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 August 2, 2004, by and
between Bionutrics, Inc. , a Nevada corporation (the “
Company ”), and Asia Pacific Investment Holdings
Limited , a British Virgin Islands company (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 one million (1,000,000) shares of its Common Stock,
$.001 par value, at $1.00 per share (the “Shares”) 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
the full amount of the purchase price of the Shares in the amount
of $1,000,000.00 in U.S. funds by wire transfer as directed by the
Company to the Company's designated escrow account. Such funds
deposited into the escrow account on behalf of the Investor shall
be held until the conditions for the Closing of the offering have
been met.
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 1.2 above
in consideration for the Company's delivery into the escrow account
of certificates representing the Shares subscribed for. If at the
Closing any of the conditions specified in Section 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 Section 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
14,802,600shares are issued and outstanding as of July 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 July 31, 2004,
there were outstanding warrants and options to purchase up to
937,000 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, has obtained a
certified public accountant (MillerEllin Company LLP, 750 Lexington
Avenue, New York, NY 10022) 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. The Investor further
acknowledges that it is aware of the Nostrum Pharm
