Exhibit D
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as of the 5th
day of July, 2007, by and among DMI BIOSCIENCES, INC., a Colorado corporation
(the "Company"), and COGENCO INTERNATIONAL, INC., a Colorado corporation (the
"Buyer"). Each of the foregoing is a "Party" and collectively they are the
"Parties."
RECITALS
A. The Company and the Buyer are executing and delivering this Agreement in
reliance upon an exemption from securities registration pursuant to Section 4(2)
and/or Rule 506 of Regulation D ("Regulation D") as promulgated by the U.S.
Securities and Exchange Commission (the "SEC") under the Securities Act of 1933,
as amended (the "Securities Act");
B. The Company desires to receive and the Buyer desires to invest into the
Company, up to One Million Dollars ($1,000,000.00) for which investment the
Buyer will receive the Common Stock (as such term is defined below);
C. In order to incentivize the Buyer to invest more money earlier, the
Company is willing to sell the Common Stock at various decreasing discounts as
set forth in Paragraph 1(b) below; and
D. In order to further incentivize the Buyer to invest the entire One
Million Dollars ($1,000,000.00) on or before December 31, 2007, upon such event
the Company is willing to issue its warrant to purchase an additional One
Million (1,000,000) shares of the Company's Common Stock at $1.00 per share as
set forth in Paragraph 1(c) below;
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants and agreements hereinafter contained, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
intending to be legally bound, the parties hereto hereby agree as follows:
1. PURCHASE AND SALE OF COMMON STOCK.
(a) Beginning in January, 2007 through and including June 30, 2007, the
Company has issued and sold to the Buyer, and the Buyer has purchased from the
Company, Four Hundred One Thousand Four Hundred Twenty-nine (401,429) shares of
the Company's no par value Common Stock (the "Common Stock") for which the buyer
has paid a total of Three Hundred Thirty Thousand Dollars ($330,000.00) as
follows:
Date of Amount of Price Per Number of
Investment Investment Share Shares Purchased
---------- ---------- ----- ----------------
March, 2007 $100,000 $1.00 100,000
April, 2007 $ 15,000 $0.70 21,429
May, 2007 $135,000 $0.75 180,000
June, 2007 $ 80,000 $0.80 100,000
--------- -------
$330,000 401,429
(b) From and after July 1, 2007 through and including December 31, 2007,
the Buyer shall have the right, but not the obligation, to invest the remainder
of the One Million Dollars (up to an additional Six Hundred Seventy Thousand
Dollars ($670,000)) to purchase shares of the Company's no par value Common
Stock at the following purchase prices:
Date of Price Per
Investment Share
---------- -----
July, 2007 $0.85
August, 2007 $0.90
September, 2007 $0.95
October - December 31, 2007 $1.00
(c) Upon the investment by the Buyer of the entire One Million Dollars
($1,000,000.00) into the Company pursuant to this Securities Purchase Agreement
on or before December 31, 2007, the Company shall deliver to the Buyer a warrant
(the "Warrant") substantially in the form of Exhibit A to this Agreement
granting the Buyer the right to purchase up to One Million (1,000,000) shares of
Company's no par value Common Stock (the "Warrant Shares"), which Warrant shall
not be transferable except according to its terms, and shall initially be
exercisable at $1.00 per share of Common Stock, subject to adjustment, and be
exercisable through the close of business on December 31, 2008.
(d) Closing Date. The Closing for each purchase will occur as the Buyer
pays funds to the Company.
2. BUYER'S REPRESENTATIONS AND WARRANTIES.
The Buyer represents and warrants that:
(a) Investment Purpose. The Buyer has acquired and will acquire the Common
Stock for its own account for investment only and not with a view towards, or
for resale in connection with, the public sale or distribution thereof, except
pursuant to sales registered or exempted under the Securities Act; provided,
however, that by making the representations herein, the Buyer reserves the right
to dispose of the Common Stock at any time in accordance with all applicable
legal requirements.
(b) Reliance on Exemptions. The Buyer understands that the Common Stock was
offered and sold to it in reliance on specific exemptions from the registration
requirements of United States federal and state securities laws and that the
Company is relying in part upon the truth and accuracy of, and the Buyer's
compliance with, the representations, warranties, agreements, acknowledgments
and understandings of the Buyer set forth herein in order to determine the
availability of such exemptions and the eligibility of the Buyer to acquire such
securities.
(c) Information. The Buyer and its advisors (and his or, its counsel), if
any, have been furnished with all materials relating to the business, finances
and operations of the Company and information he deemed material to making an
informed investment decision regarding his purchase of the Common Stock which
have been requested by the Buyer. The Buyer and its advisors, if any, have been
afforded the opportunity to ask questions of the Company and its management.
Neither such inquiries nor any other due diligence investigations conducted by
the Buyer or its advisors, if any, or its representatives shall modify, amend or
affect the Buyer's right to rely on the Company's representations and warranties
contained in Section 3 below. The Buyer understands that its investment in the
Common Stock involves a high degree of risk. The Buyer is in a position
regarding the Company, which, based upon employment, family relationship or
economic bargaining power, enabled and enables the Buyer to obtain information
from the Company in order to evaluate the merits and risks of this investment.
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The Buyer has sought such accounting, legal and tax advice, as it has considered
necessary to make an informed investment decision with respect to its
acquisition of the Common Stock.
(d) Transfer or Resale. The Buyer understands that: (i) the Common Stock
have not been, and are not being, registered under the Securities Act or any
state securities laws, and may not be offered for sale, sold, assigned or
transferred unless (A) subsequently registered thereunder, or (B) the Buyer
shall have delivered to the Company an opinion of counsel, in a generally
acceptable form, to the effect that such securities to be sold, assigned or
transferred may be sold, assigned or transferred pursuant to an exemption from
such registration requirements; and (ii) neither the Company nor any other
person is under any obligation to register such securities under the Securities
Act or any state securities laws or to comply with the terms and conditions of
any exemption thereunder. The Company reserves the right to place stop transfer
instructions against the shares and certificates for the Common Stock.
(e) Legends. The Buyer understands that the certificates or other
instruments representing the Common Stock shall bear a restrictive legend in
substantially the following form (and a stop transfer order may be placed
against transfer of such stock certificates):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS. THE SECURITIES HAVE BEEN ACQUIRED SOLELY FOR
INVESTMENT PURPOSES AND NOT WITH A VIEW TOWARD RESALE AND MAY NOT BE
OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS, OR AN OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT
REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE
SECURITIES LAWS.
(f) Authorization, Enforcement. This Agreement has been duly and validly
authorized, executed and delivered on behalf of the Buyer and is a valid and
binding agreement of the Buyer enforceable in accordance with its terms, except
as such enforceability may be limited by general principles of equity or
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and
other similar laws relating to, or affecting generally, the enforcement of
applicable creditors' rights and remedies.
(g) Good Funds. All purchase payments transferred or that may be
transferred to the Company pursuant to this Agreement originated directly from a
bank or brokerage account in the name of the Buyer located within the United
States of America or another Compliant Jurisdiction as defined in by the
Financial Action Task Force on Money Laundering (found at
xxxx://xxx.xxxx.xxx/xxxx/).
-------------------------
(h) No Legal Advice From the Company. The Buyer acknowledges, that it had
the opportunity to review this Agreement and the transactions contemplated by
this Agreement with his or its own legal counsel and investment and tax
advisors. The Buyer is relying solely on such counsel and advisors and not on
any statements or representations of the Company or any of its representatives
or agents for legal, tax or investment advice with respect to this investment,
the transactions contemplated by this Agreement or the securities laws of any
jurisdiction.
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(i) Agreement in Connection with Initial Registration or Public Offering.
The Buyer agrees, in connection with the initial registration or public offering
of the Company's securities pursuant to a registration statement under the Act,
(i) not to sell, make short sale of, loan, grant any options for the purchase
of, or otherwise dispose of any shares of Common Stock held by the Buyer (other
than any shares included in the offering) without the prior written consent of
the Company for a period of 180 days from the effective date of such
registration statement, and (ii) to execute any agreement reflecting clause (i)
above as may be requested by the Company at the time of such registration or
public offering; provided, however, that all other persons selling shares of
Common Stock in such offering, all persons holding in excess of 5% of the
capital stock of the Company on a fully diluted basis and all executive officers
and directors of the Company shall also have agreed not to sell publicly their
Common Stock under the circumstances and pursuant to the terms set forth in this
paragraph and the Corporation does not permit any such person to sell, on a
percentage of total holdings by such person, more than the Corporation permits
the Buyer to sell within that 180 day period.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants as of the date hereof to the Buyer that,
except as disclosed in the attached schedules:
(a) Organization and Qualification. The Company and its subsidiaries are
corporations duly organized and validly existing in good standing under the laws
of the jurisdiction in which they are incorporated, and have the requisite
corporate power to own their properties and to carry on their business as now
being conducted. Each of the Company and its subsidiaries is duly qualified as a
foreign corporation to do business and is in good standing in every jurisdiction
in which the nature of the business conducted by it makes such qualification
necessary, except to the extent that the failure to be so qualified or be in
good standing would not have a material adverse effect on the Company and its
subsidiaries taken as a whole.
(b) Authorization, Enforcement, Compliance with Other Instruments. (i) The
Company has the requisite corporate power and authority to enter into and
perform this Agreement and to issue the Common Stock in accordance with the
terms hereof, (ii) the execution and delivery of this Agreement by the Company
and the completion by it of the transactions contemplated hereby, including,
without limitation, the issuance of the Common Stock have been duly authorized
by the Company's Board of Directors and no further consent or authorization is
required by the Company, its Board of Directors or its stockholders, (iii) this
Agreement has been duly executed and delivered by the Company, (iv) this
Agreement constitutes the valid and binding obligations of the Company
enforceable against the Company in accordance with its terms, except as such
enforceability may be limited by general principles of equity or applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws
relating to, or affecting generally, the enforcement of creditors' rights and
remedies.
(c) Issuance of Securities. The Common Stock has been duly authorized and
reserved for issuance and when issued in accordance with the terms of this
Agreement or the Warrant Agreement will be legally and validly issued, fully
paid and nonassessable.
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(d) No Conflicts.
(1) The execution, delivery and performance of this Agreement by the
Company and the completion by the Company of the transactions contemplated
hereby will not (i) result in a violation of the Articles of Incorporation,
any certificate of designations of any outstanding series of preferred
stock of the Company or the By-laws or (ii) conflict with or constitute a
default (or an event which with notice or lapse of time or both would
become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, indenture or
instrument to which the Company or any of its subsidiaries is a party, or
result in a violation of any law, rule, regulation, order, judgment or
decree applicable to the Company or any of its subsidiaries or by which any
property or asset of the Company or any of its subsidiaries is bound or
affected.
(2) Neither the Company nor its subsidiaries is in violation of any
term of or in default under its Articles of Incorporation or By-laws or
their organizational charter or by-laws, respectively.
(3) The business of the Company and its subsidiaries is not being
conducted, and shall not be conducted in violation of any material law,
ordinance, or regulation of any governmental entity.
(4) Except as specifically contemplated by this Agreement and as
required under the Securities Act and any applicable state securities laws,
the Company is not required to obtain any consent, authorization or order
of, or make any filing or registration with, any court or governmental
agency in order for it to execute, deliver or perform any of its
obligations under or contemplated by this Agreement in accordance with the
terms hereof. All consents, authorizations, orders, filings and
registrations which the Company is required to obtain pursuant to the
preceding sentence have been obtained or effected on or prior to the date
hereof. Except as contemplated by this Agreement, the Company and its
subsidiaries are unaware of any facts or circumstance, which might give
rise to any of the foregoing.
(e) Accuracy of Information. The information about the Company that the
Company has provided to the Buyer is accurate and complete in all material
respects. Such information does not include any untrue statements of material
fact, nor do they omit to state any material fact required to be stated therein
necessary to make the statements made, in light of the circumstances under which
they were made, not misleading.
(f) Absence of Litigation. There is no action, suit, proceeding, inquiry or
investigation before or by any court, public board, government agency,
self-regulatory organization or body known to be pending against or affecting
the Company, the Common Stock or any of the Company's subsidiaries, wherein an
unfavorable decision, ruling or finding would (i) have a material adverse effect
on the transactions contemplated hereby (ii) adversely affect the validity or
enforceability of, or the authority or ability of the Company to perform its
obligations under, this Agreement or any of the documents contemplated herein,
or (iii) have a material adverse effect on the business, operations, properties,
financial condition or results of operations of the Company and its subsidiaries
taken as a whole.
(g) No General Solicitation. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf, has engaged in any
form of general solicitation or general advertising (within the meaning of
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Regulation D under the Securities Act) in connection with the offer or sale of
the Common Stock.
(h) No Integrated Offering. Neither the Company, nor any of its affiliates,
nor any person acting on its or their behalf has, directly or indirectly, made
any offers or sales of any security or solicited any offers to buy any security,
under circumstances that would require registration of the Common Stock under
the Securities Act or cause this offering of the Common Stock to be integrated
with prior offerings by the Company for purposes of the Securities Act where
such integration would result in an exemption not being available for the
transactions contemplated herein.
(i) Employee Relations. Neither the Company nor any of its subsidiaries is
involved in any labor dispute nor, to the knowledge of the Company or any of its
subsidiaries, is any such dispute threatened. None of the Company's or its
subsidiaries' employees is a member of a union and the Company and its
subsidiaries believe that their relations with their employees are good.
(j) Intellectual Property Rights. The Company and its subsidiaries own or
possess adequate rights or licenses to use all trademarks, trade names, service
marks, service xxxx registrations, service names, patents, patent rights,
copyrights, inventions, licenses, approvals, governmental authorizations, trade
secrets and rights necessary to conduct their respective businesses as now
conducted. The Company and its subsidiaries do not have any knowledge of any
infringement by the Company or its subsidiaries of trademark, trade name rights,
patents, patent rights, copyrights, inventions, licenses, service names, service
marks, service xxxx registrations, trade secret or other similar rights of
others, and, to the knowledge of the Company there is no claim, action or
proceeding being made or brought against, or to the Company's knowledge, being
threatened against, the Company or its subsidiaries regarding trademark, trade
name, patents, patent rights, invention, copyright, license, service names,
service marks, service xxxx registrations, trade secret or other infringement;
and the Company and its subsidiaries are unaware of any facts or circumstances
which might give rise to any of the foregoing.
(k) Environmental Laws. The Company and its subsidiaries are (i) in
compliance with any and all applicable foreign, federal, state and local laws
and regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"), (ii) have received all permits, licenses or
other approvals required of them under applicable Environmental Laws to conduct
their respective businesses and (iii) are in compliance with all terms and
conditions of any such permit, license or approval.
(l) Insurance. The Company and each of its subsidiaries are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as management of the Company believes to be prudent and
customary in the businesses in which the Company and its subsidiaries are
engaged. Neither the Company nor any such subsidiary has been refused any
insurance coverage sought or applied for and neither the Company nor any such
subsidiary has any reason to believe that it will not be able to renew its
existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business at a cost that would not materially and adversely affect the condition,
financial or otherwise, or the earnings, business or operations of the Company
and its subsidiaries, taken as a whole.
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(m) Regulatory Permits. The Company and its subsidiaries possess all
material certificates, authorizations and permits issued by the appropriate
federal, state or foreign regulatory authorities necessary to conduct their
respective businesses, and neither the Company nor any such subsidiary has
received any notice of proceedings relating to the revocation or modification of
any such certificate, authorization or permit.
(n) Tax Status. The Company and each of its subsidiaries has made and filed
all federal and state income and all other tax returns, reports and declarations
required by any jurisdiction to which it is subject and (unless and only to the
extent that the Company and each of its subsidiaries has set aside on its books
provisions reasonably adequate for the payment of all unpaid and unreported
taxes) has paid all taxes and other governmental assessments and charges that
are material in amount, shown or determined to be due on such returns, reports
and declarations, except those being contested in good faith and has set aside
on its books provision reasonably adequate for the payment of all taxes for
periods subsequent to the periods to which such returns, reports or declarations
apply. There are no unpaid taxes in any material amount claimed to be due by the
taxing authority of any jurisdiction, and the officers of the Company know of no
basis for any such claim.
4. GOVERNING LAW: MISCELLANEOUS.
(a) Governing Law. This Agreement shall be governed by and interpreted in
accordance with the laws of the State of Colorado without regard to the
principles of conflict of laws. The parties further agree that any action
between them shall be heard in the District Court of Arapahoe County, Colorado
for the adjudication of any civil action asserted pursuant to this Paragraph.
(b) Counterparts. This Agreement may be executed in two or more identical
counterparts, all of which shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each party and
delivered to the other party. In the event any signature page is delivered by
facsimile transmission, the party using such means of delivery shall cause four
additional original executed signature pages to be physically delivered to the
other party within five days of the execution and delivery hereof.
(c) Headings. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement.
(d) Severability. If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Agreement in that
jurisdiction or the validity or enforceability of any provision of this
Agreement in any other jurisdiction.
(e) Entire Agreement, Amendments. This Agreement supersedes all other prior
oral or written agreements between the Buyer, the Company, their affiliates and
persons acting on their behalf with respect to the matters discussed herein, and
this Agreement and the instruments referenced herein contain the entire
understanding of the parties with respect to the matters covered herein and
therein and, except as specifically set forth herein or therein, neither the
Company nor any Buyer makes any representation, warranty, covenant or
undertaking with respect to such matters. No provision of this Agreement may be
waived or amended other than by an instrument in writing signed by the party to
be charged with enforcement.
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(f) Notices. Any notices, consents, waivers, or other communications
required or permitted to be given under the terms of this Agreement must be in
writing and will be deemed to have been delivered (i) upon receipt, when
delivered personally; (ii) upon confirmation of receipt, when sent by facsimile;
(iii) three days after being sent by U.S. certified mail, return receipt
requested, or (iv) one day after deposit with a nationally recognized overnight
delivery service, in each case properly addressed to the party to receive the
same. The addresses and facsimile numbers for such communications shall be:
If to the Company, to: DMI Biosciences, Inc.
0000 Xxxxx Xxxxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxx, XX 00000-0000
Attention: Xxxxx Xxxxxx, President
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Buyer: Cogenco International, Inc.
Attention: Xxxxx X. Xxxxxxx, President
0000 Xxxxx Xxxxxxx'x Xxxxx Xxxxxx - Xxxxx 0000
Xxxxxxxxx Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to: Xxxxx, Figa & Will, P.C.
0000 Xxxxx Xxxxxxx'x Xxxxx Xxxxxx - Xxxxx 0000
Xxxxxxxxx Xxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxx, Xx., Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(g) Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties and their respective successors and assigns.
Neither the Company nor any Buyer shall assign this Agreement or any rights or
obligations hereunder without the prior written consent of the other party
hereto.
(h) No Third Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.
(i) Survival. The representations and warranties of the Company contained
in Section 3 and the representations and warranties of the Buyer contained in
Sections 2(a) through and including 2(h) shall survive through December 31,
2009. The agreement in Section 2(i) shall survive according to its terms.
(j) Publicity. The Company and the Buyer shall have the right to approve,
before issuance any press release or any other public statement with respect to
the transactions contemplated hereby made by any party; provided, however, that
the Company shall be entitled, without the prior approval of the Buyer, to issue
any press release or other public disclosure with respect to such transactions
required under applicable securities or other laws or regulations (the Company
shall use its best efforts to consult the Buyer in connection with any such
press release or other public disclosure prior to its release and Buyer shall be
provided with a copy thereof upon release thereof).
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(k) Further Assurances. Each party shall do and perform, or cause to be
done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
(l) No Strict Construction. The language used in this Agreement will be
deemed to be the language chosen by the parties to express their mutual intent,
and no rules of strict construction will be applied against any party.
IN WITNESS WHEREOF, the Buyers and the Company have caused this Securities
Purchase Agreement to be duly executed on July 5, 2007, as of the date first
written above.
BUYER: COMPANY:
COGENCO INTERNATIONAL, INC. DMI BIOSCIENCES, INC.
By: /s/ Xxxxx X. Xxxxxxx By: /s/ Xxxxx Xxxxxx
Xxxxx X. Xxxxxxx, President Xxxxx Xxxxxx, President
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