Document:

Exhibit 10.1

EXHIBIT
10.1

 

Membership
Interest Purchase AGREEMENT

 

AGREEMENT
(this "Agreement") is made this 16th day of March,

2005, by
and between HouseRaising, Inc., a North Carolina corporation (“HRAI”), Cobs
Homes, LLC, a California limited liability company (“Cobs”), and all of the
members of Cobs.

Recitals

WHEREAS,
in a transaction valued at $5 million, HRAI wishes to acquire 100% of the
membership interests in Cobs and thereby acquire control of all of Cobs existing
businesses and assets, and the members of Cobs desires to sell all of their
membership interests in Cobs to HRAI and thereby transfer control of all of the
existing businesses and assets of Cobs to HRAI, and, in connection with such
sale, certain members are prepared to enter into non-compete agreements with
HRAI and Cobs, all by means of an exchange of cash and shares of restricted
common stock of HRAI (the “Acquisition”); 

WHEREAS,
in furtherance of the Acquisition, the Board of Directors of HRAI and Managing
Members of Cobs, as well as all of the members of Cobs, have approved the
Acquisition and its exchange of stock and cash, upon the terms and subject to
the conditions set forth in this Agreement;

WHEREAS,
in signing this agreement the parties hereto agree that they have set forth the
material terms and conditions upon which they agree to effectuate the
Acquisition and agree immediately following the execution of this agreement to
have counsel for HRAI prepare a mutually satisfactory long form acquisition
agreement containing customary representations, warranties, covenants and
conditions of each of the parties hereto (it being agreed, however, that only
limited representations and warranties as to title and related matters will be
required of members who are not employees of Cobs), with a projected closing to
occur on or before May 16th 2005. If this Agreement does not close on or before
June 1st, 2005, either party may terminate this Agreement;

WHEREAS,
the parties agree that this Agreement shall be a legally binding contract
between the parties with respect to the acquisition of assets and the membership
interests of Cobs, subject to due diligence to be performed in the next 45 days
and subject to HRAI review of Cobs financials. HRAI agrees to conduct its due
diligence and review of Cobs financials promptly. If HRAI does not notify Cobs
in writing that it has completed and approved its due diligence and financial
review on or before April 30, 2005, this Agreement may be terminated by either
party. Otherwise, this agreement contains all of the terms and conditions of the
acquisition which are considered material to the acquisition, so that it shall
be enforceable by any of the parties hereto; 

WHEREAS,
upon its execution, the definitive agreement shall supercede this Agreement,
but, if, and only if, such definitive agreement is fully signed by all of the
parties hereto; otherwise, the provisions of this Agreement shall remain in full
force and effect;

1

 

WHEREAS,
neither party is seeking tax counsel or legal or accounting opinions on whether
the transaction qualifies for tax free treatment.

Agreement

Based on
the stated premises, which are incorporated herein by reference, and for and in
consideration of the mutual covenants and agreements hereinafter set forth, the
mutual benefits to the parties to be derived here from, and other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, it is hereby agreed as follows:

HRAI,
Cobs and all of the members of Cobs agree to an acquisition of all of
the membership interests of Cobs by HRAI through an exchange of cash and shares
of common stock of HRAI in accordance with this Agreement. The members of Cobs
shall be entitled to their pro rata portion of the cash and shares, subject to
any different allocation of the purchase price which is hereinafter set forth.
Upon consummation of the Acquisition, Cobs shall become a wholly owned
subsidiary of HRAI.

 

1.01
Allocation
of the $5 million:

a.
Employment
Agreements:
Representing $1,275,000 in HRAI  common
stock and $25,000 in cash, and as part of this Acquisition, the executives of
Cobs listed below hereby agree to execute and deliver four year employment
contracts with HRAI containing terms and conditions which are mutually
satisfactory. Upon meeting the terms of the four (4) year employment agreements,
at the end of each year, 25% of the escrowed shares will be released to the
employee. $25,000 cash will be paid as a signing bonus to Liz Nicol at Closing.

	   
      Name
	 	
      Cash
      Bonus Awarded at Closing
	 	
      Restricted
      Stock under Section 1.01 (a)
	 	
      Stock
      Earn Out Section 1.01 (d)
	 	
      Cash
      Earn Out Section 1.01(d) 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
      Rob
      Mackle
	 	 	
      0
	 	
      $
	
      400,000
	 	
      $
	
      70,000
	 	
      $
	
      180,000
	 
	
      Dan
      McCloskey
	 	 	
      0
	 	
      $
	
      400,000
	 	
      $
	
      65,000
	 	
      $
	
      160,000
	 
	
      Chip
      Martoccia
	 	 	
      0
	 	
      $
	
      400,000
	 	
      $
	
      65,000
	 	
      $
	
      160,000
	 
	
      Liz
      Nicol
	 	
      $
	
      25,000
	 	
      $
	
      50,000
	 	
      $
	
      50,000
	 	 	
      0
	 
	 	 	
      $
	
      25,000
	 	
      $
	
      1,250,000
	 	
      $
	
      250,000
	 	
      $
	
      500,000
	 

 

 

	b.  	
      Non
      Compete Agreements:
      Effective at closing, the Cobs members listed below agree to a non-compete
      agreement with HRAI and Cobs, in which they agree not to compete with the
      business of providing services to individuals acting as owner-builders of
      personal residences for a period of four years following the closing,
      within the geographic limits of the United States or by means of the
      Internet The parties agree that the purchase price for this non-compete is
      $573,000 in cash and $250,000 in value of stock allocated as set forth
      below. In addition, HRAI and such members of Cobs agree to allocate the
      $823,000 total amount paid for this non-compete agreement to a non-compete
      provision for both federal income tax purposes and financial accounting
      purposes on the books of HRAI. 

2

	
         
      Name
	 	
      Cash
      Payment for Non-Compete
	 	
      Stock
      Payment for Non-Compete
	 
	 	 	 	 	 	 	 	 
	
      Rob
      Mackle
	 	
      $
	
      303,000
	 	
      $
	
      55,333
	 
	
      Dan
      McCloskey
	 	
      $
	
      112,000
	 	
      $
	
      55,333
	 
	
      Chip
      Martoccia
	 	
      $
	
      113,000
	 	
      $
	
      55,334
	 
	
      Pat
      Sullivan 
	 	
      $
	
      45,000
	 	
      $
	
      84,000
	 
	 	 	
      $
	
      573,000
	 	
      $
	
      250,000
	 

 

c.
Membership
Interests: The
parties agree that the purchase price for the Membership Interests of Cobs shall
be $1,300,000 in cash and $250,000 in HRAI stock, and it shall be allocated as
set forth below. 

	
         
      Name
	 	
      Percentage
      Interest
	 	
      Cash
      Payment for Membership Interest
	 	
      Stock
      Payment for Membership Interest
	 
	 	 	 	 	 	 	 	 
	
      Rellen
      Stewart
	 	 	
      12.1
	 	
      $
	
      275,000
	 	 	
      0
	 
	
      Larry
      Mackle
	 	 	
      15.4
	 	
      $
	
      400,000
	 	 	
      0
	 
	
      Tom
      Candelaria
	 	 	
      5.5
	 	
      $
	
      125,000
	 	 	
      0
	 
	
      Ted
      Keenan
	 	 	
      5.5
	 	
      $
	
      125,000
	 	 	
      0
	 
	
      Rob
      Mackle
	 	 	
      19.7
	 	
      $
	
      157,000
	 	
      $
	
      100,000
	 
	
      Keith
      Sharp
	 	 	
      .7
	 	
      $
	
      15,000
	 	 	
      0
	 
	
      Ethan
      Falk
	 	 	
      .7
	 	
      $
	
      15,000
	 	 	
      0
	 
	
      Dan
      McCloskey
	 	 	
      16.5
	 	
      $
	
      81,500
	 	
      $
	
      75,000
	 
	
      Chip
      Martoccia
	 	 	
      16.5
	 	
      $
	
      81,500
	 	
      $
	
      75,000
	 
	
      Pat
      Sullivan
	 	 	
      7.5
	 	
      $
	
      25,000
	 	 	
      0
	 
	 	 	 	
      100
	 	
      $
	
      1,300,000
	 	
      $
	
      250,000
	 

 

d.
Payment
of $500,000 in cash and $250,000 of value in restricted stock
for Earn
Out Provision for the Benefit of Executive Employees: The
parties agree that the executive employees Cobs listed under Section 1.01(a)
above shall be entitled to awards of restricted stock if Cobs continues to
develop business after the closing at a rate that produces at least the same
number of new homes and renovation projects, revenues and net cash flow as
produced in the year 2004. As promptly as practicable after the end of each year
in which Cobs meets these annual goals, such counsel shall cause 25% of the
common stock to be promptly released from escrow on a pro rata basis to an
earn-out for the benefit of the executive employees. In the event that these
annual goals for any of the four years do not meet the 2004 level, such members
agree to forfeit twenty five percent (25%) of the total compensation to which
they would otherwise have been entitled. It is agreed that $750,000 is to be
exchanged pursuant to this Acquisition shall be allocated to this earn-out
provision, and that such common stock shall be held in escrow by counsel to
HRAI. 

	
      
	
      e.
      At Closing, HRAI agrees to provide to cause Cobs to pay $560,000 in full
      satisfaction of the outstanding principal and interest of notes owed by
      Cobs set forth below. 

 

3

 

	
         
      Name
	 	
      Principal
      Amount of Note
	 	
      Accrued
      Interest to be Paid
	 	
      Total
      Payment
	 
	 	 	 	 	 	 	 	 
	
      Rellen
      Stewart
	 	
      $
	
      50,000
	 	
      $
	
      0
	 	
      $
	
      50,000
	 
	
      Larry
      Mackle
	 	
      $
	
      150,000
	 	
      $
	
      0
	 	
      $
	
      150,000
	 
	
      Tom
      Candelaria
	 	
      $
	
      100,000
	 	
      $
	
      70,000
	 	
      $
	
      170,000
	 
	
      Rob
      Mackle
	 	
      $
	
      50,000
	 	
      $
	
      0
	 	
      $
	
      50,000
	 
	
      Mason
      Bailey
	 	
      $
	
      50,000
	 	
      $
	
      20,000
	 	
      $
	
      70,000
	 
	
      Steve
      Basile
	 	
      $
	
      50,000
	 	
      $
	
      20,000
	 	
      $
	
      70,000
	 
	 	 	
      $
	
      450,000
	 	
      $
	
      110,000
	 	
      $
	
      560,000
	 

f.
Payment
of Fees. At
Closing, HRAI will cause Cobs to pay Tom Candelaria a finder fee of $32,000. At
Closing, HRAI will cause Cobs to pay the legal fees incurred by it and its
members under this transaction.

g.
Removal
of Guaranties; Contribution of Capital. At
Closing, HRAI will cause all personal guaranties of Cobs’ debts or obligations
issued by Cobs members to be released and will contribute to Cobs $250,000 in
working capital.

  1.02
Establishing Value of HRAI Shares: For purposes of determining the market value
of HRAI shares of common stock exchanged in the Acquisition, the market value
per share shall be determined by averaging the closing bid price for the shares
over a 20 day business period determined to be the 10 business days preceding
the date this agreement is signed and the 10 days following the signing of this
agreement. The average bid price as so determined shall establish the market
value to determine the number of HRAI shares to be transferred in the
Acquisition. 

1.03
Delivery of ownership in Cobs: The transfer of 100% ownership interests in Cobs
to HRAI shall be effected at the Closing. HRAI agrees that such interests are
being acquired for investment purposes only and not with a view to or in
connection with a distribution thereof.

1.04
Delivery of Shares and Cash: Subject to the escrow provisions and the purchase
price allocation provisions hereof, the shares and cash shall be delivered by
HRAI at closing.

1.05
Registration Rights for the Shares: HRAI will cause all shares of common stock
issued at Closing under this Agreement to be registered on or before December 1,
2005. HRAI agrees to cause any shares delivered pursuant to Sections 1.01(a) or
1.101(d) above to be registered on or prior to delivery thereunder.

1.06
Audited Financial Statements Prepared by P C A O B Auditor: Within ten (10) days
following the signing of this Agreement, the members HRAI will arrange for and
pay for all expenses related to the preparation and delivery of audited
financial statements of COBS. The PCAOB auditor will report for the fiscal year
ended 2004, 2003 and 2002. The members acknowledge that HRAI intends to include
those audited financial statements, together with pro forma financial
statements, on a Current Report on Form 8-K or 8-K/A which will be filed with
the Securities and Exchange Commission. Additionally HRAI will cover all other
related expenses associated with the audit and related due diligence if it
requires any outside the company assistance and is approved in advance and in
writing by HRAI. Cobs agrees to provide prompt assistance to the said auditors
in regard to completing the above mentioned audits.

4

 

1.07
Operation as Wholly-Owned Subsidiary: After giving effect to the transaction
contemplated hereby, HRAI will own all the membership interests of Cobs and Cobs
will be operated as a wholly-owned subsidiary of HRAI. 

1.08
Further Assurances: At the Closing and from time to time thereafter, the Cobs
members shall execute such additional instruments and take such other action as
HRAI may reasonably request, without cost to Cobs members, in order to more
effectively sell, transfer, and assign clear title and ownership in Cobs to
HRAI.

1.09
Continuing all marketing and sales partnerships that exist: Cobs’ has existing
marketing partnerships with Home Depot and others that HRAI considers to have
added value to the Acquisition. The members of Cobs providing employment
services to Cobs after the closing agree to use their best efforts to maintain
those relationships in the future in accordance with their duties under their
respective employment agreements. 

1.10
Closing and Parties: The Closing contemplated hereby shall be held at a mutually
agreed upon time and place on or before April 29th, 2005, or
on another date to be agreed to in writing by the parties (the “Closing Date”).
The Agreement may be closed at any time following approval by the Board of
Directors of HRAI and the Cobs members. The Closing may be accomplished by wire,
express mail, overnight courier, conference telephone call or as otherwise
agreed to by the respective parties or their duly authorized
representatives.

1.11 Due
Diligence Investigation: The parties hereby agree that the obligations of HRAI
to consummate the Acquisition is subject to the satisfactory completion of a due
diligence investigation of the business and affairs of Cobs prior to the
closing. HRAI agrees to conduct such investigation as promptly as possible and
to promptly notify Cobs if it has decided that such review is not
satisfactory.

1.12
Governing Law; Execution in Counterparts: This Agreement shall be governed by
and construed in accordance with the laws of the State of North Carolina. In
addition, this Agreement may be executed in any number of counterparts, and when
each counterpart is put together it shall constitute one and the same
part.

1.13
Confidentiality. The terms of those certain Confidentiality Agreements that are
signed by and between HRAI and Cobs, shall remain in full force and effect.
Between the date hereof and the Closing Date, HRAI will not furnish any
communication to the public generally if the subject matter thereof relates to
Cobs or to the transactions contemplated by this Agreement without the prior
approval of Cobs as to the content thereof, and subject to each Party’s
compliance with applicable law. If HRAI believe that is it required under law to
disclose any information concerning Cobs or the transactions contemplated under
this Agreement, it shall promptly give Cobs prior notice thereof.

5

IN
WITNESS WHEREOF, the parties hereto have executed this Agreement intending to be
legally bound as of the date first written above.

	 HOUSERAISING,
      INC.	 	 	 COBS HOMES
    LLC
	 	 	 	 
	/s/ Charles M.
      Skibo	 	 	/s/ Robert
      Mackle
	
      

    	 	 	
      

    
	Name: Charles M.
      Skibo
Title: Chairman and CEO
	 	 	Name: Robert
      Mackle
Title: Chief Manager

 

 

	
      MEMBERS
      OF COBS HOMES LLC:

	 	 
	 	 
	
      [conformed
      signatures of members intentionally omitted]

	 	 
	 	 
	
      ___________________________
	
      ___________________________

	
      (Rellen
      Stewart) - Member
	
      (Rob
      Mackle) - Member

	 	 
	
      ___________________________
	
      ___________________________

	
      (Tom
      Candelaria) - Member
	
      (Dan
      McCloskey) - Member

	 	 
	
      ___________________________
	
      ___________________________

	
      (Ted
      Keenan) - Member
	
      (Chip
      Martoccia) - Member

	 	 
	
      ___________________________
	
      ____________________________

	
      (Larry
      Mackle) - Member
	
      (Pat
      Sullivan) - Member

	 	 
	
      ___________________________
	
       

	
      (Ethan
      Falk - Member
	 
	 	 
	
      ___________________________
	 
	
      (Keith
      Sharp) - Member
	 
	 	 
	
      ____________________________
	 
	
      (Mason
      Bailey) - Note Holder Only
	 
	 	 
	
      ___________________________
	 
	
      (Steve
      Basile) - Note Holder Only
	 

6Exhibit 10.2

 

EXHIBIT 10.2

April 4,
2005 

VIA
FACSIMILE: (760) 269-3112

Mr. Rob
Mackle

Members
of COBS Homes

COBS
Homes

2221 S.
El Camino Real

Oceanside,
CA 92054

Gentlemen:

Reference
is made to the Membership Interest Purchase Agreement dated March 16, 2005,
signed, and electronically delivered to HouseRaising, Inc. on March 31,
2005.

We hereby
amend the agreement as follows:

 

		1)	Paragraph
      4 on page 1; ‘whereby with a projected closing to occur on or before June
      17,2005’
      is hereby substituted for the language ‘with a projected closing on or
      before May 16,2005’
      and in the same paragraph; ‘If this agreement does not close on or before
      July 1, 2005, either
      party may terminate this agreement’ is hereby substituted for the language
      ‘If this agreement
      does not close on or before June 1, 2005, either party may terminate this
      agreement.’

		2)	Paragraph
      5 on page 1; ‘If HouseRaising, Inc. does not notify COBS in writing that
      it has completed
      and approved its due diligence and financial review on or before June 10,
      2005’ is is
      hereby substituted for the language ‘If HouseRaising, Inc. does not notify
      COBS in writing that
      it has completed and approved its due diligence and financial review on or
      before April 30,
      2005.’

 

		3)	Paragraph
      1.06 on page 4; ‘within forty-five (45) days following the signing of this
      agreement’
      is hereby substituted for the language ‘within ten (10) days following the
      signing of
      this agreement.’

		4)	Paragraph
      1.10 on page 5; ‘The closing contemplated hereby shall be held at a
      mutually agreed
      upon time and place on or before June 17, 2005’ is hereby substituted for
      the

   
language ‘The closing contemplated hereby shall be held at a mutually agreed
upon time and place on
or before April 29, 2005.’

 

 

1

 

Mr. Rob
Mackle

April 4,
2005

Page
2.

 

Kindly
evidence your agreement to the foregoing amendments by signing in the space
provided below and sending a copy of this letter agreement to us by fax at
704.536.0928.

Sincerely,

	 HouseRaising,
  Inc.
	 
 	 
 	 
 
	By:  /s/ Charles M. Skibo
	
      

      Name: Charles M. Skibo
	Title:  Chairman and CEO 

 

Agreed to
and Accepted as 

Of the
Date first written above:

	 COBS Homes,
LLC
	 
 	 
 	 
 
	By:  /s/ Robert Mackle
	
      

      Name: Robert Mackle
	Title:  Chief
      Manager 

 

	
                                                       
      Members of COBS Homes, LLC:

	 	 
	 	 
	
                               
      [conformed signatures of members intentionally omitted]

	 	 
	 	 
	
      ____________________________
	
      ____________________________

	
       
	 
	
      ____________________________
	
      ____________________________

	 	 
	
      ____________________________
	
      ____________________________

	 	 
	
      ____________________________
	
      ____________________________

	 	 
	
      ____________________________
	
      ____________________________

	 	 
	
      __________________________
	
      __________________________

2

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