Exhibit 10.52
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT is made as of the 5th day of
February, 2004, by and between Biophan Technologies, Inc. (the "Company"), a
corporation organized under the laws of the State of Nevada, with its principal
offices at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
and SBI Brightline Consulting, LLC, a California limited liability company with
its principal offices at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ (the "Purchaser").
IN CONSIDERATION of the mutual covenants contained in this
Agreement, the Company and the Purchaser hereby agree as follows:
SECTION 1. Authorization of Sale of the Shares. Subject to the
terms and conditions of this Agreement, the Company may issue and sell to the
Purchaser and the Purchaser shall purchase from the Company up to 17,750,000
shares of the Company's Common Stock (the "Shares"), par value $.005 per share
(the "Common Stock"). To the extent that the Company has available authorized
shares, the Company covenants to reserve and continue to reserve, free of
preemptive rights and other similar contractual rights of stockholders, a
sufficient number of its authorized but unissued shares of its Common Stock to
cover the Shares which may be issued pursuant to the terms of this Agreement.
SECTION 2. Agreement to Purchase the Shares.
2.1 Schedule 2.1 attached hereto defines fourteen (14)
tranches of Shares that the Purchaser has agreed to purchase from the Company
(each, a "Tranche") and, with respect to each Tranche, sets forth the number of
Shares constituting such Tranche (the "Tranche Shares") and the purchase price
per share for the Tranche Shares in such Tranche (the "Tranche Purchase Price").
2.2 The Company may, in its sole discretion, elect to sell the
Tranche Shares of any Tranche to the Purchaser at any time after the date on
which a Registration Statement (as defined in Section 7.1) of the Company
covering the Shares elected to be sold is declared effective (an "Effective
Date"); provided, however, (i) the Company must elect to sell all of the Tranche
Shares included in a Tranche if it elects to sell any of the Tranche Shares in
such Tranche; and (ii) the Company must elect to sell the Tranche Shares in the
order that the Tranches are listed on Schedule 2.1. The Company may elect to
sell Tranche Shares included in more than one Tranche at the same time. To
effect its election to sell Shares, the Company must give written notice thereof
(an "Election Notice") to the Purchaser. The Election Notice shall specify the
Tranche or Tranches with respect to which the election is being made and the
date on which the closing of the sale and purchase of the Tranche Shares shall
occur; provided, such date shall be a business day and shall not be earlier than
five days after the date such Election Notice is given to the Purchaser. An
Election Notice shall be irrevocable except as provided in Section 3.5.
Page 1 of 18
SECTION 3. Closing of the Purchase of the Shares.
3.1 Subject to the satisfaction or waiver of the conditions
precedent set forth in Sections 3.2 and 3.3, the closing of a purchase of
Tranche Shares by the Purchaser pursuant to this Agreement (each, a "Closing")
shall occur at 10:00 a.m. on the date specified in the Election Notice delivered
by the Company with respect to such Tranche Shares unless the Company and the
Purchaser have mutually agreed on a different time or date with respect to such
Closing (the time and date of the Closing of a particular Tranche is referred to
herein as the "Tranche Closing Date"). Unless otherwise agreed by the Company
and the Purchaser, each Closing shall occur at the offices of ▇▇▇▇▇ ▇▇▇▇▇▇▇,
LLP, Rochester, New York.
3.2 The obligation of the Purchaser to purchase Tranche Shares
at a Closing shall be subject to the satisfaction of the following conditions,
or the waiver of such conditions by the Purchaser, at or prior to the applicable
Tranche Closing Date:
(a) the representations and warranties of the Company set
forth in Section 4 of this Agreement shall be true and correct with the same
force and effect as though expressly made on and as of such Tranche Closing
Date, except for representations or warranties made as of a particular date
which representations and warranties shall be true and correct as of such date;
(b) the Company shall have complied with all the agreements
hereunder and satisfied all the conditions on its part to be performed or
satisfied hereunder at or prior to such Tranche Closing Date;
(c) the Company shall have delivered to the Purchaser a
certificate executed by the Chairman of the Board or President and the chief
financial or accounting officer of the Company, dated the applicable Tranche
Closing Date, to the effect that the conditions in clauses (a) and (b) have been
satisfied; and
(d) a Registration Statement covering such Tranche Shares
shall have been declared effective and shall not have been withdrawn, no stop
order suspending the effectiveness of such Registration Statement shall be in
effect, and no proceedings for the suspension of the effectiveness of such
Registration Statement shall have been instituted or threatened by the
Securities and Exchange Commission (the "Commission").
3.3 The obligation of the Company to sell Tranche Shares at a
Closing shall be subject to the satisfaction of the following conditions, or the
waiver of such conditions by the Company, at or prior to the applicable Tranche
Closing Date:
(a) the representations and warranties of the Purchaser set
forth in Section 5 of this Agreement shall be true and correct with the same
force and effect as though expressly made on and as of such Tranche Closing
Date, except for representations or warranties made as of a particular date
which representations and warranties shall be true and correct as of such date;
Page 2 of 18
(b) the Purchaser shall have complied with all the agreements
hereunder and satisfied all the conditions on its part to be performed or
satisfied hereunder at or prior to such Tranche Closing Date;
(c) the Purchaser shall have delivered to the Company a
certificate executed by a duly authorized officer of the Purchaser, dated the
applicable Tranche Closing Date, to the effect that the conditions in clauses
(a) and (b) have been satisfied; and
(d) no stop order suspending the effectiveness of the
Registration Statement covering such Tranche Shares shall be in effect, and no
proceedings for the suspension of the effectiveness of such Registration
Statement shall have been instituted or threatened by the Commission.
3.4 At each Closing, (i) each of the Company and the Purchaser
shall deliver to the other, as applicable, any documents required to be
delivered by Sections 3.2 or 3.3 which have not been delivered prior to such
Closing, (ii) the Purchaser shall pay to the Company, by wire transfer of
immediately available funds to an account designated in writing by the Company
at or prior to the Closing, the applicable Tranche Purchase Price for the
Tranche Shares being purchased at the Closing, and (iii) the Company shall
deliver to the Purchaser a stock certificate representing the Tranche Shares
being purchased or shall cause the Tranche Shares being purchased to be
electronically transferred to the Purchaser.
3.5 If a Closing does not occur on a proposed Tranche Closing
Date because the conditions specified in Sections 3.3 and 3.4 were not satisfied
at the time of the applicable proposed Tranche Closing Date, the Election Notice
with respect to the Tranche or Tranches proposed to be sold on such proposed
Tranche Closing Date shall automatically be revoked; provided, however, such
revocation shall not impair the right of the Company to give another Election
Notice with respect to the Tranche or Tranches covered by the revoked Election
Notice or to compel the Purchaser to purchase any Tranche Shares included in
such Tranche or Tranches on a subsequent Tranche Closing Date on which the
conditions specified in Section 3.2 are satisfied.
SECTION 4. Representations and Warranties of the Company. The
Company hereby represents and warrants to the Purchaser as follows:
4.1 Organization and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation and the Company is qualified to do business
as a foreign corporation in each jurisdiction in which qualification is
required, except where the failure to so qualify would not individually or in
the aggregate have a material adverse effect on the financial condition, results
of operations, properties or business of the Company taken as a whole.
4.2 Subsidiaries. As of the date hereof, the Company does not
have any subsidiaries other than LTR Antisense Technology, Inc., a New York
corporation, and MRIC Drug Delivery Systems, LLC, a New York limited liability
company. As used in this Section 4, the term "the Company" shall include such
subsidiaries.
Page 3 of 18
4.3 Authorized and Outstanding Capital Stock. The Company has
authorized the issuance of 80,000,000 shares of Common Stock, of which
approximately 57,476,396 shares are issued and outstanding as of January 31,
2004. The Company's stock option plan provides for the granting of options to
the Company's employees, directors, consultants and advisors, to purchase an
aggregate of up to 7,000,000 shares of Common Stock, of which as of January 31,
2004, options to purchase an aggregate of 3,844,993 shares of Common Stock were
outstanding. In addition, the Company has granted warrants to purchase an
aggregate of 4,463,669 shares of Common Stock as of the date of this Agreement.
Except for shares of Common Stock, options and warrants described in this
Section 4.3 and certain rights of Biomed Solutions, LLC to convert a debt owed
to it by the Company, as of January 31, 2004 there were no authorized or
outstanding options, warrants, preemptive rights, rights of first refusal or
other rights to purchase any capital stock of the Company or any equity or debt
securities convertible into or exchangeable or exercisable for capital stock of
the Company. Between January 31, 2004 and the date hereof, the Company has not
granted or issued any options, warrants, preemptive rights, rights of first
refusal or other rights to purchase any capital stock of the Company or any
equity or debt securities convertible into or exchangeable or exercisable for
capital stock of the Company except for shares of Common Stock issued upon the
exercise of outstanding warrants or options or the conversion of debt originally
held by Biomed Solutions, LLC.
4.4 Issuance, Sale and Delivery of the Shares. When issued,
delivered and paid for in the manner set forth in this Agreement, the Shares
will be duly authorized, validly issued, fully paid and nonassessable. No
preemptive rights or other rights to subscribe for or purchase exist with
respect to the issuance and sale of the Shares by the Company pursuant to this
Agreement. No further approval or authority of the stockholders or the Board of
Directors of the Company will be required for the issuance and sale of the
Shares to be sold by the Company as contemplated herein except for, with respect
to a portion of the Shares, the approval of the Board of Directors and the
stockholders to an amendment to the articles of incorporation of the Company to
increase the number of authorized shares of Common Stock of the Company.
4.5 Due Execution, Delivery and Performance of the Agreement.
The Company has full legal right, corporate power and authority to enter into
this Agreement and to perform the transactions contemplated hereby. This
Agreement has been duly authorized, executed and delivered by the Company. The
execution, delivery and performance of this Agreement by the Company and the
consummation of the transactions herein contemplated will not violate any
provision of the organizational documents of the Company and will not result in
the creation of any lien, charge, security interest or encumbrance upon any
assets or property of the Company pursuant to the terms or provisions of, or
will not conflict with, result in the breach or violation of, or constitute,
either by itself or upon notice or the passage of time or both, a default under
any agreement, mortgage, deed of trust, lease, franchise, license, indenture,
permit or other instrument to which the Company is a party or by which the
Company or any of its assets or properties may be bound or affected or any
statute or any authorization, judgment, decree, order, rule or regulation of any
court or any regulatory body, administrative agency or other governmental body
applicable to the Company or any of its properties. No consent, approval,
authorization or other order of any court, regulatory body, administrative
agency or other governmental body is required for the execution, delivery and
performance of this Agreement or the consummation by the Company of the
transactions contemplated hereby, except for compliance with the Blue Sky laws
and federal securities laws applicable to the offering of the Shares. Assuming
the valid execution hereof by the Purchaser, this Agreement will constitute the
Page 4 of 18
legal, valid and binding obligation of the Company, enforceable in accordance
with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally and except as enforceability may be subject to
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law) and except as the
indemnification agreements of the Company in Section 7.3 hereof may be legally
unenforceable.
4.6 No Actions. There are no legal or governmental actions,
suits or proceedings pending or, to the Company's knowledge, threatened to which
the Company is or may be a party which seeks to prevent or restrain the
transactions contemplated by this Agreement or to recover damages as a result of
the consummation of such transactions.
4.7 Investment Company. The Company is not an "investment
company" or an "affiliated person" of, or "promoter" or "principal underwriter"
for an investment company, within the meaning of the Investment Company Act of
1940, as amended.
4.8 Conflicting Registration Rights. No stockholder of the
Company has any right (which has not been waived or has not expired by reason of
lapse of time following notification of the Company's intent to file the
Registration Statement) to request or require the Company to register the sale
of any shares owned by such stockholder under the Securities Act of 1933, as
amended (the "Securities Act"), on the Registration Statement.
4.9 Brokers. There is no broker, finder or other party that is
entitled to receive from the Company any brokerage or finder's fee or other fee
or commission as a result of any transactions contemplated by this Agreement.
4.10 Books and Records. The books, records and accounts of the
Company accurately and fairly reflect, in reasonable detail, the transactions
in, and dispositions of, the assets of, and the results of operations of, the
Company, all to the extent required by generally accepted accounting principles.
The Company maintains a system of internal accounting controls sufficient to
provide reasonable assurances 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
accordance with generally accepted accounting principles 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.
Page 5 of 18
4.11 Sole Representations and Warranties. Except for the
representations and warranties contained in this Section 4, the Company makes no
representation or warranty to the Purchaser, express or implied, in connection
with the transactions contemplated by this Agreement.
SECTION 5. Representations, Warranties and Covenants of the
Purchaser. The Purchaser represents and warrants to the Company as follows:
5.1 Organization and Qualification. The Purchaser is a company
duly organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation.
5.2 Due Execution, Delivery and Performance of the Agreements.
The Purchaser has full legal right, power and authority to enter into this
Agreement and to perform the transactions contemplated hereby. This Agreement
has been duly authorized, executed and delivered by the Purchaser. The
execution, delivery and performance of this Agreement by the Purchaser and the
consummation of the transactions herein contemplated will not violate any
provision of the organizational documents of the Purchaser and will not result
in the creation of any lien, charge, security interest or encumbrance upon any
assets or property of the Purchaser pursuant to the terms or provisions of, or
will not conflict with, result in the breach or violation of, or constitute,
either by itself or upon notice or the passage of time or both, a default under
any agreement, mortgage, deed of trust, lease, franchise, license, indenture,
permit or other instrument to which the Purchaser is a party or by which the
Purchaser or any of its assets or properties may be bound or affected or any
statute or any authorization, judgment, decree, order, rule or regulation of any
court or any regulatory body, administrative agency or other governmental body
applicable to the Purchaser or any of its properties. No consent, approval,
authorization or other order of any court, regulatory body, administrative
agency or other governmental body is required for the execution, delivery and
performance of this Agreement or the consummation by the Purchaser of the
transactions contemplated hereby. Assuming the valid execution hereof by the
Company, this Agreement will constitute the legal, valid and binding obligation
of the Purchaser, enforceable in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights generally
and except as enforceability may be subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law) and except as the indemnification agreements of the Purchaser
in Section 7.3 hereof may be legally unenforceable.
5.3 No Actions. There are no legal or governmental actions,
suits or proceedings pending or, to the Purchaser's knowledge, threatened to
which the Purchaser is or may be a party which seeks to prevent or restrain the
transactions contemplated by this Agreement or to recover damages as a result of
the consummation of such transactions. The Purchaser has not been and is not
currently the subject of an investigation or inquiry by the Securities and
Exchange Commission, the NASD, or any state securities commission.
Page 6 of 18
5.4 Nature of Purchaser. The Purchaser is knowledgeable,
sophisticated and experienced in making, and is qualified to make, decisions
with respect to investments in shares representing an investment decision like
that involved in the purchase of the Shares, including investments in securities
issued by the Company. The Purchaser is an "accredited investor" within the
meaning of Rule 501(a) of Regulation D promulgated under the Securities Act and
would be considered a large, institutional accredited investor. SBI USA, LLC,
which owns at least 80% of the outstanding equity securities of the Purchaser,
is a "qualified institutional buyer" (as such term is defined in Rule 144A(a)(1)
of the Securities Act). Based on the nature of the Purchaser and the amount of
its investments as of the date hereof for its own account and on a discretionary
basis for qualified institutional buyers; if the purchase of all of the Shares
were consummated on the terms set forth in this Agreement prior to the date
hereof, the Purchaser would qualify on the date of this Agreement as a qualified
institutional buyer. The Purchaser is not a "dealer" within the meaning of the
Securities Act or a "broker" or "dealer" within the meaning of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). The Purchaser is able to
bear the economic risk of loss of the Purchaser's entire investment in the
Shares.
5.5 Access to Information. The Purchaser has requested,
received, reviewed and considered all information it deems relevant in making an
informed decision to purchase the Shares. The Purchaser understands that the
Company is still in the development stage and does not have operating revenues.
5.5 Investment Intent. The Purchaser is acquiring the Shares
in the ordinary course of its business and for its own account for investment
only and with no present intention of distributing any of such Shares or
entering into any arrangement or understanding with any other person regarding
the distribution of such Shares (it being understood that the foregoing does not
limit the Purchaser's right to sell Shares pursuant to the Registration
Statement).
5.6 Sole Representations and Warranties. Except for the
representations and warranties contained in this Section 5, the Purchaser makes
no representation or warranty to the Company, express or implied, in connection
with the transactions contemplated by this Agreement.
SECTION 6. Survival of Representations, Warranties and
Agreements. Notwithstanding any investigation made by any party to this
Agreement, all covenants, agreements, representations and warranties made by the
Company and the Purchaser herein and in the certificates delivered pursuant
hereto shall survive the execution of this Agreement, the delivery to the
Purchaser of the Shares being purchased and the payment therefor.
Page 7 of 18
SECTION 7. Covenants.
7.1 Registration Procedures and Expenses.
(a) The obligations of the Purchaser to purchase the Shares
shall be subject to the Company preparing and filing with the Commission one or
more registration statements on Form SB-2 or other applicable form as determined
by the Company (each, a "Registration Statement") for the purpose of registering
the sale of the Shares by the Purchaser from time to time on the facilities of
any securities exchange or trading system on which the Common Stock is then
traded or in privately-negotiated transactions, which Registration Statements
shall contain all material non-public information disclosed to the Purchaser by
the Company in connection with the issuance and sale of the Shares. For purposes
of this Section 7.1, the term "Shares" shall include any other securities of the
Company issued in exchange for the Shares, as a dividend on the Shares or in
connection with a stock split or other reorganization transaction affecting the
Shares. As soon as practicable, but in any event no later than forty-five (45)
days following the date of this Agreement, the Company shall file a Registration
Statement which covers the Shares included in the Tranches that the Company is
able to sell to the Purchaser without increasing its capitalization, after
taking into account shares that the Company may be obligated to issue pursuant
to outstanding warrants, options and convertible debt. The Company shall use its
commercially reasonable efforts to cause this initial Registration Statement to
become effective as soon as practicable. Filing of subsequent Registration
Statements to cover additional Shares shall be at the sole discretion of the
Company; provided that this sentence shall not affect the closing condition in
Section 3.2(d).
(b) The Company shall prepare and file with the Commission
such amendments and supplements to the Registration Statements and the
prospectuses forming a part thereof as may be necessary to keep the Registration
Statements effective until the earliest date, after the date on which all of the
Shares covered thereby have been purchased pursuant to this Agreement or the
obligation of the Purchaser to purchase the Shares covered thereby pursuant to
this Agreement has been terminated, on which (i) all the Shares covered thereby
have been disposed of pursuant to the Registration Statement, (ii) all of the
Shares covered thereby that are then held by the Purchaser may be sold under the
provisions of Rule 144 without limitation as to volume, whether pursuant to Rule
144(k) or otherwise, or (iii) the Company has determined that all Shares covered
thereby that are then held by the Purchaser may be sold without restriction
under the Securities Act and has removed any stop transfer instructions relating
to such Shares and offered to cause to be removed any restrictive legends on the
certificates, if any representing such Shares (the period between the Effective
Date and the earliest of such dates is referred to herein as the "Registration
Period"). At any time after the end of the Registration Period, the Company may
withdraw the applicable Registration Statement and its obligations under this
Section 7 (other than its obligations under Section 7.3) shall automatically
terminate.
(c) The Purchaser agrees to comply with all federal and state
securities laws and the rules and regulations promulgated thereunder in
connection with any sale by it of the Shares, whether or not such sale is
pursuant to a Registration Statement. In connection with the sale of any Shares
pursuant to a Registration Statement, but without limiting the generality of the
foregoing sentence, the Purchaser shall (i) comply with the provisions of
Regulation M promulgated under the Exchange Act, and (ii) deliver to the
Page 8 of 18
purchaser of Shares the prospectus forming a part of such Registration Statement
and all relevant supplements thereto which have been provided by the Company to
the Purchaser on or prior to the applicable delivery date.
(d) The Company shall not be obligated to prepare and file a
post-effective amendment or supplement to a Registration Statement or the
prospectus constituting a part thereof during the continuance of a Blackout
Event. A "Blackout Event" means any of the following: (a) the possession by the
Company of material information that is not ripe for disclosure in a
registration statement or prospectus, as determined in good faith by the Chief
Executive Officer or the Board of Directors of the Company or that disclosure of
such information in a Registration Statement or the prospectus constituting a
part thereof would be detrimental to the business and affairs of the Company; or
(b) any material engagement or activity by the Company which would, in the good
faith determination of the Chief Executive Officer or the Board of Directors of
the Company, be adversely affected by disclosure in a registration statement or
prospectus at such time.
(e) At least two (2) days prior to the filing with the
Commission of a Registration Statement (or any amendment thereto) or the
prospectus forming a part thereof (or any supplement thereto), the Company shall
provide draft copies thereof to the Purchaser and shall consider incorporating
into such documents such comments as the Purchaser (and its counsel) may propose
to be incorporated therein. Notwithstanding the foregoing, no prospectus
supplement, the form of which has previously been provided to the Purchaser,
need be delivered in draft form to the Purchaser.
(f) The Company shall promptly notify the Purchaser upon the
occurrence of any of the following events in respect of a Registration Statement
or the prospectus forming a part thereof: (i) receipt of any request for
additional information from the Commission or any other federal or state
governmental authority during the Registration Period, the response to which
would require any amendments or supplements to such Registration Statement or
related prospectus; (ii) the issuance by the Commission or any other federal or
state governmental authority of any stop order suspending the effectiveness of
such Registration Statement or the initiation of any proceedings for that
purpose; or (iii) receipt of any notification with respect to the suspension of
the qualification or exemption from qualification of any of the Shares for sale
in any jurisdiction or the initiation or threatening of any proceeding for such
purpose.
(g) The Company shall furnish to the Purchaser with respect to
the Shares registered under a Registration Statement (and to each underwriter,
if any, of such Shares) such number of copies of prospectuses and such other
documents as the Purchaser may reasonably request, in order to facilitate the
public sale or other disposition of all or any of the Shares by the Purchaser
pursuant to such Registration Statement.
Page 9 of 18
(h) The Company shall file or cause to be filed such documents
as are required to be filed by the Company for normal blue sky clearance in
states specified in writing by the Purchaser; provided, however, that the
Company shall not be required to qualify to do business or consent to service of
process in any jurisdiction in which it is not now so qualified or has not so
consented.
(i) With a view to making available to the Purchaser the
benefits of Rule 144, the Company agrees, throughout the Registration Period and
so long as the Purchaser owns Shares purchased pursuant to this Agreement, to:
(i) comply with the provisions of paragraph (c)(1) of
Rule 144; and
(ii) file with the Commission in a timely manner all
reports and other documents required to be filed by the Company pursuant to
Section 13 or 15(d) under the Exchange Act; and, if at any time it is not
required to file such reports but in the past had been required to or did file
such reports, it will, upon the request of the Purchaser, make available other
information as required by, and so long as necessary to permit sales of its
Shares pursuant to, Rule 144.
(j) The Company shall bear all expenses incurred by it in
connection with the procedures in paragraphs (a) through (i) of this Section 7.1
and the registration of the Shares pursuant to each Registration Statement. The
Company shall not be responsible for any expenses incurred by the Purchaser in
connection with its sale of the Shares or its participation in the procedures in
paragraphs (a) through (i) of this Section 7.1 including, without limitation,
any fees and expenses of counsel or other advisers to the Purchaser and any
underwriting discounts, brokerage fees and commissions incurred by the
Purchaser.
7.2 Covenants of the Purchaser.
(a) The Purchaser acknowledges and understands that the Shares
are "restricted securities" as defined in Rule 144. The Purchaser hereby agrees
not to offer or sell (as such terms are defined in the Securities Act and the
rules and regulations promulgated thereunder) any Shares unless such offer or
sale is made (a) pursuant to an effective registration of the Shares under the
Securities Act, or (b) pursuant to an available exemption from the registration
requirements of the Securities Act. The Purchaser agrees that it will not engage
in hedging transactions with regard to the Shares other than in compliance with
the Securities Act. A proposed transfer shall be deemed to comply with this
Section 7.2(a) if the Purchaser delivers to the Company a legal opinion in form
and substance satisfactory to the Purchaser from counsel satisfactory to the
Purchaser to the effect that such transfer complies with this Section 7.2(a).
(b) If at any time or from time to time after an Effective
Date, the Company notifies the Purchaser in writing that a Registration
Statement or the prospectus forming a part thereof (taking into account any
prior amendments or supplements thereto) contains any untrue statement of a
material fact or omits to state a material fact necessary to make the statements
therein, in light of the circumstances under which they are made, not
Page 10 of 18
misleading, the Purchaser shall not offer or sell any Shares or engage in any
other transaction involving or relating to the Shares (other than purchases of
Shares pursuant to this Agreement), from the time of the giving of notice with
respect to such untrue statement or omission until the Purchaser receives
written notice from the Company that such untrue statement or omission no longer
exists or has been corrected or disclosed in an effective post-effective
amendment to such Registration Statement or a valid prospectus supplement to the
prospectus forming a part thereof.
(c) In connection with the sale of any Shares pursuant to a
Registration Statement, the Purchaser shall deliver to the purchaser thereof the
prospectus forming a part of such Registration Statement and all relevant
supplements thereto which have been provided by the Company to the Purchaser on
or prior to the applicable delivery date, all in accordance with the
requirements of the Securities Act and the rules and regulations promulgated
thereunder and any applicable blue sky laws.
(d) The Company may refuse to register (or permit its transfer
agent to register) any transfer of any Shares not made in accordance with this
Section 7.2 and for such purpose may place stop order instructions with its
transfer agent with respect to the Shares.
(e) The Purchaser will cooperate with the Company in all
respects in connection with the performance by the Company of its obligations
under Section 7.1, including timely supplying all information reasonably
requested by the Company (which shall include all information regarding the
Purchaser, and any person who beneficially owns Shares held by the Purchaser
within the meaning of Rule 13d-3 promulgated under the Exchange Act, and the
proposed manner of sale of the Shares required to be disclosed in each
Registration Statement) and executing and returning all documents reasonably
requested in connection with the registration and sale of the Shares. The
Purchaser hereby consents to be named as an underwriter in each Registration
Statement, if applicable, in accordance with current Commission policy and, if
necessary, to join in the request of the Company for the acceleration of the
effectiveness of each Registration Statement.
(f) Neither the Purchaser nor any entity controlling it, under
its control or under common control with it has, prior to the execution of this
Agreement, and will not, for a period of eighteen (18) months following the
execution of this Agreement, carry a net short position in the Common Stock of
the Company, participate in any short selling activities, recommendations, or
collusion, directly or indirectly, as such activities relate to the Common Stock
of the Company. A net short position will include any derivative instruments
such as a put option, collar, swap or any other instrument which would result in
a net short position.
7.3 Indemnification. For the purpose of this Section 7.3:
(i) the term "Purchaser Affiliate" shall mean any person
who controls the Purchaser within the meaning of
Section 15 of the Securities Act or Section 20 of the
Exchange Act; and
Page 11 of 18
(ii) the term "Registration Statement" shall include any
final prospectus, exhibit, supplement or amendment
included in or relating to a Registration Statement
referred to in Section 7.1.
(a) The Company agrees to indemnify and hold harmless the
Purchaser and each Purchaser Affiliate, against any losses, claims, damages,
liabilities or expenses, joint or several, to which such Purchaser or such
Purchaser Affiliate may become subject, under the Securities Act, the Exchange
Act, or any other federal or state statutory law or regulation, or at common law
or otherwise (including in settlement of any litigation, if such settlement is
effected with the written consent of the Company), insofar as such losses,
claims, damages, liabilities or expenses (or actions in respect thereof as
contemplated below) arise out of or are based upon (i) any untrue statement or
alleged untrue statement of any material fact contained in a Registration
Statement, as amended as of the applicable Effective Date, including any
information deemed to be a part thereof as of the time of effectiveness pursuant
to paragraph (b) of Rule 430A, or pursuant to Rule 434 promulgated under the
Securities Act, or the prospectus, in the form first filed with the Commission
pursuant to Rule 424(b) of the Regulations, or filed as part of such
Registration Statement at the time of effectiveness if no Rule 424(b) filing is
required (the "Prospectus"), or any amendment or supplement thereto, (ii) the
omission or alleged omission to state in such Registration Statement as of the
applicable Effective Date a material fact required to be stated therein or
necessary to make the statements in such Registration Statement or any
post-effective amendment or supplement thereto, or in the Prospectus or any
amendment or supplement thereto, not misleading, in each case in the light of
the circumstances under which the statements contained therein were made, or
(iii) any inaccuracy in the representations and warranties of the Company
contained in this Agreement, or any failure of the Company to perform its
obligations hereunder, and will reimburse the Purchaser and each such Purchaser
Affiliate for any legal and other expenses as such expenses which are reasonably
incurred by the Purchaser or such Purchaser Affiliate in connection with
investigating, defending, settling, compromising or paying any such loss, claim,
damage, liability, expense or action; provided, however, that the Company will
not be liable in any such case to the extent that any such loss, claim, damage,
liability or expense arises out of or is based upon (i) an untrue statement or
alleged untrue statement or omission or alleged omission made in a Registration
Statement, the Prospectus or any amendment or supplement thereto in reliance
upon and in conformity with written information furnished to the Company by the
Purchaser expressly for use therein, or (ii) the failure of the Purchaser to
comply with the covenants and agreements contained in Section 7.2 hereof
respecting the sale of the Shares, or (iii) the inaccuracy of any
representations made by the Purchaser herein or (iv) any statement or omission
in any Prospectus that is corrected or disclosed in any subsequent Prospectus
that was delivered to the Purchaser prior to the pertinent sale or sales by the
Purchaser.
(b) The Purchaser will indemnify and hold harmless the
Company, each of its directors, each of its officers who signed a Registration
Statement and each person, if any, who controls the Company within the meaning
of the Securities Act and the Exchange Act, against any losses, claims, damages,
liabilities or expenses to which the Company, each of its directors, each of its
officers who signed such Registration Statement or controlling person may become
subject, under the Securities Act, the Exchange Act, or any other federal or
Page 12 of 18
state statutory law or regulation, or at common law or otherwise (including in
settlement of any litigation, if such settlement is effected with the written
consent of such Purchaser) insofar as such losses, claims, damages, liabilities
or expenses (or actions in respect thereof as contemplated below) arise out of
or are based upon (i) any failure to comply with the covenants and agreements
contained in Section 7.2 hereof respecting the sale of the Shares, (ii) the
inaccuracy of any representation made by the Purchaser herein, or (iii) any (x)
untrue or alleged untrue statement of any material fact contained in such
Registration Statement, the Prospectus, or any amendment or supplement thereto,
or (y) omission or alleged omission to state in such Registration Statement, the
Prospectus or any amendment or supplement thereto a material fact required to be
stated therein or necessary to make the statements in such Registration
Statement or any amendment or supplement thereto, or in the Prospectus or any
amendment or supplement thereto, not misleading, in each case in the light of
the circumstances under which they were made; provided, that the Purchaser's
indemnification obligation under this clause (iii) shall apply to the extent,
and only to the extent, that such untrue statement or alleged untrue statement
or omission or alleged omission was made in such Registration Statement, the
Prospectus, or any amendment or supplement thereto, in reliance upon and in
conformity with written information furnished to the Company by the Purchaser
expressly for use therein, and will reimburse the Company, each of its
directors, each of its officers who signed such Registration Statement or
controlling person for any legal and other expense reasonably incurred by the
Company, each of its directors, each of its officers who signed such
Registration Statement or controlling person in connection with investigating,
defending, settling, compromising or paying any such loss, claim, damage,
liability, expense or action.
(c) Promptly after receipt by an indemnified party under this
Section 7.3 of notice of the threat or commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made against an
indemnifying party under this Section 7.3, promptly notify the indemnifying
party in writing thereof; provided, the omission so to notify the indemnifying
party will not relieve it from any liability which it may have to any
indemnified party for contribution (except as provided in paragraph (d)) or
otherwise than under the indemnity agreement contained in this Section 7.3 or to
the extent it is not prejudiced as a result of such failure. In case any such
action is brought against any indemnified party and such indemnified party seeks
or intends to seek indemnity from an indemnifying party, the indemnifying party
will be entitled to participate in, and, to the extent that it may wish, jointly
with all other indemnifying parties similarly notified, to assume the defense
thereof with counsel reasonably satisfactory to such indemnified party. Upon
receipt of notice from the indemnifying party to such indemnified party of its
election so to assume the defense of such action and approval by the indemnified
party of counsel, the indemnifying party will not be liable to such indemnified
party under this Section 7.3 for any legal or other expenses subsequently
incurred by such indemnified party in connection with the defense thereof unless
the indemnified party shall not have employed counsel reasonably satisfactory to
Page 13 of 18
the indemnified party to represent the indemnified party within a reasonable
time after notice of commencement of action, in which case the reasonable fees
and expenses of counsel shall be at the expense of the indemnifying party.
(d) If the indemnification provided for in this Section 7.3 is
required by its terms but is for any reason held to be unavailable to or
otherwise insufficient to hold harmless an indemnified party under paragraphs
(a) or (b) of this Section 7.3 in respect to any losses, claims, damages,
liabilities or expenses referred to herein (subject to the limitation of
paragraph (c) of this Section 7.3), then each applicable indemnifying party
shall contribute to the amount paid or payable by such indemnified party as a
result of any losses, claims, damages, liabilities or expenses referred to
herein (i) in such proportion as is appropriate to reflect the relative benefits
received by the Company and the Purchaser from the placement of the Common Stock
contemplated by this Agreement or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i) above but
the relative fault of the Company and the Purchaser in connection with the
statements or omissions or inaccuracies in the representations and warranties in
this Agreement that resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The relative
benefits received by the Company on the one hand and the Purchaser on the other
shall be deemed to be in the same proportion as the amount paid by the Purchaser
to the Company pursuant to this Agreement for the Shares purchased by the
Purchaser that were sold pursuant to the Registration Statement bears to the
difference (the "Difference") between the amount such Purchaser paid for the
Shares that were sold pursuant to the Registration Statement and the amount
received by such Purchaser from such sale. The relative fault of the Company on
the one hand and the Purchaser on the other shall be determined by reference to,
among other things, whether the untrue or alleged statement of a material fact
or the omission or alleged omission to state a material fact or the inaccurate
or the alleged inaccurate representation and/or warranty relates to information
supplied by the Company or by the Purchaser and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement, omission or inaccuracy. The amount paid or payable by a party as a
result of the losses, claims, damages, liabilities and expenses referred to
above shall be deemed to include, subject to the limitations set forth in
paragraph (c) of this Section 7.3, any legal or other fees or expenses
reasonably incurred by such party in connection with investigating or defending
any action or claim. The provisions set forth in paragraph (c) of this Section
7.3 with respect to the notice of the threat or commencement of any threat or
action shall apply if a claim for contribution is to be made under this
Page 14 of 18
paragraph (d); provided, however, that no additional notice shall be required
with respect to any threat or action for which notice has been given under
paragraph (c) for purposes of indemnification. The Company and each Purchaser
agree that it would not be just and equitable if contribution pursuant to this
Section 7.3 were determined solely by pro rata allocation or by any other method
of allocation which does not take account of the equitable considerations
referred to in this paragraph. Notwithstanding the provisions of this Section
7.3, the Purchaser shall not be required to contribute any amount in excess of
the amount by which the Difference exceeds the amount of any damages that the
Purchaser has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
7.4 Information Available. So long as a Registration Statement
is effective covering the resale of Shares then still owned by the Purchaser,
the Company will furnish to the Purchaser:
(a) as soon as practicable after available, one copy of (i)
its Annual Report to Stockholders (which Annual Report shall contain financial
statements audited in accordance with generally accepted accounting principles
by a firm of certified public accountants), (ii) upon written request, its
Annual Report on Form 10-KSB, (iii) upon written request, its Quarterly Reports
on Form 10-QSB, (iv) upon written request, its Current Reports on Form 8-K, and
(v) a full copy of each Registration Statement (the foregoing, in each case,
excluding exhibits); and
(b) upon the written request of the Purchaser, all exhibits
excluded by the parenthetical to subparagraph (a)(v) of this Section 7.4.
SECTION 8. Notices. All notices, requests, consents and other
communications hereunder shall be in writing, shall be mailed by first-class
registered or certified airmail, confirmed facsimile or nationally recognized
overnight express courier postage prepaid, and shall be deemed given when so
mailed and shall be delivered as addressed as follows:
(a) if to the Company, to:
Biophan Technologies, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Phone: ▇▇▇.▇▇▇.▇▇▇▇
Facsimile: 585.427.9049
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
with a copy to:
▇▇▇▇▇ Peabody LLP
Clinton Square
▇.▇. ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Phone: ▇▇▇.▇▇▇.▇▇▇▇
Facsimile: 585.263.1600
Attn.: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Page 15 of 18
or to such other person at such other place as the
Company shall designate to the Purchaser in writing;
and
(b) if to the Purchaser, at its address as set forth above or
at such other address or addresses as may have been furnished to the Company in
writing.
SECTION 9. Assignment. Neither party hereto may assign or
delegate any of such party's rights or obligations under or in connection with
this Agreement, and any attempted assignment or delegation of such rights or
obligations shall be void. Except as expressly provided in Section 7.3 with
respect to Purchaser Affiliates, directors and controlling persons of the
Company and officers of the Company who signed a Registration Statement, no
person, including without limitation any person who purchases or otherwise
acquires or receives any Shares from the Purchaser, is an intended third party
beneficiary of this Agreement, and no party to this Agreement shall have any
obligation arising under this Agreement to any person other than the other party
hereto and, to the extent expressly provided in Section 7.3, Purchaser
Affiliates, directors and controlling persons of the Company and officers of the
Company who signed a Registration Statement.
SECTION 10. Changes. This Agreement may not be modified or
amended except pursuant to an instrument in writing signed by the Company and
the Purchaser.
SECTION 11. Headings. The headings of the various sections of
this Agreement have been inserted for convenience of reference only and shall
not be deemed to be part of this Agreement.
SECTION 12. Severability. In case any provision contained in
this Agreement should be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby.
SECTION 13. Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York without
regard to its conflicts of law principles and the federal law of the United
States of America.
SECTION 14. Counterparts. This Agreement may be executed in
two or more counterparts, each of which shall constitute an original, but all of
which, when taken together, shall constitute but one instrument, and shall
become effective when one or more counterparts have been signed by each party
hereto and delivered to the other parties.
Page 16 of 18
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their duly authorized representatives as of the
day and year first above written.
Biophan Technologies, Inc.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
------------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Vice-President, Treasurer and Chief
Financial Officer
SBI Brightline Consulting, LLC
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Managing Member
Page 17 of 18
SCHEDULE 2.1
TRANCHES
Number of Tranche Shares Tranche Purchase Price per
Tranche No. Included in Tranche Tranche Share (U.S. Dollars)
----------- ------------------- ----------------------------
1 2,000,000 $0.60
2 2,000,000 $0.65
3 2,000,000 $0.70
4 2,000,000 $0.80
5 1,000,000 $2.00
6 1,000,000 $2.00
7 1,000,000 $2.00
8 1,000,000 $2.00
9 1,000,000 $2.00
10 1,000,000 $2.00
11 1,000,000 $2.00
12 1,000,000 $2.00
13 1,000,000 $2.00
14 750,000 $2.00
Page 18 of 18