SECURITIES PURCHASE AGREEMENT Dated as of November 6, 2007 among MEDICAL DISCOVERIES, INC. and THE PURCHASERS LISTED ON EXHIBIT A
SECURITIES
PURCHASE
AGREEMENT
Dated
as of November 6, 2007
among
MEDICAL
DISCOVERIES, INC.
and
THE
PURCHASERS LISTED ON EXHIBIT A
This
SECURITIES PURCHASE AGREEMENT this (“Agreement”), dated as of November 6,
2007, by and among Medical Discoveries, Inc., a Utah corporation (the
“Company”), and the persons and entities listed on Exhibit A
hereto (each, a “Purchaser” and collectively, the “Purchasers”),
for the sale by the Company, and the purchase by Purchasers, of shares of the
Company’s Series B Convertible Preferred Stock, no par value per share (the
“Series B Preferred Stock”). The Company and the Purchasers are
collectively referred to herein as the “Parties.”
The
Parties hereto agree as follows:
ARTICLE
I
Purchase
and Sale of Series B Preferred Stock
Section
1.1 Purchase
and Sale of Series B Preferred Stock.
Upon
the following terms and conditions, the Company hereby agrees to issue and
sell
to the Purchasers, and each Purchaser, severally but not jointly, hereby agrees
to purchase from the Company that number of shares of Series B Preferred Stock
set forth opposite such Purchaser’s name on Exhibit
A
hereto
(the “Preferred
Shares”),
for
the purchase price (the “Purchase
Price”)
set
forth opposite such Purchaser’s name on Exhibit
A.
Each
share of Series B Preferred Stock shall have a stated price of $100 per share,
shall be convertible into shares of Common Stock of the Company at an initial
conversion price equal to eleven cents ($0.11) per share, and shall have the
rights, preferences, privileges and restrictions set forth in the Certificate
of
Designation, Preferences and Rights of the Series B Convertible Preferred Stock
(the “Certificate
of Designation”),
the
form of which is attached hereto as Exhibit
B.
The
Company and the Purchasers are executing and delivering this Agreement in
accordance with and in reliance upon the exemption from securities registration
afforded by Section 4(2) of the U.S. Securities Act of 1933, as amended, and
the
rules and regulations promulgated thereunder (the “Securities
Act”),
including Regulation D (“Regulation
D”),
and/or upon such other exemption from the registration requirements of the
Securities Act as may be available with respect to any or all of the investments
to be made hereunder.
Section
1.2 Tranches.
The
purchase of the Preferred Shares shall be effected in two tranches. The Company
hereby agrees to issue and sell to the Purchasers, and the Purchasers, severally
but not jointly, hereby agree to purchase the number of shares of Series B
Preferred Stock set forth opposite their respective names on Exhibit
A
as
follows:
(a) At
the
Closing (as defined below), the Company shall issue and sell to the Purchasers,
and each Purchaser shall acquire from the Company, that number of Preferred
Shares representing fifty percent (50%) of the number of shares of Series B
Preferred Stock set forth opposite such Purchaser’s name on Exhibit
A
(the
“First
Tranche”),
and
each Purchaser shall pay the Company fifty percent (50%) of the Purchase Price
set forth opposite such Purchaser’s name on Exhibit
A;
and
(b) On
or
before November 23, 2007, the Company shall issue and sell to each Purchaser,
and each Purchaser shall acquire from the Company, the remaining shares of
Series B Preferred Stock set forth opposite such Purchaser’s name on
Exhibit
A
that
were not sold to the Purchaser at the Closing (the “Second
Tranche”),
and
each Purchaser shall pay the Company for such shares the balance of the Purchase
Price set forth opposite such Purchaser’s name on Exhibit
A.
The
Purchase
Price payable by each Purchaser
at each of the First Tranche and Second Tranche shall be payable to the Company
in cash, in the lawful currency of the United States of America, made by bank
wire transfer, and paid from readily available funds of each
Purchaser.
Section
1.3 Closing.
The
closing of the purchase and sale of the Series B Preferred Stock to be acquired
by the Purchasers from the Company under this Agreement shall take place at
the
offices of the Company located at ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇, (the “Closing”)
at
10:00 a.m., Pacific Time (i) on or before November 9, 2007; provided,
however,
that
all of the conditions set forth in Article IV hereof and applicable to the
Closing shall have been fulfilled or waived in accordance herewith, or (ii)
at
such other time and place or on such date as the Purchasers and the Company
may
agree upon (the “Closing
Date”).
Section
1.4 Reserved
Shares of Common Stock.
The
Company covenants to authorize, reserve and continue to reserve, free of
preemptive rights and other similar contractual rights of stockholders, a number
of its authorized but unissued shares of Common Stock equal to the aggregate
number of shares of Common Stock issuable upon the conversion of the Preferred
Shares. Any shares of Common Stock issuable upon the conversion of the Preferred
Shares (and such shares when issued) are herein referred to as the “Conversion
Shares.”
The
Preferred Shares and the Conversion Shares are sometimes collectively referred
to herein as the “Securities.”
ARTICLE
II
Representations
and Warranties
Section
2.1 Representations
and Warranties of the Company.
In
order to induce the Purchasers to enter into this Agreement and to purchase
the
Preferred Shares, the Company hereby makes the following representations and
warranties to the Purchasers:
(a) Organization,
Good Standing and Power.
The
Company is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Utah and has the requisite corporate
power to own, lease and operate its properties and assets and to conduct its
business as it is now being conducted. Except as set forth on Schedule
2.1(g)
hereto,
the Company does not have any Subsidiaries (as defined in Section 2.1(g)) or
own
securities of any kind in any other entity. The Company and each such Subsidiary
is duly qualified as a foreign corporation to do business, and is in good
standing in every jurisdiction in which the nature of the business conducted
or
property owned by it makes such qualification necessary, except for any
jurisdiction(s) (alone or in the aggregate) in which the failure to be so
qualified will not have a Material Adverse Effect. For the purposes of this
Agreement, “Material
Adverse Effect”
means
any adverse effect on the business, operations, properties, prospects or
financial condition of the Company or its Subsidiaries, taken as a whole, and
which is material to such entity or other entities controlling or controlled
by
such entity or which is likely to materially hinder the performance by the
Company of its material obligations hereunder.
-2-
(b) Authorization;
Enforcement.
As of
the Closing Date, the Company will have authorized the issuance, pursuant to
the
terms and conditions of this Agreement, of a number of shares of Series B
Preferred Stock sufficient to meet its obligations hereunder (up to a maximum
of
13,000 Preferred Shares). The Company has the requisite corporate power and
authority to enter into and perform this Agreement and any other agreement
contemplated hereby, and to issue and sell the Preferred Shares in accordance
with the terms hereof. The execution, delivery and performance of this Agreement
by the Company and the consummation by it of the transactions contemplated
hereby have been duly and validly authorized by all necessary corporate action,
and no further consent or authorization of the Company, its Board of Directors
or its shareholders is required. This Agreement has been duly executed and
delivered by the Company, and constitutes a valid and binding obligation of
the
Company enforceable against the Company in accordance with its terms, except
as
such enforceability may be limited by applicable bankruptcy, reorganization,
moratorium, liquidation, conservatorship, receivership or similar laws relating
to, or affecting generally the enforcement of, creditor’s rights and remedies or
by other equitable principles of general application.
(c) Capitalization.
The
authorized capital stock of the Company and the shares thereof currently issued
and outstanding as of November 6, 2007 are set forth on Schedule
2.1(c)
hereto.
All of the outstanding shares of the Company’s Common Stock and any other
securities of the Company have been duly and validly authorized. Except as
set
forth on Schedule
2.1(c)
hereto,
no shares of Common Stock or any other securities of the Company are entitled
to
preemptive rights or registration rights and there are no outstanding options,
warrants, scrip, rights to subscribe to, call or commitments of any character
whatsoever relating to, or securities or rights convertible into, any shares
of
capital stock of the Company. The Company has furnished or made available to
the
Purchasers true and correct copies of the Company’s Amended and Restated
Articles of Incorporation, as amended and in effect on the date hereof (the
“Articles
of Incorporation”),
and
the Company’s Amended Bylaws as in effect on the date hereof (the “Bylaws”).
(d) Issuance
of Securities.
The
Preferred Shares to be issued as contemplated herein have been duly authorized
by all necessary corporate action and, when paid for or issued in accordance
with the terms hereof, the Preferred Shares shall be validly issued and
outstanding, fully paid and nonassessable and free and clear of all liens,
encumbrances and rights of refusal of any kind and the holders shall be entitled
to all rights accorded to a holder set forth in the Certificate of Designation.
When the Conversion Shares are issued upon the conversion the Preferred Shares
in accordance with the Certificate of Designation, such shares will be duly
authorized by all necessary corporate action and validly issued and outstanding,
fully paid and nonassessable, free and clear of all liens, encumbrances and
rights of refusal of any kind and the holders shall be entitled to all rights
accorded to a holder of Common Stock.
-3-
(e) No
Conflicts.
Except
as set forth in Schedule
2.1(e)
hereto,
the execution, delivery and performance of this Agreement by the Company and
the
consummation by the Company of the transactions contemplated hereby do not
(i)
violate any provision of the Articles of Incorporation or
Bylaws, (ii) conflict with, or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or give to others
any rights of termination, amendment, acceleration or cancellation of, any
agreement, mortgage, deed of trust, indenture, note, bond, license, lease
agreement, instrument or obligation to which the Company is a party or by which
the Company’s properties or assets are bound, (iii) create or impose a lien,
mortgage, security interest, charge or encumbrance of any nature on any property
or asset of the Company under any agreement or any commitment to which the
Company is a party or by which the Company is bound or by which any of its
properties or assets are bound, or (iv) result in a violation of any federal,
state, local or foreign statute, rule, regulation, order, judgment or decree
(including federal and state securities laws and regulations) applicable to
the
Company or by which any property or asset of the Company is bound or affected,
except, in all cases other than violations pursuant to clauses (i) or (iv)
(with
respect to federal and state securities laws) above, for such conflicts,
defaults, terminations, amendments, acceleration, cancellations and violations
as would not, individually or in the aggregate, have a Material Adverse Effect.
The Company is not required under federal, state, foreign or local law, rule
or
regulation to obtain any consent, authorization or order of, or make any filing
or registration with, any court or governmental agency in order for it to
execute, deliver or perform any of its obligations under this Agreement or
issue
and sell the Preferred Shares or the Conversion Shares in accordance with the
terms hereof or thereof (other than any filings which may be required to be
made
by the Company with the Securities and Exchange Commission (the “SEC”)
and/or
the any exchange on which the Company’s securities are traded prior to or
subsequent to the Closing, or state securities administrators subsequent to
the
Closing).
(f) SEC
Documents.
The
Company’s Common Stock is registered pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended (the “Exchange
Act”),
and
except as disclosed on Schedule
2.1(f)
hereto,
the Company has filed all Form 10-KSBs and Form 10-QSBs required to be filed
by
it with the SEC pursuant to the reporting requirements of the Exchange Act
(collectively, the “SEC
Documents”).
(g) Subsidiaries.
Schedule
2.1(g)
hereto
sets forth each Subsidiary of the Company, showing the jurisdiction of its
incorporation or organization and showing the percentage of each person’s
ownership of the outstanding stock or other interests of such Subsidiary. For
the purposes of this Agreement, “Subsidiary”
shall
mean any corporation or other entity of which at least a majority of the
securities or other ownership interest having ordinary voting power (absolutely
or contingently) for the election of directors or other persons performing
similar functions are at the time owned directly or indirectly by the Company
and/or any of its other Subsidiaries. All of the outstanding shares of capital
stock of each Subsidiary have been duly authorized and validly issued, and
are
fully paid and nonassessable. Neither the Company nor any Subsidiary is subject
to any obligation (contingent or otherwise) to repurchase or otherwise acquire
or retire any shares of the capital stock of any Subsidiary or any convertible
securities, rights, warrants or options of the type described in the preceding
sentence except as set forth on Schedule
2.1(g)
hereto.
-4-
(h) No
Undisclosed Events or Circumstances.
Since
October 31, 2007, no event or circumstance has occurred or exists with respect
to the Company or its Subsidiaries or their respective businesses, properties,
prospects, operations or financial condition, which, under applicable law,
rule
or regulation, requires, or will require, public disclosure or announcement
by
the Company but which has not yet been so publicly announced or
disclosed.
(i) Litigation.
There
is no action, suit, claim, investigation, arbitration, alternate dispute
resolution proceeding or other proceeding pending or, to the knowledge of the
Company, threatened against the Company or any Subsidiary which questions the
validity of this Agreement or any of the transactions contemplated hereby or
any
action taken or to be taken pursuant hereto. Except as set forth on Schedule
2.1(i)
hereto,
there is no action, suit, claim, investigation, arbitration, alternate dispute
resolution proceeding or other proceeding pending or, to the knowledge of the
Company, threatened against or involving the Company, any Subsidiary or any
of
their respective properties or assets, which individually or in the aggregate,
would have a Material Adverse Effect. There are no outstanding orders,
judgments, injunctions, awards or decrees of any court, arbitrator or
governmental or regulatory body against the Company or any Subsidiary or any
officers or directors of the Company or any Subsidiary in their capacities
as
such, which individually, or in the aggregate, would have a Material Adverse
Effect.
(j) Compliance
with Law.
The
business of the Company and the Subsidiaries has been and is presently being
conducted in accordance with all applicable federal, state and local
governmental laws, rules, regulations and ordinances, except as set forth in
the
SEC Documents or such that, individually or in the aggregate, the noncompliance
therewith would not have a Material Adverse Effect. The Company and each of
its
Subsidiaries have all franchises, permits, licenses, consents and other
governmental or regulatory authorizations and approvals necessary for the
conduct of its business as now being conducted by it unless the failure to
possess such franchises, permits, licenses, consents and other governmental
or
regulatory authorizations and approvals, individually or in the aggregate,
could
not reasonably be expected to have a Material Adverse Effect.
(k) Taxes.
Except
as set forth on Schedule
2.1(k)
hereto,
the Company and each of the Subsidiaries has accurately prepared and filed
all
federal, state and other tax returns required by law to be filed by it, has
paid
or made provisions for the payment of all taxes shown to be due and all
additional assessments, and adequate provisions have been and are reflected
in
the financial statements of the Company and the Subsidiaries for all current
taxes and other charges to which the Company or any Subsidiary is subject and
which are not currently due and payable. None of the federal income tax returns
of the Company or any Subsidiary have been audited by the Internal Revenue
Service. The Company has no knowledge of any additional assessments, adjustments
or contingent tax liability (whether federal or state) of any nature whatsoever,
whether pending or threatened against the Company or any Subsidiary for any
period, nor of any basis for any such assessment, adjustment or contingency
that
could reasonably be expected to have a Material Adverse Effect.
(l) Material
Agreements.
Except
for that certain Service Agreement, dated as of October 15, 2007, between the
Company and Corporativo LODEMO S.A DE CV (the “LODEMO
Agreement”),
the
Company has filed with the SEC all written contracts, instruments, agreements,
commitments, or obligations entered into by the Company or any Subsidiary since
July 1, 2007. The Company and each of its Subsidiaries has in all material
respects performed all the obligations required to be performed by them to
date
under all such agreements, have received no notice of default and, to the best
of the Company’s knowledge, are not in default under any such agreements now in
effect, the result of which could cause a Material Adverse Effect.
-5-
(m) Securities
Act of 1933.
The
Company has complied and will comply with all applicable federal and state
securities laws in connection with the offer, issuance and sale of the Preferred
Shares and the Conversion Shares hereunder. Neither the Company nor anyone
acting on its behalf, directly or indirectly, has or will sell, offer to sell
or
solicit offers to buy any of the Securities, or similar securities to, or
solicit offers with respect thereto from, or enter into any preliminary
conversations or negotiations relating thereto with, any person, or has taken
or
will take any action so as to bring the issuance and sale of any of the
Securities under the registration provisions of the Securities Act and
applicable state securities laws. Neither the Company nor any of its affiliates,
nor any person acting on its or their behalf, has engaged in any form of general
solicitation or general advertising (within the meaning of Regulation D under
the Securities Act) in connection with the offer or sale of the Preferred
Shares.
Section
2.2 Representations
and Warranties of the Purchasers.
Each of
the Purchasers hereby makes the following representations and warranties to
the
Company with respect solely to himself/itself and not with respect to any other
Purchaser:
(a) Organization
and Standing of the Purchasers.
If such
Purchaser is an entity, such Purchaser is a corporation, limited liability
company or partnership duly incorporated or organized, validly existing and
in
good standing under the laws of the jurisdiction of its incorporation or
organization.
(b) Authorization
and Power.
Such
Purchaser has the requisite power and authority to enter into and perform this
Agreement and to purchase the Preferred Shares sold to it hereunder. The
execution, delivery and performance of this Agreement by such Purchaser and
the
consummation by it of the transactions contemplated hereby have been duly
authorized by all necessary corporate, partnership or other action, if
applicable, and no further consent or authorization of such Purchaser or its
Board of Directors, stockholders, or partners, as the case may be, is required.
This Agreement has been duly authorized, executed and delivered by such
Purchaser. This Agreement constitutes the valid and binding obligations of
such
Purchaser enforceable against such Purchaser in accordance with their terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation, conservatorship,
receivership or similar laws relating to, or affecting generally the enforcement
of, creditor’s rights and remedies or by other equitable principles of general
application.
(c) Acquisition
for Investment.
Such
Purchaser is purchasing the Preferred Shares solely for its own account for
the
purpose of investment and not with a view to or for sale in connection with
the
distribution thereof. Such Purchaser does not have a present intention to sell
any of the Securities, nor a present arrangement (whether or not legally
binding) or intention to effect any distribution of any of the Securities to
or
through any person or entity. Such Purchaser acknowledges that it (i) has such
knowledge and experience in financial and business matters such that such
Purchaser is capable of evaluating the merits and risks of its investment in
the
Company, (ii) is able to bear the financial risks associated with an investment
in the Securities, and (iii) has been given full access to such records of
the
Company and the Subsidiaries and to the officers of the Company and the
Subsidiaries as it has deemed necessary or appropriate to conduct its due
diligence investigation.
-6-
(d) Rule
144.
Such
Purchaser understands that the Securities must be held indefinitely unless
such
Securities are registered under the Securities Act or an exemption from
registration is available. Such Purchaser acknowledges that it is familiar
with
Rule 144 of the rules and regulations of the SEC, as amended, promulgated
pursuant to the Securities Act (“Rule
144”),
and
that such Purchaser has been advised that Rule 144 permits resales only under
certain circumstances. Such Purchaser understands that to the extent that Rule
144 is not available, such Purchaser will be unable to sell any Securities
without either registration under the Securities Act or the existence of another
exemption from such registration requirement.
(e) General.
Such
Purchaser understands that the Securities are being offered and sold in reliance
on a transactional exemption from the registration requirements of federal
and
state securities laws and the Company is relying upon the truth and accuracy
of
the representations, warranties, agreements, acknowledgments and understandings
of such Purchaser set forth herein in order to determine the applicability
of
such exemptions and the suitability of such Purchaser to acquire the Securities.
Such Purchaser understands that no United States federal or state agency or any
government or governmental agency has passed upon or made any recommendation
or
endorsement of the Securities.
(f) Delinquent
SEC Documents; Access to Information.
Such
Purchaser expressly acknowledges that the Company has disclosed, and it is
aware
of the Company’s delinquency in filing certain reports required to be filed by
the Company pursuant to the reporting requirements of the Exchange Act
(including, without limitation, the disclosures made under Schedule
2.1(f)
hereto)
(all such delinquent reports, the “Delinquent
SEC Filings”).
Such
Purchaser acknowledges that such Purchaser has had the opportunity to ask
questions of and receive answers from, or obtain additional information and
documents from, the executive officers of the Company concerning the financial
and other affairs of the Company, and to the extent deemed necessary in light
of
such Purchaser’s personal knowledge of the Company’s affairs, such Purchaser has
asked such questions and received answers to the full satisfaction of such
Purchaser. Notwithstanding the Delinquent SEC Filings, such Purchaser desires
to
invest in the Company, execute this Agreement and perform the transactions
contemplated hereby.
(g) No
General Solicitation.
Such
Purchaser acknowledges that the Preferred Shares were not offered to such
Purchaser by means of any form of general or public solicitation or general
advertising, or publicly disseminated advertisements or sales literature,
including (i) any advertisement, article, notice or other communication
published in any newspaper, magazine, or similar media, or broadcast over
television or radio, or (ii) any seminar or meeting to which such Purchaser
was
invited by any of the foregoing means of communications.
-7-
(h) Accredited
Investor.
Such
Purchaser is an accredited investor (as defined in Rule 501 of Regulation D),
and such Purchaser has such experience in business and financial matters that
it
is capable of evaluating the merits and risks of an investment in the
Securities. Such Purchaser acknowledges that an investment in the Securities
is
speculative and involves a high degree of risk.
ARTICLE
III
Covenants
The
Company covenants with each Purchaser as follows, which covenants are for the
benefit of each Purchaser and their respective permitted assignees.
Section
3.1 Securities
Compliance.
The
Company shall notify the SEC, in accordance with its rules and regulations,
of
the transactions contemplated by this Agreement, and shall take all other
necessary action and proceedings as may be required and permitted by applicable
law, rule and regulation, for the legal and valid issuance of the Securities
to
the Purchasers, or their respective subsequent holders.
Section
3.2 Compliance
with Laws.
The
Company shall comply, and cause each Subsidiary to comply, with all applicable
laws, rules, regulations and orders, the noncompliance with which could have
a
Material Adverse Effect.
Section
3.3 Reporting
Requirements.
The
Company covenants that it shall use its commercially best efforts to file the
Delinquent SEC Filings as promptly as possible and, thereafter, that it shall
file, or cause to be filed, in a timely manner as and when due, all reports,
schedules, forms, statements and other documents required to be filed by it
with
the SEC pursuant to the reporting requirements of the Exchange Act or the
Securities Act, as applicable.
Section
3.4 Reservation
of Shares.
The
Company covenants that it shall use its commercial best efforts to amend its
Articles of Incorporation by no later than June 1, 2008 to increase its number
of authorized shares of Common Stock to a number sufficient to enable the
issuance, on a fully diluted basis, of the maximum number of shares of Common
Stock upon the conversion of all Preferred Shares.
Section
3.5 Delivery
of Share Certificates.
At
Closing or as soon thereafter as reasonably possible (but in any event no later
than three Business Days immediately following the Closing Date), the Company
shall deliver to each Purchaser certificates representing the Preferred Shares
(in such denominations as each Purchaser may request) acquired by such Purchaser
hereunder.
Section
3.6 Short
Sales and Confidentiality.
From
the date hereof until the Closing, each Purchaser,
severally and not jointly with the other Purchasers, covenants that it has
not,
nor will it execute any Short Sales (or
enter into any other similar hedging transaction with respect to) of the
Preferred Shares or shares of the Company’s Common Stock issuable upon the
conversion thereof. Each
Purchaser, severally and not jointly with the other Purchasers, covenants that
until such time as the transactions contemplated by this Agreement are publicly
disclosed by the Company, such Purchaser will maintain the confidentiality
of
the existence and terms of this Agreement and the transactions contemplated
hereby.
For purposes of this Section 3.6, “Short
Sales”
means
all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange
Act (but shall not be deemed to include the location and/or reservation of
borrowable shares of Common Stock).
-8-
ARTICLE
IV
Conditions
Section
4.1 Conditions
Precedent to the Obligation of the Company to Close and to Sell the Preferred
Shares.
The
obligation hereunder of the Company to close and issue and sell the Preferred
Shares to the Purchasers as contemplated in this Agreement is subject to the
satisfaction or waiver, prior to the Closing, of the conditions set forth below.
These conditions are for the Company’s sole benefit and may be waived by the
Company at any time in its sole discretion.
(a) Accuracy
of the Purchasers’ Representations and Warranties.
The
representations and warranties of each Purchaser shall be true and correct
in
all material respects as of the date when made and as of the Closing Date as
though made at that time, except for representations and warranties that are
expressly made as of a particular date, which shall be true and correct in
all
material respects as of such date.
(b) Performance
by the Purchasers.
Each
Purchaser shall have performed, satisfied and complied in all material respects
with all covenants, agreements and conditions required by this Agreement to
be
performed, satisfied or complied with by the Purchasers at or prior to the
Closing Date.
(c) No
Injunction.
No
statute, rule, regulation, executive order, decree, ruling or injunction shall
have been enacted, entered, promulgated or endorsed by any court or governmental
authority of competent jurisdiction which prohibits the consummation of any
of
the transactions contemplated by this Agreement.
(d) Delivery
of Purchase Price.
The
Purchase Price for the Preferred Shares shall have been delivered to the Company
as contemplated in Section 1.2 of this Agreement.
(e) No
Proceedings or Litigation.
No
action, suit or proceeding before any arbitrator or any governmental authority
shall have been commenced, and no investigation by any governmental authority
shall have been threatened, against the Company or any Subsidiary, or any of
the
officers, directors or affiliates of the Company or any Subsidiary, seeking
to
restrain, prevent or change the transactions contemplated by this Agreement,
or
seeking damages in connection with such transactions.
(f) Filing
of Certificate of Designation.
The
Certificate of Designation shall have been filed with the office of the
Secretary of State of the State of Utah.
-9-
Section
4.2 Conditions
Precedent to the Obligation of the Purchasers to Close and to Purchase the
Preferred Shares.
The
obligation hereunder of the Purchasers to purchase the Preferred Shares and
consummate the transactions contemplated by this Agreement is subject to the
satisfaction or waiver, prior to the Closing, of each of the conditions set
forth below. These conditions are for the Purchasers’ sole benefit and may be
waived by the Purchasers at any time in their sole discretion.
(a) Accuracy
of the Company’s Representations and Warranties.
Each of
the representations and warranties of the Company in this Agreement shall be
true and correct in all material respects as of the Closing Date, except for
representations and warranties that speak as of a particular date, which shall
be true and correct in all material respects as of such date.
(b) No
Injunction.
No
statute, rule, regulation, executive order, decree, ruling or injunction shall
have been enacted, entered, promulgated or endorsed by any court or governmental
authority of competent jurisdiction which prohibits the consummation of any
of
the transactions contemplated by this Agreement.
(c) No
Proceedings or Litigation.
No
action, suit or proceeding before any arbitrator or any governmental authority
shall have been commenced, and no investigation by any governmental authority
shall have been threatened, against the Company or any Subsidiary, or any of
the
officers, directors or affiliates of the Company or any Subsidiary, seeking
to
restrain, prevent or change the transactions contemplated by this Agreement,
or
seeking damages in connection with such transactions.
(d) Filing
of Certificate of Designation.
The
Certificate of Designation shall have been filed with the office of the
Secretary of State of the State of Utah.
(e) Opinion
of Counsel.
The
Purchasers shall have received an opinion of counsel to the Company, dated
the
Closing Date, in the form of Exhibit
C
hereto.
(f) Resolutions.
The
Board of Directors of the Company shall have adopted resolutions authorizing
the
issuance of the Preferred Shares to the Purchasers (the “Resolutions”).
(g) Officer’s
Certificate.
The
Company shall have delivered to the Purchasers a certificate of an executive
officer of the Company, dated as of the Closing Date, as to (i) the Resolutions,
(ii) the Articles of Incorporation and the Bylaws, each as in effect at the
Closing, and (iii) confirming the accuracy of the Company’s representations,
warranties and covenants as of the Closing Date.
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ARTICLE
V
Certificate
Legend
Section
5.1 Legend.
Each
certificate representing the Preferred Shares and the Conversion Shares shall
be
stamped or otherwise imprinted with a legend substantially in the following
form
(in addition to any legend required by applicable state securities or “blue sky”
laws):
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE (THE “SECURITIES”) HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”)
OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE
DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER APPLICABLE
STATE SECURITIES LAWS OR MEDICAL DISCOVERIES, INC. SHALL HAVE RECEIVED AN
OPINION OF ITS COUNSEL THAT REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES
ACT AND UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT
REQUIRED.
ARTICLE
VI
Termination
Section
6.1 Termination
by Mutual Consent.
This
Agreement may be terminated as follows:
(a) At
any
time prior to the Closing Date by the mutual written consent of the Company
and
the Purchasers; or
(b) By
either
the Company or the Purchasers if the Closing does not occur on or before
November 16, 2007.
Section
6.2 Effect
of Termination.
In the
event of termination by the Company or the Purchasers, written notice thereof
shall forthwith be given to the other party and the transactions contemplated
by
this Agreement shall be terminated without further action by any party. If
this
Agreement is terminated as provided in Section 6.1 herein, this Agreement shall
become void and of no further force and effect, except for Sections 8.1 and
8.2,
and Article VII herein. Nothing in this Section 6.2 shall be deemed to release
the Company or any Purchaser from any liability for any breach under this
Agreement, or to impair the rights of the Company or such Purchaser to compel
specific performance by the other party of its obligations under this
Agreement.
ARTICLE
VII
Miscellaneous
Section
7.1 Fees
and Expenses.
Each
party shall pay the fees and expenses of its advisors, counsel, accountants
and
other experts, if any, and all other expenses, incurred by such party incident
to the negotiation, preparation, execution, delivery and performance of this
Agreement.
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Section
7.2 Specific
Enforcement; Consent to Jurisdiction.
(a) The
Company and the Purchasers acknowledge and agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached.
It
is accordingly agreed that the Parties shall be entitled to an injunction or
injunctions to prevent or cure breaches of the provisions of this Agreement
and
to enforce specifically the terms and provisions hereof or thereof, this being
in addition to any other remedy to which any of them may be entitled by law
or
equity.
(b) The
Company and each Purchaser (i) hereby irrevocably submit to the non-exclusive
jurisdiction of the United States District Court sitting in the Central District
of California and the courts of the State of California located in the City
of
Los Angeles for the purposes of any suit, action or proceeding arising out
of or
relating to this Agreement or the transactions contemplated hereby, and (ii)
hereby waive, and agree not to assert in any such suit, action or proceeding,
any claim that it is not personally subject to the jurisdiction of such court,
that the suit, action or proceeding is brought in an inconvenient forum or
that
the venue of the suit, action or proceeding is improper. The Company and each
Purchaser consent to process being served in any such suit, action or proceeding
by mailing a copy thereof to such party at the address in effect for notices
to
it under this Agreement and agrees that such service shall constitute good
and
sufficient service of process and notice thereof. Nothing in this Section 7.2
shall affect or limit any right to serve process in any other manner permitted
by law. The Company and the Purchasers hereby agree that the prevailing party
in
any suit, action or proceeding arising out of or relating to the Preferred
Shares or this Agreement shall be entitled to reimbursement for reasonable
legal
fees from the non-prevailing party.
Section
7.3 Entire
Agreement; Amendment.
This
Agreement and the Certificate of Designation contain the entire understanding
and agreement of the parties with respect to the matters covered hereby and,
except as specifically set forth herein or in the Certificate of Designation,
neither the Company nor any Purchaser make any representation, warranty,
covenant or undertaking with respect to such matters, and they supersede all
prior understandings and agreements with respect to said subject matter, all
of
which are merged herein. No provision of this Agreement may be waived or amended
other than by a written instrument signed by the Company and the holders of
at
least a majority in interest of the then-outstanding Preferred Shares. No such
amendment shall be effective to the extent that it applies to less than all
of
the holders of the Preferred Shares then outstanding. No consideration shall
be
offered or paid to any person to amend or consent to a waiver or modification
of
any provision of any of this Agreement unless the same consideration is also
offered to all of the parties to this Agreement or holders of Preferred Shares,
as the case may be.
Section
7.4 Notices.
Any
notice, demand, request, waiver or other communication required or permitted
to
be given hereunder shall be in writing and shall be effective (a) upon hand
delivery by telecopy or facsimile at the address or number designated below
(if
delivered on a business day during normal business hours where such notice
is to
be received), or the first business day following such delivery (if delivered
other than on a business day during normal business hours where such notice
is
to be received), or (b) on the second business day following the date of mailing
by express courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur. The addresses
for
such communications shall be:
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| If to the Company: | Medical Discoveries, Inc. | |
| ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇. ▇▇▇▇▇ ▇▇▇▇ | ||
| ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ | ||
| Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, President & COO | ||
|
with
copies (which copies
shall
not constitute notice
to
the Company) to:
|
▇▇▇▇ & ▇▇▇▇▇ Professional Corporation | |
| ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ | ||
| ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ | ||
| Attention: ▇▇▇▇▇▇ ▇▇▇▇▇, Esq. | ||
| Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇ | ||
| Telephone: (▇▇▇) ▇▇▇-▇▇▇▇ | ||
| If to any Purchaser: | At the address of such Purchaser set forth on the signature page of this Agreement. | |
Any
party
hereto may from time to time change its address for notices by giving at least
ten (10) days written notice of such changed address to the other party
hereto.
Section
7.5 Waivers.
No
waiver by any party of any default with respect to any provision, condition
or
requirement of this Agreement shall be deemed to be a continuing waiver in
the
future or a waiver of any other provision, condition or requirement hereof,
nor
shall any delay or omission of any party to exercise any right hereunder in
any
manner impair the exercise of any such right accruing to it
thereafter.
Section
7.6 Captions;
Interpretation.
The
article, section and subsection headings in this Agreement are for convenience
only and shall not constitute a part of this Agreement for any other purpose
and
shall not be deemed to limit or affect any of the provisions hereof.
The
interpretation of this Agreement shall not be affected by the party who drafted
this Agreement, and all parties waive any statute, legal decision, or common
law
principle that would require interpretation of any ambiguities in this Agreement
against the party that drafted this Agreement.
Section
7.7 Successors
and Assigns.
This
Agreement shall be binding upon and inure to the benefit of the parties and
their successors and assigns. After the Closing, the assignment by a party
to
this Agreement of any rights hereunder shall not affect the obligations of
such
party under this Agreement. The Purchasers may not assign the Preferred Shares,
their rights under this Agreement and any other rights hereto without the prior
written consent of the Company.
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Section
7.8 No
Third Party Beneficiaries.
This
Agreement is intended for the benefit of the parties hereto and their respective
permitted successors and assigns and is not for the benefit of, nor may any
provision hereof be enforced by, any other person.
Section
7.9 Governing
Law.
This
Agreement shall be governed by and construed in accordance with the internal
laws of the State of California, and the United States of America without giving
effect to the choice of law provisions. This Agreement shall not be interpreted
or construed with any presumption against the party causing this Agreement
to be
drafted.
Section
7.10 Counterparts.
This
Agreement may be executed in any number of counterparts, all of which taken
together shall constitute one and the same instrument and shall become effective
when counterparts have been signed by each party and delivered to the other
parties hereto, it being understood that all parties need not sign the same
counterpart.
Section
7.11 Publicity.
The
Company agrees that it will not disclose, and will not include in any public
announcement, the names of the Purchasers without the consent of the Purchasers,
which consent shall not be unreasonably withheld or delayed, or unless and
until
such disclosure is required by law, rule or applicable regulation, and then
only
to the extent of such requirement.
Section
7.12 Severability.
The
provisions of this Agreement are severable and, in the event that any court
of
competent jurisdiction shall determine that any one or more of the provisions
or
part of the provisions contained in this Agreement shall, for any reason, be
held to be invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other provision or part
of a
provision of this Agreement and this Agreement shall be reformed and construed
as if such invalid or illegal or unenforceable provision, or part of such
provision, had never been contained herein, so that such provisions would be
valid, legal and enforceable to the maximum extent possible.
Section
7.13 Further
Assurances.
From
and after the date of this Agreement, upon the request of the Purchasers or
the
Company, the Company and each Purchaser shall execute and deliver such
instruments, documents and other writings as may be reasonably necessary or
desirable to confirm and carry out and to effectuate fully the intent and
purposes of this Agreement.
-14-
Section
8.15 Independent
Nature of Purchasers’ Obligations and Rights.
The
obligations of each Purchaser under this Agreement are several and not joint
with the obligations of any other Purchaser, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser under this Agreement. Nothing contained herein, and no action taken
by
any Purchaser pursuant hereto, shall be deemed to constitute the Purchasers
as a
partnership, an association, a joint venture or any other kind of entity, or
create a presumption that the Purchasers are in any way acting in concert or
as
a group with respect to such obligations or the transactions contemplated by
this Agreement. Each Purchaser confirms that it has independently participated
in the negotiation of the transactions contemplated hereby with the advice
of
its own counsel and advisors. Each Purchaser shall be entitled to independently
protect and enforce its rights, including, without limitation, the rights
arising out of this Agreement, and it shall not be necessary for any other
Purchaser to be joined as an additional party in any proceeding for such
purpose.
[Remainder
of page intentionally left blank. Signature pages to follow.]
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IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the date first above
written.
| MEDICAL DISCOVERIES, INC. | ||
| |
|
|
| Date: | By: | |
|
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ |
||
| Title: President & COO | ||
[Signatures
of Purchasers to follow on next pages.]
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| PURCHASER: | ||
| |
|
|
| By: | ||
|
|
||
| Name: | ||
|
|
||
| Address: |
|
|
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