West Virginia Series A Preferred Stock Purchase Agreement

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West Virginia Series A Preferred Stock Purchase Agreement Powered By Docstoc
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                             This Series A Preferred Stock Purchase Agreement 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 contains many of the standard provisions commonly
                             included in a preferred stock purchase agreement and may be customized to fit the specific
                             needs of the parties. This document should be used by a company located in West Virginia
                             selling Series A preferred stock and a purchaser of such stock.
             ®




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               SERIES A PREFERRED STOCK PURCHASE AGREEMENT

THIS SERIES A PREFERRED STOCK PURCHASE AGREEMENT (hereinafter the “Agreement”) is
made as of ____ [Month] ____ [Date], 20___ [Year], by and between
_______________________________ [Instruction: Insert name of company] (hereinafter the
“Company”),       a    West      Virginia     corporation,   with its principal office  at
___________________________ [Instruction: Insert the address of company], and
_____________________ [Instruction: Insert name of purchaser] (hereinafter the
“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 the “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 the “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
       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.



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2. CLOSING, DELIVERY, AND PAYMENT

   a. Closing

        i. The losing 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.

       iii. 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 West Virginia. 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.




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       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
       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
       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;



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       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 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 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 or her in
       connection with his or her 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 the Purchaser or his
       or her 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 or her attorney in
       connection herewith.




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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.

       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
           or she is capable of evaluating the merits and risks of his or her investment in the
           Company and has the capacity to protect his or her 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




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           The Purchaser represents that by reason of his or her, or of his or her management’s
           business or financial experience, he or she has the capacity to protect his or her own
           interests in connection with the transactions contemplated in this Agreement.
           Further, the Purchaser is aware of no publication of any advertisement in connection
           with the transactions contemplated in the Agreement.

        iv. Accredited Investor

           The Purchaser represents that he or she is an accredited investor within the meaning
           of Regulation D under the Securities Act, in that he or she 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.

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




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        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 West Virginia 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 West Virginia.

6.      MISCELLANEOUS

        a. Governing Law

        This Agreement shall be governed in all respects by the laws of the State of West
        Virginia 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

        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.



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       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).

         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
       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.




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         o. West Virginia 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 West Virginia 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 [STATUTE]. THE RIGHTS OF ALL PARTIES TO THIS
         AGREEMENT ARE EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION
         BEING OBTAINED, UNLESS THE SALE IS SO EXEMPT.

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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Description: This Series A Preferred Stock Purchase Agreement 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 contains many of the standard provisions commonly included in a preferred stock purchase agreement and may be customized to fit the specific needs of the parties. This document should be used by a company located in West Virginia selling Series A preferred stock and a purchaser of such stock.
This document is also part of a package Essential West Virginia Legal Documents 144 Documents Included