Exhibit 4.1
CONVERTIBLE PREFERRED STOCK AND WARRANT
PURCHASE AGREEMENT
THIS CONVERTIBLE PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT (this
"Agreement") is made as of ________ by and between NuWay Medical, Inc., a
Delaware corporation (the "Company"), and _____________________ (the
"Purchaser").
RECITALS
WHEREAS, the Company desires to sell to Purchaser and Purchaser desires
to purchase from the Company NuWay Medical, Inc. shares of the Company's
Convertible Preferred Stock (the "Convertible Preferred Stock") at a price of
$.50 per share, with one Warrant per share purchased; said Warrant(s) shall be
exercisable at .20 cents per Warrant, no sooner than six (6) months from the
date of issuance expiring at the end of Three (3) years and callable by the
Company if it's Common Stock trades at or above .35 cents for ten consecutive
trading days. Subject to the terms and conditions of this Agreement and the
other documents or instruments contemplated hereby.
NOW, THEREFORE, the parties hereto hereby agree as follows:
AGREEMENT
Section 1. Sale and Issuance of Convertible Preferred Stock.
Subject to the terms and conditions of this Agreement, the Company has
authorized the sale and issuance (the "Issuance") to Purchaser of the
Convertible Preferred Stock. At the Closing (as defined in Section 2.1), the
Company shall sell to Purchaser, and Purchaser shall purchase from the Company,
the Convertible Preferred Stock at a purchase price of $.50 per share, to
include One Warrant for each share purchased, exercisable at $ .20 cents with
six month piggy-back registration rights. The Warrant will be exercisable for a
term of Three (3) years, at which point the Warrant may be extended or called in
by the Company. The holders of the Preferred shall have the right to convert the
Preferred, at the option of the holder, after sic months into shares of Common
Stock of the Company, at the rate of one share of Preferred for each share of
Common Stock subject to proportional adjustments made for capital
reorganizations, stock splits, reclassifications, etc. The Convertible Preferred
Stock and the Warrants are being offered separately and not as units, and each
is separately transferable The total purchase price is $.50 PER SHARE MULTIPLIED
BY THE NUMBER OF SHARES PURCHASED (the "Purchase Price"), subject to the terms
and conditions of this Agreement.
Section 2. The Closing.
2.1 The Closing.
The closing of the Issuance to Purchaser (the "Closing") shall take
place simultaneously with the execution and delivery of this Agreement at the
offices of the Company.
2.2 Actions at the Closing.
(a) At the Closing, or within Ninety (90) days, the Company shall
deliver to Purchaser a stock certificate representing the Convertible Preferred
Stock. In addition, The Company will issues applicable Warrant certificates. In
the absence of the issuance of any certificate due, this agreement shall serve
as evidence of ownership.
(b) At the Closing, Seller shall execute and deliver to the Company
payment equal to Fifty Cents ($.50) per share multiplied by the number of shares
purchased in cash.
(c) Schedule A attached ("Schedule A"), describes the amount of
investment by purchaser, as may be amended from time to time.
Section 3. Representations and Warranties of the Company.
The Company hereby represents and warrants to Purchaser as follows:
3.1 Organization.
The Company is duly organized, validly existing and in good standing
under the laws of the State of Delaware and is qualified to conduct its business
as a foreign corporation in each jurisdiction where the failure to be so
qualified would have a material adverse effect on the Company.
3.2 Authorization of Agreement, Etc.
The execution, delivery and performance by the Company of this
Agreement, and all other documents or instruments contemplated hereby or thereby
have been duly authorized by all requisite corporate action by the Company; and
this Agreement has been duly executed and delivered by the Company. Each of the
Documents when executed and delivered by the Company, constitutes the valid and
binding obligation of the Company, enforceable against the Company in accordance
with its terms, subject to applicable bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratorium or other similar laws affecting creditors'
rights and remedies generally, and subject as to enforceability to general
principles of equity (regardless of whether enforcement is sought in a
proceeding at law or in equity).
3.3 Capitalization.
The authorized capital stock of the Company consists of (i)
100,000,000 shares of common stock, of which approximately 23,000,000 shares are
issued and outstanding, and (ii) 25,000,000 shares of preferred stock, none of
which are issued or outstanding.
Section 4. Representations and Warranties of Purchaser.
Purchaser hereby represents and warrants to the Company as follows:
4.1 Authorization of the Documents.
Purchaser has all requisite power and authority (corporate or
otherwise) to execute, deliver and perform this Agreement, and each other
document or instrument contemplated hereby or thereby and the transactions
contemplated thereby, and the execution, delivery and performance by Purchaser
of the Documents have been duly authorized by all requisite action by Purchaser
and each such Document, when executed and delivered by Purchaser, constitutes a
valid and binding obligation of Purchaser, enforceable against Purchaser in
accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other similar laws
affecting creditors' rights and remedies generally, and subject, as to
enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity).
4.2 Not an Affiliate; No Prior Investment.
Purchaser is neither an officer, director nor "affiliate" (as that term
is defined in Rule 405 of the Securities Act of 1933, as amended (the
"Securities Act"). Neither Purchaser nor any of its affiliates owned in the
aggregate five percent (5%) or greater percentage of Company common stock at or
prior to the Closing Date.
4.3 Investment Intent. This Agreement is made with Purchaser in
reliance upon Purchaser's representations to the Company, evidenced by
Purchaser's execution of this Agreement, that Purchaser is acquiring the
Convertible Preferred Stock for investment for Purchaser's own accounts, not as
nominee or agent, and not with a view to, or for resale in connection with, any
distribution or public offering thereof within the meaning of the Securities Act
of 1933, as amended (the "Securities Act").
4.4 Convertible Preferred Stock Not Registered. Purchaser understands
and acknowledges that the offering of Convertible Preferred Stock pursuant to
this Agreement will not be registered under the Securities Act on the grounds
that the offering and sale of securities contemplated by this Agreement are
exempt from registration under the Securities Act pursuant to Section 4(2)
thereof, and that the Company's reliance upon such exemption is predicated upon
Purchaser's representations set forth in this Agreement. Purchaser understands
and acknowledges that the Convertible Preferred Stock must be held indefinitely
unless the Convertible Preferred Stock is subsequently registered under the
Securities Act or an exemption from such registration is available.(See section
1. Sale and Issuance of Convertible Preferred Stock).
4.5 Knowledge and Experience. Purchaser (i) has such knowledge and
experience in financial and business matters as to be capable of evaluating the
merits and risks of Purchaser's prospective investment in the Common Stock; (ii)
has the ability to bear the economic risk of Purchaser's prospective investment;
(iii) has been furnished with and has had access to such information as
Purchaser has considered necessary to verify the accuracy of the information
supplied; (iv) has had all questions which have been asked by Purchaser
satisfactorily answered by the Company; and (v) has not been offered the
Convertible Preferred Stock by any form of advertisement, article, notice or
other communication published in any newspaper, magazine, or similar media or
broadcast over television or radio, or any seminar or meeting whose attendees
have been invited by any such media.
4.6 Not Organized to Purchase. Purchaser has not been organized for the
purpose of purchasing the Convertible Preferred Stock. Purchaser is an
accredited investor as defined in Rule 501(a) of Regulation D promulgated under
the Securities Act.
4.7 Holding Requirements. Purchaser understands that if the Company
does not have a registration statement covering the Convertible Preferred Stock
under the Securities Act in effect when Purchaser decides to sell the
Convertible Preferred Stock, Purchaser may be required to hold the Convertible
Preferred Stock subject to piggy-back registration rights. Purchaser also
understands that any sale of the Convertible Preferred Stock that might be made
by Purchaser in reliance upon Rule 144 under the Securities Act may be made only
in limited amounts in accordance with the terms and conditions of that rule.
4.8 Legend. Purchaser understands that each certificate representing
the Convertible Preferred Stock shall be stamped or otherwise imprinted with a
legend in the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR
UNDER THE SECURITIES LAWS OF ANY STATE. SUCH SECURITIES MAY NOT BE SOLD
OR OFFERED FOR SALE OR OTHERWISE HYPOTHECATED OR DISTRIBUTED EXCEPT (A)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES
UNDER THE ACT, OR (B) PURSUANT TO A VALID EXEMPTION FROM SUCH
REGISTRATION UNDER THE ACT AND UNDER THE SECURITIES LAW OF ANY STATE
AND UPON RECEIPT BY THE COMPANY OF AN OPINION OF COUNSEL SATISFACTORY
IN FORM AND SUBSTANCE TO IT THAT ANY SUCH SALE IS IN COMPLIANCE WITH,
OR NOT SUBJECT TO, THE ACT AND STATE SECURITIES LAWS."
Where applicable, the Company shall remove such legend so as to
facilitate the sale of such shares, if and to the extent applicable, pursuant to
Rule 144 under the Act, provided (in the case of Rule 144 sales) that if
Purchaser requests such removal, the Company shall have provided such
documentation as the Company and its transfer agent shall reasonably require in
connection therewith.
Section 5. Indemnification.
Purchaser hereby agrees to indemnify and defend (with counsel
acceptable to the Company) the Company and its officers, directors, employees
and agents and hold them harmless from and against any and all liability, loss,
damage, cost or expense, including costs and reasonable attorneys' fees,
incurred on account of or arising from:
(i) Any breach of or inaccuracy in Purchaser's representations,
warranties or agreements herein;
(ii) Any action, suit or proceeding based on a claim that any of
Purchaser's representations and warranties were inaccurate or misleading, or
otherwise cause for obtaining damages or redress from the Company or any
officer, director, employee or agent of the Company under the Securities Act.
Registration Rights.
Section 6. The Purchaser in this offering will be granted the following
"piggy-back" registration rights:
(a) Whenever the Company shall propose to file a registration statement
under the Securities Act on a form which permits the inclusion of the Shares for
resale (the "Registration Statement"), it will give written notice to each
Purchaser in this offering at least fifteen (15) business days prior to the
anticipated filing thereof, specifying the approximate date on which the Company
proposes to file the Registration Statement and the intended method of
distribution in connection therewith, and advising the holder of the Shares (the
"Shareholder") of his right to have any or all of the Shares then held by him
included among the securities to be covered by such registration statement (the
"Piggy-Back Rights").
(b) Subject to Section (d) and Section (e) hereof, in the event that
the Shareholder has and shall elect to utilize the Piggy-Back Rights, the
Company shall include in the Registration Statement the number of the Shares
identified by the Shareholder in a written request (the "Piggy-Back Request")
given to the Company not later than ten (10) Business Days prior to the proposed
filing date of the Registration Statement. The Shares identified in the
Piggy-Back Request shall be included in the Registration Statement on the same
terms and conditions as the other shares of Common Stock included in the
Registration Statement.
(c) Notwithstanding anything in this Agreement to the contrary, the
Shareholder shall not have Piggy-Back Rights with respect to (i) a registration
statement on Form S-4 or Form S-8 or Form S-3 (with respect to dividend
reinvestment plans and similar plans) or any successor forms thereto, (ii) a
registration statement filed in connection with an exchange offer or an offering
of securities solely to existing stockholders or employees of the Company, (iii)
a registration statement filed in connection with an offering by the Company of
securities convertible into or exchangeable for Common Stock, and (iv) a
registration statement filed in connection with private placement of securities
of the Company (whether for cash or in connection with an acquisition by the
Company or one of its subsidiaries).
(d) If the lead managing underwriter selected by the Company for an
underwritten offering for which Piggy-Back Rights are requested determines that
marketing or other factors require a limitation on the number of shares of
Common Stock to be offered and sold in such offering, then (i) such underwriter
shall provide written notice thereof to each of the Company and the
Shareholders, and (ii) there shall be included in the offering, first, all
shares of Common Stock proposed by the Company to be sold for its account (or
such lesser amount as shall equal the maximum number determined by the lead
managing underwriter as aforesaid) and, second, only that number of Shares
requested to be included in the Registration Statement by the Shareholder that
such lead managing underwriter reasonably and in good faith believes will not
substantially interfere with (including, without limitation, adversely affect
the pricing of) the offering of all the shares of Common Stock that the Company
desires to sell for its own account.
(e) Nothing contained in this Section shall create any liability on the
part of the Company to the Shareholder if the Company for any reason should
decide not to file a Registration Statement for which Piggy-Back Rights are
available or to withdraw such Registration Statement subsequent to its filing,
regardless of any action whatsoever that the Shareholder may have taken, whether
as a result of the issuance by the Company of any notice hereunder or otherwise.
(f) As a condition to providing Piggy-Back Rights, the Company may
require each Shareholder to furnish to the Company in writing such information
regarding the proposed distribution by such Shareholder as the Company may from
time to time reasonably request.
(g) Except as set forth below, the Company shall bear all expenses of
the Registration Statement. Each Shareholder will be individually responsible
for payment of his own legal fees (if the selling security holder retains legal
counsel separate from that of the Company), underwriting fees and brokerage
discounts, commissions and other sales expenses incident to any registration
hereunder.
Section 7. Successors and Assigns.
This Agreement shall bind and inure to the benefit of the Company,
Purchaser and their respective successors and assigns.
Section 8. Final Agreement; Entire Agreement.
This Agreement and the other writings and agreements referred to in
this Agreement or delivered pursuant to this Agreement are the final agreements
between the parties and contain the entire understanding of the parties with
respect to the subject matter hereof and supersede all prior agreements and
understandings, written and oral, signed or unsigned, among the parties with
respect thereto.
Section 9. Notices.
All notices, demands and requests of any kind to be delivered to any
party in connection with this Agreement shall be in writing and shall be deemed
to have been duly given if personally delivered or if sent by
internationally-recognized overnight courier or by registered or certified mail,
return receipt requested and postage prepaid, addressed as follows:
if to the Company, to:
NuWay Medical, Inc.
00000 Xxxxx Xxxxxx Xx. xxxxx 000
Xxxxxx Xxxxx, XX. 00000
Attention: Xxxxxx Xxxxxxx
if to the Purchaser, to:
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or to such other address as the party to whom notice is to be given may have
furnished to the other parties to this Agreement in writing in accordance with
the provisions of this Section 10. Any such notice or communication shall be
deemed to have been received (i) in the case of personal delivery, on the date
of such delivery, (ii) in the case of internationally-recognized overnight
courier, on the next business day after the date when sent and (iii) in the case
of mailing, on the third business day following that on which the piece of mail
containing such communication is posted.
Section 10. Amendments.
This Agreement may not be modified or amended, or any of the provisions
of this Agreement waived, except by written agreement of the Company and
Purchaser.
Section 11. Governing Law; Waiver of Jury Trial.
All questions concerning the construction, interpretation and validity
of this Agreement shall be governed by and construed and enforced in accordance
with the domestic laws of the State of California without giving effect to any
choice or conflict of law provision or rule (whether in the State of California
or any other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of California. In furtherance of the
foregoing, the internal law of the State of California will control the
interpretation and construction of this Agreement, even if under such
jurisdiction's choice of law or conflict of law analysis, the substantive law of
some other jurisdiction would ordinarily or necessarily apply.
BECAUSE DISPUTES ARISING IN CONNECTION WITH COMPLEX FINANCIAL
TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN EXPERIENCED AND
EXPERT PERSON AND THE PARTIES WISH APPLICABLE LAWS TO APPLY (RATHER THAN
ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR DISPUTES BE RESOLVED BY A
JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION
OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE PARTIES HERETO
WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT OR PROCEEDING BROUGHT TO
ENFORCE OR DEFEND ANY RIGHTS OR REMEDIES UNDER THIS AGREEMENT OR ANY DOCUMENTS
RELATED HERETO.
Section 12. Submission to Jurisdiction.
Any legal action or proceeding with respect to this Agreement may be
brought in the courts of the State of California and the United States of
America located in the City of Los Angeles, California and, by execution and
delivery of this Agreement, the Company hereby accepts for itself and in respect
of its property, generally and unconditionally, the jurisdiction of the
aforesaid courts. Purchaser hereby irrevocably waives, in connection with any
such action or proceeding, any objection, including, without limitation, any
objection to the venue or based on the grounds of forum non conveniens, which it
may now or hereafter have to the bringing of any such action or proceeding in
such respective jurisdictions. Purchaser hereby irrevocably consents to the
service of process of any of the aforementioned courts in any such action or
proceeding by the mailing of copies thereof by registered or certified mail,
postage prepaid, to it at its address as set forth herein.
Section 13. Severability.
It is the desire and intent of the parties that the provisions of this
Agreement be enforced to the fullest extent permissible under the law and public
policies applied in each jurisdiction in which enforcement is sought.
Accordingly, in the event that any provision of this Agreement would be held in
any jurisdiction to be invalid, prohibited or unenforceable for any reason, such
provision, as to such jurisdiction, shall be ineffective, without invalidating
the remaining provisions of this Agreement or affecting the validity or
enforceability of such provision in any jurisdiction. Notwithstanding the
foregoing, if such provision could be more narrowly drawn so as not be invalid,
prohibited or unenforceable in such jurisdiction, it shall, as to such
jurisdiction, be so narrowly drawn, without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of such
provision in any other jurisdiction.
Section 14. Independence of Agreements, Covenants, Representations and
Warranties.
All agreements and covenants hereunder shall be given independent
effect so that if a certain action or condition constitutes a default under a
certain agreement or covenant, the fact that such action or condition is
permitted by another agreement or covenant shall not affect the occurrence of
such default, unless expressly permitted under an exception to such covenant. In
addition, all representations and warranties hereunder shall be given
independent effect so that if a particular representation or warranty proves to
be incorrect or is breached, the fact that another representation or warranty
concerning the same or similar subject matter is correct or is not breached will
not affect the incorrectness of or a breach of a representation and warranty
hereunder. The exhibits and any schedules attached hereto are hereby made part
of this Agreement in all respects.
Section 15. Counterparts.
This Agreement may be executed in any number of counterparts, and each
such counterpart of this Agreement shall be deemed to be an original instrument,
but all such counterparts together shall constitute but one agreement. Facsimile
counterpart signatures to this Agreement shall be acceptable and binding.
Section 16. Headings.
The section and paragraph headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
Section 17. Preparation of Agreement.
The Company prepared this Agreement solely on its behalf. Each party to
this Agreement acknowledges that: (i) the party had the advice of, or sufficient
opportunity to obtain the advice of, legal counsel separate and independent of
legal counsel for any other party hereto; (ii) the terms of the transactions
contemplated by this Agreement are fair and reasonable to such party; and (iii)
such party has voluntarily entered into the transactions contemplated by this
Agreement without duress or coercion. Each party further acknowledges that such
party was not represented by the legal counsel of any other party hereto in
connection with the transactions contemplated by this Agreement, nor was he or
it under any belief or understanding that such legal counsel was representing
his or its interests. Each party agrees that no conflict, omission or ambiguity
in this Agreement, or the interpretation thereof, shall be presumed, implied or
otherwise construed against any other party to this Agreement on the basis that
such party was responsible for drafting this Agreement.
(REST OF PAGE LEFT INTENTIONALLY BLANK)
IN WITNESS WHEREOF, each of the undersigned has duly executed this Common Stock
Purchase Agreement as of the date first written above.
COMPANY:
NUWAY MEDICAL, INC., a Delaware corporation
By:
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Name: Xxxxxx Xxxxxxx
Title: President
PURCHASER:
[name]
By:
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Name:
Title:
