fsb20907ex10ii_kraig.htm


    STOCK
      PURCHASE AND INVESTOR RIGHTS AGREEMENT

    


    This
      Stock Purchase and Investor Rights Agreement (this "Agreement") is made and
      entered into as of December 29, 2006 by and among Worth Equity Fund, L.P.,
      a
      Delaware Limited Partnership with offices at Wachovia Financial Center, 51st
      Floor, Suite 5120, 200 South Biscayne Blvd., Miami, FL 33131-2310 ("Worth"
      or
      "Purchaser") and Kraig Biocraft Laboratories, Inc., a Wyoming corporation with
      offices at 120 North Washington Square, Suite 805, 'Lansing, Michigan 48933
      (the
      "Company' or “Kraig") (Worth 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 herein attar set forth, and conditioned upon
      the
      rights granted to it hereunder. hereunder.

    


    NOW,
      THERFFORE, 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 common stock (the "Stock")
      of the Company as set forth below:

    


    
      	
               

            	
              1.1

            	
              175,000
                shares of Stock for S15,000 within five (5) business days of execution
                of
                this Agreement;

            


    

    


    
      	
               

            	
              1.2

            	
              1,750,000
                shares of Stock for $150,000 within thirty (30) business days
                of

            


    

    
      	
               

            	
              execution
                of this Agreement;

            


    

    


    
      	
               

            	
              1.3

            	
              1,166,650
                shares of Steele for $100„000 within one hundred and eighty (130) days of
                execution of this Ageement and

            


    

    


    
      	
               

            	
              1.4

            	
              At
                Purchaser's option, up to 10;908,350 additional shares of Stock for
                $0.085714 per share on or before a date that is one year from the
                execution of this Agreement (the "Additional
                Purchase").

            


    

    


    
      	
              2.

            	
              Closing
                and Payments. Subject to the terms and conditions hereof, and in
                'reliance: upon The written representations and warranties of the
                Company,
                Purchaser will purchase, at closing on the dates set forth in Section
                1,
                the Stock as set forth in Section 1 (the "Closings"). The Closings
                shall
                be held at the offices of Guzov Ofsink, LLC, 600 Madison Avenue 14th
                floor, New
                York, New York 10022. At the Closings, the Company will deliver to
                TV-chaser original stock certificates evidencing the Stock to be
                purchased
                hereunder and Purchaser will deliver to Sellers the purchase price
                by wire
                transfer, cashier's check, or by such cattier moans as the Parties
                may
                agree upon in writing.

            


    

    


    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    
      	
              3.

            	
              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 an true and complete as
                of the
                date hereof

            


    

    


    
      	
               

            	
              3.1

            	
              Authority;
                Due Authorization. This Agreement has 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.

            


    

    


    
      	
               

            	
              3.2

            	
              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.

            


    

    


    
      	
               

            	
              3.3

            	
              Valid
                issue. The Stock being purchased by the Purchaser hereunder shall
                be
                at the Closings, duly and validly issued, fully paid, and non-assessable
                and in each instance have been issued in accordance with the registration
                requirements or applicable securities laW:4, including, without
                limitation, the Securities Act of 1933, as amended (the “Act”), or valid
                exemptions there from.

            


    

    


    
      	
               

            	
              3.4

            	
              Corporate
                Documents. The Company's current certificate of incorporation
                and

            


    

    
      	
               

            	
              bylaws,
                as of the date hereof and arc in the form attached hereto as attachment
                A.

            


    

    


    
      	
               

            	
              3.5

            	
              The
                Company. The Company, and its subsidiaries, are corporations duly
                incorporated, validly existing and in good standing under the laws
                of its
                jurisdiction of incorporation.

            


    

    


    
      	
               

            	
              3.6

            	
              Capitalization
                of the Company. Immediately prior to the first 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 Closings there will be no shares
                of
                preferred stock outstanding, no shares of Class B Common Stock outstanding
                and no more than 35,050,000 shares of Common Stock
                outstanding.

            


    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

    There
      are
      no commitments to issue, and there are no outstanding warrants, options,
      convertible securities or debt, preferred stock, or any other securities. In
      addition, 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, 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 curve
      out for certain applications of the Company's intellectual property in exchange
      for the company’s promise to use its best reasonable efforts 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 or Cass 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,

    


    
      	
               

            	
              3.7

            	
              Subsidiaries.
                The Company is not own, directly or indirectly, any capital stock
                or other
                equity securities of any other corporation, partnership, limited
                liability
                company, association or other business entity. The Company is not
                a
                participant in any joint venture, partnership or similar
                arrangement.

            


    

    


    
      	
               

            	
              3.8

            	
              Financial
                Statements. The Company's financial statements annexed hereto as
                Attachment 13 (the "Financial Statements") fairly present the financial
                condition and operating results of the Company as of the dates, and
                for
                the periods, indicated therein, subject to normal year-end audit
                adjustments. Except as set forth in the Financial Statements, the
                Company
                has no material liabilities (contingent or otherwise). Except as
                disc1osed
                in the Financial Statements, the Company is not a guarantor or indemnitor
                of any indebtedness of any other person, firm or corporation. The
                Company
                intends to maintain a standard system of accounting established and
                administered in accordance with U.S.
                GAAP.

            


    

    


    
      	
               

            	
              3.9

            	
              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, and no right or any party to accelerate, terminate, modify or
                cancel
                has come into existence under. (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 then is a party; or (iii) any law, statute, rule or regulation
                applicable to any or them.

            


    

    


    
      	
               

            	
              3.10

            	
              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, instrumental at 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 or instrumentality. There
      is no action, suit, proceeding or investigation by the Company or any subsidiary
      currently pending or which the Company intends to initiate. When any reference
      to the "knowledge" or "best knowledge" or the Company is made in this Agreement,
      such terms shall mean the knowledge that would he gained from due inquiry into
      the matters referenced.

    


    
      	
               

            	
              3.11

            	
              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.

            


    

    


    
      	
               

            	
              3.12

            	
              Applicable
                Law. 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.

            


    

    


    
      	
               

            	
              3.13

            	
              Books
                and Financial Records. All the accounts, books, resisters, ledgers,
                Board minutes and financial and other material records of whatsoever
                kind
                of each of the Company arid 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.

            


    

    


    
      	
               

            	
              3.14

            	
              Employee
                Benefit Plans. The Company does net have any "Employee Benefit Plan"
                as defined in the U.S. Employee Retirement Income Security Act of
                1974 or
                similar plans under applicable
                laws.

            


    

    


    
      	
               

            	
              3.15

            	
              Tax
                Returns, Payment 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 he 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.

            


    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Each
      of
      the Company and its subsidiaries has withheld or collected from each payment
      made to each of its employees, the amount of all Taxes (including, but not
      limited to, United States income taxes and other foreign taxes) required to
      be
      withheld or collected therefrom, and has paid the same to the proper Tax
      Authority, For purposes of this Agreement, the following terms have the
      following meanings:  "Tax" (and, with correlative meaning, "Taxes and
      "Taxable") Means any and all taxes including, without limitation, (i) any act
      income, alternative or add-on minimum tax, gross income, gross receipts, sales,
      use, ad valorem, transfer, franchise, profits, value added, net worth, license,
      withholding payroll, employment, excise, severance, stamp, occupation, premium,
      property, environmental or windfall profit tax, custom. duty or other tax,
      governmental fee or other like assessment or charge of any kind whatsoever,
      together with any interest or any penalty, addition to tax or additional amount
      imposed by any United States, local or Foreign governmental authority or
      regulatory body responsible for the imposition of any such tax (domestic or
      foreign) (a "Tax Authority"), (ii) any liability for the payment of any amounts
      of the type described in (I) as a result of being a member of an affiliated
      ,
      consolidated, combined or unitary group for any taxable period or as the result
      of being a transferee or successor thereof and (iii) any liability for the
      payment of any amounts of the type described in (i) or (ii) as a result of
      any
      express or implied obligation to indemnify any other person..

    


    
      	
               

            	
              3.16

            	
              Minute
                Books. The minute books of each of the Company and its subsidiaries
                contain at 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.

            


    

    


    
      	
               

            	
              3.17

            	
              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 nor has sought to represent
                any of
                the employees, representatives or agents of any such
                company.

            


    

    


    
      	
               

            	
              3.18

            	
              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.

            


    

    


    
      	
              4.

            	
              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 or the date
                hereof:

            


    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      
        	
                 

              	
                
                  4.1

                

              	
                
                  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.

                

              


      

      

        
          
            	
                     

                  	
                    
                      4.2

                    

                  	
                    
                      
                        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 or
                          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.

                      

                    

                  


          

          

            
              
                	
                         

                      	
                        
                          4.3

                        

                      	
                        
                          
                            Purchase
                              for Own Account. The Stock to he 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.

                          

                        

                      


              

              

                
                  
                    	
                             

                          	
                            
                              4.4

                            

                          	
                            
                              
                                
                                  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.

                                

                              

                            

                          




                

              

            

          

        

      

    

    
      	
              5.

            	
              Conditions
                to the Purchaser's Obligations at the
                Closing

            


    

     

    
      
        
          	
                   

                	
                  
                    5.1

                  

                	
                  
                    
                      
                        
                          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.

                        

                      

                    

                  

                


           

          
            	
                     

                  	
                    5.1.1

                  	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.


          

          
            
               

              
                	
                         

                      	
                        5.1.2

                      	Performance of Obligations. The Company shall have
                        performed end 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.


              

              
                 

                 

                
                  
                    
                    

                  

                  
                    
                    

                    
                      

                    

                  

                  
                    
                    

                  

                

                 

                 

                
                  	
                           

                        	
                          5.1.3

                        	
                          Securities Laws. The offer
                            and sale
                            of the Stock to the Purchaser pursuant to this Agreement
                            shall be exempt
                            from the registration trod or qualification requirements
                            or all applicable
                            securities laws.

                        


                

                 

              

            

          

        

      

    

    
      	
              6.

            	
              Conditions
                to the Company's Obligations at the
                Closings.

            


    

     

    
      
        
          
            	
                     

                  	
                    
                      6.1

                    

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

                            

                          

                        

                      

                    

                  


             

            
              
                	
                         

                      	
                        6.1.1

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

                      


              

               

            

            
              
                	
                         

                      	
                        6.1.2

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

                      


              

               

            

          

        

      

    

    
      	
              7.

            	
              Additional
                Agreements and Investor Rights.

            


    

     

    
       

      
        
          
            
              	
                       

                    	
                      
                        7.1

                      

                    	
                      
                        
                          
                            
                              
                                Company
                                  Agreements.

                              

                            

                          

                        

                      

                    


               

              
                
                  	
                           

                        	
                          7.1.1

                        	
                          Registration
                            Rights.

                        


                

                 

                
                  
                    
                      	
                               

                            	
                              7.1.1.1

                            	
                              Filing
                                of Registration Statement. The Company shall file a registration
                                statement with the SEC under the Securities Act on
                                an appropriate form for
                                the registration of the resale of the Stock by the
                                Purchaser or its
                                designees within sixty (60) days or a written request
                                by the Purchaser. In
                                the event additional shares of Stock are issuable
                                pursuant to Section
                                7.1.5, the Company shall file registration statement
                                (or a post-effective
                                amendment to the registration required by this Section
                                to register such
                                additional Stock) with the SEC under the Securities
                                Act For the
                                registration of the Stock within sixty (60) days
                                of a written request by
                                Purchaser. This provision 7.1.1 and its subsections
                                are conditioned on the
                                Purchaser having fully or substantially exercised
                                its option under Section
                                1.4 for the Additional
                                Investment.

                            


                    

                  

                   

                  
                    
                      
                        
                          	
                                   

                                	
                                  7.1.1.2

                                	
                                  Effective
                                    Registration Statement. The Company shall use reasonable efforts
                                    to
                                    cause a. registration statement required pursuant
                                    to this Section
                                    7.1.1 to be declared effective by the SEC. A registration
                                    statement
                                    shall not be deemed to have been effected unless
                                    the registration
                                    statement has been declared effective by the
                                    SEC and has remained
                                    effective in compliance with the provisions of
                                    the Securities Act with
                                    respect to the disposition of all of the Stock
                                    covered by such
                                    registration statement until such time as all
                                    of the Stock has been
                                    disposed or in accordance with the intended methods
                                    of disposition by each
                                    selling stockholder set forth in such registration
                                    statement (unless the
                                    failure to so dispose of such Shares shall be
                                    caused solely by reason of a
                                    failure on the part of the selling
                                    stockholders).

                                


                        

                      

                       

                       

                      
                        
                          
                          

                        

                        
                          
                          

                          
                            

                          

                        

                        
                          
                          

                        

                      

                       

                      
                        
                          
                            
                              
                                	
                                         

                                      	
                                        7.1.1.3

                                      	
                                        Expenses.
                                          All expenses (other than fees of counsel
                                          to the Purchaser) incurred in
                                          connection with registration, filings or
                                          qualifications of Shares pursuant
                                          to this Sec(ion 7.1.1, including (without
                                          limitation) all registration,
                                          filing, and qualification fees, printers'
                                          and accounting fees, fees and
                                          disbursement of counsel for the Company,
                                          shall be borne by the
                                          Company.

                                      


                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

     

    
      
        
          
            
              
                	
                         

                      	
                        7.1.1.4

                      	
                        Registration
                          Procedures. The Company shall, as expeditiously as
                          possible:

                      


              

            

          

        

      

       

      
        
          	
                   

                	 	
                  7.1.1.4.1

                	
                  use
                    its best efforts to cause, the registration statement filed pursuant
                    to
                    this Section to be declared elective by the SEC within 150 days
                    from the
                    date of the initial filing;

                


        

      

       

    

    
      
        
          	
                   

                	 	
                  7.1.1.4.2

                	
                  with
                    regard to Section 7.1.1.4.1, after the 180th
                    day after
                    the date of the initial filing, and for each 30-calendar day
                    period
                    thereafter in which the registration statement fails to be declared
                    effective:, the Company shall issue to purchaser a number or
                    shares of
                    Stock equal to 2% of Purchaser's Stock covered by such registration
                    statement at that time, up to a maximum of 10%, which Stock shall
                    be
                    included in the registration
                    statement;

                


        

      

       

      
        
          
            	
                     

                  	 	
                    7.1.1.4.3

                  	
                    prepare
                      and file with the SEC such amendments and supplements to such
                      registration
                      statement and the prospectus used in connection therewith as
                      may be
                      necessary to keep such registration statement effective and
                      to comply with
                      the provisions of the Securities Act with respect to the disposition
                      of
                      all the Stock covered by such registration statement until
                      the earlier of
                      the time as all of such Stock have been disposed of in accordance
                      with the
                      intended methods of disposition by the Investors set forth
                      in such
                      registration statement or the date that the Shares are eligible
                      for resale
                      pursuant to the provisions of Rule 144 under the Securities
                      Act;

                  


          

        

         

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

         

        
          
            
              	
                       

                    	 	
                      7.1.1.4.4

                    	
                      furnish
                        to the investors' counsel copies of any correspondence between
                        the Company
                        and the SEC with respect to such registration statement or
                        amendments or
                        supplements thereto filed;

                    


            

          

           

          
            
              
                	
                         

                      	 	
                        7.1.1.4.5

                      	
                        use
                          its reasonable best efforts to (A) register or qualify
                          the Shock under
                          such other securities or blue sky laws of such states and
                          jurisdictions
                          where an exemption is not available and as the investors
                          shall reasonably
                          request, (B) keep such registration or qualification in
                          effect. for so
                          long as such registration statement remains in effect,
                          and (C.) take any
                          other action which may be reasonably necessary or advisable
                          to enable the
                          Investors to consummate the disposition in such jurisdictions
                          of the
                          securities to be sold by the Investors, except that the
                          Company shall not
                          for any such purpose be required to qualify generally to
                          do business as a
                          foreign corporation in any jurisdiction wherein it would
                          not but for the
                          requirements of this subdivision (vii) be obligated to
                          be so qualified or
                          to consent to general service of process in any such
                          jurisdiction;

                      


              

            

             

            
              
                
                  
                    	
                             

                          	 	
                            7.1.1.4.6

                          	
                            notify
                              the Purchaser at any time when a prospectus relating
                              thereto, is required
                              to be delivered under the Securities Act, upon discovery
                              that, or upon the
                              happening of any event as a result of which, the prospectus
                              included in
                              such registration statement, as then in effect, includes
                              an untrue
                              statement of a material fact or omits to state any
                              material fact required
                              to be stated therein or necessary to make the statements
                              therein not
                              misleading, in the light of the circumstances under
                              which they were made,
                              and at the request of the Investors promptly prepare
                              and furnish to it a
                              reasonable number of copies of a supplement to or an
                              amendment of such
                              prospectus as may be necessary so that, as thereafter
                              delivered to the
                              purchasers of such securities, vet) prospectus shall
                              not include an untrue
                              statement of a material fact or omit to state a material
                              fact required to
                              he stated therein or necessary to make the statements
                              therein not
                              misleading in light of the circumstances under which
                              they were made;
                              and

                          


                  

                

                 

              

            

          

        

      

    

    
      
        
          
            
              	
                       

                    	 	
                      7.1.1.4.7

                    	
                      otherwise
                        use its reasonable best efforts to comply with all applicable
                        rules and
                        regulations of the SEC.

                    


            

          

           

          
             

            
              
                
                

              

              
                
                

                
                  

                

              

              
                
                

              

            

             

             

            
              
                
                  
                    
                      
                        	
                                 

                              	
                                7.1.1.5

                              	
                                Indemnification
                                  by the Company. With regard to any registration Statement,
                                  the Company
                                  will and hereby does, indemnify and hold harmless
                                  Purchaser and its
                                  directors, officers, partners, agents and affiliates,
                                  against any losses
                                  whatsoever, joint or several, to which Purchaser
                                  or any, such director,
                                  officer, partner, agent, affiliate or controlling
                                  person may become
                                  subject under the Securities Act or otherwise,
                                  including, without
                                  limitation, the Fees and expenses of legal counsel,
                                  insofar as such any
                                  losses arise out of or are based upon any untrue
                                  statement or alleged
                                  untrue statement of any material fact contained
                                  in any registration
                                  statement any preliminary prospectus, final prospectus
                                  or summary
                                  prospectus contained therein, or any amendment
                                  or supplement thereto, or
                                  any omission or alleged emission to state therein
                                  a material fact required
                                  to be stated therein or necessary to make the statements
                                  therein in light
                                  of the circumstances in which they were made not
                                  misleading, and the
                                  Company will reimburse such Purchaser and each
                                  such director, officer,
                                  partner, agent, affiliate and controlling person
                                  for any legal or any
                                  other expenses reasonably incurred by them in connection
                                  with
                                  investigating or defending any such any claims.
                                  Such indemnity shall
                                  remain in full force area effect regardless Of
                                  any investigation made by
                                  or on behalf of such Purchaser or any such director,
                                  officer, partner,
                                  agent, affiliate or controlling person and shall
                                  survive the transfer of
                                  such securities by the Purchaser. The indemnification
                                  and contribution
                                  required by this Section shall be made by periodic
                                  payments of the amount
                                  thereof during the course of the investigation
                                  or defense, as and when
                                  bills are received or losses are
                                  incurred.

                              


                      

                    

                  

                

              

               

              
                
                  
                    	
                             

                          	
                            7.1.2

                          	
                            [Intentionally
                              Omitted]

                          


                  

                   

                  
                    
                      
                        
                          	
                                   

                                	
                                  7.1.3

                                	
                                  
                                    Rule
                                      144. The Company agrees that in the event
                                      Purchaser, or any of its
                                      direct transfers wish to sell their Stock pursuant
                                      to Rule 144 under the
                                      Securities Act, the Company shall use its best
                                      efforts to remove any
                                      restrictive legend from such Stock or otherwise
                                      facilitate such holder's
                                      being able to sell the stock and in no event
                                      shall take more than three
                                      (3) business days to remove a restrictive legend
                                      from stock upon the
                                      presentation of proper representation letters
                                      and a Form 144 (if
                                      necessary). In the event of breach of this
                                      Section 7.1.3, the Company
                                      shall repurchase the Stock, at the holder's
                                      option, at the highest price
                                      during the thirty (30) days following the
                                      breach.

                                  

                                


                        

                         

                         

                        
                          
                            
                            

                          

                          
                            
                            

                            
                              

                            

                          

                          
                            
                            

                          

                        

                         

                        
                          
                            
                              
                                
                                  	
                                           

                                        	
                                          7.1.4

                                        	
                                          
                                            
                                              Access
                                                to Books and Records. For a period of twenty four
                                                (24) month after the
                                                date of this Agreement, the Company
                                                shall grant to Purchaser, upon at
                                                least two (2) business days written
                                                notice, access to all of its corporate
                                                books and records.

                                            

                                          

                                        


                                

                                 

                                
                                  
                                    
                                      
                                        
                                          
                                            	
                                                     

                                                  	
                                                    7.1.5

                                                  	
                                                    
                                                      
                                                        Anti-Dilution.

                                                      

                                                    

                                                  


                                          

                                           

                                          
                                            
                                              
                                                
                                                  
                                                    
                                                      
                                                        	
                                                                 

                                                              	
                                                                
                                                                  7.1.5.1

                                                                

                                                              	
                                                                
                                                                  Subject
                                                                    to Section 7.1.52,
                                                                    in the event
                                                                    that a Closing
                                                                    under Section
                                                                    1.3 shall
                                                                    occur and during
                                                                    the twenty four
                                                                    (24) 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 $0.085714
                                                                    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
                                                                    yielded by the
                                                                    following
                                                                    formula:

                                                                

                                                              


                                                      

                                                    

                                                  

                                                

                                              

                                               

                                            

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

    (((B/A)*C)-C)*
      (E-D)/E

    


    Where:

    


    A-
      price
      at which securities are sold

    B-$0.085714

    C-
      the
      number of shares of Stock purchased under this Agreement.

    D-
      the
      number of shares outstanding prior to a Dilutive issuance.

    E-
      the
      number of shares outstanding after a Dilutive Issuance.

     

    
      
        
          
            
              
                
                  
                    	
                             

                          	
                            
                              7.1.5.2

                            

                          	
                            
                              
                                In
                                  the event that a Closing is held for the Additional
                                  Investment and during
                                  the twenty four (24) months after the date of this
                                  Agreement the Company
                                  shall effect a Dilutive Issuance, then the Company
                                  shall, as soon as
                                  practicable issue to the Purchaser a number of
                                  shares of Stock yielded by
                                  the following formula. When and if this Section
                                  becomes effective, Section
                                  7.1.5.1 shall no longer be
                                  effective:

                              

                            

                          


                  

                

              

            

          

           

        

      

    

    ((B/A)*C)-C-D

    


    Where
      A,
      B and C have the definitions contained in Section 7.3.5.1 and where D= the
      number of shares previously issued under Section 7.1.5.1 with respect to a
      Dilutive Issuance.

     

    
      
        
          
            
              
                
                  
                    
                      	
                               

                            	
                              
                                7.1.5.3

                              

                            	
                              
                                
                                  
                                    Excepted
                                      Issuance. Notwithstanding the foregoing provisions
                                      of this Section
                                      7.1.5:

                                  

                                

                              

                            


                    

                  

                

              

            

             

             

            
              
                
                

              

              
                
                

                
                  

                

              

              
                
                

              

            

             

            
              
                
                  
                    
                      
                        
                          
                            
                              
                                	
                                         

                                      	
                                         

                                      	
                                        
                                          
                                            
                                              a)
                                                within sixty (60) days of this Agreement,
                                                the Company may issue to
                                                purchasers of 1,166,650 shares of
                                                Stock who pay at least $0.085714
                                                per
                                                such share, up to 1,166,650 additional
                                                shares of Stock at any price
                                                without the same being subject to
                                                this section 7.1.5, alt the condition
                                                that Kim Thompson shall return to
                                                the Company for cancellation, and
                                                the
                                                Company shall have canceled, 1,166,650
                                                of his shares of
                                                Stock.

                                            

                                          

                                        

                                      


                              

                            

                          

                        

                      

                       

                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          	
                                                   

                                                	
                                                   

                                                	
                                                  
                                                    
                                                      
                                                        b)
                                                          the Company may issue to
                                                          employees or university'
                                                          research personnel
                                                          shares of Stock as employee
                                                          incentives and bonuses,
                                                          without the same being
                                                          subject to this section
                                                          7.1.5.

                                                      

                                                    

                                                  

                                                


                                        

                                      

                                    

                                  

                                

                                 

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

    
      	
               

            	
              7.1.6

            	
              Stock
                Splits. For a period or twenty four (24) months after the execution
                of
                this Agreement, the Company shall not, without the written consent
                of the
                Purchaser, affect any stock split. This provision is conditioned
                on the
                Purchaser having fully or substantially exercised its option under
                provision 1.4 above and having otherwise satisfactorily meet its
                obligations under this agreement.

            


    

    


    
      	
               

            	
              7.1.7

            	
              Provision
                of Shell Company. The Company hereby agrees that within six (6) months
                of the date of' this Agreement it shall purchase from Purchaser a
                majority
                interest in a publicly held "shell" company which it shall use for
                a
                reverse merger transaction for the Company. Worth will consult with
                and
                coordinate with Company concerning the above described purchase of
                a
                publicly held corporate entity. The Company shall have the right
                to
                approve any such purchase and the resulting, reverse merger. This
                provision is subject to the Company's reasonable due diligence on
                the
                proposed shell and upon the parties good faith negotiation ever the
                purchase price of each shell. This provision is conditioned on the
                Purchaser having fully or substantially exercised its option tinder
                provision 1.4 above.

            


    

    


    8.           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.

    


    
      	
               

            	
              8.1

            	
              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 Florida.
                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 Florida and of
                the United States District Court of the Southern District of Florida,
                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 Florida 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 on the judgment or in any other manner provided by law. Each
      party hereby irrevocably and unconditionally waives, to the fullest extent
      it
      may legally and effectively do so, any objection which it may new 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 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 OROTHERWISE, 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

     

    
      
        	
                 

              	
                8.2

              	
                
                  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.

                

              


      

      
         

        
          
            	
                     

                  	
                    8.3

                  	
                    
                      
                        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.

                      

                    

                  


          

          
             

             

            
              
                
                

              

              
                
                

                
                  

                

              

              
                
                

              

            

             

            
              
                	
                         

                      	
                        8.4

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

                            

                          

                        

                      


              

              
                 

                
                  
                    	
                             

                          	
                            8.5

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

                                  

                                

                              

                            

                          


                  

                  
                     

                    
                      
                        	
                                 

                              	
                                8.6

                              	
                                
                                  
                                    
                                      
                                        
                                          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
                                            he enforceable in accordance with
                                            its
                                            terms.

                                        

                                      

                                    

                                  

                                

                              


                      

                      
                         

                        
                          
                            	
                                     

                                  	
                                    8.7

                                  	
                                    
                                      
                                        
                                          
                                            
                                              
                                                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
                                                  representations.

                                              

                                            

                                          

                                        

                                      

                                    

                                  


                          

                          

                             

                            
                              
                                	
                                         

                                      	
                                        8.8

                                      	
                                        
                                          
                                            
                                              
                                                
                                                  
                                                    
                                                      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 he
                                                        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.

    


    WORTH
      EQUITY FUND, L.P.

    By:
      SPIDER INVESTMENTS, LLC, General Partner

    


    


    By:  /s/  Edward
      Defeudis

    Edward
      Defeudis

    


    KRAIG
      BlOCRAFT LABORATORIES, INC.

    


    


    By:  /s/  Kim
      Thompson

    Kim
      Thompson

    CEO

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      MUTUAL
        RELEASE

       

      TO
        ALL TO
        WHOM THESE PRESENTS SHALL COME OR MAY CONCERN, KNOW THAT WORTH EQUITY FUND
        LP
        (Worth) and KRAIG BIOCRAFT LABORATORIES, INC., (Kraig),  (collectively
        Worth and Kraig are referred to herein as PARTIES or RELEASORS) for themselves
        and their respective successors and assigns, for good and valuable
        consideration, the receipt and adequacy of which is hereby acknowledged,
        hereby
        releases and discharges each other and their respective heirs, executors,
        administrators, agents, attorneys, successors and assigns, from all actions,
        causes of action, suits, debts, dues, sums of money, accounts, reckonings,
        covenants, contracts, controversies, agreements, promises, or obligations
        stemming from that certain stock purchase agreement entered into between
        the
        PARTIES  and which is dated December 29, 2006.

       

      Pursuant
        to that agreement, Worth purchased 175,000 shares of the common stock of
        Kraig
        Biocraft Laboratories.  Kraig hereby releases Worth from any
        obligation to purchase additional securities pursuant to said agreement and
        releases Worth from all other obligations pursuant to said agreement except
        the
        agreement of Worth to comply with the relevant securities regulations in
        regard
        to said 175,000 shares.  Worth hereby releases Kraig from any
        obligation to sell any securities to Worth over and above the 175,000 shares
        of
        stock that have been transferred to Worth as of this date, and releases Kraig
        from all other obligations pursuant to said agreement including, without
        limitation, the anti-dilution provisions of said agreement.  It is the
        intention of the PARTIES  that as of the execution of this mutual
        release, neither party will have any continuing contractual obligation to
        the
        other.

       

      The
        PARTIES each wave any variances, trespasses, damages, judgments, extents,
        executions, claims and demands, damages and obligations whatsoever, whether
        known or unknown, in law, admiralty or equity against the other PARTY, its
        successors and assigns ever had, now have, or hereafter can, shall or may
        have
        for, upon, or by reason of any matter, cause or thing whatsoever from the
        beginning of the world to the day of the date of this RELEASE.

       

      Both
        Kraig. and Worth represent and warrant that they have not heretofore assigned
        to
        any person or entity any claim against the other party being released
        hereunder.

       

      Both
        Kraig and Worth covenant not to sue one another or bring any action or
        proceeding (or participate in or join in or otherwise act in concert with
        any
        action) against the other party with respect to the matters released
        hereunder.

       

      It
        is
        RELEASORS’ intention that the execution of this Release will forever bar claims
        against RELEASORS, to the extent provided herein.

       

      This
        RELEASE shall be governed by the laws of the State of Michigan.  This
        RELEASE shall inure to the benefit of RELEASORS and RELEASORS successors
        and
        assigns.

       

      This
        RELEASE may not be changed orally.

       

      IN
        WITNESS WHEREOF, RELEASORS have executed this RELEASE by their duly authorized
        officer, as of May 23, 2007.

       

       

      WORTH
        EQUITY FUND LP

       

      By:                                                           

      


      


      KRAIG
        BIOCRAFT LABORATORIES, INC.

      


      


      By: