fsb20907ex10iii_kraig.htm


    STOCK
      PURCHASE AND INVESTOR RIGHTS AGREEMENT

    KRAIG
      BIOCRAFT LABORATORIES, INC.

     

     

    This
      Stock Purchase and Investor Rights Agreement (this “Agreement”) is made and
entered
      into as of May 23, 2007.

    


    By
      and
      among Lion Equity, an individual (“Purchaser” or “Subscriber”) and Kraig
      Biocraft Laboratories, Inc., a Wyoming corporation (the “Company” or
“Kraig”).  Purchaser and the Company are collectively referenced
      herein as the “Parties”.

    


    PRELIMINARY
      STATEMENTS

     

        A.    The
      Company is in the
      business of developing recombinant fiber (the “Business”).

     

        B.    The
      Company desires to issue and sell to the Purchaser, and the Purchaser desires
      to
      subscribe for and acquire from the Company, an equity interest in the Company
      upon the terms and conditions hereinafter set forth, and conditioned upon the
      rights granted to it hereunder.

     

        C.    Time  is
      of the essence, as the Company requires the capital contribution described
      herin
      to continue its operations forthwith.


     

        NOW,
      THEREFORE, in the Parties agree as follows:

     

     

    1.      
Agreement
      to Purchase and Sell the Stock.  The Company will sell to
      Purchaser, and Purchaser agrees to purchase, no par value, class “A” common
      stock (the “Stock”) of the Company as set forth below:

     

       1.1    1,687,500
      shares of Stock, at eight cents ($0.08) per share, for
      a
      total purchase price of  $135,000.00, within seven (7) days of
      execution of this Agreement.

     

     

    
      2.       Representations,
        Warranties and Covenants of the Company.  The Company hereby
        represents, warrants and covenants to Purchaser that the statements in the
        following paragraphs of this Section 3 are all true and complete as of the
        date
        hereof:

    

    
       

         2.1    Authority;
        Due Authorization.  This Agreement, when signed by the Company’s
        CEO, will have been duly and validly executed and delivered by the Company,
        and
        upon the execution and delivery by Purchaser of this Agreement and the
        performance by Purchaser of its obligations herein, will constitute, a legal,
        valid and binding obligation of the Company enforceable against it in accordance
        with its terms, except as such enforcement may be limited by bankruptcy or
        insolvency laws or other laws affecting enforcement of creditors’ rights or by
        general principles of equity.

    

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

     

       2.2    No
      Conflicts.  The execution and delivery by the Company of this
      Agreement does not, and the performance by the Company of its obligations under
      this Agreement and the consummation of the transactions contemplated hereby
      will
      not, conflict with or result in a violation or breach of any of the terms,
      conditions or provisions of any other agreement to which the Company is a
      party.


     

       2.3    Valid
      Issuance.  The Stock being purchased by the Purchaser hereunder
      shall be at the Closing, duly and validly issued, fully paid, and
      non-assessable.


     

    
         2.4    The
        Company. The Company is a corporation duly incorporated, validly
        existing and in good standing under the laws of the state of
        Wyoming. 



       2.5    Capitalization
      of
      the Company. Immediately prior to the Closing, the authorized capital
      stock of the Company shall consist of a total of 60,000,000 shares of Class
      A
      Common Stock, no par value, 25,000,000 shares of Class B Common Stock, no par
      value and 10,000,000 shares of Preferred Stock, no par
      value.  Immediately prior to the Closing there will be no more that
      200,000 shares of preferred stock outstanding, as described immediately below,
      no shares of Class B Common Stock outstanding,  and no more than
      50,000,000 shares of Common Stock outstanding.  There are no
      conversion or exchange privileges, preemptive rights, or other rights or
      agreements to purchase or otherwise acquire or issue any securities of the
      Company other than have been disclosed to purchaser, and there is no agreement
      or understanding between any persons and/or entities, which affects or relates
      to the voting or giving of written consents with respect to any security of
      the
      Company or any instrument or security exercisable or exchangeable for, or
      convertible into any security of the Company.

     

    The
      Company has entered into an agreement with its founder whereby the founder
      has
      surrendered  rights to royalties and has further surrendered a carve
      out for certain applications of the Company’s intellectual property in exchange
      for the Company’s agreement to issue to the founder 200,000 shares of the
      Company’s preferred stock.  Said stock shall be issued without any
      right to receive any dividend.  The preferred shares will however have
      super voting rights equivalent to 100 votes of Class A Common shares per share
      of preferred, such that the total issuance of preferred shares to the founder
      shall have the voting power of 20,000,000 Class A shares.

     

    The
      Company has an obligation to issue additional shares to its employees and/or
      consultants upon the happening of certain triggering events, specifically the
      successful completion of certain research benchmarks.

     

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

     

       2.6    No
      Conflicts. Neither the Company, nor any subsidiary, is in violation of,
      in conflict with, in breach of or in default under any term or provision of,
      (i)
      its Certificate of Incorporation or By-laws (each as may have been amended,
      supplemented or restated), (ii) any provision of any judgment, writ, injunction,
      decree or order to which the any of them is a party.

    


             Litigation.    There
      is no
      action, suit, proceeding or investigation pending or, to the best knowledge
      of
      the Company, currently threatened against the Company or any subsidiary that
      may
      affect the validity of this Agreement or the right of the Company to enter
      into
      this Agreement or to consummate the transactions contemplated
      hereby.  There is no action, suit, proceeding or investigation pending
      or, to the best knowledge of the Company , currently threatened against the
      Company or its subsidiaries, before any court or by or before any governmental
      body or any arbitration board or tribunal, nor is there any judgment, decree,
      injunction or order of any court, governmental department, commission, agency,
      instrumentality or arbitrator against the Company or any of its
      subsidiaries.  The Company and its subsidiaries are not a party or
      subject to the provisions of any order, writ, injunction, judgment or decree
      of
      any court or government agency.

     

       2.7    Brokers’
Fees
      and
      Commissions. Neither the Company nor any of its officers, directors,
      employees, stockholders, agents or representatives, have employed any investment
      banker, broker, or finder in connection with the transactions contemplated
      by
      this Agreement and no such person or entity is entitled to a fee with respect
      to
      the transactions contemplated by this Agreement, unless purchaser has otherwise
      received a disclosure to such effect.

     

    
         2.8    Applicable
        Laws.   The Company has complied in all respects with
        applicable federal and state laws, rules and regulations applicable to it
        and
        all shares of capital stock of the Company have been issued in accordance
        with
        applicable federal and state securities laws, rules and
        regulations.

    

     

       2.9    Books
      and
      Financial Records.  All the accounts, books, registers, ledgers,
      Board minutes and financial and other material records of whatsoever kind of
      each of the Company and its subsidiaries have been fully properly and accurately
      kept and completed; there are no material inaccuracies or discrepancies of
      any
      kind contained or reflected therein; and they give and reflect a true and fair
      view of the financial, contractual and legal position of each
      company. 

     

    
         2.10   Tax
        Returns, Payments
        and Elections. Each of the Company and its subsidiaries has timely
        filed all Tax (as defined below) returns, statements, reports, declarations
        and
        other forms and documents (including, without limitation, estimated Tax returns
        and reports and material information returns and reports) (“Tax Returns”)
        required pursuant to applicable law to be filed with any Tax Authority (as
        defined below), all such Tax Returns are accurate, complete and correct in
        all
        material respects, and each Company has timely paid all Taxes
        due.  



    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    

         2.11   Minute
        Books.  The minute books of each of the Company and its
        subsidiaries contain a complete summary of all meetings of directors and
        stockholders since the time of incorporation of such company and reflect
        all
        transactions referred to in such minutes accurately in all material
        respects.  

    

     

    
         2.12   Labor
        Agreements and
        Actions; Employee Compensation.  Neither the Company, nor any of
        its subsidiaries is bound by or subject to (and none of its assets or properties
        is bound by or subject to) any written or oral, express or implied, contract,
        commitment or arrangement with any labor union, and no labor union has requested
        or has sought to represent any of the employees, representatives or agents
        of
        any such company.  

       

    

    
         2.13   Investment
        Company.  The Company is not an “investment company” or a company
“controlled” by an “investment company,” within the meaning of the Investment
        Company Act of 1940, as amended.  

    

     

    3.    Representations
      and Warranties of Purchaser.  Purchaser hereby represents and
      warrants to the Company that the statements in the following paragraphs of
      this
      Section 4 are all true and complete as of the date hereof:

     

       3.1    Exempt
      Transaction. Purchaser understands that the offering and sale of the
      Stock is intended to be exempt from registration under the Act and exempt from
      registration or qualification under any state law. 

     

       3.2    Authorization.  Purchaser
      represents that it has full power and authority to enter into this Agreement.
      This Agreement has been duly and validly executed and delivered by Purchaser,
      and upon the execution and delivery by Sellers of this Agreement and the
      performance by Sellers of their obligations herein, will constitute, a legal,
      valid and binding obligation of Purchaser enforceable against Purchaser in
      accordance with its terms, except as such enforcement may be limited by
      bankruptcy or insolvency laws or other laws affecting enforcement of creditors’
rights or by general principles of equity. 


    

         3.3    Purchase
        for Own Account.The Stock to be purchased by Purchaser hereunder will be
        acquired for investment for Purchaser’s own account, not as a nominee or agent,
        and not with a view to the public resale or distribution thereof, and Purchaser
        has no present intention of selling, granting any participation in, or otherwise
        distributing the same. 

       

         3.4     Investment
        Experience.  The Purchaser understands that the purchase of the
        Stock involves substantial risk and understands the risk disclosures set
        forth
        in Attachment C. Purchaser understands that the securities which are offered
        hereby are highly speculative and involve a high degree of risk and are only
        suitable for those persons who, like the Purchaser, can afford to bear the
        full
        risk of losing their entire investment.  The Purchaser has carefully
        considered the numerous risks that face a new business venture and especially
        a
        new enterprise which is involved in highly speculative scientific and biological
        laboratory research. 

       

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

       

      4.    Conditions
        to the
        Purchaser’s Obligations at the Closings.

       

       

    

    
         4.1    Conditions
        to Each
        Closing.  Subject to the terms hereof, the obligation of the
        Purchaser to purchase Stock at a Closing is subject to the fulfillment, prior
        to
        the Closing to the satisfaction of the Purchaser, of the following conditions,
        the waiver of which shall not be effective against Purchaser without written
        consent thereto:  

       

                
        4.1.1    Representations
        and Warranties True and Correct. The representations and warranties made by
        the Company in Section 3 hereof shall be true and correct and complete as
        of the
        date hereof, and shall be true and correct and complete as of the date of
        the
        Closing with the same force and effect as if they had been made on and as
        of
        such date.

    

     

             
4.1.2    Performance
      of
      Obligations. The Company shall have performed and complied with all
      agreements, obligations and conditions contained in this Agreement that are
      required to be performed or complied with by it on or before a Closing, or
      after
      a Closing. 

     

    5.    Conditions
      to the
      Company’s Obligations at the Closings.

     

       5.1    The
      obligations of
      the Purchaser under this Agreement are subject to the fulfillment at or before
      each Closing of the following conditions: 

    


            5.1.1    Representations
      and Warranties. The representations and warranties of the Purchaser
      contained in Section 4 hereof shall be true and correct as of such
      Closing. 

     

              
      5.1.2    Payment of
      Purchase Price.  Purchaser shall have delivered to the Sellers the
      applicable purchase price.

    


    6.     Additional
      Agreements and Investor Rights. 

     

    
 

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    

             6.1.1    Anti-Dilution.  

    

    


                     
      6.1.1.1  In the event that
      during the twelve (12) months after the date of this Agreement, the Company
      shall sell or issue to any person or entity Stock at a price or valuation of
      less than $0.08 per share (as may be adjusted for any stock splits or other
      events)(a “Dilutive Issuance”), then the Company shall as soon as practicable
      issue to the Purchaser a number of additional shares of Stock so that the total
      number of shares issued to Purchaser pursuant to this agreement shall be such
      that the Purchaser will receive the benefit of the lower issuance price, the
      issuance of such additional shares will be yielded by the following
      formula:

     

                    
      (B/A)-C                                           Where:

     

                    
      A= price at which securities are sold

                    
      B= $135,000 (the consideration for this agreement)

                    
      C=1,687,500 (the number of shares purchased under this
      Agreement).

     

    
                     
        6.1.1.2  Excepted
        Issuances. Notwithstanding
        the foregoing provisions of this Section 6, the Company may issue to employees
        or university research personnel, or consultants, shares of Stock as incentives
        and bonuses,  without the same being subject to this
        section,

    

     

          
      Rule 144.  The Purchaser agrees that he will transfer these
      securities only in accordance with rule 144.

     

    7.    General
      Provisions. 


     

          
      Successors and Assigns.  The terms and conditions of this
      Agreement shall inure to the benefit of and be binding upon the respective
      successors and assigns of the parties.

     

       7.1    Governing
      Law; Jurisdiction.  Any
      dispute, disagreement, conflict of interpretation or claim arising out of or
      relating to this Agreement, or its enforcement, shall be governed by the laws
      of
      the State of Michigan.  Sellers and Purchaser hereby irrevocably and
      unconditionally submit, for themselves and their property, to the nonexclusive
      jurisdiction of the State courts of the State of Michigan and of the United
      States District Court in Grand Rapids Michigan, and any appellate court from
      any
      thereof, in any action or proceeding arising out of or relating to this
      Agreement, or for recognition or enforcement of any judgment, and each of the
      parties hereto hereby irrevocably and unconditionally agrees that all claims
      in
      respect of any such action or proceeding between the two of them may be heard
      and determined in such Michigan State or, to the extent permitted by law, in
      such Federal court.  Each of the parties hereto agrees that a final
      judgment in any such action or proceeding shall be conclusive and may be
      enforced in other jurisdictions by suit on the judgment or in any other manner
      provided by law. 

     

     

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

     

     

                      
      Each party hereby irrevocably and unconditionally waives, to the fullest extent
      it may legally and effectively do so, any objection which it may now or
      hereafter have to the laying of venue of any suit, action or proceeding arising
      out of or relating to this Agreement in any court referred to
      above.  Each of the parties hereto hereby irrevocably waives, to the
      fullest extent permitted by law, the defense of an inconvenient forum to the
      maintenance of such action or proceeding in any such court.  Each
      party to this Agreement irrevocably consents to service of process in the manner
      provided for notices below.  Nothing in this Agreement will affect the
      right of any party to this Agreement to serve process in any other manner
      permitted by law.   EACH PARTY HERETO HEREBY WAIVES, TO THE
      FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL
      BY
      JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
      TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON
      CONTRACT, TORT OR ANY OTHER THEORY).  EACH PARTY HERETO (A) CERTIFIES
      THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
      EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
      LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT
      IT
      AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT
      BY,
      AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
      SECTION.

     

    
         7.2    Counterparts.  This
        Agreement may be executed in two or more counterparts, with facsimile
        signatures, each of which shall be deemed an original, but all of which together
        shall constitute one and the same agreement.  A telefaxed copy of this
        Agreement shall be deemed an original.  

    

     

    
         7.3    Headings.  The
        headings and captions used in this Agreement are used for convenience only
        and
        are not to be considered in construing or interpreting this
        Agreement.  All references in this Agreement to sections, paragraphs,
        exhibits and schedules shall, unless otherwise provided, refer to sections
        and
        paragraphs hereof and exhibits and schedules attached hereto, all of which
        exhibits and schedules are incorporated herein by this
        reference. 


         7.4    Costs,
        Expenses.  Each party hereto shall bear its own costs in
        connection with the preparation, execution and delivery of this
        Agreement.  

    

    

         7.5    Amendments
        and Waivers.  Any term of this Agreement may be amended and the
        observance of any term of this Agreement may be waived (either generally
        or in a
        particular instance and either retroactively or prospectively), only with
        the
        written consent of the Parties.  

       

       

       

       

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

       

                         No
        delay or omission to exercise any right, power, or remedy accruing to Purchaser,
        upon any breach, default or noncompliance of the Company under this Agreement
        shall impair any such right, power, or remedy, nor shall it be construed
        to be a
        waiver of any such breach, default or noncompliance, or any acquiescence
        therein, or of any similar breach, default or noncompliance thereafter
        occurring.  All remedies, either under this Agreement, by law, or
        otherwise afforded to Purchaser, shall be cumulative and not
        alternative.  

       

      
           7.6    Severability.  If
          one or more provisions of this Agreement are held to be unenforceable under
          applicable law, such provision(s) shall be excluded from this Agreement
          and the
          balance of the Agreement shall be interpreted as if such provision(s) were
          so
          excluded and shall be enforceable in accordance with its
          terms.  

         

      

    

    
         7.7    Entire
        Agreement.  This Agreement, together with all attachments and
        schedules hereto, constitutes the entire agreement and understanding of the
        parties with respect to the subject matter hereof and supersedes any and
        all
        prior negotiations, correspondence, agreements, understandings duties or
        obligations between the parties with respect to the subject matter
        hereof.  There are no oral agreements representations or warranties
        between the parties, neither is any party relying upon any prior or
        contemporaneous oral representation.  

       

         7.8    Further
        Assurances.  From and after the date of this Agreement, upon the
        request of a Party, the other Parties shall execute and deliver such
        instruments, documents or other writings as may be reasonably necessary or
        desirable to confirm and carry out and to effectuate fully the intent and
        purposes of this Agreement.


      
 

    

    In
      Witness Whereof,
      the parties hereto have executed this Agreement as of the date first written
      above.

    


    


    PURCHASER

    


    


    By:________________________

    


    


    


    KRAIG
      BIOCRAFT LABORATORIES, INC.

    


    


    


    By:/s/Kim
      Thompson                       


         
Kim
      Thompson

         
CEO

     

    8