EXHIBIT 4
NORTH AMERICAN TECHNOLOGIES GROUP, INC.
SERIES CC CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT
This SERIES CC CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT
(this "AGREEMENT"), dated as of February 22, 2005, by and among Sponsor
Investments, LLC, a Delaware limited liability company ("SPONSOR"), and each of
the purchasers listed on the Schedule A attached hereto (each, a "PURCHASER"
and, collectively, the "PURCHASERS"). Each of Sponsor and the Purchasers is
sometimes referred to herein, collectively, as the "PARTIES" and, individually,
as a "PARTY".
W I T N E S S E T H
WHEREAS, pursuant to that certain Exchange Agreement, dated as of
November 8, 2004, by and among North American Technologies Group, Inc. ("NATK"),
Avalanche Resources, Ltd., Xxxxx Xxxxxx and Sponsor (the "EXCHANGE AGREEMENT"),
Sponsor shall own 43,114 shares of North American Technologies Group, Inc.
Series CC Convertible Preferred Stock (the "SERIES CC PREFERRED") and warrants
to purchase an additional 9,158 Series CC Preferred upon the consummation of the
Exchange Agreement;
WHEREAS, subject to the terms and conditions set forth in this
Agreement, Sponsor desires to sell to the Purchasers, and the Purchasers desire
to purchase from Sponsor, 1,620 Series CC Preferred, at the price per share
shown and in the amounts set forth on Schedule A; and
NOW, THEREFORE, in consideration of the recitals and the mutual
promises, covenants and agreements contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Parties hereby agree as follows:
SALE OF THE SERIES CC PREFERRED
Section 1.1 Sale and Purchase of the Series CC Preferred. Subject to
the satisfaction of the terms and conditions of this Agreement set forth herein
and in reliance upon the representations and warranties of the Purchasers set
forth or referred to herein, Sponsor agrees to sell to each Purchaser, and each
Purchaser agrees to purchase from Sponsor, the number of Series CC Preferred set
forth opposite the name of such Purchaser on Schedule A attached hereto on the
Closing Date (as defined below).
Section 1.2 Purchase Price; Payment. The purchase price for the Series
CC Preferred, purchased on the Closing Date (as defined below), shall be the
amount set forth opposite the name of the Purchaser on Schedule A attached
hereto (the "PURCHASE PRICE"). Each Purchaser shall pay to Sponsor on the
Closing Date the Purchase Price either by wire transfer of immediately available
funds in accordance with written instructions from the Company as set forth on
Exhibit B attached hereto.
Section 1.3 Closing Date. The closing of the purchase and sale of at
least 1,620 shares of Series CC Preferred to be purchased by the Purchasers
hereunder (the "CLOSING") shall occur on February 22, 2005. The date of the
Closing is hereinafter referred to as the "CLOSING DATE."
Section 1.4 Tax Treatment. If the value of the Series CC Preferred
acquired by a Purchaser pursuant to this Agreement (the "STOCK VALUE") exceeds
the Purchase Price paid by such Purchaser as set forth on Schedule A, then (i)
such excess shall be treated for income tax purposes as received by Sponsor as
partial consideration for the Series CC Preferred and then paid by Sponsor to
the Purchaser as consideration for independent consulting services provided to
Sponsor by Purchaser, and (ii) Sponsor and such Purchaser agree to file all
appropriate income tax returns and forms consistent with such tax treatment and
not take any action inconsistent with such tax treatment unless otherwise
required pursuant to a "determination" as defined in Section 1313(a) of the
Internal Revenue Code of 1986, as amended. The Stock Value shall be computed by
multiplying the number of shares set forth opposite the name of the Purchaser on
Schedule A by the per share value of the Series CC Preferred as determined by
the
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independent appraiser engaged by Sponsor for purposes of valuing the shares of
Series CC Preferred acquired by Sponsor pursuant to the Exchange Agreement.
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Each Purchaser, severally and not jointly, hereby represents and
warrants to Sponsor, solely on its own behalf, as follows:
Section 2.1 Purchase for Investment. The Purchaser will acquire the
Series CC Preferred (and upon conversion the common shares of NATK, issuable
upon conversion thereof, the "CONVERSION SECURITIES") for investment and not
with a view to distributing all or any part thereof in any transaction which
would constitute a "distribution" within the meaning of the Securities Act of
1933 (the "SECURITIES ACT"). The Purchaser acknowledges that neither the Series
CC Preferred nor any Conversion Securities have been registered under the
Securities Act.
Section 2.2 Investor Qualifications. The Purchaser (a) has such
knowledge and experience in financial and business matters that it is capable of
evaluating the merits and risks of its investment in the Series CC Preferred and
the Conversion Securities, (b) is able to bear the complete loss of its
investment in the Series CC Preferred and the Conversion Securities, and (c) is
an Accredited Investor. For the purposes of this Agreement, a Purchaser shall be
deemed an "Accredited Investor" if: (i) he or she has an individual net worth,
or along with his or her spouse, a joint net worth in excess of $1,000,000; (ii)
he or she has had individual income in excess of $200,000 in each of the two
most recent calendar years, and reasonably expects individual income in excess
of $200,000 in the current calendar year; (iii) he or she has had joint income,
along with his or her spouse, in excess of $300,000 in each of the two most
recent calendar years and reasonably anticipates reaching the same income level
in the current calendar year.
Section 2.3 Rule 144. The Purchaser acknowledges and agrees that the
Series CC Preferred, and the Conversion Securities 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, 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 NATK, the resale
occurring not less than one year after a party has purchased and paid for the
security to be sold, the sale being through an unsolicited "broker's
transaction" or in transactions directly with a market maker (as said term is
defined under the Securities Exchange Act of 1934, as amended) and the number of
shares being sold during any three-month period not exceeding specified
limitations.
Section 2.4 Tax Matters. The Purchaser: (a) has reviewed with its own
tax advisors the federal, state, local, and foreign tax consequences of this
investment and the transactions and tax reporting contemplated by this
Agreement; (b) is relying solely on such advisors and not on any statements or
representations of Sponsor (other than any representations made in this
Agreement) or any of its agents; and (c) understands that the Purchaser (and not
Sponsor) shall be responsible for its own tax liability that may arise as a
result of this investment or the transactions and tax reporting contemplated by
this Agreement, the Series CC Preferred and the Conversion Securities.
Section 2.5 Fees and Commissions. The Purchaser has not retained any
finder, broker, agent, financial advisor or other intermediary in connection
with the transactions contemplated by this Agreement, nor shall the Purchaser or
Sponsor be responsible for the payment all fees and expenses incurred in
connection with any finder, broker, agent, financial advisor or other
intermediary.
MISCELLANEOUS
Section 3.1 Successors and Assigns. Except as otherwise expressly
provided herein, all covenants and agreements contained in this Agreement by or
on behalf of any Party will bind and inure to the benefit of the respective
successors and assigns of such Party, whether so expressed or not.
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Section 3.2 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND DUTIES OF
THE PARTIES HERETO SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK
(WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS).
Section 3.3 CONSENT TO JURISDICTION. EACH PARTY HEREBY IRREVOCABLY
AGREES THAT ANY SUIT, ACTION, PROCEEDING OR CLAIM AGAINST HIM, HER OR IT ARISING
OUT OF OR IN ANY WAY RELATING TO THIS AGREEMENT OR ANY OF THE RELATED
AGREEMENTS, OR ANY JUDGMENT ENTERED BY ANY COURT IN RESPECT THEREOF, MAY BE
BROUGHT OR ENFORCED IN THE STATE OR FEDERAL COURTS LOCATED IN THE CITY OF
DALLAS, TEXAS, AND EACH PARTY HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE VENUE
OF ANY PROCEEDING BROUGHT IN THE CITY OF DALLAS, TEXAS, AND FURTHER IRREVOCABLY
WAIVES ANY CLAIMS THAT ANY SUCH PROCEEDING HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM.
Section 3.4 WAIVER OF JURY TRIAL. EACH PARTY HEREBY EXPRESSLY WAIVE ANY
RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY
RIGHT, POWER, OR REMEDY UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE
RELATED AGREEMENTS OR UNDER OR IN CONNECTION WITH ANY AMENDMENT, INSTRUMENT,
DOCUMENT, OR AGREEMENT DELIVERED OR FROM ANY RELATIONSHIP EXISTING IN CONNECTION
WITH THIS AGREEMENT OR ANY RELATED AGREEMENT, AND AGREE THAT ANY SUCH ACTION
SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY. THE TERMS AND PROVISIONS OF
THIS SECTION 3.4 CONSTITUTE A MATERIAL INDUCEMENT FOR THE PARTIES ENTERING INTO
THIS AGREEMENT.
Section 3.5 Specific Performance. Each Party hereto agrees that the
other Parties may seek an injunction or injunctions to prevent breaches of the
provisions of this Agreement and to enforce specifically this Agreement and the
terms and provisions hereof in any action instituted in any court of the United
States or any state thereof having jurisdiction over the Parties and the matter,
in addition to any other remedy to which it may be entitled, in law or in
equity. Each Party's right to seek specific performance shall be in addition to,
and not in lieu of, any other rights and remedies that may be available
hereunder or otherwise.
Section 3.6 Reproduction of Documents. This Agreement and all documents
relating hereto, including, but not limited to, (a) consents, waivers,
amendments and modifications which may hereafter be executed and (b)
certificates and other information previously or hereafter furnished, may be
reproduced by any photographic, photostatic, microfilm, optical disk,
micro-card, miniature photographic or other similar process. The Parties agree
that any such reproduction shall be admissible in evidence as the original
itself in any judicial or administrative proceeding, whether or not the original
is in existence and whether or not such reproduction was made by a party in the
regular course of business, and that any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence.
Section 3.7 Severability. Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable Law, such provision will be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.
Section 3.8 Entire Agreement. This Agreement, together with all
Schedules hereto and thereto and all other agreements entered into pursuant
hereto and thereto and any separate confidentiality agreement between any
Purchaser and Sponsor, constitute the complete and final agreement of the
parties concerning the matters referred to herein, and supersede all prior
agreements and understandings.
Section 3.9 Execution in Counterparts. This Agreement may be executed
in any number of counterparts, each of which when so executed and delivered
shall be deemed an original, and such counterparts together shall constitute one
instrument.
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Section 3.10 Further Assurances. Each of the parties shall execute such
documents and perform such further acts (including, without limitation,
obtaining any consents, exemptions, authorizations or other actions by, or
giving any notices to, or making any filings with, any Governmental Authority or
any other Person) as may be reasonably required or desirable to carry out or to
perform the provisions of this Agreement.
Section 3.11 Exculpation Among Purchasers. Each Purchaser acknowledges
that it is not relying upon any other Purchaser in making its investment or
decision to invest in NATK. Each Purchaser agrees that no Purchaser nor the
respective controlling Persons, officers, directors, partners, agents or
employees of any Purchaser shall be liable to any other Purchaser for any
investment decision heretofore made by any of them in connection with the Series
CC Preferred and Conversion Shares.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first set forth above.
SPONSOR
SPONSOR INVESTMENTS, LLC
By: Herakles Investments, Inc., Manager
By: /s/ Xxxxxx X. Xxxxx
-----------------------------------
Name: Xxxxxx X. Xxxxx, President
PURCHASERS
By: /s/ Xxxx Xxxxxxxxx
-----------------------------------
Name: Xxxx Xxxxxxxxx
By: /s/ Xxxxxxxxxxx Xxxxxxxx
-----------------------------------
Name: Xxxxxxxxxxx Xxxxxxxx
By: /s/ Xxxxxxx Xxxxxx
-----------------------------------
Name: Xxxxxxx Xxxxxx
By: /s/ Xxxx X. Xxxxxx
-----------------------------------
Name: Xxxx X. Xxxxxx
By: /s/ Xxx Xxxx Siang
-----------------------------------
Name: Xxx Xxxx Siang
By: /s/ Xxx Xxxx
-----------------------------------
Name: Xxx Xxxx
By: /s/ Xxxxx Xxxxxxx
-----------------------------------
Name: Xxxxx Xxxxxxx
By: /s/ Xxxxxxx Xxxxxx
-----------------------------------
Name: Xxxxxxx Xxxxxx
By: /s/ Xxxxx Xxxxxxx
-----------------------------------
Name: Xxxxx Xxxxxxx
Signature Page to Purchase Agreement
SCHEDULE A
SCHEDULE OF PURCHASERS
PRICE PER SHARE OF
PREFERRED UNDERLYING
PURCHASER ADDRESS STOCK COMMON STOCK TOTAL COST
--------- ------- --------- ------------------ ----------
1. Xxxx Xxxxxxxxx Two Lincoln Centre 41 $0.08 $3,3037.04
0000 XXX Xxxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
2. Xxxxxxxxxxx Xxxxxxxx Xxx Xxxxxxx Xxxxxx 000 $0.08 $11,999.92
0000 XXX Xxxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
3. Xxxxxxx Xxxxxx Two Lincoln Centre 162 $0.08 $11,999.92
0000 XXX Xxxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
4. Xxxx X. Xxxxxx Two Lincoln Centre 81 $0.08 $6,000.00
0000 XXX Xxxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
5. Xxx Xxxx Siang Two Lincoln Centre 324 $0.08 $23,999.92
0000 XXX Xxxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
6. Xxx Xxxx Two Lincoln Centre 648 $0.08 $47,999.76
0000 XXX Xxxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
7. Xxxxx Xxxxxxx Two Lincoln Centre 20 $0.08 $1,481.44
0000 XXX Xxxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
8. Xxxxxxx Xxxxxx Two Lincoln Centre 162 $0.08 $11,999.92
0000 XXX Xxxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
9. Xxxxx Xxxxxxx Two Lincoln Centre 20 $0.08 $1,481.44
0000 XXX Xxxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
