Strategic Partnering Stock Purchase Agreement by bobzepfel

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Agreement between company and strategic partner for investment in the company, limitations on operation, board representations, rights of first refusal

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									                                 STRATEGIC PARTNERING
                              STOCK PURCHASE AGREEMENT


      THIS AGREEMENT (the “Agreement”) dated the _______ day of _______,                    _
between                              (the “Investor”), and
                 (the “Company”), who hereby agree as follows:

       1.      Purchase of Shares.

                (a)     Stock Purchase Commitment. Based upon the representations and
warranties and subject to the terms and conditions set forth in this Agreement, the Company
agrees to sell and Investor agrees to purchase                                      shares of the
Company's Common Stock, no par value, at a price of                                         per
share. (All of the shares of Common Stock, of the Company being purchased by the Investor
pursuant to the provisions of this Agreement are herein collectively called the “Shares”.)

                 (b)     Stock Purchase Option. The Investor shall have the option, at any time
during the period of thirty (30) months commencing with the first full month beginning after the
“First Closing Date” (as hereinafter defined) to purchase from the Company, and the company
agrees to sell, at a price of                                   per Share, such number of shares
which, when added to the Shares then owned by the Investor, shall equal, after the issuance
thereof,         % of the issued and outstanding shares of the Company on a fully diluted basis or,
at the investor's option, any part of such Shares. This option shall be exercised by written notice
by the Investor to the Company prior to the expiration of such thirty (30) month period; provided
however that investor shall notify the Company within twenty four (24) months from the First
Closing Date, of Investor's intention to exercise its option, and further provided, however, that
the “Closing Date” (as hereinafter defined) of the purchase and sale provided for in this
paragraph 1(b) shall be at least sixty (60) days after the date of such notice.

        In the event of a stock dividend paid in shares of stock of the Company or a
recapitalization, a split up or a combination of shares with respect to shares of such Common
Stock of the Company, appropriate adjustment of the price per Share shall be made so that the
Investor's aggregate payment for the Shares to be acquired under this paragraph 1(b) shall be the
same as if such event or events had not occurred. In the event that the Company shall issue shares
or other units of Common Stock or “Stock Equivalents” (as hereinafter defined) pursuant to
paragraph l(c) or otherwise for a consideration other than cash, at a price per share less than the
price per share at which the Investor shall then be entitled to purchase Shares pursuant to this
paragraph 1(b) in effect on the date of and immediately prior to such issue (the “Exercise Price”),
then and in such event, the Exercise Price shall be reduced, concurrently with such issue, to a
price per share (calculated to the nearest cent) determined by multiplying such Exercise Price by
a fraction, the numerator of which shall be the number of shares of Common Stock outstanding
immediately prior to such issue, plus the number of shares of Common Stock which the


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aggregate consideration received by the Company for the total Shares (restricted to 15% of such
shares in the case of any issue to which paragraph 1(c) shall apply) of such Common Stock and
Stock Equivalents so issued would purchase at such Exercise Price; and the denominator of
which shall be the number of shares of Common Stock outstanding immediately prior to such
issue plus the number of such shares (restricted to 15% of such share in the case of an issue to
which paragraph 1(c) shall apply) of Common Stock so issued. For the purposes of the foregoing
calculations all shares of Common Stock issuable upon conversion or exercise of any shares or
other units of Stock Equivalents shall be deemed to be outstanding. insofar as any such
consideration received by the Company consists of property other than cash, it shall be assigned
the fair value thereof at the time of such issue as determined in good faith by the Board of
Directors of the Company.

         As used in this Agreement, the term “on a fully diluted basis” shall mean it is assumed
the (i) all rights to convert or exchange, directly or indirectly, shares of any class of stock or units
of other securities of the Company into shares of Common Stock have been exercised (ii) all
rights to purchase shares of stock or other units of other securities of the Company have been
exercised and (iii) subject to (i) above, a unit of outstanding securities of the Company other than
Common Stock which has voting rights in the election of directors of the Company shall be
deemed a number of shares of Common Stock equal to the number of votes which the holder of
such unit is entitled to cast assuming only one director was then to be elected. The term “Stock
Equivalents” shall mean any securities of the Company (i) which are, directly or indirectly,
convertible into or exchangeable for shares of stock of the Company, or (ii) which grant to the
holder thereof the right or option to purchase stock of the Company or other Stock Equivalents.

                 (c)     Interim Financing. If at any time prior to the exercise in full or the
expiration of the investor's option provided for by paragraph 1b), the Company shall need
additional financing, the Company shall notify the Investor of its intention to sell Common Stock
or Stock Equivalents indicating the amount of financing it shall need, and, unless the Inventor
shall exercise such option in full prior to the sale of such Common Stock or Stock Equivalents,
then the Company may offer and sell Common Stock or Stock Equivalents for such purpose in a
transaction to which Section 4 of the Securities Act of 1933, as amended, shall apply. The
Company shall offer and, if the Investor shall select, sell to the Investor up to 20% of the number
of shares or other units of Common Stock or Stock Equivalents offered or sold in such
transaction, if the purchase of such shares or other units by such corporation or such affiliate
would result in the acquisition by such corporation which, when added to all other shares and
units owned by such corporation and its affiliates, shall equal or exceed in the aggregate, 30% of
the issued and outstanding shares of Common Stock of the Company on a fully diluted basis,
unless the Company shall have first offered, and if the Investor shall so elect, shall sell to the
Investor, all of such shares or other units which the Company intends to sell to such corporation
and its affiliates to the extent the sale of Shares or other units would result in the acquisition of
such 30% or greater interest.




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                (d)      Interim Public Offering. Notwithstanding paragraph 6(a), in the event the
Investor shall not exercise its option provided for in paragraph 1(b) in full within the time
provided for therein, the Company may, prior to ___________,            _ offer, sell or otherwise
dispose of any of its Common Stock in a transaction or transactions which require registration
under the Securities Act of 1933, as amended, (other than an offering to employees of not more
than an aggregate of                    shares of Common Stock) provided the Company shall (i)
advise the investor of its intention to so offer, sell or otherwise dispose of such common Stock
and (ii)shall offer to the Investor such Common Stock at a price the (“Interim Price”) to be
determined in the manner set forth below. The Investor, may within the thirty (30) day period
following the receipt of such offer, at its option, elect to purchase all of such Shares pursuant to
said offer, and the Company shall sell to the Investor such Shares, at the Interim Price. The
Company and the Investor will agree upon the Interim Price or upon the retention of an
investment banking firm who will establish the Interim Price. If the Company and the Inventor
cannot agree within a reasonable time on the Interim Price or on the selection of an investment
banking firm, each shall appoint its own investment banking firm, which firms shall then
cooperate in establishing the Interim Price. If such investment banking firms should fail to agree
upon the Interim Price within twenty business days after their appointment, they shall select a
third investment banking firm which shall establish the Interim Price and shall each set their own
recommendation for the Interim Price. The Company and the Investor shall be bound by such
interim Price established by such third investment banking firm provided it does not vary by
more than 20% from the median of the recommended prices set by the Company's and the
Investor's investment banking firms. If the Interim Price does so vary by more than 20% and the
Company and the Investor cannot agree upon the Interim Price, the procedure set forth in this
paragraph i (d) shall be repeated with different investment banking firms.

                (e)     Right of First Refusal. If at any time prior to the completion of a
transaction contemplated by paragraph 1(f), the Company proposes to offer, sell or otherwise
dispose of any of its stock or Stock Equivalents for cash (other than an offering to employees of
the Company of not more than an aggregate of                    shares of Common Stock or an
offering to which paragraphs 1(c), 1(d), 1(f) or 1(q) shall apply) the Company shall (i) certify to
the investor that the Company has a need to raise additional capital funds involving its stock or
Stock Equivalents and (ii) offer to the Investor such stock or Stock Equivalents (the “Offered
Securities”) which offer shall be in writing, shall set forth the terms thereof, including the
purchase price or prices of the offered Securities, and shall permit the acceptance of such offer by
the Investor within a period of thirty (30) days following the making of such offer. The Investor
may within such thirty (30) day period, at its option, (i) elect to purchase all or any part of the
Offered Securities on the terms set forth in the offer and the Company agrees to sell such
Securities to the Investor on such terms or (ii) offer to purchase the Offered Securities at such
other terms (including the price or prices thereof) as the Investor shall elect. The investor shall
exercise any rights it may have under this paragraph 1(e)within thirty (30) days after receipt of an
offer from the Company as described above, by notice to the Company specifying the number of
shares of stock or other units of Stock Equivalents it so elects to purchase hereunder or
specifying the terms of its offer. Any Offered Securities not purchased by the Investor may be


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offered by the Company within one hundred eighty (180) days after the expiration of such thirty
(30) day period to other persons on terms not more favorable to such other persons than (i) the
terms on which such Offered Securities were purchased by the Investor or (ii) such other terms
(including the price or prices thereof) contained in the offer to purchase the offered Securities
made by the Investor, as the case may be.

                 (f)     Public Offering. If at any time the Company proposes to offer, sell or
otherwise dispose of any of its Common Stock in a transaction or transactions which require
registration under the Securities Act of 1933, as amended, (other than an offering to employees
of not more than an aggregate of                 shares of Common Stock or an offering to which
paragraphs 1(d) or 1(g) shall apply), the Company shall first (i) advise the Investor of its intent to
so offer, sell or otherwise dispose of such Common Stock, and (ii) offer to the Investor all of the
Common Stock it proposes to offer, sell or otherwise dispose of in such transaction or
transactions, which offer shall be for such number of shares of Common Stock so that such
number of shares, when added to the Shares then owned by the Investor, would equal, after the
issuance thereof, a majority of issued and outstanding shares of the Company on a fully diluted
basis at a price the (“Price”) to be determined in the manner set forth below. The Investor may
within the thirty (30) day period following the determination of the Price of such offer, at its
option, elect to purchase all or any part of such Shares pursuant to said offer, and the Company
shall sell to the Investor such Shares as the Investor shall elect to purchase at the Price. The
Company and the investor will agree upon the Price or upon the retention of an investment
banking firm who will establish the Price. if the Company and the Investor cannot agree within a
reasonable time on the Price or on the selection of an investment banking firm, each shall appoint
its own investment banking firm, which firms shall then cooperate in establishing the Price. if
such investment banking firms should fail to agree upon the Price within twenty business days
after their appointment, they shall select a third investment banking firm which shall establish the
Price and shall each set their own recommendation for the Price. The Company and the investor
shall be bound by such Price established by such third investment banking firm provided it does
not vary by more than 20% from the median of the recommended prices set by the Company's
and the Investor's investment banking firms. If the Price does so vary by more than 20%, and the
Company and the investor cannot agree upon the Price, the procedure as set forth in this
paragraph i (f) shall be repeated with different investment banking firms.

                (g)      If, during the term of the thirty (30) month period referred to in paragraph
1(b) but prior to Investor's exercise thereof in full, subscription rights in respect of new issues of
stock of any class shall accrue to the holders of shares of Common Stock of the Company,
Investor, upon exercising its subscription rights, shall, at Investor's option, have the right to
purchase from the Company, and the Company shall sell to the Investor, stock of the same class
of each such new subscription issue in an amount equal to that which Investor would have been
entitled to subscribe, if at the date of the accrual of such subscription rights, the Investor was the
owner of the amount of Shares it had the right to acquire under paragraph l(b) had Investor,
immediately prior to such accrual of subscription rights, exercised its rights under such paragraph
1(b) in full. The Investor shall make payment to the Company for any Shares which it elects to


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acquire under this paragraph, the purchase price to be an amount equal to the price at which
stockholders of the Company were entitled to subscribe for such Shares under the subscription
rights.

                 (h)    General. The Shares to be delivered on the exercise of Investor’s rights
under paragraphs l (b), 1(c), l (d), 1(e), 1(f) and 1(g) shall be duly validly authorized, issued and
outstanding, fully paid, nonassessable and free from any liens and charges, and the Company
shall at all times have available sufficient Shares pursuant to such paragraphs to satisfy
Investor's rights to purchase securities under this Agreement.

       2.      Closing.

                (a)     The Closings. The closing of the purchase and sale of the Shares set forth
in the paragraph 1(a) above and any subsequent purchase and sale of Shares set forth in
paragraphs 1(b), 1(c), 1(d), 1(e) and 1(f) (each such individual closing shall be herein called the
“Closing”) shall take place at the offices of the Company. The Closing referenced in paragraph
l(a) above shall take place on the ______ day of ________________,                   , at 10:00 a.m.
or at such other date and time the parties shall agree upon (the “First Closing Date”) and such
other Closings at such other times and dates as the parties mutually agree (each such individual
Closing date shall be a “Closing Date”) or at such other times or dates or location as the investor
shall specify by written notice to the Company prior to the Closing Date.

                 (b)     Delivery of Shares. At each Closing, subject to the conditions set forth in
this Agreement, the Company shall deliver to the Investor, against payment of the purchase price
therefor, a certificate or certificates representing the Shares or other securities of the Company to
be purchased and sold at such Closing, dated such Closing Date, and issued in the name
of the Investor.

                (c)     Payment for Shares. The aggregate purchase price for the Shares or other
securities of the Company to be purchased and sold at each Closing shall be paid by the Investor
by either electronic funds transfer or del
								
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