Series A Preferred Stock
Purchase Agreement
ocstoc Legal Agreements
This Series A Preferred Stock Purchase Agreement, which easily and
inexpensively facilitates the purchase of Series A stock, is an agreement
between a Company and a party wishing to purchase the Series A Preferred
Stock of the Company. The stock is issued to the purchasing party on certain
terms and conditions and is the first round of stock offered for sale. This
agreement can be easily customized to suit your unique situation.
ALL INFORMATION AND FORMS ARE PROVIDED “AS IS” WITHOUT ANY EXPRESS OR IMPLIED
WARRANTY, INCLUDING AS TO LEGAL EFFECT OR COMPLETENESS. They are for guidance and should be
modified by you or your attorney to meet your specific needs and the laws of your state. Use at your own
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Entire document © Docstoc, Inc., 2010, 2011
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Attorney Drafted
SERIES A PREFERRED STOCK PURCHASE AGREEMENT
THIS SERIES A PREFERRED STOCK PURCHASE AGREEMENT (hereinafter “Agreement”) is made
as of ____ [Month] ____ [Date], 20___ [Year], by and between
_______________________________ [Instruction: Insert name of company] (hereinafter
“Company”), a Montana corporation, with its principal office at
___________________________ [Instruction: Insert the address of company], and
_____________________ [Instruction: Insert name of purchaser] (hereinafter “Purchaser”),
with registered address at _____________________________________ [Instruction: Insert
address of purchaser]. The Company and the Purchaser may individually be referred to as
“Party”, or collectively as “Parties”.
WHEREAS, the Company has authorized the sale and issuance of up to an aggregate of
____________ [Instruction: Insert the number of shares the Company has authorized
issuance and sale of] shares of its Series A Preferred Stock (hereinafter “Shares”); and
WHEREAS, the Company and the Purchaser desire to enter into an agreement regarding the
purchase of the Shares on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing and the mutual promises,
representations, warranties, and covenants hereinafter set forth and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto
agree as follows:
1. AGREEMENT TO SELL AND PURCHASE
a. Authorization of Shares
The Shares shall have the rights, preferences, privileges, and restrictions set forth in the
amended and restated Articles of Incorporation of the Company, in the form attached
hereto as Exhibit A (the “Restated Charter”). The Shares shall be sold at one or more
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closings (each, a “Closing”), provided that no Closing shall occur more than six months
after the date of this Agreement.
b. Sale and Purchase
Subject to the terms and conditions hereof, at the initial Closing the Company hereby
agrees to issue and sell to the Purchaser, and the Purchaser agrees to purchase from the
Company the Shares at a purchase price of $_________ [Instruction: Insert the
purchase price of shares] per share.
c. Warrants
As further consideration for the purchase of the Shares, the Company shall issue to the
Purchaser, at the Closing, a warrant, in the form attached hereto as Exhibit B (hereinafter
“Warrant”), to purchase the same number of Shares the Purchaser is purchasing at the
Closing.
2. CLOSING, DELIVERY AND PAYMENT
a. Closing
i. The closing of the sale and purchase of the Shares under this Agreement (the “Initial
Closing”) shall take place at the offices of the Company, or at such other time or
place as the Company and the Purchaser may mutually agree (such date is hereinafter
referred to as the “Initial Closing Date”). Subsequent Closings shall take place at
such places and times as the Company and the Purchaser participating in such
Closings shall mutually agree, provided that no Closing shall occur after ____
[Month] ____ [Date], 20___ [Year].
ii. Subsequent Closing: Any sale and issuance in a subsequent Closing shall be on the
same terms and conditions as those contained herein, and the purchaser shall, upon
execution and delivery of the relevant signature pages, be bound by this Agreement,
without the need for an amendment to the Agreement and shall have the rights and
obligations hereunder, in each case as of the date of the applicable Subsequent
Closing.
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i. Delivery: At the Initial Closing, subject to the terms and conditions hereof, the
Company will deliver to the Purchaser a certificate representing the number of Shares
to be purchased at the Initial Closing by the Purchaser, together with the Purchaser’s
Warrant, against payment of the purchase price there for by check, wire transfer made
payable to the order of the Company, cancellation of indebtedness, or any
combination of the foregoing.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Purchaser as of the date of this
Agreement and as of each Closing as set forth below:
a. Organization, Good Standing, and
Qualification
The Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Montana. The Company has all requisite corporate power
and authority to own and operate its properties and assets, to carry on its business as
presently conducted, to execute and deliver this Agreement, and to issue and sell the
Shares and the shares of Common Stock issuable upon conversion of the Shares (the
“Conversion Shares”).
b. Subsidiaries
The Company does not own or control, directly or indirectly, any interest in any
corporation, partnership, limited liability company, association, or other business entity.
c. Capitalization; Voting Rights
The authorized capital stock of the Company, immediately prior to the Initial Closing
(and after the filing of the Restated Charter), consists of ____________ [Instruction:
Insert the authorized capital stock of the Company prior to Initial Closing] shares, of
which _______________ [Instruction: Insert the number of shares designated as
shares of Common Stock, without par value] shares are designated as shares of
Common Stock, without par value and ____________ [Instruction: Insert the number
of shares designated as Series A Preferred Stock] shares are designated as Series A
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Preferred Stock. Except for the foregoing, and except as may be granted pursuant to, or as
contemplated by, this Agreement, there are no outstanding options, warrants, rights
(including conversion or preemptive rights and rights of first refusal), proxy or
shareholder agreements, or agreements of any kind for the purchase or acquisition from
the Company of any of its securities.
d. Authorization
All corporate action on the part of the Company and its directors, officers, and
shareholders necessary for the authorization, execution, and delivery of the Agreement by
the Company, the authorization, sale, issuance, and delivery of the Shares and the
conversion Shares, and the performance of all of the Company’s obligations under the
Agreement has been taken or will be taken prior to the Initial Closing. This Agreement,
when executed and delivered by the Company, shall constitute the valid and binding
obligation of the Company, enforceable in accordance with its terms, except (i) as limited
by laws of general application relating to bankruptcy, insolvency, and the relief of
debtors, and (ii) as limited by rules of law governing specific performance, injunctive
relief, or other equitable remedies and by general principles of equity.
e. Financial Condition
The Company has furnished to the Purchaser an unaudited balance sheet of the Company
dated ____ [Month] ____ [Date], 20___ [Year] (the "Financial Statements"). Subject to
the information in this section, the Company warrants that the Company’s Financial
Statements are correct in all material respects and present fairly the financial condition of
the Company as of the date indicated therein. Except as shown on the Financial
Statements, the Company has no material liabilities and, to the best of its knowledge,
knows of no material contingent liabilities not disclosed in the Financial Statements,
except current liabilities incurred in the ordinary course of business since the date of the
Financial Statements, which have not been, either in any individual case or in the
aggregate, material to the financial condition or operating results of the Company. Since
the date of the Financial Statements, there has not been, to the Company’s knowledge,
any change in the assets, liabilities, financial condition, prospects, or operations of the
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Company from that reflected in the Financial Statements, other than changes in the
ordinary course of business, none of which individually or in the aggregate has had or is
reasonably expected to have a material adverse effect on such assets, liabilities, financial
condition, prospects, or operations of the Company;
f. Intellectual Property:
i. The Company owns or possesses sufficient legal rights to all patents, trademarks,
service marks, trade names, copyrights, trade secrets, licenses, information, and other
proprietary rights and processes necessary for its business as now conducted and as
presently proposed to be conducted, without any known conflict with, or infringement
of, the rights of others.
ii. The Company has not received any communications alleging that the Company has
violated or, by conducting its business as presently proposed, would violate any of the
patents, trademarks, service marks, trade names, copyrights, or trade secrets or other
proprietary rights of any other person or entity, nor is the Company aware of any
basis there for.
g. Compliance with Laws; Permits
The Company is not in violation of any applicable statute, rule, regulation, order, or
restriction of any domestic or foreign government or any instrumentality or agency
thereof in respect of the conduct of its business or the ownership of its properties which
violation would materially and adversely affect the business, assets, liabilities, financial
condition, operations, or prospects of the Company. No governmental orders,
permissions, consents, approvals, or authorizations are required to be obtained and no
registrations or declarations are required to be filed in connection with the execution and
delivery of this Agreement and the issuance of the Shares or the shares of Common Stock
issuable upon conversion of the Shares (the “Conversion Shares”), except such as has
been duly and validly obtained or filed, or with respect to any filings that must be made
after the Closing, as will be filed in a timely manner. The Company has all franchises,
permits, licenses, and any similar authority necessary for the conduct of its business as
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now being conducted by it, the lack of which could materially and adversely affect the
business, properties, prospects, or financial condition of the Company and believes it can
obtain, without undue burden or expense, any similar authority for the conduct of its
business as planned to be conducted.
h. Full Disclosure
The Company has provided the Purchaser with all information requested by him in
connection with his decision to purchase the Shares, including all information the
Company believes is reasonably necessary to make such investment decision. Neither
this Agreement nor any other document delivered by the Company to Purchaser or his
attorney or agent in connection herewith or therewith or with the transactions
contemplated hereby or thereby, contain any untrue statement of a material fact nor omit
any material fact necessary in order to make the statements contained herein or therein
not misleading. To the Company’s knowledge, there are no facts which (individually or
in the aggregate) materially adversely affect the business, assets, liabilities, financial
condition, prospects, or operations of the Company that have not been set forth in the
Agreement or in other documents delivered to the Purchaser or his attorney in
connection herewith.
4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the Company as follows (such
representations and warranties do not lessen or obviate the representations and warranties of
the Company set forth in this Agreement):
a. Requisite Power and Authority
The Purchaser has all necessary power and authority under all applicable provisions of
law to execute and deliver this Agreement and to carry out its provisions. Upon its
execution and delivery, this Agreement will be valid and binding obligation of the
Purchaser, enforceable in accordance with its terms, except (i) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium, or other laws of general application
affecting enforcement of creditors’ rights, or (ii) as limited by general principles of equity
that restrict the availability of equitable remedies.
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b. Investment Representations
The Purchaser understands that neither the Shares nor the Conversion Shares have been
registered under the Securities Act. The Purchaser also understands that the Shares are
being offered and sold pursuant to an exemption from registration contained in the
Securities Act based in part upon the Purchaser’s representations contained in the
Agreement. The Purchaser hereby represents and warrants as follows:
i. Purchaser Bears Economic Risk
The Purchaser has substantial experience in evaluating and investing in private
placement transactions of securities in companies similar to the Company so that he is
capable of evaluating the merits and risks of his investment in the Company and has
the capacity to protect his own interests. The Purchaser must bear the economic risk
of this investment indefinitely unless the Shares (or the Conversion Shares) are
registered pursuant to the Securities Act, or an exemption from registration is
available. The Purchaser understands that the Company has no present intention of
registering the Shares, the Conversion Shares, or any shares of its Common Stock.
The Purchaser also understands that there is no assurance that any exemption from
registration under the Securities Act will be available and that, even if available, such
exemption may not allow the Purchaser to transfer all or any portion of the Shares or
the Conversion Shares under the circumstances, in the amounts or at the times the
Purchaser might propose.
ii. Acquisition for Own Account
The Purchaser is acquiring the Shares and the Conversion Shares for his own account
for investment only, and not with a view towards their distribution.
iii. Purchaser Can Protect His Interest
The Purchaser represents that by reason of his, or of his management’s business or
financial experience, he has the capacity to protect his own interests in connection
with the transactions contemplated in this Agreement. Further, the Purchaser is aware
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of no publication of any advertisement in connection with the transactions
contemplated in the Agreement.
iv. Accredited Investor
The Purchaser represents that he is an accredited investor within the meaning of
Regulation D under the Securities Act, in that he is a director or executive officer of
the Company, or has a net worth of not less than $1,000,000.
v. Company Information
The Purchaser has had an opportunity to discuss the Company’s business,
management, and financial affairs with directors, officers, and management of the
Company and has had the opportunity to review the Company’s operations and
facilities. The Purchaser has also had the opportunity to ask questions to and receive
answers from, the Company and its management regarding the terms and conditions
of this investment.
vi. Rule 144
The Purchaser acknowledges and agrees that the Shares, and if issued, the Conversion
Shares, must be held indefinitely unless they are subsequently registered under the
Securities Act or an exemption from such registration is available. The Purchaser has
been advised or is aware of the provisions of Rule 144 promulgated under the
Securities Act as in effect from time to time, which permits limited resale of shares
purchased in a private placement subject to the satisfaction of certain conditions,
including, among other things: the availability of certain current public information
about the Company, the resale occurring following the required holding period under
Rule 144 and the number of shares being sold during any three-month period not
exceeding specified limitations.
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5. CONDITIONS TO THE PURCHASER’S OBLIGATIONS TO CLOSE
The Purchaser’s obligation to purchase the Shares at a Closing is subject to the fulfillment on
or before the Closing of each of the following conditions, unless waived in writing by the
Purchaser purchasing the Shares in such Closing:
a. Representations and Warranties
The representations and warranties made by the Company in Section 3 shall be true and
correct as of the date of such Closing.
b. Covenants
The Company shall have performed or complied with all covenants, agreements, and
conditions contained in this Agreement to be performed or complied with by the
Company on or prior to the Closing.
c. Blue Sky
The Company shall have obtained all necessary Montana Blue Sky law permits and
qualifications, or have the availability of exemptions there from, required by any state for
the offer and sale of the Shares and the Conversion Shares.
d. Restated Charter
The Restated Charter shall have been duly authorized, executed and filed with and
accepted by the Secretary of State of the State of Montana.
6. MISCELLANEOUS
a. Governing Law
This Agreement shall be governed in all respects by the laws of the State of Montana as
such laws are applied to agreements between _______________ [Instruction: Insert the
State] residents entered into and performed entirely in _______________ [Instruction:
Insert the State].
b. Survival
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The representations, warranties, covenants, and agreements made herein shall survive any
investigation made by the Purchaser and the closing of each of the transactions
contemplated hereby. All statements as to factual matters contained in any certificate or
other instrument delivered by or on behalf of the Company pursuant hereto in connection
with the transactions contemplated hereby shall be deemed to be representations and
warranties by the Company hereunder solely as of the date of such certificate or
instrument.
c. Successors and Assigns
Except as otherwise expressly provided herein, the provisions hereof shall inure to the
benefit of, and be binding upon, the successors, assigns, heirs, executors, and
administrators of the Parties hereto and shall inure to the benefit of and be enforceable by
each person who shall be a holder of the Shares from time to time.
d. Entire Agreement
This Agreement and the other documents delivered pursuant hereto constitute the full and
entire understanding and agreement between the Parties with regard to the subjects hereof
and no Party shall be liable or bound to any other in any manner by any representations,
warranties, covenants, and agreements except as specifically set forth herein and therein.
e. Severability
In case any provision of the Agreement shall be invalid, illegal, or unenforceable, the
validity, legality, and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
f. Amendment and Waiver:
i. This Agreement may be amended or modified only upon the written consent of the
Company and holders of at least sixty-six and two-thirds percent (66 2/3%) of the
outstanding Shares (treated as if converted and including any Conversion Shares into
which the Shares have been converted that have not been sold to the public).
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ii. The obligations of the Company and the rights of the holders of the Shares and the
Conversion Shares under the Agreement may be waived only with the written consent
of the holders of at least sixty-six and two-thirds percent (66 2/3%) of the Shares
(treated as if converted and including any Conversion Shares into which the Shares
have been converted that have not been sold to the public).
g. Delays or Omissions
It is agreed that no delay or omission to exercise any right, power, or remedy accruing to
any Party, upon any breach, default, or noncompliance by another Party under this
Agreement or the Restated Charter, 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 or in any similar breach, default, or noncompliance thereafter
occurring. It is further agreed that any waiver, permit, consent, or approval of any kind
or character on the Purchaser’s part of any breach, default, or noncompliance under this
Agreement or under the Restated Charter or any waiver on such Party’s part of any
provisions or conditions of the Agreement or the Restated Charter must be in writing and
shall be effective only to the extent specifically set forth in such writing. All remedies,
either under this Agreement the Restated Charter, by law, or otherwise afforded to any
Party, shall be cumulative and not alternative.
h. Notices
All notices required or permitted hereunder shall be in writing and shall be deemed
effectively given: (i) upon personal delivery to the Party to be notified, (ii) when sent by
confirmed telex or facsimile if sent during normal business hours of the recipient, if not,
then on the next business day, (ii) ___________ (___) [Instruction: Insert number of
days e.g., five (◊ 5)] days after having been sent by registered or certified mail, return
receipt requested, postage prepaid, or (iv) ___________ (___) [Instruction: Insert
number of days e.g., one (◊ 1)] day after deposit with a nationally recognized overnight
courier, specifying next day delivery, with written verification of receipt. All
communications shall be sent to the Company and the Purchaser at the address as set
forth on the signature page hereof or at such other address as the Company or the
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Purchaser may designate by ___________ (___) [Instruction: Insert number of days
e.g., ten (◊ 10)] days advance written notice to the other Party hereto.
i. Expenses
Each Party shall pay all costs and expenses that it incurs with respect to the negotiation,
execution, delivery, and performance of the Agreement.
j. Attorneys’ Fees
In the event that any suit or action is instituted to enforce any provision in this
Agreement, the prevailing Party in such dispute shall be entitled to recover from the
losing Party all fees, costs, and expenses of enforcing any right of such prevailing Party
under or with respect to this Agreement, including without limitation, such reasonable
fees and expenses of attorneys and accountants, which shall include, without limitation,
all fees, costs, and expenses of appeals.
k. Titles and Subtitles
The titles of the sections and subsections of the Agreement are for convenience of
reference only and are not to be considered in construing this Agreement.
l. Counterparts
This Agreement may be executed in any number of counterparts, each of which shall be
an original, but all of which together shall constitute one instrument.
m. Confidentiality
Each Party hereto agrees that, except with the prior written consent of the other Party, it
shall at all times keep confidential and not divulge, furnish, or make accessible to anyone
any confidential information, knowledge, or data concerning or relating to the business or
financial affairs of the other Party to which such Party has been or shall become privy by
reason of this Agreement, discussions or negotiations relating to this Agreement, the
performance of its obligations hereunder, or the ownership of the Shares purchased
hereunder. The provisions of this Section shall be in addition to, and not in substitution
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for, the provisions of any separate nondisclosure agreement executed by the Parties
hereto.
n. Pronouns
All pronouns contained herein, and any variations thereof shall be deemed to refer to the
masculine, feminine, or neutral, singular or plural, as to the identity of the Parties hereto
may require.
o. Montana Corporate Securities Law
THE SALE OF THE SECURITIES THAT ARE THE SUBJECT OF THIS
AGREEMENT HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER OF
CORPORATIONS OF THE STATE OF MONTANA AND THE ISSUANCE OF SUCH
SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE
CONSIDERATION FOR SUCH SECURITIES PRIOR TO SUCH QUALIFICATION
IS UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT FROM
QUALIFICATION BY SECTION 104, CHAPTER 10, TITLE 30, OF THE MONTANA
CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT
ARE EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION BEING
OBTAINED, UNLESS THE SALE IS SO EXEMPT.
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IN WITNESS WHEREOF, the Parties hereto have executed the SERIES A PREFERRED STOCK
PURCHASE AGREEMENT as of the date set forth in the first paragraph hereof.
COMPANY PURCHASER
Signature: Signature:
Print Name: Print Name:
Title: Title:
Address: Address:
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EXHIBIT A
RESTATED CHARTER
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EXHIBIT B
WARRANT FORM
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