STOCK PURCHASE AGREEMENT
Stock Purchase
Agreement
(the “Agreement”)
entered into as of the ___ day of December 2007 (the “Effective Date”) by and
between IElement Corporation, a Nevada corporation (the “Seller”) and Xxxx Xxxxx (the
“Buyer”) and, IElement,
Inc., a Nevada corporation (the “Target”)
RECITALS
A. Seller is owner of
all of the Target’s outstanding capital stock (the “Shares”) such that Target
is a
wholly-owned subsidiary of the Seller.
B.
Seller desires to sell, assign and transfer, and Buyer desires to purchase,
the
Shares upon the terms and conditions herein provided.
NOW,
THEREFORE, in consideration of the
mutual covenants, undertakings, representations and warranties herein
contained and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
1. Recitals. The
above recitals are true and correct and incorporated herein.
2. Purchase
and
Sale.
2.1. Subject
to the terms and conditions hereof, Seller shall sell to Buyer, and Buyer shall
purchase from Seller, the Shares for the consideration set forth
below.
2.2. As
consideration for the Share purchase, Buyer shall:
2.2.1. Assume,
through Target, those liabilities of the Target set forth on Schedule 2.2.1
attached hereto.
2.2.2. Release
Seller and Seller shall release Buyer from any and all liability under that
certain Employment Agreement between the Seller and Buyer dated January 1,
2007
as disclosed in the Seller’s Form 8-K filed with the Securities Exchange
Commission (the “SEC”)
on April 20, 2007 (the “Employment
Release”).
2.2.3. Release
Seller and Seller shall release Buyer from any and all liability under that
certain Consulting Agreement between the Seller and Kramerica Capital
Corporation (“Kramerica”) dated January 1,
2007 as disclosed in the Seller’s Form 8-K filed with the SEC on April 20, 2007
(the “Kramerica
Release”). Buyer owns 100% of the equity of Kramerica Capital
Corporation and as such has full power and authority, on behalf of Kramerica,
to
enter into this Agreement.
2.2.4. The
relinquishment and cancellation of all stock options and warrants by Buyer
for
the purchase of the stock of Seller.
2.2.5. An
indemnification agreement by Buyer in favor of Seller in which Buyer agrees
to
indemnify Seller for any and all liabilities of Seller, which liabilities are
not listed on Schedule 2.2.6 hereto and which liability arose prior to the
Closing hereof.
2.3. The
closing of the sale of Shares by Sellers to Buyer as contemplated herein (the
“Closing”) shall take
place on or before December ___, 2007 (the “Closing Date”) at the office
of Target or Target’s legal counsel, subject to the satisfaction or waiver of
the conditions precedent to the Closing set forth in Section 5 of this
Agreement. At the Closing:
2.3.1. Seller
shall deliver or cause to be delivered to Buyer, free and clear of any Liens,
one or more certificates representing the Shares, duly endorsed or accompanied
by stock powers or other instruments of transfer duly executed for
transfer to the Buyer, together with any Tax or transfer stamps or other
documents or actions necessary to accomplish the foregoing; and
2.3.2. Buyer
shall deliver or cause to be delivered to Seller a Release substantially in
the
form attached hereto as Exhibit”A”, in
connection with the Employment Release.
2.3.3. Buyer
shall deliver or cause to be delivered to Seller a Release substantially in
the
form attached hereto as Exhibit”B”, in
connection with the Kramerica Release
2.3.4. Buyer
shall deliver or cause to be delivered to Seller an Indemnification
substantially in the form attached hereto as Exhibit “C”.
2.3.5. Buyer
shall deliver or cause to be delivered to Seller a resignation by Buyer as
an
officer and director of Seller (which is contained in Exhibit “A”).
2.4. The
Buyer
shall be entitled to deduct and withhold from the amounts otherwise paid to
a
Seller such amounts that may be required to be deducted and withheld with
respect to the making of such payment under any Tax Law. To the
extent that amounts are so withheld and paid over to the appropriate taxing
authority, such amounts so required to be deducted and withheld shall be treated
for the purposes of this Agreement as having been paid to such
Seller.
3. Buyer’s
Representations. Buyer hereby represents and warrants to
the Seller that:
3.1. Buyer
has
all requisite right, power, authority and capacity to enter into this Agreement
and to perform all of his obligations hereunder. This Agreement is a
valid and binding agreement of Buyer, enforceable in accordance with its
terms.
3.2. He
has
full legal right, power and authority to enter into this Agreement and to
consummate or cause to be consummated the obligations contemplated in this
Agreement.
3.3. No
consents, approvals, orders or authorizations of any governmental authority
are
required in connection with the execution, delivery and performance by Buyer
of
this Agreement or the consummation of any of the transactions contemplated
hereby.
3.4. The
representations and warranties made in this Agreement by Buyer will be true
and
correct on and as of the Closing Date with the same effect as though such
representations and warranties had been made on and as of the Closing Date
except that any such representations and warranties which expressly relate
to an
earlier date shall be true as of such earlier date.
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4. Seller’s
Representations. Seller hereby represents and warrants to Buyer
that:
4.1. Seller
is a corporation duly organized, validly existing and in good standing under
the
laws of the State of Nevada. It has full power and authority to
execute and deliver this Agreement and any other instruments to be executed
and
delivered by Buyer in connection herewith and therewith and to consummate the
transactions contemplated hereby and thereby and all acts required to be taken
by or on the part of Seller to carry out this Agreement, and such other
instruments and transactions contemplated hereby and thereby have been duly
and
properly taken; and this Agreement has been, and such other instruments will
be,
duly executed and delivered by Seller. This Agreement and such other
instruments will constitute legal, valid and binding obligations of Seller,
enforceable in accordance with their respective terms (subject, as to the
enforcement or remedies, to applicable bankruptcy, reorganization, insolvency,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally from time to time in effect).
4.2. No
Conflict. The execution, delivery and performance of this Agreement
by Seller will not (i) violate any provisions of any applicable Law (including
any foreign law or regulation), judgment, decree or order or (ii) conflict
with,
or result in any breach of, any of the terms, conditions or provisions of,
or
constitute a default under, the Articles of Incorporation of Seller, or any
agreement, instrument, arrangement, contract, obligation, commitment or
understanding to which Seller is a party or by which any properties of Seller
is
bound.
4.3. No
Consent. No consent, approval or agreement of any person, party,
court, government or entity is required to be obtained by Seller in connection
with the execution and delivery of this Agreement or the performance by Seller
hereunder.
4.4. Shares. Seller
is the owner of the Shares will deliver such Shares to Buyer free and clear
of
any direct or indirect claims, liens, security interests, charges, pledges
or encumbrances of any nature whatsoever. All of the Shares are validly issued
to the Seller, fully paid and nonassessable. There are no existing
options, calls or commitments of any character relating to the Shares or the
Target.
4.5. Financial
Statements. Seller has provided to Buyer the compiled financial
statements of Seller (the " Seller Financial Statements"),
including balance sheets, statements of operations, statements of retained
earnings for the years ended March 31, 2006 and 2007, and for the interim period
ended September 30, 2007 (said balance sheets being hereinafter referred to
as
the " Seller Balance Sheet"). As the CEO of Seller, Buyer has been
intimately involved in the operations and management of Seller and
Target. Therefore these Seller financial Statements are presented
without warranty and Buyer represents that he has had the opportunity to
independently examine such statements and accepts them “where-is-as-is”. Seller
makes no representation whatsoever of the future or past performance of its
business or of Target’s business, or any of the business’ customers or clients,
based on historical financial data or results, or otherwise.
4.6. The
Target. Seller hereby represents and warrants to Buyer
that:
4.6.1. The
Target is duly organized, validly existing and in good standing under the laws
of the State of Nevada and has the requisite corporate power and authority
to
carry on its business as now being conducted.
4.6.2. The
authorized capital stock of the Target consists of Thirty Million
(30,000,000) shares of Target Common Stock, par value $.001 per share, 3,000,000 of which
are outstanding. Except as set forth above, no shares of capital
stock or other equity securities of the Target are issued, reserved for issuance
or outstanding. All outstanding shares of capital stock of the Target
are duly authorized, validly issued, fully paid and nonassessable and not
subject to pre-emptive rights. There are no outstanding bonds,
debentures, notes or other indebtedness or other securities of the Target having
the right to vote (or convertible into, or exchangeable for, securities having
the right to vote) on any matters on which shareholders of the Target may
vote. Except as set forth above, there are no outstanding securities,
options, warrants, calls, rights, commitments, agreements, arrangements or
undertakings of any kind to which the Target is a party or by which it is bound
obligating the Target to issue, deliver or sell, or cause to be
issued, delivered or sold, additional shares of capital stock or other equity
or
voting securities of the Target or obligating the
Target to issue, grant, extend or enter into any such security,
option, warrant, call, right, commitment, agreement, arrangement or
undertaking. There are no outstanding contractual obligations,
commitments, understandings or arrangements of the Target to
repurchase, redeem or otherwise acquire or make any payment in respect of any
shares of capital stock of the Target.
4.7. Representations
True on the Closing Date. The representations and warranties made in
this Agreement by Seller will be true and correct on and as of the Closing
Date
with the same effect as though such representations and warranties had been
made
on and as of the Closing Date except that any such representations and
warranties which expressly relate to an earlier date shall be true as of such
earlier date.
5. Covenants
of the Buyers and
the Seller.
5.1. Confidentiality. Each
party shall maintain the confidentiality of Confidential Information in
accordance with procedures adopted by such party in good faith to protect
confidential information of third parties delivered to such party, provided
that
such party may deliver or disclose Confidential Information to (i) such party’s
representatives, members of its investment committees, advisory committees,
and
similar bodies, and Persons related thereto, who are informed of the
confidentiality obligations of this Section 5.1; provided, that such party
shall
be responsible for any disclosure made by any of the foregoing as if it had
been
made by such party, (ii) any Governmental Authority having jurisdiction over
such party to the extent required by applicable Law or (iii) any other Person
to
which such delivery or disclosure may be necessary (A) to effect compliance
with
any Law applicable to such party, or (B) in response to any subpoena or other
legal process, provided that, in the cases of clauses (ii) and (iii) above,
the
disclosing party shall provide each other party with prompt written notice
thereof so that the appropriate party may seek (with the cooperation and
reasonable efforts of the disclosing party) a protective order, confidential
treatment or other appropriate remedy, and in any event shall furnish only
that
portion of the information which is reasonably necessary for the purpose at
hand
and shall exercise reasonable efforts to obtain reliable assurance that
confidential treatment will be accorded such information to the extent
reasonably requested by any other party.
5.2. Publicity. Except
as may be required by the SEC or NASDAQ rules or the rules of any other
quotation system or exchange on which the Seller’s securities are listed or
applicable Law, the Seller shall not issue a publicity release or announcement
or otherwise make any public disclosure concerning this Agreement or any other
ancillary agreements, which announcement names any party without its prior
approval. If any announcement is required by applicable Law to be
made by any party hereto, prior to making such announcement such party will
deliver a draft of such announcement to the other parties and shall give the
other parties an opportunity to comment thereon.
5.3. Further
Assurances. Following the Closing Date, each party shall, from time
to time, execute and deliver such additional instruments, documents, conveyances
or assurances and take such other actions as shall be necessary, or otherwise
reasonably be requested by any other party, to confirm and assure the rights
and
obligations provided for in this Agreement and render effective the consummation
of the purchase and sale of Shares contemplated hereby, or otherwise to carry
out the intent and purposes of this Agreement.
6. Conditions
to
Close.
6.1. The
obligations of Buyer to proceed with the closing of the transaction herein
contemplated are subject to the fulfillment at or prior to the closing of each
of the following conditions:
6.1.1. All
representations and warranties of Sellers made in or pursuant to this Agreement
shall be true and correct at and as of the Closing Date, with the same force
and
effect as if made at and as of the Closing Date;
6.1.2. Sellers
shall have performed, observed and complied with all the obligations and
conditions required by this Agreement to be performed, observed or complied
with
by him at or prior to the Closing Date; and
6.1.3. There
shall be no actions, proceedings, suits or investigations pending or threatened
to restrain or prohibit the transaction herein contemplated.
6.2. The
obligations of Sellers to proceed with the closing of the transaction herein
contemplated are subject to the fulfillment at or prior to the closing of
each of the following conditions:
6.2.1. All
representations and warranties of Buyer made in or pursuant to this Agreement
shall be true and correct at and as of the Closing Date, with the same force
and
effect as if made at and as of the Closing Date; and
6.2.2. Buyer
shall have performed, observed and complied with all of the obligations and
conditions required by this Agreement to be performed, observed or complied
with
by it at or prior to the Closing Date.
7. No
Brokers.
The Parties represent and warrant to each other that there are no real
estate
brokers, salesmen or finders.
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8. Indemnification. The
Seller shall defend, indemnify and hold harmless Buyer against and in respect
of
any and all loss, damage, liability, fine, penalty, cost and expense, including
reasonable attorneys' and accountants’ fees (in a mediation, arbitration, court
of original jurisdiction and/or one or more courts of appellate jurisdiction)
and amounts paid in settlement, suffered or incurred by reason of, or arising
out of any misrepresentation, breach of warranty or representation, or breach
or
non-fulfillment of any agreement, covenant or obligation of Seller and/or Target
in this Agreement (without regard to thresholds contained
therein). In addition, Seller shall defend, indemnify and hold
harmless Buyer against and in respect of any and all loss, damage, liability,
fine, penalty, costs and expense, including reasonable attorneys’ and
accountants’ fees (in a mediation, arbitration, court of original jurisdiction
and/or one or more courts of appellate jurisdiction) by reason of the fact that he
is or was
a director, officer, employee, fiduciary or agent of Seller,
if he acted in good faith and in a
manner he reasonably believed to be in the best interests
of the Seller
and, with respect to any criminal
action or proceeding, had no reasonable cause to believe his conduct was
unlawful. The termination of any action, suit, or proceeding by judgment,
order, settlement, or conviction
or equivalent shall not of itself create a presumption that the person did
not
act in good faith and in a manner which he reasonably believed to be in the
best
interests of the Seller
and, with respect to any criminal
action or proceeding, had reasonable
cause to believe his conduct was
unlawful.
Should
any claim or action by a third party arise after the Closing for which Seller
and/or the Target is or may be liable pursuant to the terms of this Agreement,
Buyer shall notify Seller within ten (10) days after such claim or action is
known to Buyer, and shall give Seller a reasonable opportunity to participate
in
any proceedings and to settle or defend any such claim or action. The
expenses of Seller’s participation in all proceedings, contests or lawsuits with
respect to such claims or actions shall be borne by Seller.
If
Seller wishes to assume the defense
of such claim or action, such Seller shall give written notice to Buyer within
ten (10) days after notice from Buyer of such claim or action, and such Seller
shall thereafter assume the defense of any such claim or liability, through
counsel reasonably satisfactory to Buyer, provided that Buyer may participate
in
such defense at Buyer’s own expense, and such Seller shall, in any event, have
the right to control the defense of the claim or action. If Seller
does not assume the defense of, or if after so assuming it shall fail to defend
any such claim or action, Buyer may defend against any such claim or action
in
such manner as Buyer may deem appropriate and Buyer may settle such claim or
litigation on such terms as Buyer may deem
appropriate. Notwithstanding the foregoing, any such settlement shall
be deemed approved by Seller if such Seller fails to object thereto, by written
notice to Buyer, within fifteen (15) days after such Seller’s receipt of a
written summary of such settlement. Seller shall promptly reimburse
Buyer for one hundred percent (100%) of the amount of all costs and expenses,
legal, accounting, and otherwise, incurred by Buyer in connection with the
defense and settlement of such claim or action to the extent they are covered
by
the indemnification hereunder. If a non-appealable judgment is
rendered against Buyer or Target in any action covered by the indemnification
hereunder, or any lien attaches to any of the assets of Buyer or the Target,
Seller shall immediately upon such entry or attachment, pay such judgment in
full or discharge such lien. Seller shall promptly reimburse Buyer
for one hundred percent (100%) of the amount of all costs and expenses, legal,
accounting, and otherwise, incurred by Buyer in connection with the appeal
of
any action covered by the indemnification hereunder. If and when a
final judgment is rendered in any such action, Seller shall forthwith pay such
judgment or discharge such lien before Buyer is compelled to do
so. Buyer’s failure to give any notice or to take any action
hereunder shall not be deemed a waiver of any of Buyer’s rights hereunder
provided that notice was in fact given in time for Seller to timely proceed
as
provided herein.
In
furtherance of Seller’s obligations
in this Section 8, Seller agrees to maintain and keep current its directors
and
officers insurance policy. In addition, in the event of a change of
control of Seller, Seller shall insure that appropriate directors and officers
insurance is in place which covers prior officers and directors, including
Buyer
9. Survival
of Representations
and Warranties. The representations, warranties, agreements
and indemnifications of the Parties in this Agreement or in any writing
delivered pursuant to the provisions of this Agreement shall survive any
investigation heretofore or hereafter made by the Parties and the consummation
of the transactions contemplated herein and shall continue in full force and
effect after the Closing.
10. Notices. All
notices and other communications pursuant to this Agreement shall be in writing
and shall be deemed to be sufficient if contained in a written instrument and
shall be deemed given if delivered personally, telecopied, sent by
nationally-recognized, overnight courier or mailed by registered or certified
mail (return receipt requested), postage prepaid, to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
If
to IElement
Corporation:
Xxxxx
Xxxxxx
Chief
Executive Officer
IElement
Corporation
Fax
No.:
_________________
With
a copy to:
Xxx
Xxxxx
Xxxxxxx
and Biagi
Columbia
Center
000
Xxxxx
Xxx.
Xxxxx
0000
Xxxxxxx,
XX 00000-0000
Fax
No.:
000 000-0000
If
to Xxxx Xxxxx:
0000
Xxxxxxxx Xxxxx
Xxxxxx,
XX 00000
Fax
No.:
000-000-0000
With
a copy to:
________________________
Fax
No.:
_________________
If
to IElement Inc.:
0000
Xxxxxxxx Xxxxx
Xxxxxx,
XX 00000
Fax
No.:
000-000-0000
With
a copy to:
________________________
Fax
No.:
_________________
All
such notices and other
communications shall be deemed to have been received (i) in the case of personal
delivery, on the date of such delivery, (ii) in the case of a telecopy, when
the
party receiving such telecopy shall have confirmed receipt of the communication,
(iii) in the case of delivery by nationally-recognized, overnight courier,
on
the Business Day following dispatch, and (iv) in the case of mailing, on the
third Business Day following such mailing. For purposes of this
Agreement, "Business Day" shall mean any day, other than a Saturday, Sunday
or
legal holiday, on which banks are permitted to close in Houston,
Texas.
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11. Counterparts. This
Agreement may be executed in any number of counterparts, each of which shall
be
deemed an original and all of which shall constitute one and the same
instrument.
12. Entire
Agreement/Merger
Clause. This Agreement and all Exhibits attached hereto and
incorporated herein by reference supersedes all prior discussions and agreements
between the parties with respect to the subject matter hereof, and this
Agreement contains the sole and entire agreement among the Parties with respect
to the matters covered hereby. All Exhibits and Schedules shall be a
part of this Agreement and shall be incorporated herein by
reference
13. Amendments. This
Agreement shall not be altered or amended except by a written instrument signed
by or on behalf of all of the Parties
14. Construction.
14.1. No
ambiguity in any provision hereof shall be construed against a Party by reason
of the fact it was drafted by such Party or its counsel
14.2. References
to "including” means including without limiting the generality of any
description preceding such term.
14.3. For
purposes of this Agreement the words "herein", "hereby", "hereunder",
"herewith", "hereafter" and "hereinafter" refer to this Agreement in its
entirety, and not to any particular subsection or paragraph, unless so required
by the context.
14.4. Nothing
expressed or implied in this Agreement is intended, or shall be construed,
to
confer upon or give any person other than the Parties any rights or remedies
under or by reason of this Agreement.
15. Jurisdiction
and
Venue. This Agreement shall be for all purposes a Texas
document and shall be construed pursuant to the laws of the State of Texas,
without regard to any conflict of law rule or principle that would give effect
to the laws of another jurisdiction. Accordingly, all of the
provisions of this Agreement administered according to and its validity and
effect shall be determined under the laws of the State of Texas.
16. Binding
Effect. This
Agreement shall be binding upon and shall inure to the benefit of the Parties
and their respective heirs, executors, legal representatives, and
successors. Buyer may assign this Agreement or any rights hereunder,
in whole or in part. It is contemplated that Buyer shall assign this
Agreement to a newly formed wholly owned subsidiary. Seller may not
assign this Agreement or any rights hereunder.
17. Legal
Effect. All
rights and restrictions contained herein may be exercised and shall be
applicable and binding only to the extent that they do not violate any
applicable laws and are intended to be limited to the extent necessary to render
this Agreement legal, valid and enforceable. If any terms of this
Agreement not essential to the commercial purpose of this Agreement, shall
be
held to be illegal, invalid or unenforceable by a court of competent
jurisdiction, it is the intention of the Parties that the remaining terms hereof
shall constitute their agreement with respect to the subject matter hereof
and
all such remaining terms shall remain in full force and effect. To
the extent legally permissible, any illegal, invalid or unenforceable provision
of this Agreement shall be replaced by a valid provision that will implement
the
commercial purpose of the illegal invalid or unenforceable
provision.
18. Waiver. Any
term or condition of this Agreement may be waived at any time by the Party
entitled to the benefit thereof, provided that such waiver is in writing signed
by waiving Party. No failure on the part of a Party to exercise, and no delay
in
exercising, any right, power or remedy created hereunder, shall operate as
a
waiver thereof nor shall any single or partial exercise of any right, power
or
remedy by any such party preclude any other future exercise thereof or the
exercise of any other right, power or remedy. No waiver by a Party to
any breach of or default in any term or condition of this Agreement shall
constitute a waiver of or assent to any succeeding breach of or default in
the
same or any other term or condition hereof.
19. Expenses. Each
Party shall bear its own legal expenses and costs in connection
herewith
20. Attorneys
Fees. In the event either Party shall be required to retain
the services of an attorney to enforce any of its rights hereunder, the
prevailing Party shall be entitled to receive from the other Party, all costs
and expenses including, but not limited to, court costs and attorney's fees
(whether in a court of original jurisdiction or one or more courts of appellate
jurisdiction) incurred by it in connection therewith
21. Relationship. Nothing
contained in this Agreement shall be construed to be or to create a partnership,
joint venture or relationship between Seller and Buyer other than as Buyer
and
Seller of the Shares in accordance with this Agreement.
22. Exhibits
and
Schedules. All Exhibits and Schedules referenced in this
Agreement are hereby incorporated into this Agreement for all
purposes.
23. WAIVER
OF JURY
TRIAL. THE PARTIES KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
WAIVE THE RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION BASED HEREON OR ARISING OUT OF UNDER OR IN CONNECTION WITH THIS
AGREEMENT AND ANY DOCUMENT CONTEMPLATED TO BE EXECUTED IN CONJUNCTION HEREWITH
OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR
WRITTEN) OR ACTIONS OF ANY PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR
THE PARTIES' ACCEPTANCE HEREOF.
The
Parties have executed this Agreement on the day first above
written.
IElement
Corporation:
By:
Name:
Title:
IElement
Inc.:
By:
Name:
Title:
Xxxx
Xxxxx
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EXHIBIT
A
EXHIBIT
B
Schedule
2.2.1
Any
and
all liabilites known and unknown of IElement, Inc. and of its parent IElement
Corporation as of the date this Agreement becomes effective except the
liabilities as listed in Exhibit A to the IElement Master Terms and Escrow
Agreement under the terms of which this Stock Purchase Agreement becomes
effective.
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