SECURITIES PURCHASE AGREEMENT
EXHIBIT
10.1
This
Securities Purchase Agreement (this “Agreement”) is
dated as of September 10, 2007, by and among Universal Fog, Inc., a Delaware
corporation (the “Company”), Xxxxxx Xxxxxxx, a citizen
and resident of the state of Arizona
(“Bontems”), and Sun
Xin, a resident and citizen of Harbin, Heilongjiang Province, People’s Republic
of China (“Buyer”).
WHEREAS,
subject to the terms and conditions set forth in this Agreement and pursuant
to
Section 4(1) and 4(2) of the Securities Act (as defined below), and Regulation
S
promulgated under the Securities Act, Bontems desires to sell to Buyer, and
Buyer desires to purchase from Bontems the (i) number of shares of Common Stock
representing at least 51.53% of the total issued and outstanding shares of
Common Stock of the Company on a fully diluted basis (the “Shares”), and (ii)
4,000,000 shares of Convertible Preferred Stock (the “Preferred
Stock”).
NOW,
THEREFORE, in consideration of the mutual covenants contained in this
Agreement, and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the Company, Bontems and Buyer agree
as follows:
ARTICLE
I.
DEFINITIONS
1.1
Definitions. In addition to the terms defined elsewhere in this Agreement,
for
all purposes of this Agreement, the following terms have the meanings indicated
in this Section 1.1:
“Action”
shall have the meaning ascribed to such term in Section
3.1(i).
“Affiliate”
means any Person that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with
a
Person as such terms are used in and construed under Rule 144.
“Asset
Purchase Agreement” means that certain asset
purchase agreement dated the date hereof pursuant to which the principals of
the
Company will acquire all of the assets of the Company at a second phase closing,
assume all the liabilities of the Company at a first phase closing, and
indemnify Buyer from and against any and all liabilities of the Company as
such
term is defined by generally accepted accounting principles.
“Business
Day” means any day except Saturday, Sunday and any day which shall
be a federal legal holiday or a day on which banking institutions in the State
of Delaware are authorized or required by law or other governmental action
to
close.
“Closing”
means the closing of the purchase and sale of the Shares and the Preferred
Stock
pursuant to Section 2.1 on September 10, 2007, or such other
date as agreed to by the parties.
“Closing
Date” means the date of the Closing.
“Commission”
means the Securities and Exchange Commission.
“Common
Stock” means the Common Stock of the Company, par value $.0001 per
share, and any securities into which such Common Stock may hereafter be
reclassified.
“Common
Stock Equivalents” means any securities of the Company or the
Subsidiaries which would entitle the holder thereof to acquire at any time
Common Stock, including without limitation, any debt, preferred stock, rights,
options, warrants or other instrument that is at any time convertible into
or
exchangeable for, or otherwise entitles the holder thereof to receive, Common
Stock.
“Company
Counsel” means Xxxxxxx & Xxxx, X.X.
“Disclosure
Schedules” means the Disclosure Schedules attached
hereto.
“Exchange
Act” means the Securities Exchange Act of 1934, as
amended.
“Indemnified
Party” shall have the meaning ascribed to such term Section
5.13(b).
“Indemnifying
Party” shall have the meaning ascribed to such term in Section
5.13(b).
“Intellectual
Property Rights” shall have the meaning ascribed to such term in
Section 3.1(n).
-
1
-
"Investor
Securities" means the Shares and the Preferred Stock.
“Liens”
means a lien, charge, security interest, encumbrance, right of first refusal
or
other restriction.
“Material
Adverse Effect” shall have the meaning ascribed to such term in
Section 3.1(b).
“Material
Permits” shall have the meaning ascribed to such term in
Section 3.1(l).
“Person”
means an individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability company, joint
stock company, government (or an agency or subdivision thereof) or other entity
of any kind.
“Preferred
Stock” means those 4,000,000 shares of Convertible Preferred Stock,
par value $.0001, which are convertible into one share of common stock and
which
are insulated from the impact of a forward or reverse stock split or other
recapitalization.
“Purchase
Price” means the aggregate sum of
$500,000.00.
“Registration
Statement” means that certain registration
statement on Form SB-2 with a registration number of 333-128831, and
post-effective amendment No. 1 thereto, which was filed with the Commission
on
October 5, 2005 and extended by the Commission pursuant to a post effective
order on July 13, 2007.
“Rule 144”
means Rule 144 promulgated by the Commission pursuant to the Securities
Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the Commission having substantially the same
effect as such Rule.
“SEC
Reports” shall have the meaning ascribed to such term in
Section 3.1(g).
“Securities
Act” means the Securities Act of 1933, as amended.
“Shares”
means the shares of Common Stock purchased by Buyer pursuant to this
Agreement.
“Subsidiary”
shall have the meaning ascribed to such term in
Section 3.1(a).
“Trading
Day” means (i) a day on which the Common Stock is traded on a
Trading Market, or (ii) if the Common Stock is not quoted on a Trading
Market, a day on which the Common Stock is quoted in the over-the-counter market
as reported by the National Quotation Bureau Incorporated (or any similar
organization or agency succeeding to its functions of reporting price);
provided, that in the event that the Common Stock is not listed or quoted as
set
forth in (i), and (ii) hereof, then Trading Day shall mean a Business
Day.
“Trading
Market” means the following markets or exchanges on which the
Common Stock is listed or quoted for trading on the date in question: the OTC
Bulletin Board.
“Transaction
Documents” means this Agreement and any and all other documents or
agreements executed in connection with the transactions contemplated
hereunder.
“Transaction
Securities” means the Shares and the Preferred Stock.
ARTICLE
II.
PURCHASE
AND SALE
2.1
Closing. On the terms and subject to the conditions set forth in this Agreement,
at the Closing, Bontems shall sell to Buyer and Buyer shall purchase from
Bontems subject to Section 2.3, (i) the number of Shares set forth
opposite Buyer’s name on the signature page hereto, and (ii) 4,000,000 shares of
Preferred Stock. Upon satisfaction of the conditions set forth in
Section 2.2, the Closing shall occur at the offices the Company located at
0000 Xxxxx 0xx
Xxxxxx, Xxxxxxx, Xxxxxxx 00000, or such other location as the parties shall
mutually agree.
-
2
-
2.2 Closing Conditions.
a) At
the Closing, as a condition to Buyer’s obligations hereunder, Bontems shall
deliver or cause to be delivered to:
|
(i)
|
Buyer,
a certificate or certificates for the number of shares of Common
Stock set
forth opposite the name of Buyer on the signature page hereof,
duly
endorsed in blank with a medallion signature
guaranty;
|
|
(ii)
|
subject
to Section 2.3, Buyer, a certificate for 4,000,000 shares of
Preferred Stock, duly endorsed in blank with a medallion signature
guaranty;
|
|
(iii)
|
Buyer,
this Agreement duly executed by the
Company;
|
|
(iv)
|
Buyer,
evidence satisfactory that the principals of the Company have acquired
all
of the assets and liabilities of the Company pursuant to the Asset
Purchase Agreement;
|
|
(v)
|
Buyer,
evidence satisfactory that the Registration Statement has been
withdrawn
pursuant to Rule 477 under the Securities
Act.
|
b) at
the Closing, as a condition to Bontems’ obligations hereunder, Buyer shall
deliver or cause to be delivered to Bontems the following:
|
(i)
|
this
Agreement duly executed by Buyer;
and
|
|
(ii)
|
Buyer’s
payment for the Shares and Preferred Stock being purchased from
the escrow
account by wire transfer;
|
|
c)
|
at
the Closing, as a condition to each party’s obligations hereunder, all
representations and warranties of each of the parties herein shall
remain
true and correct in all material respects as of the Closing
Date.
|
|
d)
|
as
of the Closing Date, as a condition to the Buyer’s obligations hereunder,
there shall have been no Material Adverse Effect (other than pursuant
to
the Asset Purchase Agreement) with respect to the Company since
the date
hereof.
|
|
e)
|
from
the date hereof to the Closing Date, and as a condition to the
Buyer’s
obligations, (i) trading in the Common Stock shall not have been
suspended
by the Commission (except for any suspension of trading of limited
duration agreed to by the Company, which suspension shall be terminated
prior to Closing); (ii) trading in securities generally shall not
have
been suspended or limited, or minimum prices shall not have been
established on securities whose trades are reported by such service,
or on
any Trading Market; and (iii) no banking moratorium shall have
been
declared either by the United States or New York State
authorities.
|
2.3
Escrow Provisions. Pending the sale of the Shares and the Preferred Stock,
all
funds paid hereunder shall be deposited by Buyer in escrow with Xxxxxxx &
Xxxx, X.X. (the “Escrow Agent”) pursuant to an escrow agreement
by and among the Escrow Agent, Bontems, and Buyer (the “Escrow
Agreement”). On the Closing Date, the Escrow Agent shall deliver to the
Buyer the Shares and Preferred Stock, and the balance of the Purchase Price
to
Bontems.
2.4
Certificates. Subject to Section 2.3 Buyer hereby authorizes and directs
Bontems, upon the Closing, to deliver certificates representing the Shares
and
Preferred Stock to Buyer pursuant to this Agreement to Buyer’s address indicated
in this Agreement.
ARTICLE
III.
REPRESENTATIONS
AND WARRANTIES
3.1
Representations and Warranties of the Company. Except as set forth under
the
corresponding section of the Disclosure Schedules delivered concurrently
herewith, the Company and Bontems, jointly and severally, hereby make the
following representations and warranties as of the date hereof and as of
the
Closing Date to Buyer:
|
a)
|
Subsidiaries.
Other than as disclosed in the SEC Reports, the Company has no
direct or
indirect subsidiaries (a “Subsidiary” and
collectively, the “Subsidiaries”). The Company
owns, directly or indirectly, all or the majority of the capital
stock of
each Subsidiary free and clear of any Liens, and all the issued
and
outstanding shares of capital stock of each Subsidiary are validly
issued
and are fully paid, non-assessable and free of preemptive and
similar
rights.
|
|
b)
|
Organization
and Qualification. Each of the Company and the Subsidiaries is an
entity duly incorporated or otherwise organized, validly existing
and in
good standing under the laws of the jurisdiction of its incorporation
or
organization (as applicable), with the requisite corporate power
and
authority to own and use its properties and assets and to carry
on its
business as currently conducted. Neither the Company nor any
Subsidiary is
in violation of any of the provisions of its respective certificate
or
articles of incorporation, bylaws or other organizational or
charter
documents. Each of the Company and the Subsidiaries is duly qualified
to
conduct business and is in good standing as a foreign corporation
or other
entity in each jurisdiction in which the nature of the business
conducted
or property owned by it makes such qualification necessary (as
applicable), except where the failure to be so qualified or in
good
standing (as applicable), as the case may be, would not result
in
(i) a material adverse effect on the legality, validity or
enforceability of any Transaction Document, (ii) a material adverse
effect on the results of operations, assets, business or financial
condition of the Company and the Subsidiaries, taken as a whole,
or
(iii) a material adverse effect on the Company’s ability to perform
in any material respect on a timely basis its obligations under
any
Transaction Document (any of (i), (ii) or (iii), a
“Material Adverse
Effect”).
|
-
3
-
|
c)
|
Authorization;
Enforcement; Validity. The Company has the requisite corporate power
and authority to enter into and to consummate the transactions
contemplated by each of the Transaction Documents and Bontems
has the
authority to enter into and to consummate the transactions contemplated
by
each of the Transactions Documents and otherwise to carry out
their
obligations thereunder. The execution and delivery of each of
the
Transaction Documents by the Company and Bontems and the consummation
by
them of the transactions contemplated thereby have been duly
authorized by
all necessary action on the part of the Company and Bontems and
no further
corporate action or other action is required by the Company or
Bontems in connection therewith. Each Transaction Document has
been (or
upon delivery will have been) duly executed by the Company and
Bontems
and, when delivered in accordance with the terms hereof, will
constitute
the valid and binding obligation of the Company and Bontems enforceable
against the Company and Bontems in accordance with its terms
except (i) as
limited by applicable bankruptcy, insolvency, reorganization,
moratorium
and other laws of general application affecting enforcement of
creditors’
rights generally, and (ii) as limited by laws relating to the
availability
of specific performance, injunctive relief or other equitable
remedies.
|
|
d)
|
No
Conflicts. The execution, delivery and performance of the Transaction
Documents by the Company and Bontems and the consummation by
Bontems of
the transactions contemplated thereby, do not and will not
(i) conflict with or violate any provision of the Company’s or any
Subsidiary’s certificate or articles of incorporation, certificates of
designation (or similar document related to preferred stock),
bylaws
and/or other organizational or charter documents, or (ii) conflict
with, or constitute a default (or an event that with notice or
lapse of
time or both would become a default) under, or give to others
any rights
of termination, amendment, acceleration or cancellation (with
or without
notice, lapse of time or both) of, any agreement, credit facility,
debt or
other instrument (evidencing a Company or Subsidiary debt or
otherwise),
or other understanding to which the Company or any Subsidiary
is a party
or by which any property or asset of the Company or any Subsidiary
is
bound or affected, or (iii) result in a violation of any law, rule,
regulation, order, judgment, injunction, decree or other restriction
of
any court or governmental authority to which the Company or a
Subsidiary
is subject (including federal and state securities laws and regulations),
or by which any property or asset of the Company or a Subsidiary
is bound
or affected, except in the case of each of clauses (ii) and (iii),
such as
would not result in a Material Adverse
Effect.
|
|
e)
|
Filings,
Consents and Approvals. The Company is not required to obtain any
consent, waiver, authorization or order of, give any notice to,
or make
any filing or registration with, any court or other federal,
state, local
or other governmental authority or other Person in connection
with the
execution, delivery and performance by Bontems of the Transaction
Documents, other than file a current report on Form 8-K under
the Exchange
Act.
|
|
f)
|
Capitalization.
Except as set forth in the SEC Reports, the capitalization of
the Company
is as described in the Company’s most recent periodic report filed with
the Commission. Except as set forth in the SEC Reports, the Company
has
not issued any capital stock since such filing other than shares
pursuant
to its registration statement on Form SB-2. No Person has any
right of first refusal, preemptive right, right of participation,
or any
similar right to participate in the transactions contemplated
by the
Transaction Documents. Except as a result of the purchase and
sale of the
Securities, for employee stock options under the Company’s stock option
plans, or otherwise as reflected in the SEC Reports, there are
no
outstanding options, warrants (other than the Xxxx Warrant to
purchase
2,000,000 shares of Common Stock), script rights to subscribe
to, calls or
commitments of any character whatsoever relating to, or securities,
rights
or obligations convertible into or exchangeable for, or giving
any Person
any right to subscribe for or acquire, any shares of Common Stock,
or
contracts, commitments, understandings or arrangements by which
the
Company or any Subsidiary is or may become bound to issue additional
shares of Common Stock, or securities or rights convertible or
exchangeable into shares of Common Stock. The sale of the Securities
will
not obligate Bontems to sell shares of Common Stock or Preferred
Stock
other securities to any Person (other than Buyer) and will not
result in a
right of any holder of Company securities to adjust the exercise,
conversion, exchange or reset price under such
securities.
|
|
g)
|
SEC
Reports; Financial Statements. The Company has filed all reports
required to be filed by it under the Securities Act and the Exchange
Act,
including pursuant to Section 13(a) or
Section 15(d) of the Exchange Act, for the two (2) years
preceding the date hereof (or such shorter period as the Company
was
required by law to file such material) (the foregoing materials,
including
the exhibits thereto, being collectively referred to herein as
the
“SEC Reports” and, together with the Disclosure
Schedules to this Agreement, the “Disclosure
Materials”). As of their respective dates, the SEC Reports
complied in all material respects with the requirements of the
Securities
Act and the Exchange Act and the rules and regulations of the
Commission
promulgated thereunder, as applicable, and none of the SEC Reports,
when
filed, contained any untrue statement of a material fact or omitted
to
state a material fact required to be stated therein or necessary
in order
to make the statements therein, in light of the circumstances
under which
they were made, not misleading. The financial statements of the
Company
included in the SEC Reports comply in all material respects with
applicable accounting requirements and the rules and regulations
of the
Commission with respect thereto as in effect at the time of filing.
Such
financial statements have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis
during the
periods involved (“GAAP”), except as may be
otherwise specified in such financial statements or the notes
thereto and
except that unaudited financial statements may not contain all
footnotes
required by GAAP, and fairly present in all material respects
the
financial position of the Company and its consolidated subsidiaries
as of
and for the dates thereof and the results of operations and cash
flows for
the periods then ended, subject, in the case of unaudited statements,
to
normal, immaterial, year-end audit
adjustments.
|
|
h)
|
Material
Changes. Since the date of the latest audited financial statements
included within the SEC Reports, except as disclosed in the SEC
Reports
and as contemplated by the Asset Purchase Agreement, (i) there has
been no event, occurrence or development that has had or that
could
reasonably be expected to result in a Material Adverse Effect,
(ii) the Company has not incurred any material liabilities
(contingent or otherwise) other than (A) trade payables and accrued
expenses incurred in the ordinary course of business consistent
with past
practice and (B) liabilities not required to be reflected in
the Company's
financial statements pursuant to GAAP or required to be disclosed
in
filings made with the Commission, (iii) the Company has not altered
its method of accounting, (iv) the Company has not declared or made
any dividend or distribution of cash or other property to its
holders of
Common Stock or purchased, redeemed or made any agreements to
purchase or
redeem any shares of its capital stock and (v) the Company has not
issued any equity securities to any officer, director or Affiliate,
except
pursuant to the usual and ordinary course of business and the
existing
Company stock option plans. The Company does not have pending
before the
Commission any request for confidential treatment of
information.
|
-
4
-
|
i)
|
Litigation.
Except as disclosed in the SEC Reports or on Schedule 3.1(i)
hereto, there
is no action, suit, inquiry, notice of violation, proceeding
or
investigation pending or, to the knowledge of the Company, threatened
against or affecting the Company, any Subsidiary or any of their
respective properties before or by any court, arbitrator, governmental
or
administrative agency and/or regulatory authority (federal, state,
county,
local or foreign) (collectively, an “Action”)
which (i) adversely affects or challenges the legality, validity or
enforceability of any of the Transaction Documents and/or the
Transaction
Securities or (ii) could, if there were an unfavorable decision, have
or reasonably be expected to result in a Material Adverse Effect.
Neither
the Company nor any Subsidiary, nor, to the knowledge of the
Company, any
director or officer thereof, except as disclosed in the SEC Reports,
is or
has been the subject of any Action involving a claim of violation
of or
liability under federal or state securities laws or a claim of
breach of
fiduciary duty could result in a Material Adverse
Effect. Except as disclosed in the SEC Reports, to the
knowledge of the Company, there is not pending or contemplated
any
investigation by the Commission and/or other entity involving
the Company
or any current or former director or officer of the Company.
The
Commission has not issued any stop order or other order suspending
the
effectiveness of any registration statement filed by the Company
or any
Subsidiary under the Exchange Act or the Securities
Act.
|
|
j)
|
Labor
Relations. No material labor dispute exists or, to the knowledge of
the Company, is imminent with respect to any of the employees
of the
Company which could reasonably be expected to result in a Material
Adverse
Effect.
|
|
k)
|
Compliance.
Except as disclosed in the SEC Reports, neither the Company nor
any
Subsidiary (i) is in default under or in violation of (and no event
has occurred that has not been waived that, with notice or lapse
of time
or both, would result in a default by the Company or any Subsidiary
under), nor has the Company or any Subsidiary received notice
of a claim
that it is in default under or that it is in violation of, any
indenture,
loan or credit agreement or any other agreement or instrument
to which it
is a party or by which it or any of its properties is bound (whether
or
not such default or violation has been waived), (ii) is in violation
of any order of any court, arbitrator or governmental body, or
(iii) is or has been in violation of any statute, rule or regulation
of any governmental authority, including without limitation all
foreign,
federal, state and local laws applicable to its business, except
in the
case of clauses (i), (ii) and (iii) as would not result in a
Material Adverse Effect.
|
|
l)
|
Regulatory
Permits. The Company and the Subsidiaries possess all certificates,
authorizations and permits issued by the appropriate federal,
state, local
or foreign regulatory authorities necessary to conduct their
respective
businesses as described in the SEC Reports, except where the
failure to
possess such permits would not have or reasonably be expected
to result in
a Material Adverse Effect (“Material Permits”),
and neither the Company nor any Subsidiary has received any notice
of
proceedings relating to the revocation or modification of any
Material
Permit.
|
|
m)
|
Title
to Assets. The Company and the Subsidiaries have good and marketable
title in fee simple to all real property owned by them that is
material to
the business of the Company and the Subsidiaries, taken as a
whole, and
good and marketable title in all personal property owned by them
that is
material to the business of the Company and the Subsidiaries,
taken as a
whole, in each case free and clear of all Liens, except for Liens
as do
not materially affect the value of such property and do not materially
interfere with the use made and proposed to be made of such property
by
the Company and the Subsidiaries and Liens for the payment of
federal,
state or other taxes, the payment of which is neither delinquent
nor
subject to penalties. Any real property and facilities held
under lease by the Company and the Subsidiaries are held by them
under
valid, subsisting and enforceable leases with which the Company
and the
Subsidiaries are in material
compliance.
|
|
n)
|
Patents
and Trademarks. To the knowledge of the Company and each Subsidiary,
the Company and the Subsidiaries have, or have rights to use,
all patents,
patent applications, trademarks, trademark applications, service
marks,
trade names, copyrights, licenses and other similar rights that
are
necessary or material for use in connection with their respective
businesses as described in the SEC Reports and which the failure
to so
have would result in a Material Adverse Effect (collectively,
the
“Intellectual Property Rights”). Neither the
Company nor any Subsidiary has received a written notice that
the
Intellectual Property Rights used by the Company or any Subsidiary
violates or infringes the rights of any Person. To the knowledge
of the
Company, all such Intellectual Property Rights are
enforceable.
|
|
o)
|
Transactions
With Affiliates and Employees. Except as set forth in the SEC Reports
and the Asset Purchase Agreement, none of the officers, directors
and/or
employees of the Company and the Subsidiaries are, to the knowledge
of the
Company, a party to any transaction with the Company or any Subsidiary
(other than for services as employees, officers and directors),
including
any contract, agreement or other arrangement providing for the
furnishing
of services to or by, providing for rental of real or personal
property to
or from, or otherwise requiring payments to or from any officer,
director
or such employee or, to the knowledge of the Company, any entity
in which
any officer, director, or any such employee has a substantial
interest or
is an officer, director, trustee or partner, in each case in
excess of
$60,000 other than (a) for payment of salary or consulting fees for
services rendered, (b) reimbursement for expenses incurred on behalf
of the Company and (c) for other employee benefits, including stock
option agreements under any stock option plan of the
Company.
|
|
p)
|
Internal
Accounting Controls. The Company and each of its subsidiaries
maintains a system of internal accounting controls sufficient
to provide
reasonable assurance that (i) transactions are executed in accordance
with
management’s general or specific authorizations, (ii) transactions are
recorded as necessary to permit preparation of financial statements
in
conformity with GAAP and to maintain asset accountability, (iii)
access to
assets is permitted only in accordance with management’s general or
specific authorization, and (iv) the recorded accountability
for assets is
compared with the existing assets at reasonable intervals and
appropriate
action is taken with respect to any differences. The Company
has established disclosure controls and procedures (as defined
in Exchange
Act Rules 13a-14 and 15d-14) for the Company and designed such
disclosure
controls and procedures to ensure that material information relating
to
the Company, including its Subsidiaries, is made known to the
certifying
officers by others within those entities, particularly during
the period
in which the Company's Form 10-SB or 10-QSB, as the case may
be, is being
prepared.
|
-
5
-
|
q)
|
Certain
Fees. The Company has not entered into an agreement to pay any
brokerage or finder’s fees or commissions to any person including, but not
limited to, any broker, financial advisor or consultant, finder,
placement
agent, investment banker, bank or other Person with respect to
the
transactions contemplated by this Agreement. Buyer shall have
no
obligation with respect to any fees or with respect to any claims
made by
or on behalf of other Persons for fees of a type contemplated
in this
Section that may be due in connection with the transactions contemplated
by this Agreement, except to the extent Buyer made an agreement
to make
any such payment to Xxxxxx Xxxxx & Associates,
Inc.
|
|
r)
|
Regulation
S Offering. Assuming the accuracy of Buyer’s Regulation S
representations and warranties set forth in Section 3.2(c), no
registration under the Securities Act is required for the offer
and sale
of the Investor Securities by Bontems to Buyer as contemplated
hereby. The
sale of the Investor Securities hereunder does not contravene
the rules
and regulations of the Trading
Market.
|
|
s)
|
Application
of Takeover Protections. The Company and its Board of Directors have
taken all necessary action, if any is available, in order to
render
inapplicable any control share acquisition, business combination,
poison
pill (including any distribution under a rights agreement) or
other
similar anti-takeover provision under the Company's Certificate
of
Incorporation (or similar charter documents) or the laws of its
state of
incorporation that is or could become applicable to the Buyer
as a result
of the Buyer and the Company fulfilling their obligations or
exercising
their rights under the Transaction Documents, including without
limitation
the Bontem’s sale of the Transaction Securities and Buyer’s ownership of
the Investor Securities.
|
|
t)
|
Registration
Rights. No person has any right to cause the Company to
effect the registration under the Securities Act of any securities
of the
Company.
|
|
u)
|
Right
of First Refusal. No person, firm or other business entity is a party
to any agreement, contract or understanding, written or oral
entitling
such party to a right of first refusal with respect to offerings
of
securities by the Company.
|
|
v)
|
Disclosure.
The Company confirms that, neither the Company nor any other
Person acting
on its behalf has provided any of Buyer or their agents or counsel
with
any information that constitutes or might constitute material,
non-public
information. The Company understands and confirms that Buyer
will rely on
the foregoing representations and covenants in effecting transactions
in
securities of the Company. All disclosure provided to Buyer regarding
the
Company, its business and the transactions contemplated hereby,
including
the Disclosure Schedules to this Agreement, furnished by or on
behalf of
the Company are true and correct and do not contain any untrue
statement
of a material fact or omit to state any material fact necessary
in order
to make the statements made therein, in light of the circumstances
under
which they were made, not
misleading.
|
|
w)
|
Conduct
of Business. Since December 31, 2006 and except as otherwise stated in
the SEC Reports, the Company has not (a) incurred
any debts, obligations or liabilities, absolute, accrued, contingent
or
otherwise, whether due or to become due, except current liabilities
incurred in the usual and ordinary course of business, having
a Material
Adverse Effect, (b) made or suffered any changes in its contingent
obligations by way of guaranty, endorsement (other than the endorsement
of
checks for deposit in the usual and ordinary course of business),
indemnity, warranty or otherwise, (c) discharged or satisfied
any liens
other than those securing, or paid any obligation or liability
other than,
current liabilities shown on the balance sheet dated as at December
31,
2006 and forming part of the SEC Reports, and current liabilities
incurred
since December 31, 2006, in each case in the usual and ordinary
course of
business, (d) mortgaged, pledged or subjected to lien any of
its assets,
tangible or intangible, (e) sold, transferred or leased any of
its assets
except in the usual and ordinary course of business, (f) cancelled
or
compromised any debt or claim, or waived or released any right,
of
material value, (g) suffered any physical damage, destruction
or loss
(whether or not covered by insurance) adversely affecting the
properties
or business of the Company, (h) entered into any transaction
other than in
the usual and ordinary course of business except for this Agreement
and
the related agreements referred to herein, (i) encountered any
labor
difficulties or labor union organizing activities, (j) made or
granted any
wage or salary increase or entered into any employment agreement,
(k)
issued or sold any shares of capital stock or other securities
or granted
any options with respect thereto (except pursuant to the Registration
Statement), or modified any equity security of the Company, (l)
declared or paid any dividends on or made any other distributions
with
respect to, or purchased or redeemed, any of its outstanding
equity
securities, (m) suffered or experienced any change in, or condition
affecting, its condition (financial or otherwise), properties,
assets,
liabilities, business operations or results of operations other
than
changes, events or conditions in the usual and ordinary course
of its
business, having (either by itself or in conjunction with all
such other
changes, events and conditions) a Material Adverse Effect, (n)
made any
change in the accounting principles, methods or practices followed
by it
or depreciation or amortization policies or rates theretofore
adopted, or
(o) entered into any agreement or otherwise obligated itself,
to do any of
the foregoing.
|
3.2
Representations and Warranties of Buyer. Buyer hereby represents and warrants
as
of the date hereof and as of the Closing Date to the Company and Bontems,
acknowledging that the Company and Bontems are relying upon the accuracy
and
completeness of the representations and warranties set forth
herein:
|
a)
|
Organization;
Authority. Buyer, if not a natural person, is an entity duly
organized, validly existing and in good standing under the laws
of the
jurisdiction of its organization with full right, corporate or
partnership
power and authority to enter into and to consummate the transactions
contemplated by the Transaction Documents and otherwise to carry
out its
obligations thereunder. The execution, delivery and performance
by Buyer
of the transactions contemplated by this Agreement has been duly
authorized by all necessary corporate or similar action on the
part of
Buyer. Each Transaction Document to which it is a party has been
duly
executed by Buyer, and when delivered by Buyer in accordance
with the
terms hereof, will constitute the valid and legally binding obligation
of
Buyer, enforceable against it in accordance with its
terms.
|
|
b)
|
Investment
Intent. Buyer understands that the Investor Securities are “restricted
securities” and have not been registered under the Securities Act or any
applicable state securities law and it is acquiring the Investor
Securities as principal for its own account for investment
purposes.
|
-
6
-
|
c)
|
Regulation
S Representations, Warranties and Covenants. Buyer represents and
warrants to, and covenants with, the Company and Bontems, as
follows:
|
|
(1)
|
Buyer
is not a U.S. person and is not acquiring the shares of common
stock of
UFOG for the account or for the benefit of any U.S. person and
is not a
U.S. person who purchased the shares of common stock in a transaction
that
did not require registration under the Securities
Act.
|
|
(2)
|
Buyer
agrees to resell such common stock only in accordance with the
provisions
of Regulation S, pursuant to registration under the Securities
Act, or
pursuant to an available exemption from
registration.
|
|
(3)
|
Buyer
agrees not to engage in hedging transactions with regard to such
securities unless in compliance with the Securities
Act.
|
|
(4)
|
Buyer
consents to the certificate for the shares of common stock of
UFOG to
contain a legend to the effect that transfer is prohibited except
pursuant
to registration under the Securities Act, or pursuant to an available
exemption from registration, and that hedging transactions involving
the
shares of common stock may not be conducted unless in compliance
with the
Securities Act.
|
|
(5)
|
Buyer
acknowledges that the Company has agreed to refuse to register
any
transfer of the shares of common stock not made pursuant to registration
under the Securities Act, or pursuant to an available exemption
from
registration.
|
|
(6)
|
Buyer
covenants and represents and warrants in favor of the Company
that all of
the representations and warranties set forth herein shall be
true and
correct at the time of Closing as if made on that
date.
|
|
d)
|
Buyer
Status. At the time Buyer was offered the Shares and Preferred
Stock,
it was, and at the date hereof it is an “accredited investor” as defined
in Rule 501(a) under the Securities Act. Buyer is not, and is
not required
to be, registered as a broker-dealer under Section 15 of the
Exchange Act.
In making an investment decision as to whether to purchase the
Shares and
Preferred Stock offered hereby, Buyer has relied solely upon
the SEC
Reports and the representation and warranties of the Company
contained
herein. Buyer has had the opportunity to ask questions of, and
receive
answers from, representatives of the Company concerning the Company
and
the officers and all such questions have been asked and answered
by the
Company to the satisfaction of the
Buyer.
|
|
e)
|
Experience
of Buyer. Buyer, either alone or together with its representatives,
has such knowledge, sophistication and experience in business
and
financial matters so as to be capable of evaluating the merits
and risks
of the prospective investment in the Investor Securities, and
has so
evaluated the merits and risks of such investment. Buyer is able
to bear
the economic risk of an investment in the Investor Securities
and, at the
present time, is able to afford a complete loss of such
investment.
|
|
f)
|
General
Solicitation. Buyer is not purchasing the Shares and Preferred Stock
as a result of any advertisement, article, notice or other communication
regarding the Securities published in any newspaper, magazine
or similar
media or broadcast over television or radio or presented at any
seminar or
any other general solicitation or general
advertisement.
|
|
g)
|
No
Conflicts. Neither the execution and delivery of this Agreement and/or
any Transaction Document, nor the consummation of the Transactions
contemplated hereby, will violate any constitution, statute,
regulation,
rule, injunction, judgment, order, decree, ruling, charge, or
other
restriction of any government, governmental agency, or court
to which
Buyer is subject or any provision of its organizational documents
or other
similar governing instruments.
|
|
h)
|
No
Advice. Buyer understands that nothing in this Agreement or any
other
materials presented to Buyer in connection with the purchase
and sale of
the Investor Securities constitutes legal, tax or investment
advice. Buyer
has consulted such legal, tax and investment advisors as it,
in its sole
discretion, has deemed necessary or appropriate in connection
with its
purchase of the Investor
Securities.
|
|
i)
|
No
Litigation, Etc. There is no action, suit, proceeding, judgment, claim
or investigation pending or, to the knowledge of the Buyer, threatened
against the Buyer which could reasonably be expected in any manner
to
challenge or seek to prevent, enjoin, alter or materially delay
any of the
transactions contemplated by the Transaction
Documents.
|
|
j)
|
Approvals.
The execution, delivery and performance by Buyer of this Agreement
and the
Transaction Documents to which it is a party, and the consummation
of the
transactions set forth herein require no material action by or
in respect
of, or material filing with, any governmental body, agency, official
or
authority, by Buyer other than (i) any filings, authorizations,
consents
and approvals as may be required under the Xxxx-Xxxxx-Xxxxxx
Improvements
Act of 1976, as amended; (ii) the filing by Buyer with the Commission
of
such reports under the Exchange Act as may be required in connection
with
this Agreement, the Transaction Documents and the transactions
contemplated hereby, and (iii) any filings required by the securities
or
blue sky laws of the various
states.
|
The
Company and Bontems acknowledge and agree that Buyer does not make or has
not
made any representations or warranties with respect to the transactions
contemplated hereby other than those specifically set forth in this Section
3.2 and Section 4.1.
-
7
-
ARTICLE
IV.
OTHER
AGREEMENTS OF THE PARTIES
4.1
Transfer Restrictions.
|
a)
|
The
Investor Securities may only be disposed of in compliance with
state and
federal securities laws.
|
|
b)
|
Buyer
agrees to the imprinting of a legend on any of the Investor Securities
in
the following form:
|
THESE
SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION
OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION
FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED
OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION
NOT SUBJECT TO THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND
IN
ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL
OPINION
OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL
BE
REASONABLY ACCEPTABLE TO THE COMPANY. HEDGING TRANSACTIONS INVOLVING THE
SHARES
AND COMMON STOCK INTO WHICH THE PREFERRED STOCK IS CONVERTIBLE MAY NOT
BE
CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES ACT.
4.2
Furnishing of Information. Until the date Buyer does not own any Investor
Securities, the Company covenants and agrees to timely file (or obtain
extensions in respect thereof and file within the applicable grace period)
all
reports required to be filed by the Company after the date hereof pursuant
to
the Exchange Act. Upon the request of any such holder of Investor Securities,
the Company shall deliver to such holder a written certification of a duly
authorized officer as to whether it has complied with the preceding sentence.
Until the date that Buyer does not own any Investor Securities, if the
Company
is not required to file reports pursuant to the Exchange Act, it will prepare
and furnish to Buyer and make publicly available in accordance with
Rule 144(c) such information as is required for Buyer to sell any
Shares and Preferred Stock under Rule 144. The Company further covenants
and agrees that it will take such further action as any holder of Investor
Securities may reasonably request, all to the extent required from time
to time
to enable such person to sell any Shares and Preferred Stock without
registration under the Securities Act within the limitation of the exemptions
provided by Rule 144.
4.3 Non-Public Information. The Company covenants and
agrees that neither it nor any other Person acting on its behalf will provide
Buyer or its agents or counsel with any information that the Company believes
constitutes material non-public information, unless prior thereto Buyer
shall
have executed a written agreement regarding the confidentiality and use
of such
information. The Company understands and confirms that Buyer shall be relying
on
the foregoing representations in effecting transactions in securities of
the
Company.
4.4 Reimbursement. If any Buyer
becomes involved in any capacity in any proceeding by or against any Person
who
is a stockholder of the Company (except as a result of sales, pledges, margin
sales and similar transactions by Buyer to or with any current stockholder),
solely as a result of Buyer's acquisition of the Securities under this
Agreement, and provided any such person has complied with all laws, rules
and
regulations and is not in breach of any of its representations, warranties,
or
agreements made in any of the Transaction Documents, the Company will reimburse
Buyer for its reasonable legal and other expenses (including the cost of
any
investigation preparation and travel in connection therewith) incurred
in
connection therewith, as such expenses are incurred. The reimbursement
obligations of the Company under this paragraph shall be in addition to
any
liability which the Company may otherwise have, shall extend upon the same
terms
and conditions to any Affiliates of Buyer who are actually named in such
action,
proceeding or investigation, and partners, directors, agents, employees
and
controlling persons (if any), as the case may be, of Buyer and any
such Affiliate, and shall be binding upon and inure to the benefit of any
successors, assigns, heirs and personal representatives of the Company,
Buyer
and any such Affiliate and any such Person. The Company also agrees that
neither
Buyer nor any such Affiliates, partners, directors, agents, employees or
controlling persons shall have any liability to the Company or any Person
asserting claims on behalf of or in right of the Company solely as a result
of
acquiring the Securities under this Agreement, provided such person has
complied
with all laws, rules and regulations and is not in breach of any of its
representations, warranties and agreements made in any of the Transaction
Documents.
4.5
Reservation of Common Stock. As of the date hereof, the Company has reserved
and
the Company shall continue to reserve and keep available at all times,
free of
preemptive rights, a sufficient number of shares of Common Stock for the
purpose
of enabling the Company to sell the Shares, and issue the shares of common
stock
issuable upon conversion of the Preferred Stock.
4.6 Listing of Common Stock. The Company hereby
agrees to use its best efforts to maintain the listing of the Common Stock
on
its current Trading Market, and promptly file with the Trading Market to
list
the shares issuable upon conversion of the Preferred Stock on the Trading
Market. The Company further agrees, if the Company applies to have the
Common
Stock traded on any other Trading Market, it will include in such application
the Shares, common stock issuable upon conversion of the Preferred Stock,
and
will take such other action as is necessary or desirable in the opinion
of Buyer
to cause the Shares and common stock issuable upon conversion of the Preferred
Stock to be listed on such other Trading Market as promptly as possible.
The
Company will take all action reasonably necessary to continue the listing
and
trading of its Common Stock on its current Trading Market and will use
its best
efforts to comply in all material respects with the Company’s reporting, filing
and other obligations under the bylaws or rules of the Trading
Market.
4.7 Indemnification by Buyer. Buyer agrees to indemnify
and hold harmless the Company, and its officers, directors, agents,
representatives, shareholders and employees and each of their respective
affiliates, and Bontems, in his individual capacity, from and against any
and
all losses, liabilities, obligations, claims, contingencies, damages, costs
and
expenses, including all judgments, amounts paid in settlements, court costs
and
reasonable attorneys' fees and costs of investigation that any such party
may
suffer or incur which are caused by or arise out of (i) any material
misrepresentation or material breach or default in the performance by it
of any
covenant or agreement made by it in this Agreement or in any of the Transaction
Documents; (ii) any material misrepresentation or material breach of warranty
or
representation made by it in this Agreement or in any of the Transaction
Documents or, (iii) any cause of action, suit or claim brought or made
against
such Indemnified Party and arising out of or resulting from the execution,
delivery, performance or enforcement of the Transaction Documents executed
pursuant hereto by any of the Indemnified Parties. Notwithstanding
anything to the contrary provided herein or elsewhere, the liability of
Buyer
under this Section 4.7 shall be limited to the amount paid by Buyer
pursuant hereto to purchase the Investor Securities, and the procedures
and
timing for indemnification by Buyer under this Section 4.7 shall follow
the procedures and provisions of Sections 5.13(b) and (c),
mutatis mutandis, with respect to indemnification by the
Company of the Buyer.
-
8
-
4.8 Reporting Obligations. So long as Buyer beneficially
owns any Investor Securities, the Company shall continue to file or furnish
pursuant to the Exchange Act or the Securities Act, and the Company shall
use
commercially reasonable best efforts to maintain its status as an issuer
required to file such reports under the Exchange Act.
4.9 No Assets or Liabilities at Closing. Bontems
represents, warrants and agrees with Buyer that as of the conclusion of
the
First Phase Closing and the Second Phase Closing under the Asset Purchase
Agreement, the Company shall have no “assets” or “liabilities” (other than the
Humankind and affiliate assets and liabilities) as such terms are defined
by
generally accepted accounting principles consistently applied. It is the
intention of the parties that all of the assets and liabilities of the
Company
shall have been transferred from the Company to the principals of the Company
(or a company which they control) at the Second Phase Closing and First
Phase
Closing, respectively. In addition, Bontems represents, warrants and agrees
with
Buyer that as of the Closing, the stock of Universal Fog, Inc., an Arizona
corporation, shall be conveyed to the principals of the Company (or a company
which they control), and all of the liabilities (as previously defined)
of
Universal Fog, Inc., an Arizona corporation, shall have been assumed by
such
principals or their corporation, and such principals or their corporation
shall,
jointly and severally, indemnify and hold harmless the Buyer against any
all
liabilities of the Company and Universal Fog, Inc., an Arizona
corporation..
4.10
Cancellation of Convertible Preferred Stock. The parties agree that the
4,000,000 shares of Convertible Preferred Stock shall be cancelled by the
Company upon receipt by Buyer, and the Buyer shall caused to be issued
1,938,800
shares of common stock to Bontems, and 2,061,200 shares of common stock
to the
Buyer within two weeks of the date hereof.
ARTICLE
V.
MISCELLANEOUS
5.1 Fees
and Expenses. Except as otherwise set forth in this Agreement, each party
shall
pay the fees and expenses of its advisers, counsel, accountants and other
experts, if any, and all other expenses incurred by such party incident
to the
negotiation, preparation, execution, delivery and performance of this Agreement.
Bontems shall pay all stamp and other taxes and duties levied in connection
with
the sale of the Securities.
5.2 Entire Agreement. The Transaction Documents,
together with any exhibits and any schedules thereto, contain the entire
understanding of the parties with respect to the subject matter hereof
and
supersede all prior agreements and understandings, oral or written, with
respect
to such matters, which the parties acknowledge have been merged into such
documents, exhibits and schedules.
5.3
Notices. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and
shall be
deemed given and effective on (a) the next Business Day, if sent by U.S.
nationally recognized overnight courier service for next day priority delivery,
or (b) upon actual receipt by the party to whom such notice is required to
be given. The address for such notices and communications to the Company
and
Bontems shall be as set forth below and for Buyer shall be as set forth
on the
signature pages attached hereto.
|
|
If
to the Company:
|
Universal
Fog, Inc.
0000
Xxxxx 0xx
Xxxxxx
Xxxxxxx,
Xxxxxxx 00000
Attn:
Xxxxxx Xxxxxxx
|
|
If
to Bontems:
|
c/o
Universal Fog, Inc.
0000
Xxxxx 0xx
Xxxxxx
Xxxxxxx,
Xxxxxxx 00000
5.4
Amendments; Waivers. No provision of this Agreement may be waived
or amended except in a written instrument signed, in the case of an amendment,
by the Company, Bontems and Buyer or, in the case of a waiver, 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 subsequent
default 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.
5.5 Construction. 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. The language
used in
this Agreement will be deemed to be the language chosen by the parties
to
express their mutual intent, and no rules of strict construction will be
applied
against any party.
-
9
-
5.6 Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the parties and their successors
and permitted assigns. The Company and Bontems may not assign this Agreement
or
any rights or obligations hereunder without the prior written consent of
Buyer.
Buyer, however, may assign any or all of its Investor Securities and/or
rights
under this Agreement to any Person, provided such transferee agrees in
writing
to be bound, with respect to the transferred Investor Securities and otherwise,
by the provisions hereof that apply to Buyer.
5.7 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.
5.8 Governing
Law. This Agreement shall be governed by and construed in accordance with
the
internal laws of the State of Delaware without regard to the conflicts
of laws
principles thereof. The parties hereto hereby irrevocably agree that any
suit or
proceeding arising directly and/or indirectly pursuant to or under this
Agreement shall be brought solely in a federal or state court located in
the
City of Wilmington, State of Delaware. By its execution hereof, the parties
hereby covenant and irrevocably submit to the in personam
jurisdiction of the federal and state courts located in the City of Wilmington,
State of Delaware and agree that any process in any such action may be
served
upon any of them personally, or by certified mail or registered mail upon
them
or their agent, return receipt requested, with the same full force and
effect as
if personally served upon them in Wilmington, Delaware. The parties hereto
waive
any claim that any such jurisdiction is not a convenient forum for any
such suit
or proceeding and any defense or lack of in personam jurisdiction with
respect thereto. In the event of any such action or proceeding, the party
prevailing therein shall be entitled to payment from the other party hereto
of
its reasonable counsel fees and disbursements.
5.9 Survival.
The representations, warranties, agreements and covenants contained herein
shall survive the Closing and delivery of the Shares and Preferred Stock
for a
period of twelve (12) months.
5.10 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 party, it being understood that both 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) with the
same
force and effect as if such facsimile signature page were an original
thereof.
5.11
Severability. If any provision of this Agreement is held to 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 that is a reasonable substitute therefor, and upon
so
agreeing, shall incorporate such substitute provision in this
Agreement.
5.12
Remedies. In addition to being entitled to exercise all rights provided
herein or granted by law, including recovery of damages, Buyer, the Company
and
Bontems will be entitled to specific performance under the Transaction
Documents. The parties agree that monetary damages may not be adequate
compensation for any loss incurred by reason of any breach of obligations
described in the foregoing sentence and hereby agrees to waive in any action
for
specific performance of any such obligation the defense that a remedy at
law
would be adequate.
5.13 Indemnification
by the Company and Bontems. The Company and Bontems shall, notwithstanding
any
termination of this Agreement, indemnify and hold harmless Buyer, the officers,
directors, agents and employees of it, each Person who controls Buyer (within
the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act) and the officers, directors, agents and employees of each
such
controlling Person, to the fullest extent permitted by applicable law,
from and
against any and all losses, claims, damages, liabilities, costs (including,
without limitation, reasonable attorneys' fees) and expenses (including
the cost
(including without limitation, reasonable attorneys’ fees) and expenses relating
to an Indemnified Party’s (as defined below) actions to enforce the provisions
of this Section 5.13) (collectively, “Losses”),
as incurred, to the extent arising out of or relating to (i) any material
misrepresentation or material breach of any representation or warranty
made by
the Company or Bontems in the Transaction Documents, or, (ii) any material
breach of any covenant, agreement or obligation of the Company or Bontems
contained in the Transaction Documents, or (iii) any cause of action, suit
or
claim brought or made against such Indemnified Party and arising out of
or
resulting from the execution, delivery, performance or enforcement of the
Transaction Documents executed pursuant hereto by any of the Indemnified
Parties. If the indemnification provided for in this Section 5.13 is held
by a court of competent jurisdiction to be unavailable to an Indemnified
Party
with respect to any Losses, then the Indemnifying Party (as defined below),
in
lieu of indemnifying such Indemnified Party hereunder, shall contribute
to the
amount paid or payable by such Indemnified Party as a result of Losses
in such
proportion as is appropriate to reflect the relative fault of the Indemnifying
Party on the one hand and of the Indemnified Party on the other in connection
with the actions or omissions that resulted in such Losses as well as any
other
relevant equitable considerations. The Company and Bontems shall
notify Buyer promptly of the institution, threat or assertion of any proceeding
of which the Company or Bontems is aware in connection with the transactions
contemplated by this Agreement.
|
a.
|
Conduct
of Indemnification Proceedings. If any proceeding shall be brought or
asserted against any Person entitled to indemnity hereunder (an
“Indemnified Party”), such Indemnified Party shall
promptly notify the Company (the “Indemnifying
Party”) in writing, and the Indemnifying Party shall have
the
right to assume the defense thereof, including the employment
of counsel
reasonably satisfactory to the Indemnified Party and the payment
of all
fees and expenses incurred in connection with defense thereof;
provided, however, that the failure of any Indemnified Party
to give such notice shall not relieve the Indemnifying Party
of its
obligations or liabilities pursuant to this Agreement, except
(and only)
to the extent that it shall be finally judicially determined
by a court of
competent jurisdiction (which determination is not subject to
appeal or
further review) that such failure shall have materially and adversely
prejudiced the Indemnifying Party.
|
-
10
-
An
Indemnified Party shall have the right to employ separate counsel in any
such
proceeding and to participate in the defense thereof, but the fees and
expenses
of such counsel shall be at the expense of such Indemnified Party or Parties
unless: (1) the Indemnifying Party has agreed in writing to pay such fees
and
expenses; (2) the Indemnifying Party shall have failed promptly to assume
the
defense of such proceeding and to employ counsel reasonably satisfactory
to such
Indemnified Party in any such proceeding; or (3) the named parties to any
such
proceeding (including any impleaded parties) include both such Indemnified
Party
and the Indemnifying Party, and such Indemnified Party shall have been
advised
by counsel that a conflict of interest is likely to exist if the same counsel
were to represent such Indemnified Party and the Indemnifying Party (in
which
case, if such Indemnified Party notifies the Indemnifying Party in writing
that
it elects to employ separate counsel at the expense of the Indemnifying
Party,
the Indemnifying Party shall not have the right to assume the defense thereof
and the reasonable fees and expenses of one separate counsel for all Indemnified
Parties in any matters related on a factual basis shall be at the expense
of the
Indemnifying Party). The Indemnifying Party shall not be liable for any
settlement of any such proceeding affected without its written consent,
which
consent shall not be unreasonably withheld. No Indemnifying Party shall,
without
the prior written consent of the Indemnified Party, effect any settlement
of any
pending proceeding in respect of which any Indemnified Party is a party,
unless
such settlement includes an unconditional release of such Indemnified Party
from
all liability on claims that are the subject matter of such
proceeding.
|
b.
|
Timing
of Payments. All reasonable fees and expenses of the Indemnified Party
(including reasonable fees and expenses to the extent incurred
in
connection with investigating or preparing to defend such proceeding
in a
manner not inconsistent with this Section 5.13 shall be paid to the
Indemnified Party, as incurred, within ten (10) Trading Days
of written
notice thereof to the Indemnifying Party; provided, however,
that the Indemnified Party shall promptly reimburse the Indemnifying
Party
for that portion of such fees and expenses applicable to such
actions for
which such Indemnified Party is not entitled to indemnification
hereunder,
determined based upon the relative faults of the
parties.
|
IN
WITNESS WHEREOF, the parties hereto have caused this Securities
Purchase Agreement to be duly executed by their respective authorized
signatories as of the date first indicated above.
UNIVERSAL
FOG, INC.
By:
/s/Xxxxxx Xxxxxxx
Xxxxxx
Xxxxxxx
Chief
Executive Officer
XXXXXX
XXXXXXX
/s/ XXXXXX
XXXXXXX
(In
His Individual
Capacity)
-
11
-
BUYER
SIGNATURE PAGE
SUN
XIN
/s/
SUN XIN
(In
His
Individual Capacity)
No.
33
An Xxxx Xxx, Xxx Xx Qu, Harbin, Heilongjiang Province, PRC
Address
Aggregate
Number of
Shares: 22,000,545
Dollar
Amount of
Shares: $500,000
-
12
-
