Exhibit 10.16
RESTATED STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT is entered into with the intent that it be
effective as of the 22nd day of November, 2002, 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 Spectrum Advisors, Ltd., a
Nevis Corporation with its offices at ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇
▇▇▇ (the "Purchaser").
This Agreement replaces and supercedes the Stock Purchase Agreement dated
June 6, 2002.
IN CONSIDERATION of the mutual covenants contained in this Agreement, the
Company and the Purchaser 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 USD three
million dollars ($3,000,000) (the "Commitment Amount") worth of the Company's
Common Stock (the "Shares"), par value $.005 per share (the "Common Stock").
The Company has authorized and has reserved and covenants to 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. Draw Down Procedure; Agreement to Purchase the Shares. The
parties hereby agree as follows:
2.1 The Company may in its sole discretion, issue and exercise a draw
down (a "Draw Down") during each Settlement Period, which Draw Down the
Purchaser will be obligated to accept for a period of 24 months commencing
immediately after the Effective Date (the Commitment Period"). Subject to
the terms and conditions hereof, the Company may issue and exercise an
unlimited number of Draw Downs during the Commitment Period, but no more than
one Draw Down for any Settlement Period.
2.2 If Drawn Downs are made by the Company, the Purchaser agrees to
purchase the Shares with a minimum monthly investment amount of $262,500 (the
"Minimum Monthly Commitment") worth of the Company's Common Stock during each
21 day trading period (the "Monthly Trading Period") following the Effective
Date. The Effective Date shall mean the date the Registration Statement (as
described in Section 7) of the Company covering the Shares is declared
effective.
2.3 The Minimum Settlement Commitment during any Settlement Period
shall be $37,500 worth of the Company's Common Stock. The Minimum Settlement
Commitment shall be subject to adjustment as provided in paragraphs 2.3, 2.6
and 2.7. The Minimum Settlement Commitment during any Settlement Period
shall be increased to an amount equal to the product obtained by multiplying
(i) the total trading volume for the Company's Common Stock on the Principal
Market, for the Trading Days included in the Settlement Period (the "Trading
Day Measurement Period") times (ii) the average VWAP during the Trading Day
Measurement Period, times (iii) 30%. The Minimum Settlement Commitment shall
be increased if the preceding formula would result in an increased investment
amount but shall in no event shall the formula result in a reduction of the
Minimum Settlement Commitment during any Settlement Period.
2.4 The number of shares of Common Stock purchased by the Purchaser
with respect to each Draw Down shall be determined as set forth in herein and
settled (i) as to the 1st through the 3rd Trading Days for the applicable
Monthly Trading Period (the "First Settlement Period"), on the 5th Trading
Day and (ii) as to the 4th through the 6th Trading Days for the applicable
Monthly Trading Period (the "Second Settlement Period"), on the 8th Trading
Day, (iii) as to the 7th through the 9th Trading Days for the applicable
Monthly Trading Period (the "Third Settlement Period"), on the 11th Trading
Day, (iv) as to the 10th through the 12th Trading Days for the applicable
Monthly Trading Period (the "Fourth Settlement Period"), on the 15th Trading
Day, (v) as to the 13th through the 15th Trading Days for the applicable
Monthly Trading Period (the "Fifth Settlement Period"), on the 17th Trading
Day, (vi) as to the 16th through the 18th Trading Days for the applicable
Monthly Trading Period (the "Sixth Settlement Period"), on the 20th Trading
Day, and (vii) as to the 19th through the 21st Trading Days for the
applicable Monthly Trading Period (the "Seventh Settlement Period") (each, a
"Settlement Date" and the First, Second, Third, Fourth, Fifth, Sixth and
Seventh Settlement Periods collectively referred to as "Settlement Periods"
or "Closings").
2.5 The Purchase Price per share shall be equal to 80% of the VWAP
price of the Company's Common Stock for each of the Trading Days included in
the applicable Settlement Period. "VWAP" shall mean the daily volume
weighted average price of the Company's Common Stock on the Principal Market
as reported by Bloomberg Financial L.P. (based on a trading day from 9:30 am
EST to 4:00 pm EST). Trading Day shall mean any day on which the principal
market on which the Company's stock trades (the "Principal Market") is open
for business.
2.6 If the VWAP is less than the Threshold Price on any Trading Day,
then the Trading Day on which the VWAP is less than the Threshold Price shall
not be in included in the applicable Settlement Period and the Minimum
Settlement Commitment shall be reduced by $12,500 for each Trading Day that
is excluded. The Company shall not be obligated to sell and the Purchaser
shall not be obligated to purchase Shares otherwise to be purchased for each
Trading Day that is excluded. The Threshold Price shall be $0.18 per share.
2.7 Additionally, if trading of the Company's Common Stock on the
Principal Market is suspended, for any reason, for more than three hours, in
the aggregate, on any Trading Day, then the Trading Day on which the
suspension occurred shall not be included in the applicable Settlement Period
and the Minimum Settlement Commitment for the applicable Settlement Period
shall be reduced by $12,500 for each Trading Day that is excluded.
2.8 The number of Shares of Common Stock to be issued on each
Settlement Date shall be a number of shares equal to (for each Trading Day
within the Settlement Period) (x) 1/x of the Investment Amount for the
applicable Settlement Period, divided by (y) the Purchase Price on each
Trading Day within the Settlement Period, subject to adjustment as provided
in paragraphs 2.3, 2.6 and 2.7.
2.9 The Company must inform the Purchaser by delivering on the Trading
Day before the applicable Settlement Date a draw down notice (the "Draw Down
Notice"), via facsimile transmission as to the amount of the Draw Down (the
"Investment Amount") the Company wishes to exercise. At no time shall the
Purchaser be required to purchase more than the maximum Draw Down amount for
a given Settlement Period so that if the Company chooses not to exercise the
maximum permitted Draw Down in a given Settlement Period the Purchaser is not
obligated to and shall not purchase more than the scheduled maximum amount in
a subsequent Settlement Period.
2.10 The Company shall have the option (the "Commitment Amount
Option") to increase the Commitment Amount at any time during the Commitment
Period from UDS three million dollars ($3,000,000) up to fifty percent (50%)
of the Market Capitalization of the Company, provided that (i) the Commitment
Amount shall be a maximum of USD ten million dollars ($10,000,000) and (ii)
the Company has obtained any required shareholder approvals and regulatory
approvals. The Market Capitalization shall be calculated by multiplying the
number of issued and outstanding shares in the share capital of the Company
on the date preceding the date of exercising the Commitment Amount Option
(the "Option Date") by the average of the VWAP for the twenty (20)
consecutive Trading Days preceding the Option Date.
SECTION 3. Delivery of the Shares. The delivery of the Shares to the
Purchaser shall occur as follows:
3.1 Upon delivery by the Company of a Draw Down Notice, (i) the
Company and the Purchaser shall each execute and deliver to the other and to
the Escrow Agent via facsimile transmission, a settlement certificate in
the form of Exhibit A to the Escrow Agreement (the "Settlement Certificate")
setting forth the amount of the investment and the number of Shares of Common
Stock to be purchased, (ii) the Company shall cause the delivery of that
number of whole shares of Common Stock of the Company designated in the
Settlement Certificate (the "Settlement Shares"), in the manner required by
the Escrow Agreement, and (iii) the Purchaser shall transmit payment in an
amount equal to the payment designated as "Net Proceeds to the Company" in
the Settlement Certificate (the "Settlement Payment"), to the Escrow Agent in
the manner required by the Escrow Agreement.
3.2 On the Settlement Date, and provided that the provisions of the
Agreement have been complied with (i) the Escrow Agent shall transmit the
Settlement Payment to the Company in the manner required by the Escrow
Agreement and (ii) the Escrow Agent shall cause the delivery of the Shares to
the Purchaser in the manner required by the Escrow Agreement.
SECTION 4. Representations, Warranties and Covenants of the Company.
The Company hereby represents and warrants to, and covenants with, the
Purchaser, as of the date hereof, 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, business or prospects of the Company taken
as a whole (a "Material Adverse Effect").
4.2 Subsidiaries. The Company does not have any subsidiaries other
than LTR Antisense, LLC, and a New York limited liability company. As used
in this Section 4, the term "the Company" shall include such subsidiary.
4.3 Disclosure Documents. The Purchaser acknowledges having received
or obtained various disclosure documents requested by it which describe the
Company, its business affairs and its financial condition (collectively the
"Disclosure Documents").
4.4 Significant Risk Factor. The Purchaser has also been advised
that the Company is still in the development stage and does not have
operating revenues.
4.5 Authorized and Outstanding Capital Stock. The Company has
authorized the issuance of 60,000,000 shares of its common stock, par value
$.005 per share, of which as of the date of this Purchase Agreement
32,637,516 shares are outstanding. 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 2,500,000 shares of the
Company's common stock, of which as of November 21, 2002, options to purchase
an aggregate of 2,469,997 shares of common stock were outstanding. The
Company has also granted warrants to purchase an aggregate of 5,241,294
shares of the Company's common stock (as of November 21, 2002) which warrants
are not part of the Company's stock option plan. The exercise prices at
which such outstanding stock options and warrants could be exercised range
from $.10 to $1.00 per share.
4.6 Compensation of Investment Banker. Carolina Financial
Securities, LLC ("CFS") is to receive a cash fee equal to ten percent of the
gross proceeds from the sale of the Shares to the Purchasers and to the Other
Purchasers. The Company will also grant CFS five year warrants to purchase
so many shares of the Company's common stock as shall equal five percent of
the total number of Shares sold (to the Purchaser and to the Other
Purchasers). The warrants will be exercisable at a price equal to 110% of
per Share purchase price.
4.7 Issuance, Sale and Delivery of the Shares. The Shares have been
duly authorized and, when issued, delivered and paid for in the manner set
forth in this Agreement, 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 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"), in the Registration Statement. 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.
4.8 Due Execution, Delivery and Performance of the Agreements. The
Company has full legal right, corporate power and authority to enter into the
Agreements and perform the transactions contemplated hereby and thereby. The
Agreements have been duly authorized, executed and delivered by the Company.
The execution, delivery and performance of the Agreements by the Company and
the consummation of the transactions herein and therein 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 respective 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
the Agreements or the consummation of the transactions contemplated hereby or
thereby, except for compliance with the Blue Sky laws and federal securities
laws applicable to the offering of the Shares. Upon their execution and
delivery, and assuming the valid execution thereof by the respective
Purchasers, the Agreements will constitute legal, valid and binding
obligations of the Company, enforceable in accordance with their respective
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.
4.9 Accountants. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, LLP have or will have prior
to the filing of the Registration Statement or will have prior to the filing
of the Registration Statement expressed their opinion with respect to the
audited consolidated financial statements to be incorporated by reference
into the Registration Statement and the Prospectus which forms a part thereof
from the Company's Form 10-K, and are independent accountants as required by
the Securities Act and the rules and regulations promulgated thereunder (the
"Rules and Regulations"). The Company's consolidated financial statements
(including all notes and schedules thereto) included in the Form 10-K and the
November 10-Q present fairly the financial position, the results of
operations, the statements of cash flows and the statements of stockholders'
equity and the other information purported to be shown therein of the Company
at the respective dates and for the respective periods to which they apply
and such consolidated financial statements have been prepared in conformity
with generally accepted accounting principles, consistently applied
throughout the periods involved.
4.10 No Defaults. The Company is not (i) in violation or default in
any material respect of any provision of its certificate of incorporation,
bylaws or other organizational documents, or (ii) in breach of or default
with respect to any provision of any agreement, judgment, decree, order,
mortgage, deed of trust, lease, franchise, license, indenture, permit or
other instrument to which it is a party or by which it or any of its assets
or properties are bound, except for breaches and defaults which individually
or in the aggregate would not have a Material Adverse Effect; and there does
not exist any state of fact which, with notice or lapse of time or both,
would constitute an event of default on the part of the Company as defined in
such documents, except such defaults which individually or in the aggregate
would not have a Material Adverse Effect.
4.11 Contracts. The contracts, if any, described in the Disclosure
Documents that are material to the Company are in full force and effect on
the date hereof and are valid and enforceable by the Company in accordance
with the terms thereof, except as limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally, and except as may be limited by general principles of
equity and public policy; nor, to the Company's knowledge, is any other party
in breach of or default under any of such contracts, which breaches and
defaults would individually or in the aggregate have a Material Adverse
Effect.
4.12 No Actions. Except as disclosed in the Disclosure Documents,
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 or of which property owned or leased by the Company is or may be the
subject, or related to environmental or discrimination matters, which
actions, suits or proceedings, individually or in the aggregate, might
prevent or might reasonably be expected to materially and adversely affect
the transactions contemplated by this Agreement or result in a Material
Adverse Effect; and no labor disturbance exists or, to the Company's
knowledge, is imminent which might reasonably be expected to have a Material
Adverse Effect. The Company is not a party to or subject to the provisions
of any material injunction, judgment, decree or order of any court,
regulatory body administrative agency or other governmental body.
4.13 Properties. The Company has good and marketable title to all the
properties and assets reflected as owned by them in the consolidated
financial statements included or incorporated by reference in the Disclosure
Documents, subject to no lien, mortgage, pledge, charge or encumbrance of any
kind except (i) those, if any, reflected in such consolidated financial
statements, or (ii) those which are not material in amount and do not
materially and adversely affect the use made and intended to be made of such
property by the Company. The Company holds its leased properties under valid
and binding leases, with such exceptions as are not materially significant in
relation to the business of the Company, taken as a whole. Except as
disclosed in the Disclosure Documents or in this Agreement, the Company owns
or leases all such properties as are necessary to its operations as now
conducted.
4.14 No Material Change. Except as disclosed in the Disclosure
Documents, since August 30, 2002 (i) the Company has not incurred any
liabilities or obligations, indirect, or contingent, or entered into any
verbal or written agreement or other transaction which is not in the ordinary
course of business or which could reasonably be expected to result in a
material reduction in the future earnings of the Company or, other than the
use of its cash resources for its research and development and business
operations in accordance with its past practices, in a Material Adverse
Effect; (ii) the Company has not sustained any material loss or interference
with its businesses or properties from fire, flood, windstorm, accident or
other calamity not covered by insurance; (iii) the Company has not paid or
declared any dividends or other distributions with respect to its capital
stock and the Company is not in default in the payment of principal or
interest on any outstanding debt obligations; (iv) there has not been any
change in the capital stock of the Company other than the sale of the Shares
hereunder and shares or options issued pursuant to exercise of outstanding
warrants or employee and director stock option plans approved by the
Company's Board of Directors, or indebtedness material to the Company; and
(v) there has not been any other change or event that would result in a
Material Adverse Effect.
4.15 Intellectual Property. Except as otherwise disclosed in the
Disclosure Documents, (i) the Company owns or has obtained valid licenses,
options or rights to use for the material inventions, patent applications,
patents, trademarks (both registered and unregistered), tradenames,
copyrights and trade secrets necessary for the conduct of the Company's
businesses as currently conducted and as the Disclosure Documents indicate
the Company contemplates conducting in all material respects (collectively,
the "Intellectual Property"); (ii) the Company has not received notice of any
third parties who have any ownership rights to any Intellectual Property that
is owned by, or has been licensed to, the Company for the product indications
described in the Disclosure Documents that would preclude the Company from
conducting its businesses as currently conducted and as the Disclosure
Documents indicate the Company contemplates conducting in all material
respects; (iii) to the Company's knowledge there are currently no sales of
any products that would constitute an infringement by third parties of any
material Intellectual Property owned, licensed or optioned by the Company;
(iv) there is no pending or, to the Company's knowledge, threatened action,
suit, proceeding or claim by others challenging the rights of the Company in
or to any material Intellectual Property owned, licensed or optioned by the
Company; (v) there is no pending or, to the Company's knowledge, threatened
action, suit, proceeding or claim by others challenging the validity or scope
of any material Intellectual Property owned, licensed or optioned by the
Company; and (vi) there is no pending or, to the Company's knowledge,
threatened action, suit, proceeding or claim by others that the Company
infringes or otherwise violates any patent, trademark, copyright, trade
secret or other proprietary right of others as would reasonably be expected
to result in a Material Adverse Effect.
4.16 Compliance. The Company has not been advised, and has no reason
to believe, that it is not conducting its business in compliance with all
applicable laws, rules and regulations of the jurisdictions in which it is
conducting business, including, without limitation, all applicable local,
state and federal environmental laws and regulations; except where failure to
be so in compliance would not individually or in the aggregate have a
Material Adverse Effect.
4.17 Taxes. The Company has filed or obtained filing extensions with
respect to all federal, state, local and foreign income and franchise tax
returns material to the Company, taken as a whole and has paid or accrued all
taxes shown as due thereon, and the Company has no knowledge of a tax
deficiency which has been or might be asserted or threatened against it which
would reasonably be expected to have a Material Adverse Effect.
4.18 Transfer Taxes. On each Closing Date, all stock transfers or
other taxes (other than income taxes) which are required to be paid in
connection with the sale and transfer of the Shares to be sold to the
Purchaser hereunder at the applicable Closing will be, or will have been,
fully paid or provided for by the Company and all laws imposing such taxes
will be or will have been fully complied with.
4.19 Insurance. The Company maintains insurance of the type and in
the amount that the Company reasonably believes is adequate for its business,
including, but not limited to, insurance covering all real and personal
property owned or leased by the Company against risks customarily insured
against by similarly situated companies, all of which insurance is in full
force and effect.
4.20 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.
4.21 Legal Opinions. Prior to and as a condition to each Closing, (i)
Boylan, Brown, Code, ▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP, counsel to the Company, will
deliver its legal opinion to the Purchaser with regard to the validity of the
Shares, capitalization of the Company, authorization of this Agreement,
absence of conflict with law, absence of defaults and other customary matters
(including negative assurance with respect to the accuracy and completeness
of the disclosures contained in the Registration Statement), in form and
substance reasonably satisfactory to the Purchaser in form and substance as
agreed with the Purchaser. Such opinion shall also state that each of the
Purchasers may rely thereon as though it were addressed directly to such
Purchaser.
4.22 Related Party Transactions. No transaction has occurred between
or among the Company and its affiliates, officers or directors or any
affiliate or affiliates of any such officer or director that is required to
be described in the Company's reports and other filings under the Securities
Exchange Act of 1934 (the "Exchange Act") attached as Disclosure Documents
that is not so described.
4.23 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.
4.24 Additional Information. The Company represents and warrants
that the Disclosure Documents furnished to the Purchaser, and the
Registration Statement that the Company will furnish to the Purchaser prior
to each Closing, as of its date (or date of filing with the Commission, as
applicable), does not or will not contain an untrue statement of a material
fact or omit or will omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were or will be made, not misleading.
4.25 Certificate. At each Closing, the Company will deliver 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 Closing Date, to the effect that the representations and
warranties of the Company set forth in this Section 4 are true and correct in
all material respects as of the date of this Agreement and as of such Closing
Date (except for such changes or modifications as are specified therein), and
the Company has complied with all the agreements and satisfied all the
conditions herein on its part to be performed or satisfied on or prior to
such Closing Date.
SECTION 5. Representations, Warranties and Covenants of the Purchaser.
(a) The Purchaser represents and warrants to, and covenants with, the
Company that: (i) 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, and has requested, received, reviewed and considered all
information it deems relevant in making an informed decision to purchase the
Shares; (ii) the Purchaser is acquiring the number of Shares set forth in
Section 2 above 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 any arrangement or understanding with any other persons
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 or, other than with respect to any claims arising out
of a breach of this Section 5, the Purchaser's right to indemnification
pursuant to Section 7.3); (iii) the Purchaser will not, directly or
indirectly, offer, sell, pledge, transfer or otherwise dispose of (or solicit
any offers to buy, purchase or otherwise acquire or take a pledge of) any of
the Shares except in compliance with the Securities Act and the Rules and
Regulations; (iv) the Purchaser has completed or caused to be completed the
Registration Statement Questionnaire and the Stock Certificate Questionnaire,
both attached hereto as Appendix I, for use in preparation of the
Registration Statement, and the answers thereto are true and correct as of
the date hereof and will be true and correct as of the effective date of the
Registration Statement; (v) the Purchaser has, in connection with its
decision to purchase the number of Shares set forth in Section 2 above,
relied solely upon the Disclosure Documents and the representations and
warranties of the Company contained herein; (vi) the Purchaser is an
"accredited investor" within the meaning of Rule 501(a) of Regulation D
promulgated under the Securities Act; and (vi) the Purchaser is not a
"dealer" within the meaning of the Securities Act or a "broker" or "dealer"
within the meaning of the Exchange Act.
(b) The Purchaser further represents and warrants to, and covenants
with, the Company that (i) the Purchaser has full right, power, authority and
capacity to enter into this Agreement and to consummate the transactions
contemplated hereby and has taken all necessary action, obtained all
necessary consents and has satisfied or will satisfy all notification and
filing requirements necessary to authorize the execution, delivery and
performance of this Agreement by the Purchaser, and (ii) upon the execution
and delivery of this Agreement, this Agreement shall constitute a 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.
(c) The Purchaser agrees that it has not and will not, for a period of
eighteen months following the execution of this Agreement, carry a net short
position in the common shares 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.
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 for the Shares delivered
pursuant hereto shall survive the execution of this Agreement, the delivery
to the Purchaser of the Shares being purchased and the payment therefor.
SECTION 7. Registration of the Shares; Compliance with the Securities
Act.
7.1 Registration Procedures and Expenses. The Company shall:
(a) as soon as practicable, but in any event no later than one (1)
business day following public disclosure of the transactions contemplated by
this Agreement, prepare and file with the Commission the Registration
Statement on Form SB-2 or other applicable form relating to the sale of the
Shares by the Purchasers from time to time on the facilities of any
securities exchange on which the Common Stock is then traded or in privately-
negotiated transactions, which Registration Statement on Form SB-2 shall or
other applicable from contain all material non-public information disclosed
to the Purchasers by the Company in connection with the issuance and sale of
the Shares;
(b) prepare and file with the Commission such amendments and
supplements to the Registration Statement and the prospectus used in
connection therewith as may be necessary to keep the Registration Statement
effective until the date on which the Shares may be resold by the Purchasers
without registration by reason of Rule 144(k) under the Securities Act or any
other rule of similar effect;
(c) furnish to the Purchaser with respect to the Shares registered
under the 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; provided,
however, that the obligation of the Company to deliver copies of prospectuses
to the Purchaser shall be subject to the receipt by the Company of reasonable
assurances from the Purchaser that the Purchaser will comply with the
applicable provisions of the Securities Act and of such other securities or
blue sky laws as may be applicable in connection with any use of such
prospectuses;
(d) file documents required of 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; and
(e) bear all expenses in connection with the procedures in paragraphs
(a) through (d) of this Section 7.1 and the registration of the Shares
pursuant to the Registration Statement, other than fees and expenses, if any,
of counsel or other advisers to the Purchaser or the Other Purchasers or
underwriting discounts, brokerage fees and commissions incurred by the
Purchaser or the Other Purchasers, if any.
7.2 Transfer of Shares After Registration. The Purchaser agrees that
it will not effect any disposition of the Shares or its right to purchase the
Shares that would constitute a sale within the meaning of the Securities Act,
except as contemplated in the Registration Statement referred to in Section
7.1, and that it will promptly notify the Company of any changes in the
information set forth in the Registration Statement regarding the Purchaser
or its plan of distribution.
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
(ii) the term "Registration Statement" shall include any final
prospectus, exhibit, supplement or amendment included in or relating to the
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 any
untrue statement or alleged untrue statement of any material fact contained
in the Registration Statement, as amended at the time of effectiveness of the
Registration Statement, 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, of the Rules and Regulations, or the prospectus, in the
form first filed with the Commission pursuant to Rule 424(b) of the
Regulations, or filed as part of the Registration Statement at the time of
effectiveness if no Rule 424(b) filing is required (the "Prospectus"), or any
amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state in any of them a material fact required
to be stated therein or necessary to make the statements in the Registration
Statement or any amendment or supplement thereto not misleading or in the
Prospectus or any amendment or supplement thereto not misleading in the light
of the circumstances under which they were made, or arise out of or are based
in whole or in part on 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
are reasonably incurred by such 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 the 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 such 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 such
Purchaser herein or (iv) any statement or omission in any Prospectus that is
corrected 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 the 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 the Registration Statement or controlling person 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 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 or (ii) the inaccuracy of any representation made by
such Purchaser herein or (iii) any untrue or alleged untrue statement of any
material fact contained in the Registration Statement, the Prospectus, or any
amendment or supplement thereto, or (iv) the omission or alleged omission to
state in the 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 the Registration Statement or any amendment or
supplement thereto not misleading or in the Prospectus or any amendment or
supplement thereto not misleading in the light of the circumstances under
which they were made, in each case to the extent, but only to the extent,
that such untrue statement or alleged untrue statement or omission or alleged
omission was made in the 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 the 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 the 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; but 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 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 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), (b) or (c) of this Section 7.3 in respect to any losses, claims,
damages, liabilities or expenses referred to herein, 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 each Purchaser on the other shall be
deemed to be in the same proportion as the amount paid by such Purchaser to
the Company pursuant to this Agreement for the Shares purchased by such
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 each 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 such Purchaser and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. 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 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 such 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 the 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 national firm of certified public accountants), (ii) upon
written request, its Annual Report on Form 10-K, (iii) upon written request,
its Quarterly Reports on Form 10-Q, (iv) upon written request, its Current
Reports on Form 8-K, and (v) a full copy of the particular Registration
Statement covering the Shares (the foregoing, in each case, excluding
exhibits);
(b) upon the written request of the Purchaser, all exhibits excluded
by the parenthetical to subparagraph (a)(v) of this Section 7.5; and
(c) upon the written request of the Purchaser, a reasonable number of
copies of the prospectuses to supply to any other party requiring such
prospectuses in connection with the Purchaser's prospectus delivery
requirements under the Securities Act;
and the Company, upon the reasonable request of the Purchaser, will meet with
the Purchaser or a representative thereof at the Company's headquarters to
discuss information relevant for disclosure in the Registration Statement
covering the Shares, subject to appropriate confidentiality limitations as
the Company may require.
SECTION 8. Fees.
8.1 Broker's Fee. The Purchaser acknowledges that the Company intends
to pay to the CFS a fee in respect of the sale of the Shares to the
Purchaser, as described in Section 4.6 of this Agreement. Each of the
parties hereto hereby represents that, on the basis of any actions and
agreements by it, there are no other brokers or finders entitled to
compensation in connection with the sale of the Shares to the Purchaser.
8.2 Fee to Purchaser. At the First Settlement Date, the Company shall
pay to Purchaser a non-refundable, non-accountable fee of Fifteen Thousand
Dollars ($15,000) for legal and due diligence costs. The Purchaser hereby
acknowledges having already received a payment from the Company in the amount
of Ten Thousand Dollars ($10,000) for legal and due diligence costs.
8.3 Penalty Fee. Should either the Company or the Purchaser fail to
perform its obligations hereunder necessary to consummate the transactions
contemplated by this Agreement, the party which has failed to perform shall
pay a fee to the other party equal to $150,000 (the "Penalty Fee").
SECTION 9. 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.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone: ▇▇▇.▇▇▇.▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
with a copy to:
Boylan, Brown, Code, Vidgor & ▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone: ▇▇▇.▇▇▇.▇▇▇▇
Attn.: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
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 at the end of
this Agreement, or at such other address or addresses as may have been
furnished to the Company in writing.
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 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.
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: Chief Executive Officer
Spectrum Advisors, Ltd.
By: /s/▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Director
APPENDIX I
(one of two)
BIOTECH COMPANY, INC.
STOCK CERTIFICATE QUESTIONNAIRE
Pursuant to Section 3 of this Agreement, please provide us with the
following information:
1. The exact name that your Shares are to be registered in (this is the
name that will appear on your stock certificate(s)). You may use a nominee
name if appropriate: Depository Trust Company or its nominee
2. The relationship between the Purchaser of the Shares and the Registered
Holder listed in response to item 1 above: nominee
3. The mailing address of the Registered Holder listed in response to item 1
above:
______________________
______________________
______________________
______________________
4. The Social Security Number or Tax Identification Number of the
Registered Holder listed in response to item 1 above:
______________________
APPENDIX I
(two of two)
BIOTECH COMPANY, INC.
REGISTRATION STATEMENT QUESTIONNAIRE
In connection with the preparation of the Registration Statement, please
provide us with the following information:
1. Pursuant to the "Selling Stockholder" section of the Registration
Statement, please state your or your organization's name exactly as it should
appear in the Registration Statement:
2. Please provide the number of shares that you will beneficially own
immediately after Closing, including those Shares purchased by you pursuant
to this Agreement and those shares purchased by you or your affiliates
through other transactions:
3. Have you or your organization had any position, office or other
material relationship within the past three years with the Company or its
affiliates?
_____ Yes _____ No
If yes, please indicate the nature of any such relationships below:
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
