SECURITIES PURCHASE AGREEMENT
Exhibit
2.1
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).
"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 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”).
(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.
(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.
(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.
(c) Regulation
S Representations, Warranties and
Covenants. Buyer represents and warrants to, and
covenants with, the Company and Bontems, as follows:
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(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.
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(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.
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(3)
|
Buyer
agrees not to engage in hedging transactions with regard to such
securities unless in compliance with the Securities
Act.
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(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.
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(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.
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(6)
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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.
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(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.
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), mutatismutandis, with respect to indemnification by the
Company of the Buyer.
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.
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If
to the Company:
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Universal
Fog, Inc.
0000
Xxxxx 0xx
Xxxxxx
Xxxxxxx,
Xxxxxxx 00000
Attn:
Xxxxxx Xxxxxxx
|
|
If
to Bontems:
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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.
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.
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.
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UNIVERSAL
FOG, INC.
|
||
|
By:
|
/s/
Xxxxxx Xxxxxxx
|
|
|
Xxxxxx
Xxxxxxx
|
||
|
Chief
Executive Officer
|
||
|
XXXXXX
XXXXXXX
|
||
|
/s/
Xxxxxx Xxxxxxx
|
||
|
(In
His Individual Capacity)
|
||
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
