STOCK PURCHASE AND INVESTOR RIGHTS AGREEMENT KRAIG BIOCRAFT LABORATORIES, INC.
▇▇▇▇▇
BIOCRAFT LABORATORIES, INC.
This
Stock Purchase and Investor Rights Agreement (this “Agreement”) is made and
entered
into as of May 23, 2007.
By
and
among Lion Equity, an individual (“Purchaser” or “Subscriber”) and ▇▇▇▇▇
Biocraft Laboratories, Inc., a Wyoming corporation (the “Company” or
“▇▇▇▇▇”). Purchaser and the Company are collectively referenced
herein as the “Parties”.
PRELIMINARY
STATEMENTS
A. The
Company is in the
business of developing recombinant fiber (the “Business”).
B. The
Company desires to issue and sell to the Purchaser, and the Purchaser desires
to
subscribe for and acquire from the Company, an equity interest in the Company
upon the terms and conditions hereinafter set forth, and conditioned upon the
rights granted to it hereunder.
C. Time is
of the essence, as the Company requires the capital contribution described
▇▇▇▇▇
to continue its operations forthwith.
NOW,
THEREFORE, in the Parties agree as follows:
1.
Agreement
to Purchase and Sell the Stock. The Company will sell to
Purchaser, and Purchaser agrees to purchase, no par value, class “A” common
stock (the “Stock”) of the Company as set forth below:
1.1 1,687,500
shares of Stock, at eight cents ($0.08) per share, for
a
total purchase price of $135,000.00, within seven (7) days of
execution of this Agreement.
2. Representations,
Warranties and Covenants of the Company. The Company hereby
represents, warrants and covenants to Purchaser that the statements in the
following paragraphs of this Section 3 are all true and complete as of the
date
hereof:
2.1 Authority;
Due Authorization. This Agreement, when signed by the Company’s
CEO, will have been duly and validly executed and delivered by the Company,
and
upon the execution and delivery by Purchaser of this Agreement and the
performance by Purchaser of its obligations herein, will constitute, a legal,
valid and binding obligation of the Company enforceable against it in accordance
with its terms, except as such enforcement may be limited by bankruptcy or
insolvency laws or other laws affecting enforcement of creditors’ rights or by
general principles of equity.
1
2.2 No
Conflicts. The execution and delivery by the Company of this
Agreement does not, and the performance by the Company of its obligations under
this Agreement and the consummation of the transactions contemplated hereby
will
not, conflict with or result in a violation or breach of any of the terms,
conditions or provisions of any other agreement to which the Company is a
party.
2.3 Valid
Issuance. The Stock being purchased by the Purchaser hereunder
shall be at the Closing, duly and validly issued, fully paid, and
non-assessable.
2.4 The
Company. The Company is a corporation duly incorporated, validly
existing and in good standing under the laws of the state of
Wyoming.
2.5 Capitalization
of
the Company. Immediately prior to the Closing, the authorized capital
stock of the Company shall consist of a total of 60,000,000 shares of Class
A
Common Stock, no par value, 25,000,000 shares of Class B Common Stock, no par
value and 10,000,000 shares of Preferred Stock, no par
value. Immediately prior to the Closing there will be no more that
200,000 shares of preferred stock outstanding, as described immediately below,
no shares of Class B Common Stock outstanding, and no more than
50,000,000 shares of Common Stock outstanding. There are no
conversion or exchange privileges, preemptive rights, or other rights or
agreements to purchase or otherwise acquire or issue any securities of the
Company other than have been disclosed to purchaser, and there is no agreement
or understanding between any persons and/or entities, which affects or relates
to the voting or giving of written consents with respect to any security of
the
Company or any instrument or security exercisable or exchangeable for, or
convertible into any security of the Company.
The
Company has entered into an agreement with its founder whereby the founder
has
surrendered rights to royalties and has further surrendered a carve
out for certain applications of the Company’s intellectual property in exchange
for the Company’s agreement to issue to the founder 200,000 shares of the
Company’s preferred stock. Said stock shall be issued without any
right to receive any dividend. The preferred shares will however have
super voting rights equivalent to 100 votes of Class A Common shares per share
of preferred, such that the total issuance of preferred shares to the founder
shall have the voting power of 20,000,000 Class A shares.
The
Company has an obligation to issue additional shares to its employees and/or
consultants upon the happening of certain triggering events, specifically the
successful completion of certain research benchmarks.
2
2.6 No
Conflicts. Neither the Company, nor any subsidiary, is in violation of,
in conflict with, in breach of or in default under any term or provision of,
(i)
its Certificate of Incorporation or By-laws (each as may have been amended,
supplemented or restated), (ii) any provision of any judgment, writ, injunction,
decree or order to which the any of them is a party.
Litigation. There
is no
action, suit, proceeding or investigation pending or, to the best knowledge
of
the Company, currently threatened against the Company or any subsidiary that
may
affect the validity of this Agreement or the right of the Company to enter
into
this Agreement or to consummate the transactions contemplated
hereby. There is no action, suit, proceeding or investigation pending
or, to the best knowledge of the Company , currently threatened against the
Company or its subsidiaries, before any court or by or before any governmental
body or any arbitration board or tribunal, nor is there any judgment, decree,
injunction or order of any court, governmental department, commission, agency,
instrumentality or arbitrator against the Company or any of its
subsidiaries. The Company and its subsidiaries are not a party or
subject to the provisions of any order, writ, injunction, judgment or decree
of
any court or government agency.
2.7 Brokers’
Fees
and
Commissions. Neither the Company nor any of its officers, directors,
employees, stockholders, agents or representatives, have employed any investment
banker, broker, or finder in connection with the transactions contemplated
by
this Agreement and no such person or entity is entitled to a fee with respect
to
the transactions contemplated by this Agreement, unless purchaser has otherwise
received a disclosure to such effect.
2.8 Applicable
Laws. The Company has complied in all respects with
applicable federal and state laws, rules and regulations applicable to it
and
all shares of capital stock of the Company have been issued in accordance
with
applicable federal and state securities laws, rules and
regulations.
2.9 Books
and
Financial Records. All the accounts, books, registers, ledgers,
Board minutes and financial and other material records of whatsoever kind of
each of the Company and its subsidiaries have been fully properly and accurately
kept and completed; there are no material inaccuracies or discrepancies of
any
kind contained or reflected therein; and they give and reflect a true and fair
view of the financial, contractual and legal position of each
company.
2.10 Tax
Returns, Payments
and Elections. Each of the Company and its subsidiaries has timely
filed all Tax (as defined below) returns, statements, reports, declarations
and
other forms and documents (including, without limitation, estimated Tax returns
and reports and material information returns and reports) (“Tax Returns”)
required pursuant to applicable law to be filed with any Tax Authority (as
defined below), all such Tax Returns are accurate, complete and correct in
all
material respects, and each Company has timely paid all Taxes
due.
3
2.11 Minute
Books. The minute books of each of the Company and its
subsidiaries contain a complete summary of all meetings of directors and
stockholders since the time of incorporation of such company and reflect
all
transactions referred to in such minutes accurately in all material
respects.
2.12 Labor
Agreements and
Actions; Employee Compensation. Neither the Company, nor any of
its subsidiaries is bound by or subject to (and none of its assets or properties
is bound by or subject to) any written or oral, express or implied, contract,
commitment or arrangement with any labor union, and no labor union has requested
or has sought to represent any of the employees, representatives or agents
of
any such company.
2.13 Investment
Company. The Company is not an “investment company” or a company
“controlled” by an “investment company,” within the meaning of the Investment
Company Act of 1940, as amended.
3. Representations
and Warranties of Purchaser. Purchaser hereby represents and
warrants to the Company that the statements in the following paragraphs of
this
Section 4 are all true and complete as of the date hereof:
3.1 Exempt
Transaction. Purchaser understands that the offering and sale of the
Stock is intended to be exempt from registration under the Act and exempt from
registration or qualification under any state law.
3.2 Authorization. Purchaser
represents that it has full power and authority to enter into this Agreement.
This Agreement has been duly and validly executed and delivered by Purchaser,
and upon the execution and delivery by Sellers of this Agreement and the
performance by Sellers of their obligations herein, will constitute, a legal,
valid and binding obligation of Purchaser enforceable against Purchaser in
accordance with its terms, except as such enforcement may be limited by
bankruptcy or insolvency laws or other laws affecting enforcement of creditors’
rights or by general principles of equity.
3.3 Purchase
for Own Account.The Stock to be purchased by Purchaser hereunder will be
acquired for investment for Purchaser’s own account, not as a nominee or agent,
and not with a view to the public resale or distribution thereof, and Purchaser
has no present intention of selling, granting any participation in, or otherwise
distributing the same.
3.4 Investment
Experience. The Purchaser understands that the purchase of the
Stock involves substantial risk and understands the risk disclosures set
forth
in Attachment C. Purchaser understands that the securities which are offered
hereby are highly speculative and involve a high degree of risk and are only
suitable for those persons who, like the Purchaser, can afford to bear the
full
risk of losing their entire investment. The Purchaser has carefully
considered the numerous risks that face a new business venture and especially
a
new enterprise which is involved in highly speculative scientific and biological
laboratory research.
4
4. Conditions
to the
Purchaser’s Obligations at the Closings.
4.1 Conditions
to Each
Closing. Subject to the terms hereof, the obligation of the
Purchaser to purchase Stock at a Closing is subject to the fulfillment, prior
to
the Closing to the satisfaction of the Purchaser, of the following conditions,
the waiver of which shall not be effective against Purchaser without written
consent thereto:
4.1.1 Representations
and Warranties True and Correct. The representations and warranties made by
the Company in Section 3 hereof shall be true and correct and complete as
of the
date hereof, and shall be true and correct and complete as of the date of
the
Closing with the same force and effect as if they had been made on and as
of
such date.
4.1.2 Performance
of
Obligations. The Company shall have performed and complied with all
agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by it on or before a Closing, or
after
a Closing.
5. Conditions
to the
Company’s Obligations at the Closings.
5.1 The
obligations of
the Purchaser under this Agreement are subject to the fulfillment at or before
each Closing of the following conditions:
5.1.1 Representations
and Warranties. The representations and warranties of the Purchaser
contained in Section 4 hereof shall be true and correct as of such
Closing.
5.1.2 Payment of
Purchase Price. Purchaser shall have delivered to the Sellers the
applicable purchase price.
6. Additional
Agreements and Investor Rights.
5
6.1.1 Anti-Dilution.
6.1.1.1 In the event that
during the twelve (12) months after the date of this Agreement, the Company
shall sell or issue to any person or entity Stock at a price or valuation of
less than $0.08 per share (as may be adjusted for any stock splits or other
events)(a “Dilutive Issuance”), then the Company shall as soon as practicable
issue to the Purchaser a number of additional shares of Stock so that the total
number of shares issued to Purchaser pursuant to this agreement shall be such
that the Purchaser will receive the benefit of the lower issuance price, the
issuance of such additional shares will be yielded by the following
formula:
(B/A)-C Where:
A= price at which securities are sold
B= $135,000 (the consideration for this agreement)
C=1,687,500 (the number of shares purchased under this
Agreement).
6.1.1.2 Excepted
Issuances. Notwithstanding
the foregoing provisions of this Section 6, the Company may issue to employees
or university research personnel, or consultants, shares of Stock as incentives
and bonuses, without the same being subject to this
section,
Rule 144. The Purchaser agrees that he will transfer these
securities only in accordance with rule 144.
7. General
Provisions.
Successors and Assigns. The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the respective
successors and assigns of the parties.
7.1 Governing
Law; Jurisdiction. Any
dispute, disagreement, conflict of interpretation or claim arising out of or
relating to this Agreement, or its enforcement, shall be governed by the laws
of
the State of Michigan. Sellers and Purchaser hereby irrevocably and
unconditionally submit, for themselves and their property, to the nonexclusive
jurisdiction of the State courts of the State of Michigan and of the United
States District Court in Grand Rapids Michigan, and any appellate court from
any
thereof, in any action or proceeding arising out of or relating to this
Agreement, or for recognition or enforcement of any judgment, and each of the
parties hereto hereby irrevocably and unconditionally agrees that all claims
in
respect of any such action or proceeding between the two of them may be heard
and determined in such Michigan State or, to the extent permitted by law, in
such Federal court. Each of the parties hereto agrees that a final
judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law.
6
Each party hereby irrevocably and unconditionally waives, to the fullest extent
it may legally and effectively do so, any objection which it may now or
hereafter have to the laying of venue of any suit, action or proceeding arising
out of or relating to this Agreement in any court referred to
above. Each of the parties hereto hereby irrevocably waives, to the
fullest extent permitted by law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court. Each
party to this Agreement irrevocably consents to service of process in the manner
provided for notices below. Nothing in this Agreement will affect the
right of any party to this Agreement to serve process in any other manner
permitted by law. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL
BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON
CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT
IT
AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT
BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION.
7.2 Counterparts. This
Agreement may be executed in two or more counterparts, with facsimile
signatures, each of which shall be deemed an original, but all of which together
shall constitute one and the same agreement. A telefaxed copy of this
Agreement shall be deemed an original.
7.3 Headings. The
headings and captions used in this Agreement are used for convenience only
and
are not to be considered in construing or interpreting this
Agreement. All references in this Agreement to sections, paragraphs,
exhibits and schedules shall, unless otherwise provided, refer to sections
and
paragraphs hereof and exhibits and schedules attached hereto, all of which
exhibits and schedules are incorporated herein by this
reference.
7.4 Costs,
Expenses. Each party hereto shall bear its own costs in
connection with the preparation, execution and delivery of this
Agreement.
7.5 Amendments
and Waivers. Any term of this Agreement may be amended and the
observance of any term of this Agreement may be waived (either generally
or in a
particular instance and either retroactively or prospectively), only with
the
written consent of the Parties.
7
No
delay or omission to exercise any right, power, or remedy accruing to Purchaser,
upon any breach, default or noncompliance of the Company under this Agreement
shall impair any such right, power, or remedy, nor shall it be construed
to be a
waiver of any such breach, default or noncompliance, or any acquiescence
therein, or of any similar breach, default or noncompliance thereafter
occurring. All remedies, either under this Agreement, by law, or
otherwise afforded to Purchaser, shall be cumulative and not
alternative.
7.6 Severability. If
one or more provisions of this Agreement are held to be unenforceable under
applicable law, such provision(s) shall be excluded from this Agreement
and the
balance of the Agreement shall be interpreted as if such provision(s) were
so
excluded and shall be enforceable in accordance with its
terms.
7.7 Entire
Agreement. This Agreement, together with all attachments and
schedules hereto, constitutes the entire agreement and understanding of the
parties with respect to the subject matter hereof and supersedes any and
all
prior negotiations, correspondence, agreements, understandings duties or
obligations between the parties with respect to the subject matter
hereof. There are no oral agreements representations or warranties
between the parties, neither is any party relying upon any prior or
contemporaneous oral representation.
7.8 Further
Assurances. From and after the date of this Agreement, upon the
request of a Party, the other Parties shall execute and deliver such
instruments, documents or other writings as may be reasonably necessary or
desirable to confirm and carry out and to effectuate fully the intent and
purposes of this Agreement.
In
Witness Whereof,
the parties hereto have executed this Agreement as of the date first written
above.
PURCHASER
By:________________________
▇▇▇▇▇
BIOCRAFT LABORATORIES, INC.
By:/s/▇▇▇
▇▇▇▇▇▇▇▇
▇▇▇
▇▇▇▇▇▇▇▇
CEO
8