilm: balance sheet and incomes statement as of
December 31, 2009 (audited) and December 31, 2008 audited) (collectively, the
“Financial Statements”). The Financial Statements have been prepared
in accordance with accounting principles consistently applied throughout the
periods covered thereby and present fairly in all material respects, as of their
respective dates, the financial condition and results of operations of
Openfilm.
3.10. Taxes. Other
than as disclosed on Schedule 3.10 hereto, Openfilm has filed all income tax
returns (the “Tax Returns”) that it is required to file, and has paid all income
taxes (the “Taxes”) shown thereon as owing. The most recent financial
statements contained in the Financial Statements reflect an adequate reserve for
all Taxes payable by Openfilm for all taxable periods and portions thereof
accrued through the date of such financial statements, except to the extent that
any failures to reflect such reserves would not reasonably be expected to have a
Material Adverse Effect. There is no pending dispute with any taxing
authority relating to any Tax Returns of Openfilm and there is no tax audit of
any Tax Return pending or currently in process. There are no liens
for Taxes upon any of the assets of Openfilm, except Liens for current Taxes not
yet due and payable.
3.11. Employees. Schedule
3.11 sets forth the names and titles of all current employees of
Openfilm.
4
3.12. Brokers, Finders or
Financial Advisors. Neither the Seller, nor
Openfilm, has employed any investment banker, broker, finder or intermediary
(for the avoidance of doubt, expressly excluding attorneys or accountants) in
connection with the transactions contemplated hereby who might be entitled to
any fee or any commission in connection with or upon consummation of the
transactions contemplated hereby.
ARTICLE
IV
REPRESENTATIONS
AND WARRANTIES OF THE PURCHASER
The
Purchaser represents and warrants to the Sellers that the representations and
warranties made by it in this Article IV are correct and complete as of the date
of this Agreement and will be correct and complete as of the Closing (as though
made then and as though the Closing were substituted for the date of this
Agreement throughout this Article IV).
4.1. Organization and
Qualifications. The Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation, with the requisite corporate power and authority to own and use
its properties and assets and to carry on its business as currently
conducted. The Purchaser is duly qualified to do business and is in good
standing as a foreign corporation in each jurisdiction in which the nature of
its business conducted or property owned by each makes such qualification
necessary, except where the failure to be so qualified or in good standing, as
the case may be, would not reasonably be expected to have a Material Adverse
Effect.
4.2. Authorization. The
Purchaser has the requisite corporate power and authority to enter into and to
consummate the transactions contemplated by this Agreement and otherwise to
carry out its obligations hereunder. The execution and delivery of this
Agreement by the Purchaser and the consummation by it of the transactions
contemplated hereby have been duly authorized by all necessary action on the
part of the Purchaser, and no further action is required by the Purchaser.
This Agreement has been duly executed by the Purchaser and this Agreement
constitutes a valid and binding agreement of the Purchaser enforceable against
the Purchaser in accordance with its terms, subject, however, as to enforcement,
to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors’ rights
and to general principles of equity, regardless of whether such enforceability
is considered in equity or at law. The Purchaser is not in violation of
any of the provisions of its Certificate or Articles of Incorporation, bylaws or
other organizational documents.
4.3. Brokers, Finders or
Financial Advisors. No broker, investment broker, financial
advisor or other person is entitled to any broker’s, finder’s, financial
advisor’s or other similar fee or commission from the Purchaser in connection
with the transactions contemplated by this Agreement.
ARTICLE
V
DELIVERABLES
5.1. Certificates and Documents
of the Sellers. The Sellers shall have delivered at or prior to the
Closing the following:
5
(i) A
copy of Openfilm’s Certificate of Formation, with all amendments to date,
certified by the Secretary of State, together with a copy of the Operating
Agreement of Openfilm, certified by its secretary within three (3) business days
of the Effective Date;
(ii) possession
of all originals and copies of agreements, instruments, documents, deeds, books,
records, files and other data and information within the possession of the
Sellers or any Affiliate of the Sellers pertaining to Openfilm (collectively,
the “Records”); provided, however, that the Sellers may retain (1) copies of any
tax returns and copies of Records relating thereto; (2) copies of any Records
that the Sellers are reasonably likely to need for complying with requirements
of law; and (3) copies of any Records that in the reasonable opinion of the
Sellers will be required in connection with the performance of his obligations
herein;
(iii) resolutions
of Openfilm or the Sellers, or both as the requisite circumstance and Law
requires, authorizing and approving all matters in connection with this
Agreement and the transactions contemplated herein, certified by a duly
authorized officer of Openfilm within three (3) days of the Effective
Date;
(iv) the
stock book, stock ledger, minute books and corporate seal of
Openfilm;
(v) such
other documents relating to the transactions contemplated in this Agreement as
the Purchaser may reasonably request.
5.2. Certificates and Documents
of the Purchaser. The Purchaser shall have delivered at or
prior to the Closing the following (with the exception of the stock certificates
representing the Purchase Price which shall be delivered as soon as possible
thereafter):
(i)
resolutions of the Board of Directors of the Purchaser, authorizing and
approving all matters in connection with this Agreement and the transactions
contemplated herein, certified by the secretary of the Purchaser as of the
Closing Date;
(ii) such
other documents relating to the transactions contemplated in this Agreement as
the Sellers may reasonably request; and
(iii) Stock
certificates representing the Purchase Price for each of the Sellers in the
amounts set forth on Schedule I hereto.
5.3. Intervening
Litigation. If, prior to the Closing Date any preliminary or
permanent injunction or other Order issued by a court of competent jurisdiction
or by any other Governmental Entity shall restrain or prohibit this Agreement or
the consummation of the transactions contemplated herein for a period of fifteen
(15) days or longer, the Closing shall be adjourned at the option of either
party for a period of thirty (30) days. If at the end of such thirty
(30) day period such injunction or Order shall not have been favorably resolved,
either party may, by written notice thereof to the other, terminate this
Agreement, without liability or further obligation hereunder.
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ARTICLE
VI
OTHER
AGREEMENTS
6.1. Confidentiality. Each
of the parties hereto shall, and shall cause their respective principals,
officers, directors, shareholders, employees, agents, counsel, auditors, and
other personnel and authorized representatives to, hold in strict confidence,
and not divulge or disclose, any confidential information of any kind concerning
(i) the other parties and their respective principals, officers, directors,
shareholders, employees, agents, counsel, auditors and other personnel and
authorized representatives; (ii) the business or operations of any party to this
Agreement; or (iii) this Agreement, the transactions contemplated hereby, or any
negotiations or discussions between or among the parties hereto in connection
with any of the foregoing, except to the extent that such information is a
matter of public knowledge or is required to be disclosed by law or judicial or
administrative process as may be required by applicable law or as otherwise
contemplated herein. Notwithstanding anything contained herein to the contrary,
the confidentiality obligations of the parties hereto contained in this Section
6.1 shall survive the Closing.
6.2. Expenses. Except
as otherwise expressly provided herein, each party hereto will pay its own
expenses incurred in connection with the negotiation of this Agreement, the
performance of their respective obligations hereunder and the consummation of
the transactions contemplated hereby, whether or not consummated.
ARTICLE
VII
SURVIVAL
AND INDEMNIFICATION
7.1. Survival of Representations
and Warranties. The representations and warranties contained
in Articles III and IV hereof shall survive the Effective Date for a period of
twelve (12) months, after which all such representations and warranties shall
terminate and be of no further force or effect.
7.2. Indemnification by the
Seller. For a period of twelve (12) months after the Effective
Date, the Principal Sellers shall indemnify and hold harmless the Purchaser and
its respective officers, directors, employees, agents, and shareholders
(collectively, the “Purchaser Indemnified Parties”) against any Losses incurred
or paid by any Purchaser Indemnified Party, as a result of (i) any breach or
failure of any of the representations and warranties of the Principal Sellers
contained in this Agreement or (ii) any breach of, or failure to perform, any
agreement or covenant of the Sellers contained in this Agreement; provided that
(i) the Principal Sellers shall not be liable under this Section 8.2(a) unless
the aggregate amount of Losses attributable to the events or facts (including a
series of related events or facts) that resulted in such breach of
representation, warranty covenant or agreement is $10,000 or more; and (ii) the
Principal Sellers’ maximum liability under this Section 8.2(a) shall not exceed
the value of the Purchase Price on the date of the Closing.
7
7.3. Indemnification by the
Purchaser. For a period of twelve (12) months after the
Effective Date, the Purchaser shall indemnify and hold harmless the Sellers
against any Losses incurred or paid by the Sellers, as a result of (i) any
breach or failure of any of the representations and warranties of the Purchaser
contained in this Agreement or (ii) any breach of, or failure to perform, any
agreement or covenant of the Purchaser contained in this Agreement.
7.4. Procedure. Promptly
(but in no event more than 15 days) after receipt by a Purchaser Indemnified
Party or the Sellers (an “Indemnified Party”), as the case may require, of
notice of the commencement of any action, such Indemnified Party shall, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 7.4, notify in writing the indemnifying party of the commencement
thereof. In case any such action is brought against any Indemnified Party,
and such Indemnified Party notifies the indemnifying party of the commencement
thereof, the indemnifying party shall be entitled to participate in and, to the
extent that it may wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, subject to the provisions hereof, with
counsel reasonably satisfactory to such Indemnified Party. Following
notification to the Indemnified Party of its election so to assume the defense
thereof, the indemnifying party shall not be liable to such Indemnified Party
under this Section 7.4 for any legal or other expenses subsequently incurred by
such Indemnified Party in connection with the defense therewith, other than
reasonable costs of investigation. The Indemnified Party shall have the
right to employ separate counsel in any such action and to participate in the
defense thereof, but the fees and expenses of such counsel shall not be at the
expense of the indemnifying party if the indemnifying party has assumed the
defense of the action, within a reasonable time after notice of commencement of
the action, with counsel reasonably satisfactory to the Indemnified Party; provided however, that the
indemnifying party shall be required to pay for Indemnified Party’s counsel, if
such Indemnified Party shall have reasonably concluded, on reliance of the
written opinion of counsel experienced in such matters, that there may be
defenses available to it or him which are different from or additional to those
available to the indemnifying party (in which case indemnifying parties shall
not have the right to direct the defense of action). No settlement of any
action against an Indemnified Party shall be made without the consent of the
Indemnified Party, which shall not be unreasonably withheld. In the event
that any Indemnified Party should have a direct claim against any indemnifying
party hereunder that does not involve any third-party claim or claims asserted
against the Indemnified Party, the Indemnified Party shall transmit to the
indemnifying party a written notice describing in reasonable detail the nature
of the claim, an estimate of the amount of damages attributable to such claim to
the extent feasible (which estimate shall not be conclusive of the final amount
of such claim) and the basis of the Indemnified Party’s request for
indemnification under this Article VII. The parties agree that the sole
and exclusive remedy which any party hereto shall have against any other party
hereto under this Agreement shall be the right to proceed for compensation or
indemnification in the manner and only to the extent provided in this Article
VII.
ARTICLE
VIII
MISCELLANEOUS
8.1. Arbitration.
Any controversy or claim arising out of or relating to this Agreement that
cannot be resolved and which is the result of a breach or termination of
this Agreement shall be resolved, as follows:
8
(a) The
dispute or controversy will be settled finally and exclusively by binding
arbitration in accordance with and through the Commercial Arbitration Rules
(“Rules”) of the American Arbitration Association (“AAA”) in effect on the date
of this Agreement.
(b) The
place of the arbitration shall be Miami, Florida, United States of America. Each
party hereby irrevocably agrees that service of process, summons, notices or
other communications related to the arbitration procedure shall be deemed served
and accepted by the other party if given in the same manner as provided under
the notice provisions of this Agreement. Witnesses residing outside of the State
of Florida may testify telephonically.
(c) The
language to be used in the arbitration shall be English.
(d) The
arbitration shall be conducted by one arbitrator. Upon request, the AAA
will produce a list of 10 potential arbitrators familiar with international
commercial legal issues. The parties will attempt to agree on one
arbitrator. Failing to agree, the AAA shall appoint an arbitrator pursuant to
the Rules.
(e) Judgment
upon the written award rendered by the arbitrator may be entered in any court or
record of competent jurisdiction in any country, or application may be made to
such court of judicial acceptance of the award and an order of enforcement, as
the law of such jurisdiction may require or allow.
(f) The
cost of the arbitration proceedings shall be determined under the respective
rules for cost of arbitration of the AAA in effect at the time of the request
for arbitrations. All expenses of the arbitration, including
reasonable attorney’s fees, shall be borne by the losing party to the
arbitration or, as the case may be, shall be prorated to properly reflect any
partial prevailing or losing of the parties to the arbitration, as determined by
the arbitrators in the written award.
(g) The
panel of arbitrators specifically shall have the power to grant equitable relief
upon request of either party.
8.2. Entire
Agreement. This Agreement, together with the Exhibits and
Schedules hereto, contain the entire understanding of the parties with respect
to the subject matter hereof and supersedes all prior agreements and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into this Agreement and the Exhibits and Schedules
hereto.
8.3. Notices. All
notices, requests, consents and other communications hereunder shall be in
writing and shall be deemed effectively given: (a) upon personal delivery to the
party to be notified, (b) when sent by confirmed facsimile if sent during normal
business hours of the recipient; if not, then on the next business day, (c)
three business days after having been sent by registered or certified mail,
return receipt requested, postage prepaid, or (d) two business days after
deposit with recognized overnight courier, specifying next day delivery, with
written verification of receipt. The address for all notices, requests,
consents and other communications hereunder to the parties to this Agreement
shall be delivered or sent to the following:
9
If to the
Sellers:
Dmitry
Kozko
1450
South Miami Avenue
Miami,
Florida 33130
Email:
dkozko@openfilm.com
If to the
Purchaser:
Net
Element, Inc.
1450
South Miami Avenue
Miami, FL
33130
Attn: Mike
Zoi, President
Email:
mzoi@netelement.com
With a
copy to:
Curtis
Wolfe
1450
South Miami Avenue
Miami, FL
33130
Email:
cwolfe@netelement.com
Or such
other address as may be designated in writing hereafter, in the same manner, by
such Person.
8.4. Amendments;
Waivers. No provision of this Agreement may be amended except
by a written instrument signed by the Purchaser and the Sellers. No
provision of this Agreement may be waived except in a written instrument
signed by the party against whom enforcement of any such waiver is sought.
No waiver of any default with respect to any provision, condition or requirement
of this Agreement shall be deemed to be a continuing waiver in the future or a
waiver of any other provision, condition or requirement hereof, nor shall any
delay or omission of either party to exercise any right hereunder in any manner
impair the exercise of any such right accruing to it thereafter.
8.5. Headings. The
headings herein are for convenience only, do not constitute a part of this
Agreement and shall not be deemed to limit or affect any of the provisions
hereof.
8.6. Successors and
Assigns. This Agreement shall be binding upon and inure to the
benefit of the parties and their successors and permitted assigns. Neither
this Agreement nor any rights or obligations hereunder may be assigned without
the prior written consent of the other party.
8.7. No Third-Party
Beneficiaries. This Agreement is intended for the benefit of
the parties hereto and their respective successors and permitted assigns, and is
not for the benefit of, nor may any provision hereof be enforced by, any other
Person.
10
8.8. Governing Law; Consent to
Jurisdiction. This Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of
Florida without regard to the principles of conflicts of law
thereof.
8.9. Execution. This
Agreement may be executed in two or more counterparts, all of which when taken
together shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered to the
other parties, it being understood that all parties need not sign the same
counterpart. In the event that any signature is delivered by facsimile
transmission, such signature shall create a valid and binding obligation of the
party executing (or on whose behalf such signature is executed) the same with
the same force and effect as if such facsimile signature page were an original
thereof.
8.10. Severability. In
case any one or more of the provisions of this Agreement shall be invalid or
unenforceable in any respect, the validity and enforceability of the remaining
terms and provisions of this Agreement shall not in any way be affected or
impaired thereby and the parties will attempt to agree upon a valid and
enforceable provision which shall be a reasonable substitute therefor, and upon
so agreeing, shall incorporate such substitute provision in this
Agreement.
8.11. Interpretation. The
Section headings in this Agreement are for convenience of reference only and
shall not be deemed to alter or affect the meaning or interpretation of any
provision hereof. The language used in this Agreement will be deemed to be
the language chosen by the parties hereto to express their mutual intent, and no
rule of strict construction will be applied against any party hereto. The
disclosure of any matter in any portion of the Disclosure Schedules hereto shall
be deemed to be a disclosure for all purposes of this Agreement to which such
matter could reasonably be likely to be pertinent, but shall expressly not be
deemed to constitute an admission by the Sellers or the Purchaser, as the case
may be, or to otherwise imply, that any such matter is material for the purposes
of this Agreement.
ARTICLE
IX
DEFINITIONS
9.1. When
used in this Agreement, and in addition to the other terms defined herein, the
following terms shall have the meanings specified:
(a) Affiliate. “Affiliate”
shall mean, in relation to any party hereto, any entity directly or indirectly
controlling, controlled by or under common control with such party.
(b) Agreement. “Agreement”
shall mean this Membership Interest Purchase Agreement, together with the
Exhibits attached hereto and the Disclosure Schedule, as the same may be amended
from time to time in accordance with the terms hereof.
(c) Control. “Control”
(including the terms “controlling,” “controlled by,” and “under common control
with”), as used with respect to any Person, shall mean the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of such Person, through the ownership of voting securities or by
contract.
11
(d) Change of
Control. “Change of Control” shall mean (i) the merger or
consolidation of the Purchaser with or into any other corporation or entity, or
the merger or consolidation of any other corporation or entity into or with the
Purchaser, which results in the Purchaser or those persons who are shareholders
of the Purchaser as of the date hereof holding less than fifty percent (50%) in
voting power of the outstanding capital stock of the surviving corporation; (ii)
any sale or transfer in a single transaction or series of related transactions
of all or substantially all of the Company’s assets as of the transaction date
(or the date of the first transaction in a series of related transactions);
(iii) a third Person or Persons (who is or are not the Sellers or shareholders
of the Purchaser as of the date hereof) becomes the beneficial owner (as such
term is in the Securities Exchange Act of 1934, as amended) of shares of the
Purchaser having more than fifty percent (50%) of the voting power of the
outstanding capital stock of the Purchaser; or (iv) any transaction or series of
related transactions in which a third Person or Persons (who is or are not the
Sellers or shareholders of the Purchaser as of the date hereof), appoints or
elects a majority of the Board of Directors of the Company.
(e) Disclosure
Schedule. “Disclosure Schedule” shall mean the Disclosure
Schedule delivered by the Sellers to Purchaser pursuant to Section 2.2 of this
Agreement.
(f) Effective
Date. “Effective Date” shall mean the date on which the
parties hereto have signed and delivered this Agreement.
(g) Governmental
Entity. “Governmental Entity” shall mean any federal, state,
local or foreign court, arbitral tribunal, administrative agency or commission
or other governmental or regulatory authority or administrative
agency.
(h) Indebtedness. “Indebtedness”
shall mean all liabilities or obligations of Openfilm, whether primary or
secondary or absolute or contingent, in excess of $10,000 as to any single item:
(a) for borrowed money; or (b) evidenced by notes, bonds, debentures or similar
instruments; or (c) secured by Liens on any assets of Openfilm.
(i) Knowledge. “Knowledge”
shall mean actual knowledge without independent investigation of Dmitry Kozko or
any officer or manager of the respective company who should, based on his or her
responsibilities, reasonably be expected to have such knowledge.
(j) Law. “Law”
shall mean any foreign, federal, state or local governmental law, rule,
regulation or requirement, including any rules, regulations and orders
promulgated thereunder and any orders, decrees, consents or judgments of any
governmental regulatory agencies and courts having the force of law, other than
any Environmental Laws.
(k) Lien. “Lien”
shall mean, with respect to any asset (real, personal or mixed): (a) any
mortgage, pledge, lien, easement, lease, title defect or imperfection or any
other form of security interest, whether imposed by Law or by contract; and (b)
the interest of a vendor or lessor under any conditional sale agreement,
financing lease or other title retention agreement relating to such
asset.
12
(l) Loss. “Loss”
shall mean any and all damages (including incidental and consequential damages),
assessments, fines, penalties, deficiencies, losses, judgments, amounts paid in
settlement or diminution in value, costs and expenses (including, without
limitation, interest, court costs, reasonable fees and expenses of attorneys,
accountants and other experts or other reasonable expenses incurred in
investigating, preparing, defending against or prosecuting any litigation or
claim, action, suit, proceeding or demand).
(m) Material Adverse
Effect. “Material Adverse Effect” shall mean a material
adverse effect on the business, condition (financial or otherwise), results of
operations, assets, liabilities, prospects, liquidity or properties of Openfilm
or Net Element as applicable, each taken as a whole.
(n) Permitted
Liens. “Permitted Liens” shall mean those of the Existing
Liens that do not materially detract from the value of the property or assets of
Openfilm taken as a whole subject thereto and do not materially impair the
business or operations of Openfilm.
(o) Person. “Person”
shall mean a natural person, corporation, limited liability company,
association, joint stock company, trust, partnership, governmental entity,
agency or branch or department thereof, or any other legal entity.
(p) Subsidiary. “Subsidiary”
shall mean any corporation, at least a majority of the outstanding capital stock
of which (or any class or classes, however designated, having ordinary voting
power for the election of at least a majority of the board of directors of such
corporation) shall at the time be owned by the relevant Person directly or
through one or more corporations which are themselves Subsidiaries.
(q) “Transaction
Agreements” shall mean this Agreement, the Employment Agreement, and any
other agreements contemplated in this Agreement.
[Signatures
appear on next page]
13
IN WITNESS WHEREOF, the
parties hereto have caused this Membership Interest Purchase Agreement to be
duly executed by their respective authorized signatories as of the Effective
Date.
|
PURCHASER:
|
|
|
NET
ELEMENT, INC.
|
|
|
By:
|
/s/ Mike Zoi |
|
Name:
|
Mike
Zoi
|
|
Title:
|
Chief
Executive Officer
|
|
SELLERS:
|
||||
|
ENERFUND,
LLC
|
MZ
CAPITAL, LLC
|
|||
|
By:
|
/s/ Mike Zoi |
By:
|
/s/ Mike Zoi | |
|
Name:
|
Mike
Zoi
|
Name:
|
Mike
Zoi
|
|
|
Title:
|
Managing
Member
|
Title:
|
Managing
Member
|
|
| /s/ Dmitry Kozko | ||||
|
Name:
|
Dmitry
Kozko
|
Name:
|
James
Caan
|
|
|
Name:
|
Mark
Rydell
|
Name:
|
Scott
Caan
|
|
|
Name:
|
Stacey
Lindsey
|
Name:
|
Robert
Duvall
|
|
|
Name:
|
Scott
Walters
|
Name:
|
Cari
Paoli
|
|
Messrs.
J. Caan, Rydell, S. Caan, Duvall, Walters, and Paoli and Ms. Lindsey sign this
Membership Interest Purchase Agreement solely to confirm their representation of
due title to their interest in Openfilm (3.8) and capacity (3.1) and acknowledge
the exchange of their interest and incur no other obligations
hereunder.
Schedule
I
Openfilm
Membership Interests
|
Member
|
Units
|
Percentage
|
||||||
|
Common
|
||||||||
|
Enerfund,
LLC
|
45,937,500 | 42.84 | % | |||||
|
MZ
Capital
|
29,062,500 | 27.10 | % | |||||
|
Dmitry
Kozko
|
24,950,000 | 23.27 | % | |||||
|
James
Caan
|
5,568,421 | 5.19 | % | |||||
|
Scott
Caan
|
600,000 | 0.56 | % | |||||
|
Mark
Rydell
|
460,000 | 0.43 | % | |||||
|
Robert
Duval
|
460,000 | 0.43 | % | |||||
|
Stacey
Lindsey
|
100,000 | 0.09 | % | |||||
|
Scott
Walters
|
50,000 | 0.05 | % | |||||
|
Carl
Paoli
|
50,000 | 0.05 | % | |||||
|
Total:
|
107,238,421 | |||||||
|
Series
A Preferred
|
||||||||
|
Enerfund,
LLC
|
1,000,000 | 100.00 | % | |||||
|
Total:
|
1,000,000 | |||||||