STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT is made as of the _______ day of May,
2005 by and between Biophan Technologies, Inc. (the "Company"), a corporation
organized under the laws of the State of Nevada, with its principal offices at
000 Xxxxxx Xxxxxx Xxxxx, Xxxxx 000, Xxxx Xxxxxxxxx, Xxx Xxxx 00000, and SBI
Brightline XI, LLC, a California limited liability company with its principal
offices at 000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 0000, Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
(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 10,000,000
shares 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. Agreement to Purchase the Shares.
2.1 Schedule 2.1 attached hereto defines ten (10) 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 the Registration Statement (as defined in Section 7.1) of the Company
covering the Shares is declared effective (the "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.
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 SBI, Newport
Beach, California.
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;
(d) the Registration Statement shall have been declared effective
and shall not have been withdrawn, no stop order suspending the effectiveness of
the Registration Statement shall be in effect, and no proceedings for the
suspension of the effectiveness of the Registration Statement shall have been
instituted or threatened by the Securities and Exchange Commission (the
"Commission");
(e) Counsel to the Company shall have delivered its legal opinion to
the Purchaser that the Tranche Shares being issued on such Tranche Closing Date
will, upon issuance, be duly authorized, validly issued, fully paid and
non-assessable.
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;
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(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 shall be in effect, and no proceedings for the suspension of the
effectiveness of the 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.
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4.3 Authorized and Outstanding Capital Stock. The Company has
authorized the issuance of 120,000,000 shares of Common Stock, of which
approximately 74,400,000 shares are issued and outstanding as of the date of
this Agreement. 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 13,000,000 shares of Common Stock, of which as of
the date of this Agreement, options to purchase an aggregate of 8,137,355 shares
of Common Stock were outstanding. In addition, the Company has granted warrants
to purchase an aggregate of 1,565,182 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 the date of this Agreement there
are 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.
4.4 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 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
4.5 Due Execution, Delivery and Performance of the Agreements. 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 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.
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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.
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.
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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.
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. 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.
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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.
SECTION 7. Covenants.
7.1 Registration Procedures and Expenses.
(a) As soon as practicable, but in any event no later than one
hundred twenty (120) days following the date of this Agreement, the Company
shall prepare and file with the Commission a registration statement on Form SB-2
or other applicable form as determined by the Company (the "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 Statement shall contain
all material non-public information disclosed to the Purchasers 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. The
Company shall use its commercially reasonable efforts to cause the Registration
Statement to become effective as soon as practicable.
(b) The Company shall prepare and file with the Commission such
amendments and supplements to the Registration Statement and the prospectus
forming a part thereof as may be necessary to keep the Registration Statement
effective until the earliest date, after the date on which all of the Shares
have been purchased pursuant to this Agreement or the obligation of the
Purchaser to purchase the Shares pursuant to this Agreement has been terminated,
on which (i) all the Shares have been disposed of pursuant to the Registration
Statement, (ii) all of the Shares 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
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
Registration Statement and its obligations under this Section 7 (other than its
obligations under Section 7.3) shall automatically terminate.
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(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 the Registration Statement. In connection with the sale of any
Shares pursuant to the 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 purchaser of Shares the prospectus forming a part of the 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 the 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 the 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
the 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 the 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 the 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
the 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.
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(g) The Company shall 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
pursuant to the Registration Statement.
(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 the 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).
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(b) If at any time or from time to time after the Effective Date,
the Company notifies the Purchaser in writing that the 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 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 the
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 the
Registration Statement, the Purchaser shall deliver to the purchaser thereof the
prospectus forming a part of the 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 the 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 the 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 the
Registration Statement.
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.
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(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 the Registration
Statement, as amended as of the 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 the 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 the Registration Statement as of the Effective Date a material fact
required to be stated therein or necessary to make the statements in the
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 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 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 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, (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 the
Registration Statement, the Prospectus, or any amendment or supplement thereto,
or (y) 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, 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 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.
11
(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
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
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.
12
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 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 the Registration Statement (the foregoing, in each case,
excluding exhibits); and
13
(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.
000 Xxxxxx Xxxxxx Xxxxx
Xxxxx 000
Xxxx Xxxxxxxxx, Xxx Xxxx 00000
Phone: 000.000.0000
Facsimile: 585.427.9049
Attn: Xxxxxxx X. Xxxxxx
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 the 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 the 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.
14
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.
15
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:
--------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Chief Executive Officer
SBI Brightline XI, LLC
By:
--------------------------------
Name: Xxxxxx Xxxxxxx
Title: Managing Member
16
SCHEDULE 2.1
TRANCHES
Number of Tranche Shares Tranche Purchase Price per
Tranche No. Included in Tranche Tranche Share (U.S. Dollars)
----------- ------------------- ----------------------------
1 1,000,000 $ 2.00
2 1,000,000 $ 2.00
3 1,000,000 $ 2.00
4 1,000,000 $ 2.50
5 1,000,000 $ 3.00
6 1,000,000 $ 3.25
7 1,000,000 $ 3.25
8 1,000,000 $ 4.00
9 1,000,000 $ 4.00
10 1,000,000 $ 4.00
Total 10,000,000 Average: $3.00
