EXHIBIT 99.1
PAYMENT AGREEMENT
This Payment Agreement (the "Agreement"), is made June 3, 2004 (the "Effective
Date") by and between Biophan Technologies, Inc. ("Biophan"), a Nevada
corporation, and TE Bio LLC (the "Company"), a New York limited liability
company.
WHEREAS, the parties desire to enter into this Agreement to reflect certain
agreements among them.
NOW, THEREFORE, the parties hereby agree as follows:
ARTICLE I. THE BIOPHAN INVESTMENT
Section 1.01 Investment of Biophan. In exchange for good and valuable
consideration and an ownership interest in the Company, Biophan shall pay the
Company $900,000 according to the following schedule:
(a) $300,000, cumulatively, during the period of time beginning with the
Effective Date and concluding at the end of the first (1st)
anniversary of the Effective Date;
(b) $300,000, cumulatively, during the period of time beginning on the
day after the first (1st) anniversary of the Effective Date and
concluding on the second (2nd) anniversary of the Effective Date;
and
(c) $300,000, cumulatively, during the period of time beginning on the
day after the second (2nd) anniversary of the Effective Date and
concluding at the end of the third (3rd) anniversary of the
Effective Date.
For the purposes of this Agreement, each annual payment of $300,000 shall be
referred to as a "Biophan Commitment" and each one-year period shall be referred
to as a "Payment Period."
ARTICLE II. THE UNIT CLAWBACK
Section 2.01 Biophan Unit Clawback. In the event that Biophan fails to pay a
Biophan Commitment during the respective Payment Period or makes only partial
payment (the "Actual Payment"), then Biophan shall be entitled to keep some
portion of the Initial Units (as defined below)(the "Maintained Units") and be
required to return some portion thereof to the company (the "Returned Units").
At the close of each Payment Period, the Company shall make the following
calculation:
INITIAL UNITS ACTUAL PAYMENT
_____________ X ___________________ = MAINTAINED UNITS
3 [YEARS] $300,000
INITIAL UNITS
_____________ LESS MAINTAINED UNITS = RETURNED UNITS
3 [YEARS]
For the purpose of this calculation, the "Initial Units" shall equal the number
of Units held by Biophan as of the date of this agreement and shall not be
adjusted to reflect any increase or decrease in that number.
Section 2.02 Acceleration of Payment. Biophan may, during the first and second
Payment Periods, make payments to the Company in excess of the Biophan
Commitment (an "Accelerated Payment"); provided, however, that Biophan may not
retroactively recover any of the Returned Units. The Company shall apply any
Accelerated Payment made during the first Payment Period toward the Biophan
Commitment for the second Payment Period; and any Accelerated Payment during the
second Payment Period shall be applied to the third Biophan Commitment.
Section 2.03 Accelerated Payment of Entire Investment. Biophan may, at any time
and in its sole discretion, pay the Company the balance remaining on the entire
investment amount (the "Balance Payment"). For the purposes of this agreement,
the Balance Payment shall equal the sum total remaining unpaid for any
non-concluded Payment Periods. Upon receipt by the Company of the Balance
Payment this Article II shall cease to have effect; provided, however, that this
Section 2.03 shall not relieve Biophan of any obligation to deliver Returned
Units to the Company.
Section 2.04 The Returned Units. Upon notification by the Company, Biophan
agrees to immediately deliver the Returned Units to the Company and to execute
any documents that may be required to effectuate such return. Biophan
acknowledges that it has no right to recover the Returned Units from the
Company.
ARTICLE III. MISCELLANEOUS PROVISIONS
Section 3.01 Term. This Agreement shall continue in effect for three (3) years
after the Effective Date unless terminated earlier as provided in Section 3.06.
Section 3.02 Termination. The parties may terminate this Agreement by mutual
consent at any time.
Section 3.03 Amendment of Agreement. This Agreement may not be modified or
amended except in writing, signed by the parties.
Section 3.04 Entire Understanding. This Agreement sets forth the entire
agreement and understanding between the parties as to the matters contained
herein, and merges and supersedes all prior discussions, agreements, and
understandings of every kind and nature among them. No party shall be bound by
any condition, definition or representation other than as expressly provided for
in this Agreement.
Section 3.05 Assignment. This Agreement may not be assigned by either party
without the written consent of the other party and any purported assignment in
violation hereof shall be null and void.
Section 3.06 Binding Effect. This Agreement shall be binding upon, and inure to
the benefit of, the parties hereto and their respective legal representatives,
trustees. receivers, successors and permitted assigns.
Section 3.07 Notices. All notices, requests, demands and other communications
provided for in this Agreement shall be in writing and shall be deemed to have
been given at the time when personally delivered, or mailed via registered or
certified mail, return receipt requested, or delivered by overnight courier,
addressed to the address of the other party stated at the beginning of this
Agreement or to such other address as such party may have fixed by notice,
provided, however, that any notice of change of address shall be effective only
upon receipt.
Section 3.08 Invalidity of Provision. If any provision of this Agreement or the
application of any provision hereof to any person or circumstance is held
invalid, the remainder of this Agreement and the application of such provision
to the persons or circumstances shall not be affected unless the invalid
provision substantially impairs the benefits of the remaining portions of this
Agreement.
Section 3.09 Governing Law. This Agreement shall be governed by and construed
under the laws of the State of New York, without regard to its choice of law
provisions.
Section 3.10 Headings. The headings of the sections hereof are inserted for
convenience only and in no way define, limit or prescribe the intent of this
Agreement.
Section 3.11 Execution Procedure. This Agreement and its amendments may be
executed in multiple copies, with each multiple copy to be deemed an original,
but all multiple copies together constituting one and the same instrument.
Section 3.12 Waiver. No waiver by either party of any condition or of the breach
by the other party of any term or covenant contained in his Agreement, whether
by conduct or otherwise, at any time or in any one or more instances shall be
deemed or construed as a further or continuing waiver of any such condition or
breach of any similar or dissimilar term or covenant set forth in this
Agreement. Moreover, the failure of either party to exercise any right hereunder
shall not bar the later exercise thereof.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
date written above.
BIOPHAN TECHNOLOGIES, INC
By: /s/ Xxxxxx X. Xxxx
-----------------------------
Its: Chief Financial Officer
Date: June 6, 2004
TE BIO LLC
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------------
Its: Manager
Date: June 6, 2004
