Fillable Printable Series A Preferred Stock Purchase Agreement - North Dakota

Series A Preferred Stock Purchase Agreement - North Dakota

SERIES A PREFERRED STOCK PURCHASE AGREEMENT

This Agreement is made as of this ____ day of _____ 20__ (the “Agreement

Date”) between ______________________(the "Company") ____________ (Company

address), and the City of ______ administered by the Lewis and Clark Regional

Development Council, 400 East Broadway Avenue, Suite 418, Bismarck, ND 58501 (the

"Investor").

Authorization and Sale of Shares

1.1 Authorization

The Company has authorized the sale to Investor of _______ shares of its

Series A Preferred stock. The stock is non-voting, $_____ par stock having the

cumulative dividends, liquidation preferences, and other privileges as set forth in the

Articles of Amendment to Articles of Incorporation, Resolution authorizing issuance of

Preferred Stock, Preferences and Rights and of the Series A Preferred Stock of

______________________(Company), a copy of which is attached hereto as Exhibit 1.1

and is made part hereof by this reference.

1.2 Sale of Shares

Subject to the terms and conditions hereof, the Company will issue and sell

to the Investor, and the Investor will purchase from the Company, ______ Shares of the

Series A Preferred stock (the "Shares") for the purchase price of _________ per Share

at the Closings based on the following schedule: _______ shares on or about _______,

20__; _______ shares on or about _______, 20__; _______ shares on or about

__________, 20__. The purchases in ________ of 20__ and _______ of 20__ are

contingent upon the Company achieving the performance standard contained in Exhibit

1.2 hereto unless otherwise consented to in writing by Investor.

1.3 Use of Proceeds

The net proceeds from the sale of the Shares, shall be used only for the

purpose of ___________________________________________________________.

Closing Date; Delivery

2.1 Closing of Shares

The closing of the sales and purchase of the Shares under this Agreement

(the "Closings") shall be held as mutually agreed by the parties but no later than

_______, 20__ for the first purchase at the offices of the

___________________________________________, or at such other time and place

as the Company and the Investor may agree. Closings for subsequent purchase shall be

as agreed upon by the parties or in default at the offices of

_______________________________.

2.2 Delivery

At each of the Closings under this Agreement, subject to the terms and

conditions hereof, the Company shall deliver to the Investor a certificate representing the

Shares in exchange for payment of the purchase price therefor paid by immediately

available funds.

Representations and Warranties of the Company

The Company represents and warrants to the Investor as follows:

3.1 Organization and Standing

The Company is a corporation duly organized, validly existing, and in good

standing under the laws of the state of ______________. The Company has all requisite

corporate power and authority to own and operate its properties and assets and to carry

on its business as presently conducted and as proposed to be conducted. The Company

has furnished the Investor with certified copies of its Articles of Incorporation as of the

Agreement Date and Bylaws. Said copies are true, correct and complete, contain all

amendments through the Closing Date, and are attached hereto as Exhibits "3.1.1" and

"3.1.2", respectively.

3.2 Corporate Power

The Company has all requisite legal and corporate power to execute and

deliver this Agreement, to sell and issue the Shares hereunder, and to carry out and

perform its obligations under the terms of this Agreement.

3.3 Capitalization

The authorized capital stock of the Company as of the Agreement Date

consists of _____________ shares as follows:

(i) ____________ shares of common stock, without par value; and

(ii) ____________ shares of Series A preferred stock.

3.4 Financial Statements

The financial information, which has been submitted to the Investor in

connection with obtaining this financing, was prepared in good faith and fairly represents

the financial condition of the Company. Such information adheres to sound accounting

practices applied in accordance with the past practices of the Company.

3.5 Authorization

All corporate action on the part of the Company, its officers, directors, and

shareholders necessary for the authorization, execution, delivery, and performance by

the Company of this Agreement, the authorization, issuance, sale, and delivery of the

Shares of Series A Preferred stock and the performance of all of the Company's

obligations hereunder has been taken or will be taken prior to the Closing. This

Agreement, when executed and delivered by the Company, shall constitute a valid and

legally binding obligation of the Company enforceable in accordance with its respective

terms, subject to laws of general application relating to bankruptcy, insolvency, and the

relief of debtors and rules of law governing specific performance, injunctive relief or other

equitable remedies. The Shares, when issued in compliance with the provisions of this

Agreement, will be validly issued and non-assessable, and will have the rights,

preferences, and privileges described in this document; and the Shares will be free of

any liens or encumbrances; provided, however, that the Shares may be subject to

restrictions on transfer under applicable securities laws.

3.6 Title to Properties and Assets

The Company has good and marketable title to its properties and assets,

and has good title to all its leasehold interests, in each case subject to no mortgage,

pledge, lien, lease, loan, encumbrance or charge, except those existing of record as of

this the date of closing. With respect to property it leases, the Company is in compliance

with such leases in all material respects.

3.7 Compliance With Other Instruments

The Company is not in violation of any term of its Articles of Incorporation

or Bylaws, any material contract, agreement, mortgage, indebtedness, indenture,

instrument, judgment, decree, order, or, to its knowledge, any statute rule or regulation

applicable to the Company. The execution, delivery, and performance of and

compliance with this Agreement have not resulted and will not result in any such

violation, or be in conflict with or constitute a default under any such term, or result in the

creation of any lien, mortgage, pledge, encumbrance or charge upon any of the

properties or assets of the Company; and there is no such violation or default which

materially or adversely affects the Company's business or any of its properties or assets.

3.8 Litigation

There are no actions, suits, proceedings or investigations pending against

the Company, or any of its properties, before any court or governmental agency (nor, to

the Company's knowledge, is there any reasonable basis therefor or threat thereof). The

Company is not a party or subject to the provisions of any order, writ, injunction,

judgment or decree of any court or governmental agency or instrumentality. There is no

action, suit, proceeding or investigation by the Company currently pending or that the

Company intends to initiate.

3.9 Tax Returns

The Company has filed or obtained extensions for all federal, state, and

other tax returns which are required to be filed and has paid all taxes which have

become due and payable.

3.10 Insurance

The Company does maintain insurance policies in such types and amounts

as are appropriate for its business and furnish evidence of such insurance to Investor

upon written request.

3.11 Governmental Consents

No consent, approval, or authorization of or designation, declaration, or

filing with any governmental authority on the part of the Company is required in

connection with the valid execution and delivery of this Agreement, or the offer, sale or

issuance of the Shares, or the consummation of any other transaction contemplated

hereby, except (i) qualification (or taking such action as may be necessary to secure an

exemption from qualification, if available) of the offer and sale of the Shares under

applicable securities laws and (ii) filing an Amendment to the Articles of Incorporation

with the Secretary of State of the State of ___________with respect to the Series A

Preferred Stock.

3.12 Securities Law Exemption

Subject to the accuracy of the Investor's representations in Section 4 of this

Agreement, the offer, sale, and issuance of the Shares constitute transactions exempt

from the registration and prospectus delivery requirements of the Securities Act of 1933,

as amended (the "Act"), and are exempt from registration and qualification under the

registration, permit or qualification requirements of all applicable state securities laws.

3.13 Disclosure

None of the representations or warranties made by the Company in this

Agreement and no information in the exhibits hereto, or otherwise furnished to the

Investor, contains any untrue statement of a material fact or omits to state a material fact

necessary in order to make the statements contained herein and therein not misleading.

3.14 Brokerage

The Company has not retained any broker or finder or incurred any liability

for any brokerage fees, commissions or finders' fees in connection with the transactions

contemplated by this Agreement.

3.15 Prompt Payment of Taxes and Claims

The Company shall pay when due all taxes, lawful claims for labor,

materials, supplies, and rents and other debts and liabilities which if unpaid would by law

be a lien or charge upon the property of the Company unless the Company in good faith

on contests the payment.

Representations and Warranties of the Investor

The Investor (which for the purposes of these representations and warranties, is

deemed to be the City of ______ and each of its affiliates) hereby represents and

warrants to the Company as follows:

4.1 Authorization

The Investor is a governmental entity or a political subdivis ion or

instrumentality thereof. All action on the part of the Investor necessary for the purchase

of the Shares of Series A Preferred Stock and the authorization, execution, delivery, and

performance by the Investor of its obligations under this Agreement has been taken or

will be taken prior to the Closing. This Agreement when executed and delivered by the

Investor will constitute a valid and legally binding obligation of the Investor, enforceable

in accordance with its terms, except as limited by applicable bankruptcy, insolvency,

reorganization, moratorium or other laws of general application relating to or affecting

enforcement of creditors' rights.

4.2 Investment

The Investor is acquiring the Shares for its own account, not as a nominee

or agent, and not with the view to, or for resale in connection with, any distribution

thereof. The Investor understands that the Shares have not been and will not be,

registered under the Act by reason of a specific exemption from the registration

provisions of the Act, the availability of which depends upon, among other things, the

bona fide nature of the investment intent and the accuracy of the Investor's

representations as expressed herein.

4.3 No Public Market

The Investor understands that no public market now exists for any of the

securities issued by the Company and that the Company has made no assurances that a

public market will ever exist for the Company's securities.

4.4 Access to Data

The Investor has had an opportunity to discuss the Company's business,

management, and financial affairs with the Company's management and has also had

an opportunity to ask questions of the Company's officers, which questions were

answered to its satisfaction. The Investor has received and relied upon information

supplied by the Company as a part of the Investor's due diligence investigation.

4.5 Brokers or Finders

The Investor has not engaged any brokers, finders or agents and has not

incurred, and will not incur, directly or indirectly, any liability for brokerage or finder's fee

or agents' commissions or any similar charges in connection with this Agreement and the

transactions contemplated hereby.

Conditions to Investor's Obligations at the Closing

The Investor's obligations to purchase the Shares at the Closing under this

Agreement are subject to the fulfillment on or prior to the Closing Date of the following

conditions, any of which may be waived in whole or in part by the Investor:

5.1 Certain Pre-closing and Closing Documents

5.1.1 Certificate for Shares

The Company at its sole cost and expense shall have delivered to Investor

a certificate evidencing Investor's ownership of the shares of Series A Preferred Stock,

purchased by the Investor pursuant to the terms hereof duly executed by the Company.

5.1.2 Secretary's Certificate

The Company at its sole cost and expense shall have delivered to Investor

a certificate of the corporate secretary of the Company to be dated the Closing Date,

certifying as being true and accurate and in full force and effect as of the Closing Date

and attaching true copies of resolutions of the board of directors of the Company

authorizing (a) the Company to enter into and perform this Agreement and to execute

and deliver and honor or perform, as the case may be, the other documents necessary

to finalize the funding contemplated hereunder, and (b) the person or persons who have

executed or will e xecute this Agreement and the other documents to do so.

5.1.3 Officer's Certificate of the Company

The Company at its sole cost and expense shall have delivered to Investor

a certificate of the President or Vice-President of the Company, dated the Closing Date,

certifying to the best of its knowledge (a) that all representations and warranties of the

Company set forth in Article 3 hereof are true and correct as of the Closing Date and (b)

the number of shares of capital stock issued and outstanding as of the Closing Date.

5.1.4 A Certificate of Good Standing from the Secret aries of State of

______________________.

5.2 Other Financing Commitments

The Company shall have obtained firm commitments in form and

substance satisfactory to the Investor for equity investments as follows:

_________________________ $__________

and debt investments as follows:

_________________________ $__________

5.3 Representation and Warranties True ; Performance of Obligations

The representations and warranties made by the Company in Section 3

hereof shall be true and correct in all material respects on the Closing Date with the

same force and effect as if they had been made on and as of such date.

5.4 Covenants

All covenants, agreements, and conditions contained in this Agreement to

be performed by the Company on or prior to the Closing Date shall have been performed

or complied with in all material respects.

5.5 Consents

The Company shall have obtained all consents, permits, and waivers

necessary to consummate the transactions contemplated by this Agreement.

5.6 Compliance With Laws

The purchase of the Shares by the Investor hereunder shall be legally

permitted by all laws and regulations to which the Investor or the Company are subject.

5.7 Intended Third Party Beneficiary

The Division of Community Services, Department of Commerce of the

State of North Dakota (“DCS”) is an Intended Third Party Beneficiary” of this contract as

as such, is legally entitled to enforce the conditions and requirements of this agreement.

In particular, it is expressly contemplated by contracting parties that the DCS will have

the ability to enforce conditions and requirements of this agreement if the City of ______

does not exercise its right as set forth in this agreement. This provision in no way

restricts any legal rights or remedies that the DCS may assert against the City of ______

for its failure to enforce the conditions and requirements of this agreement.

Conditions to Company's Obligations at the Closing

The Company's obligation to sell and issue the Shares at the Closing is subject to

the fulfillment to the Company's satisfaction on or prior to the Closing Date of the

following conditions, any of which may be waived in whole or in part by the Company:

6.1 Representations and Warranties True; Performance of Obligations

The representations and warranties made by the Investor herein shall be

true and correct in all material respects on the Closing Date with the same force and

effect as if they had been made on and as of the same date; and the Investor shall have

performed all obligations and conditions her ein required to be performed or observed by

it on or prior to the Closing Date and all documents incident thereto shall be satisfactory

in form and content to the Company and its counsel.

6.2 Compliance With All Laws

At the Closing, the purchase of the Shares by the Investor hereunder shall

be legally permitted by all laws and regulations to which the Investor or the Company are

subject.

Covenants of the Company

7.1 Inspection

The Company shall permit the Investor at such party's expense, to visit and

inspect the Company's properties, to examine its books of accounts and records and to

discuss the Company's affairs, finances, and accounts with its officers, all at such

reasonable times as may be requested by the Investor; provided, however, that the

Company shall not be obligated pursuant to this Section 7.1 to provide access to any

information that it reasonably considers to be a trade secret or similar confidential

information unless such the Investor provides reasonable assurances in writing that it will

maintain the confidentiality of the information.

7.2 Merger Proposals

So long as the Investor holds any Series A Convertible Preferred stock, the

Company shall not without the written consent of Investor consolidate or merge with or

purchase all or a substantial part of the assets of any other business or sell, lease, or

otherwise transfer any assets other than in the normal course of its present business.

7.3 Information on Request; Disclosure

To the extent required to enable Investor to comply with the laws of the

state of North Dakota and at Investor's cost, the Company shall furnish promptly, at

Investor's request, such information as may be reasonably necessary to enable Investor

to determine whether the Company is in compliance with the terms of this Agreement or

as may be required by Investor to prepare its annual report. The Company consents to

reasonable disclosure by Investor as required by North Dakota Law of the Company's

financial information in connection with the preparation of Investor's annual report;

provided, however, that prior to making any such disclosure Investor shall give the

Company thirty (30) days written notice.

7.4 Repairs

The Company shall maintain in good repair and working order, reasonable

wear and tear expected, all properties used in its business.

7.5 Corporate Existence

The Company shall cause to be done all things necessary to maintain and

preserve its corporate existence and rights, and shall comp ly with all related laws

applicable to the Company.

7.6 Material Litigation

The Company shall notify Investor of all material litigation and of all

proceedings before any governmental or regulatory body to which it is a party and which

may affect its business.

7.7 Termination of Covenants

The covenants set forth in this Section 7 shall terminate and be of no

further force or effect when the Investor ceases to hold its Shares.

7.8 Notice of Default

The Company shall provide the Investor with notice of any default by the

Company under any loan agreement or promissory note of the Company.

7.9 Delivery of Annual Financial Statements and Other Information

The Company shall deliver to each holder of Series A Preferred stock,

("Interested Holder"):

(a) as soon as practicable, but in any event within ninety (90) days after

the end of each fiscal year of the Company, beginning with FY 20__, financial

statements for the _____ and _______ operations as well as the combined operations

consisting of operating statements for such fiscal year and balance sheets of the

Company as of the end of such year, such financial statements to be prepared in

accordance with sound accounting practices c onsistent with the past practices of the

Company and reviewed by a certified public accountant selected by the Company;

(b) as soon as practicable, but in any event prior to the end of each

fiscal year of the Company, beginning with FY20__, annual projections for the coming

year for the _______ and ______ operations as well as combined operations of the

company; and

prospects or corporate affairs of the Company as any Interested Holder may from time to

time reasonably request;

provided, however, that the Company shall not be obligated to

provide information that it deems in good faith to be proprietary or confidential unless the

Interested Holder provides reasonable assurances in writing that it will maintain the

confidentiality of the information.

7.10 Delivery of Monthly Financial Statements; Tax Returns; Quarterly

Reports.

The Company shall deliver to each Interested Holder:

(a) within thirty (30) days after the end of each month commencing with

the 5th month of 20__, unaudited operating statements, balance sheets and cash flows

for and as of the end of such period and for the year to date, in reasonable detail and

including both the _____, ______ and combined operations, including a breakdown of

jobs with salaries for the ______, ND operation;

(b) complete copies of the Company's state and federal income tax

returns, including all schedules and attachments, within thirty (30) days of the date of

filing; and

the ____ quarter of 20__, an aging of accounts receivable and accounts payable

including separate reports for _____ and _______ and a combined report.

7.11 Location of Support Center

The Company shall maintain operations in ______, North Dakota, in

operation so long as any Series A Preferred stock is outstanding. Failure of the

Company to maintain and operate its operations in _____, North Dakota or transfer of

controlling interest in the Company shall entitle the Investor to cause the Company to

redeem its Series A Preferred stock in an amount equal to the purchase price, plus any

accumulated and unpaid dividends, for the shares so redeemed. Any such redemption

shall be made in accordance with the redemption provisions for the Series A Preferred

stock provided for in the Company’s Articles of Incorporation.

7.12 Salary and Dividend Limitations

See Exhibit 7.12 for salary and dividend limitations.

7.13 Time of Performance

All the project activities required hereunder and within Exhibit 1.2 shall be

completed on or before _________.

7.14 Employment of Low and Moderate Income Individuals

The Company agrees to employ ____ (__) persons whose income prior to

such employment meets Section 8 income guidelines for VL/LI persons in ____County.