THE
SHARES BEING SUBSCRIBED FOR HEREIN HAVE NOT BEEN REGISTERED WITH
THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED, (THE “ 1933 ACT
”) OR THE SECURITIES COMMISSION OF ANY STATE UNDER ANY STATE
SECURITIES LAW. THEY ARE BEING OFFERED PURSUANT TO AN EXEMPTION
FROM REGISTRATION PURSUANT TO SECTION 4(2) OF THE 1933 ACT. THE
SHARES MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED UNLESS THE
SHARES ARE REGISTERED UNDER THE 1933 ACT AND APPLICABLE STATE
SECURITIES LAWS OR AN OPINION OF COUNSEL IS OBTAINED WHICH IS
REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH OFFERS, SALES AND
TRANSFERS MAY BE MADE PURSUANT TO AN AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THOSE LAWS.
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the
“Agreement”) is made as of June 16, 2004, by and
between Bionutrics, Inc., a Nevada corporation (the “
Company ”), and Nostrum Pharmaceuticals, Inc., a
Delaware corporation (the “ Investor
”).
THE PARTIES HEREBY AGREE AS
FOLLOWS:
1.
Purchase and Sale of Stock .
1.1 Sale and
Issuance of Stock . On the basis of the representations,
warranties and agreements contained herein and subject to the terms
and conditions herein set forth, the Company agrees to issue six
million (6,000,000) shares of its Common Stock, $.001 par value,
and the Investor hereby subscribes for and agrees to purchase the
Shares upon acceptance of this Agreement by the Company.
1.2
Payment . Investor is delivering with this Agreement a
certain Product Development and License Agreement, dated as of June
16, 2004 (the “License Agreement”), setting forth an
exclusive worldwide license under certain specified technology to
develop, make, have made, use, import, offer for sale, market and
sell the products specified in the License Agreement, as
consideration, subject to its terms and conditions, for the Shares
as a condition for the Closing of the offering.
1.3
Closing . The closing of the transaction contemplated by
this Agreement (the “ Closing ”) shall be deemed
to have occurred when this Agreement has been executed by both the
Investor and the Company and payment shall have been made as set
forth in Section 1.2 above in consideration for the
Company's promise and agreement to delivery within fifteen (15)
days certificates representing the Shares subscribed for. If at the
Closing any of the conditions specified in Article 6 hereof
shall not have been fulfilled to the reasonable satisfaction of
Investor, then Investor shall, at its election, be relieved of all
of its obligations under this Agreement, without thereby waiving
any other rights it may have by reason of such failure or
unfulfillment. If at the Closing any of the conditions specified in
Article 5 hereof shall not have been fulfilled to the
reasonable satisfaction of the Company, the Company shall, at its
election, be relieved of all of its obligations under this
Agreement, without thereby waiving any other rights it may have by
reason of such failure or unfulfillment.
2.
Representation and Warranties of the Company . The Company
hereby represents and warrants to the Investor as
follows:
2.1
Organization, Good Standing and Qualification . The Company
is a corporation validly existing and in good standing under the
laws of the State of Nevada and has all requisite power and
authority to own or lease and operate its properties and assets and
to carry on its business as now conducted. The Company is duly
qualified to transact business and is in good standing in each
jurisdiction in which the failure to so qualify would have a
material adverse effect on its business, operations, prospects,
condition (financial or other), or properties.
2.2
Capitalization . The authorized capital of the Company
consists of:
(i) Common
Stock . 45,000,000 shares of common stock (“ Common
Stock ”), par value $.001, of which 8,302,600 shares are
issued and outstanding as of March 31, 2004.
(ii) Preferred
Stock . 5,000,000 shares of preferred stock (“
Preferred Stock ”), par value $.001, 591,685 shares of
which are outstanding and convertible into 118,370 of common stock
at the election of the Company or shareholder. Further Preferred
Stock may be issued from time to time in one or more series and the
Board of Directors is authorized to fix the rights and terms
relating to dividends, conversion, voting, redemption, liquidation
preferences and any other rights, preferences, privileges and
restrictions applicable to each such series.
(iii)
Warrants, Options and Other Rights . There are no preemptive
rights or rights of first refusal for the purchase or acquisition
from the Company of any shares of its capital stock. As of March
31, 2004, there were outstanding warrants and options to purchase
up to 984,500 shares of Common Stock.
2.3
Subsidiaries, Etc . The Company’s direct or indirect
ownership in any other corporation, partnership, joint venture
association or other business enterprise, are stated in its Form
10-K for the year ended October 31, 2001, has not materially
changed from that date, and the Investor can rely upon that
information as being true and correct as of the date of this
transaction.
2.4 Valid
Issuance of Shares . All of the outstanding shares of the
Company's stock have been duly and validly authorized and issued,
are fully paid and nonassessable, and no further approval or
authority of the stockholders or the directors of the Company will
be required by the Company for the issuance of the Shares. The
Shares when issued and paid for in accordance with the terms of
this Agreement will be duly authorized, validly issued and
outstanding, fully paid and nonassessable, free from preemptive
rights and will be free from any pledge, lien, encumbrance or
restriction on transfer other than restrictions on transfer under
applicable state and federal securities laws and issued in
compliance with all state and federal securities laws.
2.5
Financial Statements .
(a) The Company
has delivered to Investor true and correct copies of (i) its Form
10-K for the year ended October 31, 2001, (ii) the unaudited
consolidated balance sheets of the Company and its subsidiaries for
the years ended October 31, 2002 and October 31, 2003 and the
six-month period ended March 31, 2004 and (iii) the related
unaudited consolidated statements of income, stockholders’
equity and cash flows of the Company and its subsidiary as of
October 31, 2002, October 31, 2003 and March 31, 2004, respectively
(collectively, the “ Balance Sheets ”). Except
as otherwise stated in the notes thereto, the Balance Sheets have
been prepared in conformity with United States generally accepted
accounting principles (and except that the unaudited Balance Sheets
may not contain all notes) applied, except as stated therein, on a
consistent basis. The Balance Sheets are true and correct and
fairly present the financial position, result of operations and
cash flows and changes in financial position of the Company as of
the dates and for the periods indicated. If and when filed by the
Company with the Securities and Exchange Commission the “
SEC ”) the financial statements in the annual reports
on Form 10-K for the years ended October 31, 2002 and 2003
including Form 10-Q for each three-month period subsequent to the
year ended October 31, 2001 will not be materially different to the
Balance Sheets for the respective periods and only be subject to
non-material year-end adjustments in case of any Balance Sheets for
a three-month period subsequent to the year ended October 31, 2003.
The Company, within 120 days, intends to obtain a certified public
accountant to conduct an audit for the Company’s fiscal years
2002 and 2003, and to review quarterly filings of the Company to
bring it current with the SEC. The Investor can rely upon the
unaudited financials noted above and supplied by the Company as
being a true and correct reflection of the Company’s
financial condition for the respective dates, and as such will be
similarly reflected in the Company’s forthcoming
audit.
(b) Except as
reflected in the Balance Sheets, the Company has no liabilities,
absolute or contingent, material to the operations, business,
prospects, assets, properties or condition (financial or other) of
the Company, other than (i) ordinary course liabilities incurred
since the last date of such Balance Sheets in connection with the
conduct of the business of the Company, and (ii) obligations under
contracts and commitments incurred in the ordinary course of
business and not required under United States generally accepted
accounting principles to be reflected in the Balance Sheets, which,
in both cases, individually or in the aggregate, are not material
to the financial condition or operating results of the
Company.
2.6
Tax Returns and Audits . All required federal, state and
local tax returns have been filed, and all federal, state and local
taxes required to be paid with respect to such returns have been
paid. The Company is not delinquent in the payment of any such tax
or in the payment of any assessment or governmental charge. The
Company has not received notice of any tax deficiency proposed or
assessed against it, and it has not executed any waiver of any
statute of limitations on the assessment or collection of any tax.
None of the Company’s tax returns has been audited by
governmental authorities in a manner to bring such audits to the
Company’s attention. The Company does not have any tax
liabilities except those reflected on the Balance Sheets or
incurred since the Balance Sheet Date in the ordinary course of
business.
2.7
Licenses . The Company possesses from the appropriate
agency, commission, board and government body and authority,
whether state, local or federal, all material licenses, permits,
authorizations, approvals, franchises and rights that are necessary
for it to engage in the business currently conducted by it. The
Company has no reason to believe that it will not be able to obtain
all licenses, permits, authorizations, approvals, franchises and
rights that may be required for any business the Company proposes
to conduct.
2.8 Books and
Records . 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 authorization, (ii) transactions are recorded
as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to
maintain accountability for assets, (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 existing assets at reasonable intervals and
appropriate action is taken with respect to any
differences.
2.9 No
Conflict with Other Instruments . Neither the authorization,
issuance and sale of the Shares, nor the execution, delivery and
performance by the Company of this Agreement nor the consummation
of the transactions herein contemplated, will: (i) contravene or
conflict with or constitute a breach of, permit the termination of,
constitute a default under, or violation of (A) the Articles of
Incorporation, as amended, or bylaws of the Company, (B) any
material agreement, indenture, mortgage, deed of trust or other
material instrument or agreement or undertaking by which the
Company is bound or to which any of its properties or assets is
subject, or, (C) to the knowledge of the Company, a violation of
any law, administrative regulation, or court decree to which the
properties or assets of the Company is subject; or (ii) result in
the creation or imposition of any material Lien upon the property
or assets of the Company. For purposes of this Agreement, “
Lien ” means, with respect to any asset, any mortgage,
lien, pledge, charge, security interest, encumbrance or restriction
of any kind in respect of such asset.
2.10
Authorization . The Company has the corporate power and
authority to enter into this Agreement and to perform all of its
obligations hereunder. The execution, delivery and performance of
this Agreement by the Company have been duly authorized by all
necessary corporate actions, and this Agreement constitutes a
legal, valid, binding and enforceable obligation of the Company. No
consent, approval, authorization or order of any court or
governmental agency or board or any other third party, or
registration, qualification, designation or filing with any
Federal, state or local authority is required to consummate the
transactions contemplated by this Agreement.
2.11
Disclosure . The Company has not knowingly withheld from
Investor any material facts relating to the assets, business,
operations, financial condition or prospects of the Company. No
representation or warranty in this Agreement or in any certificate,
schedule, statement or other document furnished or to be furnished
to Investor pursuant hereto or in connection with the transactions
contemplated hereby contains or will contain any untrue statement
of a material fact or omits or will omit to state any material fact
required to be stated herein or therein or necessary to make the
statements herein or therein not misleading.
2.12 No
Brokers or Finders . No person, firm or corporation has or will
have, as a result of any act or omission of the Company, any right,
interest or valid claim against the Company for any commission, fee
or other compensation as a finder or broker in connection with the
transactions contemplated by this Agreement.
3.
Representations and Warranties of Investor . By executing
this Agreement, Investor hereby represents and warrants to and
covenants with the Company as follows:
3.1
Authorization . Investor has the power and authority to
enter into this Agreement and to perform all of its obligations
hereunder and this Agreement constitutes a valid, binding and
enforceable obligation of Investor.
3.2 Legal
Investment and Compliance with Laws . The purchase of the
Shares by Investor is legally permitted by all laws and regulations
to which Investor is subject and all consents, approvals,
authorizations of or designations, declarations, or filings in
connection with the valid execution and delivery of this Agreement
by Investor or the purchase of the Shares by Investor has been
obtained, or will be obtained. Investor hereby represents that it
has satisfied itself as to the full observance of the laws of its
jurisdiction in connection with any invitation to subscribe for the
Shares or any use of this Agreement, including (i) any foreign
exchange restrictions applicable to such purchase, and (ii) the
income tax and other tax consequences, if any, which may be
relevant to the purchase, holding, redemption, sale, or transfer of
the Shares. Such Investor's subscription and payment for, and its
continued beneficial ownership of the Shares, will not violate any
applicable securities or other laws of its jurisdiction.
3.3 Access to
Information . Investor acknowledges that it has received the
Company's Form 10-K for the period ended October 31, 2001, the
Forms 10-Q filed subsequent thereto and the Balance Sheets (the
“ Offering Documents ”), and is familiar with
and understands the operations of the Company.
(a) Investor
understands and acknowledges that the Offering Documents provided
in connection with this investment have been prepared by the
Company. Accordingly, Investor understands and acknowledges that no
independent investment banking firm or legal counsel have passed
upon or assumed any responsibility for the accuracy, completeness
or fairness of the information contained in the Offering
Documents.
(b) Investor
understands and acknowledges that any financial projections
provided in connection with this investment have not been prepared
by independent accountants and are based on numerous assumptions
regarding sales, revenues and expenses and other factors which may
not be realized in the future.
(c) Investor
acknowledges that it has been encouraged to rely upon the advice of
its legal counsel and accountants or other financial advisers with
respect to the financial, tax and other considerations relating to
the purchase of the Shares and has been offered, during the course
of discussions concerning the purchase of the Shares, the
opportunity to ask such questions and inspect such documents
concerning the Company and its business and affairs as Investor has
requested so as to understand more fully the nature of the
investment and to verify the accuracy of the information
supplied.
(d) Investor
represents and warrants that, in determining to purc
