EXHIBIT 99.1
EXECUTION COPY
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (this "AGREEMENT") is dated as of
January 24, 2008, by and among MicroIslet, Inc., a Nevada corporation (the
"COMPANY"), and the purchasers identified from time to time on the signature
pages hereto (each, a "Purchaser" and collectively, the "PURCHASERS").
WHEREAS, subject to the terms and conditions set forth in this
Agreement and pursuant to Section 4(2) of the Securities Act (as defined below)
and Rule 506 promulgated thereunder, the Company desires to issue and sell to
the Purchasers, and the Purchasers, severally and not jointly, desire to
purchase from the Company certain securities of the Company, as more fully
described in this Agreement.
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in
this Agreement, and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the Company and the Purchasers agree
as follows:
ARTICLE I.
DEFINITIONS
1.1 DEFINITIONS. In addition to the terms defined elsewhere in this
Agreement, for all purposes of this Agreement, the following terms shall have
the meanings indicated in this SECTION 1.1:
"ACTION" means any action, suit, inquiry, notice of violation,
proceeding (including any partial proceeding such as a deposition) or
investigation pending or threatened in writing against or affecting the Company,
any Subsidiary or any of their respective properties before or by any court,
arbitrator, governmental or administrative agency, regulatory authority
(federal, state, county, local or foreign), stock market, stock exchange or
trading facility.
"AFFILIATE" means any Person that, directly or indirectly
through one or more intermediaries, controls or is controlled by or is under
common control with a Person, as such terms are used in and construed under Rule
144. With respect to a Purchaser, any investment fund or managed account that is
managed on a discretionary basis by the same investment manager as such
Purchaser will be deemed to be an Affiliate of such Purchaser.
"AGGREGATE COMMITMENT" means, with respect to each Purchaser
and any Closing, the aggregate commitment to lend money to the Company pursuant
to the Note issued to such Purchaser at such Closing, as set forth under such
Purchaser's name on the signature pages hereof for such Closing next to the
label "Aggregate Commitment".
"BUSINESS DAY" means any day except Saturday, Sunday and any
day which shall be a federal legal holiday or a day on which banking
institutions in the State of New York are authorized or required by law or other
governmental action to close.
"CLOSING" means any closing of the purchase and sale of the
Notes and Warrants pursuant to ARTICLE II.
"CLOSING DATE" means, with respect to any Closing, the date of
such Closing.
"COMMISSION" means the Securities and Exchange Commission.
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"COMMON STOCK" means the common stock of the Company, $.001
par value per share, and any securities into which such common stock may
hereafter be reclassified.
"COMMON STOCK EQUIVALENTS" means any securities of the Company
or any Subsidiary which entitle the holder thereof to acquire Common Stock at
any time, including any debt, preferred stock, rights, options, warrants or
other instrument that is at any time convertible into or exchangeable for, or
otherwise entitles the holder thereof to receive, Common Stock or other
securities that entitle the holder to receive, directly or indirectly, Common
Stock.
"COMPANY COUNSEL" means Sheppard, Mullin, Xxxxxxx & Xxxxxxx
LLP.
"DISCLOSURE MATERIALS" means (i) with respect to the date
hereof, all SEC Reports (as defined in SECTION 3.1(g)) filed prior to the date
hereof and the Original Schedules (as defined in SECTION 3.1), and (ii) with
respect to any Closing Date, all SEC Reports filed prior to such Closing Date
and the Updated Schedules (as defined in SECTION 3.1) delivered in connection
with the applicable Closing.
"ELIGIBLE MARKET" means any of the New York Stock Exchange,
the American Stock Exchange, the NASDAQ Global Market, the NASDAQ Capital Market
or the OTC Bulletin Board (or their respective successors).
"EFFECTIVE DATE" means the date that the Registration
Statement is first declared effective by the Commission.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"INITIAL ADVANCE" means, with respect to each Purchaser and
any Closing, the amount of money such Purchaser will lend and advance to the
Company at such Closing, as set forth under such Purchaser's name on the
signature pages hereof for such Closing next to the label "Initial Advance".
"INITIAL CLOSING" means the initial Closing of the purchase
and sale of Notes and Warrants pursuant to ARTICLE II.
"LIEN" means any lien, charge, encumbrance, security interest,
right of first refusal or other restrictions of any kind, but excluding any
restriction imposed under applicable securities laws.
"NOTES" means, collectively, the Subordinated Convertible
Unsecured Revolving Promissory Notes of the Company, each in the form of EXHIBIT
A, in an aggregate original principal amount not to exceed $2,000,000, issued or
issuable to the Purchasers at the Closings pursuant to this Agreement.
"PERSON" means an individual or corporation, partnership,
trust, incorporated or unincorporated association, joint venture, limited
liability company, joint stock company, government (or an agency or subdivision
thereof) or other entity of any kind.
"PROCEEDING" means an action, claim, suit, investigation or
proceeding (including an investigation or partial proceeding, such as a
deposition), whether commenced or threatened.
"REGISTRATION STATEMENT" means a registration statement
covering the resale of the Warrant Shares.
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"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
Agreement, dated as of the date of this Agreement, among the Company and the
Purchasers, in the form of EXHIBIT C.
"REQUIRED PURCHASERS" means any combination of Purchasers
holding Notes representing a majority of the aggregate principal amount of all
Notes then outstanding.
"RULE 144" means Rule 144 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended from time to time,
or any similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.
"SECURITIES" means the Notes, the Warrants, and the Warrant
Shares.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SUBSIDIARY" means any subsidiary of the Company that would be
required to be listed in an exhibit to the Company's Annual Report on Form
10-KSB covering the period in which the date of this Agreement falls.
"TRADING DAY" means (a) any day on which the Common Stock is
listed or quoted and traded on its primary Trading Market, (b) if the Common
Stock is not then listed or quoted and traded on its primary Trading Market,
then a day on which trading occurs on an Eligible Market (or any successor
thereto), or (c) if trading ceases to occur on an Eligible Market (or any
successor thereto), any Business Day.
"TRADING MARKET" means whichever of the Eligible Markets on
which the Common Stock is listed or quoted for trading on the date in question.
"TRANSACTION DOCUMENTS" means this Agreement, the Notes, the
Warrants, the Registration Rights Agreement, the Transfer Agent Instructions and
any other documents or agreements executed in connection with the transactions
contemplated hereunder.
"TRANSFER AGENT INSTRUCTIONS" means the Company's Transfer
Agent Instructions in the form of EXHIBIT D.
"WARRANTS" means, collectively, the Common Stock purchase
warrants, each in the form of EXHIBIT B, issued or issuable to the Purchasers at
the Closings pursuant to this Agreement.
"WARRANT SHARES" means, collectively, the shares of Common
Stock issued or issuable upon exercise of each Warrant.
ARTICLE II.
PURCHASE AND SALE
2.1 CLOSINGS. Subject to the terms and conditions set forth in this
Agreement:
(a) On January 24, 2008 (or at such other time as the Company
and the Purchasers participating in the Initial Closing may from time to time
agree in writing), the Company shall issue and sell to each Purchaser
participating in the Initial Closing a Note having a principal amount up to such
Investor's Aggregate Commitment for the Initial Closing and a Warrant
exercisable for a number of shares of Common Stock as provided therein, and each
such Purchaser shall, severally and not jointly, advance and lend to the Company
pursuant to such Note an amount equal to such Purchaser's Initial Advance. The
Initial Closing shall take place at the offices of Sheppard, Mullin, Xxxxxxx &
Hampton LLP, 00000 Xx Xxxxxx Xxxx, Xxxxx 000, Xxx Xxxxx, Xxxxxxxxxx 00000-0000,
or at such other location or times as the Company and such Purchasers may agree.
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(b) On the proposed Closing Date (as set forth on the
signature pages hereof for such Purchaser next to the label "Proposed Closing
Date") selected by the Company and the Purchasers for any Closing other than the
Initial Closing (or at such other time as the Company and the Purchasers
participating in such Closing may from time to time agree in writing), the
Company shall issue and sell to each Purchaser participating in such Closing a
Note having a principal amount up to such Investor's Aggregate Commitment for
such Closing and a Warrant exercisable for a number of shares of Common Stock as
provided therein, and each such Purchaser shall, severally and not jointly,
advance and lend to the Company pursuant to such Note an amount equal to such
Purchaser's Initial Advance for such Closing. Each such Closing shall take place
at the offices of Sheppard, Mullin, Xxxxxxx & Xxxxxxx LLP, 00000 Xx Xxxxxx Xxxx,
Xxxxx 000, Xxx Xxxxx, Xxxxxxxxxx 00000-0000, or at such other location or times
as the Company and the Purchasers participating in such Closing may agree. Each
such Closing must (i) be for the sale of securities yielding not less than
$100,000 in gross proceeds to the Company, and (ii) occur prior to February 29,
2008.
2.2 CLOSING DELIVERIES.
(a) At each Closing, the Company shall deliver or cause to be
delivered to each Purchaser participating in such Closing the following:
(i) a Note, registered in the name of such Purchaser,
representing a principal amount up to such Purchaser's Aggregate
Commitment for such Closing;
(ii) a Warrant, registered in the name of such
Purchaser, pursuant to which such Purchaser shall have the right to
acquire a number of shares of Common Stock calculated as provided
therein;
(iii) the Registration Rights Agreement (or joinder
thereto) duly executed by the Company; and
(iv) the Transfer Agent Instructions executed by the
Company and delivered to and acknowledged by the Company's transfer
agent.
(b) At each Closing, each Purchaser participating in such
Closing shall deliver or cause to be delivered to the Company such Purchaser's
Initial Advance for such Closing in United States dollars and in immediately
available funds, by wire transfer to an account designated in writing by the
Company for such purpose.
2.3 CLOSING CONDITIONS.
(a) The obligations of the Company hereunder in connection
with any Closing are subject to the following conditions being met or waived by
the Company:
(i) the representations and warranties of each
Purchaser participating in such Closing made herein shall be true and
correct as of the date of this Agreement and shall be true and correct
as of the applicable Closing Date, except for representations and
warranties which address matters only as of a particular date, which
representations and warranties shall be true and correct as of such
date;
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(ii) all obligations, covenants and agreements of the
Purchasers required to be performed at or prior to the applicable
Closing Date shall have been performed; and
(iii) the delivery by the Purchasers of the items set
forth in SECTION 2.2(b).
(b) The respective obligations of the Purchasers hereunder in
connection with any Closing are subject to the following conditions being met or
waived by the Purchasers:
(i) the representations and warranties of the Company
made herein shall be true and correct as of the date of this Agreement
(giving effect to the Original Schedules) and shall be true and correct
as of the applicable Closing Date (giving effect to the Updated
Schedules), except for representations and warranties which address
matters only as of a particular date, which representations and
warranties shall be true and correct as of such date;
(ii) all obligations, covenants and agreements of the
Company required to be performed at or prior to the applicable Closing
Date shall have been performed;
(iii) the delivery by the Company of the items set
forth in SECTION 2.2(a);
(iv) there shall have been no Material Adverse Effect
(as hereinafter defined) with respect to the Company since the date
hereof; and
(v) at any time prior to such Closing, a banking
moratorium shall not have been declared either by the United States or
New York State authorities, nor shall there have occurred any
declaration of war by the United States or other national or
international calamity, which, in each case, in the reasonable judgment
of each Purchaser, makes it impracticable or inadvisable to purchase
the Notes and Warrants at such Closing.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The parties
acknowledge that the Company has concurrently with the execution and delivery
hereof by the Company delivered to the Purchasers on the date hereof disclosure
schedules setting forth exceptions to the representations and warranties made in
this SECTION 3.1 on the date hereof (the "ORIGINAL SCHEDULES") and may on any
Closing Date deliver to the Purchasers participating in such Closing updated
disclosure schedules setting forth exceptions to the representations and
warranties made in this SECTION 3.1 as of such Closing Date (the "UPDATED
SCHEDULES" and, together with the Original Schedules, the "SCHEDULES"). The
parties agree that the Company's disclosure of any matter or item in the
Schedules shall not (i) constitute an acknowledgement that such matter or item
is required to be disclosed therein or is material to a representation or
warranty set forth in this Agreement, or (ii) be used as a basis for
interpreting the terms "material," "materially," "materiality" or "Material
Adverse Effect" or any word or phrase of similar import, and does not mean that
such matter or item would, with any other matter or item, have or be reasonably
expected to have, individually or in the aggregate, a Material Adverse Effect on
the Company. The Company hereby makes the following representations and
warranties to each Purchaser on the date hereof and as of each Closing Date in
which such Purchaser participates, subject to information set forth in the
Disclosure Materials, which shall qualify each subsection in this SECTION 3.1
where such information is applicable:
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(a) ORGANIZATION AND QUALIFICATION. Each of the Company and
each Subsidiary is an entity duly incorporated or otherwise organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or organization (as applicable), with the requisite corporate or
other entity power and authority to own and use its properties and assets and to
carry on its business as currently conducted. Each of the Company and each
Subsidiary is duly qualified to conduct business and is in good standing as a
foreign corporation or other entity in each jurisdiction in which the nature of
the business conducted or property owned by it makes such qualification
necessary, except where the failure to be so qualified or in good standing, as
the case may be, could not, individually or in the aggregate, have or reasonably
be expected to result in (i) an adverse effect on the legality, validity or
enforceability of any Transaction Document, (ii) a material and adverse effect
on the results of operations, assets, business or condition (financial or
otherwise) of the Company and the Subsidiaries, taken as a whole, or (iii) an
adverse impairment to the Company's ability to perform on a timely basis its
obligations under any Transaction Document (any of (i), (ii) or (iii), a
"MATERIAL ADVERSE EFFECT"). Neither the Company nor any Subsidiary is in
violation or default of any of the provisions of its respective certificate or
articles of incorporation, by-laws or other organizational or charter document.
All direct and indirect subsidiaries of the Company are set forth in the
Disclosure Materials. Except as set forth in the Disclosure Materials, the
Company owns, directly or indirectly, all of the capital stock or other equity
interests of each Subsidiary free and clear of any Liens, and all the issued and
outstanding shares of capital stock of each Subsidiary are validly issued and
are fully paid, non-assessable and free of preemptive and similar rights to
subscribe for or purchase securities.
(b) AUTHORIZATION; ENFORCEMENT. The Company has the requisite
corporate power and authority to enter into and to consummate the transactions
contemplated by each of the Transaction Documents and otherwise to carry out its
obligations thereunder. The execution and delivery of each of the Transaction
Documents by the Company and the consummation by it of the transactions
contemplated thereby have been duly authorized by all necessary corporate action
on the part of the Company and no further action is required by the Company in
connection therewith. Each Transaction Document has been (or upon delivery will
have been) duly executed by the Company and, when delivered in accordance with
the terms hereof, will constitute the 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, insolvency,
reorganization, moratorium, liquidation, conservatorship, receivership or
similar laws relating to, or affecting generally the enforcement of, creditors'
rights and remedies or by other equitable principles.
(c) NO CONFLICTS. The execution, delivery and performance of
the Transaction Documents by the Company and the consummation by the Company of
the transactions contemplated thereby do not and will not (i) conflict with or
violate any provision of the Company's or any Subsidiary's certificate or
articles of incorporation, bylaws or other organizational or charter documents,
or (ii) conflict with, or constitute a default (or an event that 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 (with or without
notice, lapse of time or both) of, any agreement, credit facility, debt or other
instrument (evidencing a Company or Subsidiary debt or otherwise) to which the
Company or any Subsidiary is a party or by which any property or asset of the
Company or any Subsidiary is bound or affected, or (iii) assuming the accuracy
of Purchasers' representations and warranties and compliance by the Purchasers
of their respective covenants as set forth in this Agreement, result in a
violation of any law, rule, regulation, order, judgment, injunction, decree or
other restriction of any court or governmental authority to which the Company or
a Subsidiary is subject (including federal and state securities laws and
regulations), or by which any property or asset of the Company or a Subsidiary
is bound or affected; except in the case of each of clauses (ii) and (iii), such
as could not, individually or in the aggregate, have or reasonably be expected
to result in a Material Adverse Effect.
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(d) FILINGS, CONSENTS AND APPROVALS. The Company is not
required to obtain any consent, waiver, authorization or order of, give any
notice to, or make any filing or registration with, any court or other federal,
state, local or other governmental authority or other Person in connection with
the execution, delivery and performance by the Company of the Transaction
Documents, other than the Company's obligations with respect to the filing of
(i) notices under federal or state securities laws, and (ii) a Form 8-K as
contemplated by SECTION 4.3.
(e) ISSUANCE OF THE SECURITIES. The Warrant Shares have been
duly authorized and, when issued and paid for in accordance with the Transaction
Documents, will be duly and validly issued, fully paid and nonassessable, free
and clear of all Liens. The Company has reserved from its duly authorized
capital stock the maximum number of shares of Common Stock issuable pursuant to
the Warrants being issued at such Closing or at any prior Closing in order to
issue the full number of Warrant Shares as are or may become issuable in
accordance with such Warrants.
(f) CAPITALIZATION. The number of shares and type of all
authorized, issued and outstanding capital stock of the Company is set forth in
SCHEDULE 3.1(f). No securities of the Company are entitled to preemptive or
similar rights, and no Person has any right of first refusal, preemptive right,
right of participation, or any similar right to participate in the transactions
contemplated by the Transaction Documents. Except as set forth in the Disclosure
Materials, and except as a result of the purchase and sale of the Securities,
there are no outstanding options, warrants, scrip rights to subscribe to, calls
or commitments of any character whatsoever relating to, or securities, rights or
obligations convertible into or exchangeable for, or giving any Person any right
to subscribe for or acquire, any shares of Common Stock, or contracts,
commitments, understandings or arrangements by which the Company or any
Subsidiary is or may become bound to issue additional shares of Common Stock, or
securities or rights convertible or exchangeable into shares of Common Stock.
The issue and sale of the Securities will not, immediately or with the passage
of time, obligate the Company to issue shares of Common Stock or other
securities to any Person (other than the Purchasers and their permitted
successors and assigns) and will not result in a right of any holder of Company
securities to adjust the exercise, conversion, exchange or reset price under
such securities. All of the outstanding shares of capital stock of the Company
are validly issued, fully paid and nonassessable, have been issued in compliance
with all federal and state securities laws, and none of such outstanding shares
were issued in violation of any preemptive rights or similar rights to subscribe
for or purchase securities. No further approval or authorization of any
stockholder of the Company, the Board of Directors of the Company or others is
required for the issuance and sale of the Securities. There are no stockholders
agreements, voting agreements or other similar agreements with respect to the
Company's capital stock to which the Company is a party or, to the knowledge of
the Company, between or among any of the Company's stockholders.
(g) SEC REPORTS; FINANCIAL STATEMENTS. The Company has filed
all reports required to be filed by it under the Exchange Act, including
pursuant to Section 13(a) or 15(d) thereof, for the twenty-four (24) months
preceding the date hereof (or such shorter period as the Company was required by
law to file such reports) (the foregoing materials being collectively referred
to herein as the "SEC REPORTS") on a timely basis or has received a valid
extension of such time of filing and has filed any such SEC Reports prior to the
expiration of any such extension. Except as may have been corrected or
supplemented in a subsequent SEC Report, as of their respective dates, the SEC
Reports complied in all material respects with the requirements of the Exchange
Act and the rules and regulations of the Commission promulgated thereunder, and
none of the SEC Reports, when filed, contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. Except as may have
been corrected or supplemented in a subsequent SEC Report, the financial
statements of the Company included in the SEC Reports comply in all material
respects with applicable accounting requirements and the rules and regulations
of the Commission with respect thereto as in effect at the time of filing.
Except as may have been corrected or supplemented in a subsequent SEC Report,
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such financial statements have been prepared in accordance with United States
generally accepted accounting principles applied on a consistent basis during
the periods involved ("GAAP"), except as may be otherwise specified in such
financial statements or the notes thereto, or, in the case of unaudited
financial statements, as permitted by Item 310(b) of Regulation S-B promulgated
under the Securities Act and the Exchange Act, and fairly present in all
material respects the financial position of the Company and its consolidated
Subsidiaries as of and for the dates thereof and the results of operations and
cash flows for the periods then ended, subject, in the case of unaudited
statements, to normal, year-end audit adjustments and the lack of footnotes. The
Company has not received any letters of comment from the Staff of the SEC which
have not been satisfactorily resolved as of the date hereof.
(h) MATERIAL CHANGES. Since the date of the latest balance
sheet included within the SEC Reports, except as specifically disclosed in the
Disclosure Materials (including in the Form 8-K filed July 24, 2007 relating to
a change in the Company's principal registered public accounting firm and the
Form 8-K filed November 19, 2007 relating to a private placement of securities),
(i) there has been no event, occurrence or development that has had or that
could reasonably be expected to result in a Material Adverse Effect, (ii) the
Company has not incurred any material liabilities (contingent or otherwise)
other than (A) trade payables and accrued expenses incurred in the ordinary
course of business consistent with past practice and (B) liabilities not
required to be reflected in the Company's financial statements pursuant to GAAP
or required to be disclosed in filings made with the Commission, (iii) the
Company has not materially altered its method of accounting or changed its
principal registered public accounting firm, (iv) the Company has not declared
or made any dividend or distribution of cash or other property to its
stockholders (in their capacity as stockholders) or purchased, redeemed or made
any agreements to purchase or redeem any shares of its capital stock, and (v)
the Company has not issued any equity securities to any officer, director or
Affiliate, except pursuant to existing Company equity compensation plans.
(i) LITIGATION. There is no Action which (i) adversely affects
or challenges the legality, validity or enforceability of any of the Transaction
Documents or the Securities or (ii) could, if there were an unfavorable
decision, individually or in the aggregate, have or reasonably be expected to
result in a Material Adverse Effect. Neither the Company nor any Subsidiary, nor
any director or officer thereof, is or has been the subject of any Action
involving a claim of violation of or liability under federal or state securities
laws or a claim of breach of fiduciary duty. There has not been, and to the
knowledge of the Company, there is not pending or contemplated, any
investigation by the Commission involving the Company or any current or former
director or officer of the Company. The Commission has not issued any stop order
or other order suspending the effectiveness of any registration statement filed
by the Company or any Subsidiary under the Exchange Act or the Securities Act.
(j) LABOR RELATIONS. No material labor dispute exists or, to
the knowledge of the Company, is imminent with respect to any of the employees
of the Company.
(k) COMPLIANCE. Neither the Company nor any Subsidiary (i) is
in default under or in violation of (and no event has occurred that has not been
waived that, with notice or lapse of time or both, would result in a default by
the Company or any Subsidiary under), nor has the Company or any Subsidiary
received notice of a claim that it is in default under or that it is in
violation of, any indenture, loan or credit agreement or any other agreement or
instrument to which it is a party or by which it or any of its properties is
bound (whether or not such default or violation has been waived), (ii) is in
violation of any order of any court, arbitrator or governmental body, or (iii)
is or has been in violation of any statute, rule or regulation of any
governmental authority, including all foreign, federal, state and local laws
relating to taxes, environmental protection, occupational health and safety,
product quality and safety and employment and labor matters, except in each case
as could not, individually or in the aggregate, have or reasonably be expected
to result in a Material Adverse Effect.
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(l) REGULATORY PERMITS. The Company and the Subsidiaries
possess all certificates, authorizations and permits issued by the appropriate
federal, state, local or foreign regulatory authorities necessary to conduct
their respective businesses as described in the Disclosure Materials, except
where the failure to possess such permits would not, individually or in the
aggregate, have or reasonably be expected to result in a Material Adverse Effect
("MATERIAL PERMITS"), and neither the Company nor any Subsidiary has received
any notice of proceedings relating to the revocation or modification of any
Material Permit.
(m) TITLE TO ASSETS. The Company and the Subsidiaries have
good and marketable title in fee simple to all real property owned by them that
is material to their respective businesses and good and marketable title in all
personal property owned by them that is material to their respective businesses,
in each case free and clear of all Liens, except for Liens as do not materially
affect the value of such property and do not materially interfere with the use
made and proposed to be made of such property by the Company and the
Subsidiaries and Liens for the payment of federal, state or other taxes, the
payment of which is not delinquent. Any real property and facilities held under
lease by the Company and the Subsidiaries are held by them under valid,
subsisting and enforceable leases of which the Company and the Subsidiaries are
in material compliance.
(n) PATENTS AND TRADEMARKS. The Company and the Subsidiaries
have, or have rights to use, all patents, patent applications, trademarks,
trademark applications, service marks, trade names, copyrights, licenses and
other similar rights that are necessary or material for use in connection with
their respective businesses as described in the Disclosure Materials and which
the failure to so have could, individually or in the aggregate, have or
reasonably be expected to result in a Material Adverse Effect (collectively, the
"INTELLECTUAL PROPERTY RIGHTS"). Neither the Company nor any Subsidiary has
received a written notice that the Intellectual Property Rights used by the
Company or any Subsidiary misappropriates or infringes upon the rights of any
Person. Except as set forth in the Disclosure Materials, to the knowledge of the
Company, all such Intellectual Property Rights are enforceable and there is no
existing infringement by another Person of any of the Intellectual Property
Rights.
(o) TRANSACTIONS WITH AFFILIATES AND EMPLOYEES. Except as set
forth in the Disclosure Materials, none of the officers or directors of the
Company and, to the knowledge of the Company, none of the employees of the
Company is presently a party to any transaction with the Company or any
Subsidiary (other than as Purchasers hereunder, as holders of stock options
and/or warrants, and for services as employees, officers and directors),
including any contract, agreement or other arrangement providing for the
furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any officer,
director or such employee or, to the knowledge of the Company, any entity in
which any officer, director, or any such employee has a substantial interest or
is an officer, director, trustee or partner.
(p) INTERNAL CONTROL OVER FINANCIAL REPORTING. The Company and
the Subsidiaries maintain a system of internal control over financial reporting
sufficient to provide reasonable assurance that (i) transactions are executed in
accordance with management's general or specific authorizations, (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain asset accountability, (iii) access to assets is permitted only in
accordance with management's general or specific authorization, and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences. The Company has established disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and
designed such disclosure controls and procedures to ensure that material
information relating to the Company, including its Subsidiaries, is made known
to the certifying officers by others within those entities, particularly during
the period in which the Company's most recently filed periodic report under the
9
Exchange Act, as the case may be, is being prepared. The Company's certifying
officers have evaluated the effectiveness of the Company's disclosure controls
and procedures as of the end of the period for the most recently filed periodic
report under the Exchange Act (such date, the "EVALUATION DATE"). The Company
presented in its most recently filed periodic report under the Exchange Act the
conclusions of the certifying officers about the effectiveness of the disclosure
controls and procedures based on their evaluations as of the Evaluation Date.
Since the Evaluation Date, there have been no significant changes in the
Company's internal control over financial reporting (as such term is defined in
Exchange Act Rule 13a-15(f)) or, to the knowledge of the Company, in other
factors that could significantly affect the Company's internal control over
financial reporting.
(q) CERTAIN FEES. No brokerage or finder's fees or commissions
are or will be payable by the Company to any broker, financial advisor or
consultant, finder, placement agent, investment banker, bank or other Person
with respect to the transactions contemplated by this Agreement. The Purchasers
shall have no obligation with respect to any fees or with respect to any claims
(other than such fees or commissions owed by a Purchaser pursuant to agreements
of such Purchaser which fees or commissions shall be the sole responsibility of
such Purchaser) made by or on behalf of other Persons for fees of a type
contemplated in this SECTION 3.1(q) that may be due in connection with the
transactions contemplated by this Agreement.
(r) CERTAIN REGISTRATION MATTERS. Assuming the accuracy of the
Purchasers' representations and warranties set forth in SECTION 3.2(b) - Section
3.2(g), inclusive, with respect to each Closing, no registration under the
Securities Act is required for the offer and sale of the Securities by the
Company to the Purchasers under the Transaction Documents. The Company has not
granted or agreed to grant to any Person any rights (including "piggy-back"
registration rights) to have any securities of the Company registered with the
Commission or any other governmental authority that have not been satisfied.
(s) INSURANCE. The Company and the Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as are prudent and customary in the businesses in which the
Company and the Subsidiaries are engaged. The Company has no reason to believe
that it will not be able to renew its existing insurance coverage as and when
such coverage expires or to obtain similar coverage from similar insurers as may
be necessary to continue its business without a significant increase in cost.
(t) LISTING AND MAINTENANCE REQUIREMENTS. Except as set forth
in the Disclosure Materials, the Company is, and has no reason to believe that
it will not, upon the issuance of the Warrants hereunder and in the foreseeable
future, continue to be, in compliance with the listing and maintenance
requirements for continued listing of the Common Stock on the principal Trading
Market. The execution of this Agreement does not contravene the rules and
regulations of the principal Trading Market. Except as set forth in the
Disclosure Materials, the Company has not, in the 12 months preceding the date
hereof, received notice from any Trading Market on which the Common Stock is or
has been listed or quoted to the effect that the Company is not in compliance
with the listing or maintenance requirements of such Trading Market, other than
the American Stock Exchange.
(u) INVESTMENT COMPANY. The Company is not, and is not an
Affiliate of, an "investment company" within the meaning of the Investment
Company Act of 1940, as amended (the "INVESTMENT COMPANY ACT").
10
(v) APPLICATION OF TAKEOVER PROTECTIONS. The Company and its
Board of Directors have taken all necessary action, if any, in order to render
inapplicable any control share acquisition, business combination, poison pill
(including any distribution under a rights agreement) or other similar
anti-takeover provision under the Company's Articles of Incorporation or the
laws of its state of incorporation that is or could become applicable to the
Purchasers participating in such Closing as a result of the Purchasers and the
Company fulfilling their obligations or exercising their rights under the
Transaction Documents, including as a result of the Company's issuance of the
Warrant Shares upon the Purchaser's exercise of any Warrant being issued to such
Purchaser hereunder.
(w) DISCLOSURE. The Company confirms that neither it nor any
other Person acting on its behalf has provided any of the Purchasers
participating in such Closing or their agents or counsel with any information
that the Company believes constitutes or might constitute material, non-public
information. The Company understands and confirms that such Purchasers will rely
on the foregoing representations and covenants in effecting transactions in
securities of the Company. None of the disclosures provided to such Purchasers
regarding the Company, its business and the transactions contemplated hereby,
including the Disclosure Materials to this Agreement, furnished by or on behalf
of the Company with respect to the representations and warranties made herein
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading.
(x) XXXXXXXX-XXXXX ACT. The Company is in compliance with
applicable requirements of the Xxxxxxxx-Xxxxx Act of 2002 and applicable rules
and regulations promulgated by the Commission thereunder in effect as of the
date of this Agreement, except where such noncompliance could not be reasonably
expected to have, individually or in the aggregate, a Material Adverse Effect.
(y) NO INTEGRATED OFFERING. Assuming the accuracy of the
Purchasers' representations and warranties set forth in SECTION 3.2 with respect
to such Closing, neither the Company, nor any of its affiliates, nor any Person
acting on its or their behalf has, directly or indirectly, made any offers or
sales of any security or solicited any offers to buy any security (other than
the offers and sales contemplated by this Agreement), under circumstances that
would cause this offering of the Securities to be integrated with prior
offerings by the Company (other than offers and sales at prior Closings, if any,
and the offer and sale of securities reported by the Company in its Form 8-K
filed on November 19, 2007) for purposes of the Securities Act or any applicable
stockholder approval provisions, including under the rules and regulations of
any Trading Market on which any of the securities of the Company are listed or
designated.
(z) SOLVENCY. Based on the financial condition of the Company
as of the applicable Closing Date after giving effect to the receipt by the
Company of the proceeds from the sale of the Securities hereunder at such
Closing, (i) the fair saleable value of the Company's assets exceeds the amount
that will be required to be paid on or in respect of the Company's existing
debts and other liabilities (including known contingent liabilities) as they
mature; (ii) the Company's assets do not constitute unreasonably small capital
to carry on its business for the current fiscal year as now conducted and as
proposed to be conducted including its capital needs taking into account the
particular capital requirements of the business conducted by the Company, and
projected capital requirements and capital availability thereof; and (iii) the
current cash flow of the Company, together with the proceeds the Company would
receive, were it to liquidate all of its assets, after taking into account all
anticipated uses of the cash, would be sufficient to pay all amounts on or in
respect of its debt when such amounts are required to be paid. The Company does
not intend to incur debts beyond its ability to pay such debts as they mature
(taking into account the timing and amounts of cash to be payable on or in
respect of its debt). The Company has no knowledge of any facts or circumstances
which lead it to believe that it will file for reorganization or liquidation
under the bankruptcy or reorganization laws of any jurisdiction within one year
from the applicable Closing Date. The Disclosure Materials set forth as of the
dates thereof all outstanding secured and unsecured Indebtedness of the Company
11
or any Subsidiary. For the purposes of this Agreement, "INDEBTEDNESS" shall mean
(A) any liabilities for borrowed money or amounts owed in excess of $50,000
(other than trade accounts payable incurred in the ordinary course of business),
(B) all guaranties, endorsements and other contingent obligations in respect of
Indebtedness of others, whether or not the same are or should be reflected in
the Company's balance sheet (or the notes thereto), except guaranties by
endorsement of negotiable instruments for deposit or collection or similar
transactions in the ordinary course of business; and (C) the present value of
any lease payments in excess of $50,000 due under leases required to be
capitalized in accordance with GAAP. Neither the Company nor any Subsidiary is
in material default with respect to any Indebtedness.
(aa) TAX STATUS. Except for matters that would not,
individually or in the aggregate, have or reasonably be expected to result in a
Material Adverse Effect, the Company and each Subsidiary has filed all necessary
federal, state and foreign income and franchise tax returns and has paid or
accrued all taxes shown as due thereon, and the Company has no knowledge of a
tax deficiency which has been asserted or threatened against the Company or any
Subsidiary.
(bb) NO GENERAL SOLICITATION. Neither the Company nor any
person acting on behalf of the Company has offered or sold any of the Securities
by any form of general solicitation or general advertising. The Company has
offered the Securities for sale only to the Purchasers participating in such
Closing and certain other "accredited investors" within the meaning of Rule 501
promulgated under the Securities Act.
(cc) FOREIGN CORRUPT PRACTICES. Neither the Company, nor to
the knowledge of the Company, any agent or other person acting on behalf of the
Company, has (i) directly or indirectly, used any funds for unlawful
contributions, gifts, entertainment or other unlawful expenses related to
foreign or domestic political activity, (ii) made any unlawful payment to
foreign or domestic government officials or employees or to any foreign or
domestic political parties or campaigns from corporate funds, or (iii) violated
in any material respect any provision of the Foreign Corrupt Practices Act of
1977, as amended.
(dd) ACCOUNTANTS. The Company's accountants are set forth in
the Disclosure Materials. To the knowledge of the Company, such accountants are
a registered public accounting firm as required by the Securities Act.
(ee) ACKNOWLEDGMENT REGARDING PURCHASERS' PURCHASE OF
SECURITIES. The Company acknowledges and agrees that each of the Purchasers
participating in such Closing is acting solely in the capacity of an arm's
length purchaser with respect to the Transaction Documents and the transactions
contemplated hereby. The Company further acknowledges that no such Purchaser is
acting as a financial advisor or fiduciary of the Company (or in any similar
capacity) with respect to this Agreement and the transactions contemplated
hereby and any advice given by any such Purchaser or any of their respective
representatives or agents in connection with this Agreement and the transactions
contemplated hereby is merely incidental to such Purchasers' purchase of the
Securities. The Company further represents to each such Purchaser that the
Company's decision to enter into this Agreement has been based solely on the
independent evaluation of the transactions contemplated hereby by the Company
and its representatives.
3.2 REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS. Each Purchaser
hereby, for itself and for no other Purchaser, represents and warrants to the
Company on the date of execution of this Agreement (or a joinder agreement), and
as of each Closing Date in which such Purchaser participates, as follows:
12
(a) ORGANIZATION; AUTHORITY. Such Purchaser, if an entity, is
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization with the requisite corporate, partnership,
limited liability company or trust power and authority to enter into and to
consummate the transactions contemplated by the applicable Transaction Documents
and otherwise to carry out its obligations thereunder. If such Purchaser is an
entity, the execution, delivery and performance by such Purchaser of the
Transaction Documents to which it is a party and the consummation by such
Purchaser of the transactions contemplated by this Agreement have been duly
authorized by all necessary corporate or, if such Purchaser is not a
corporation, such partnership, limited liability company, trust or other
applicable like action, on the part of such Purchaser. If such Purchaser is an
individual, such Purchaser has the capacity to execute, deliver and perform the
Transaction Documents. Each of this Agreement, the Registration Rights Agreement
and the Note being issued to such Purchaser at such Closing has been duly
executed by such Purchaser, and when delivered by such Purchaser in accordance
with terms hereof, will constitute the valid and legally binding obligation of
such Purchaser, enforceable against it in accordance with its 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, creditors'
rights and remedies or by other equitable principles.
(b) PURCHASER STATUS. At the time such Purchaser was offered
any Securities, it was, and at the date hereof and on each applicable Closing
Date it is, and on each date on which it exercises any Warrant it will be, an
"accredited investor" as defined in Rule 501(a) under the Securities Act. Such
Purchaser is not a registered broker-dealer under Section 15 of the Exchange
Act.
(c) GENERAL SOLICITATION. Such Purchaser is not purchasing any
Securities as a result of any advertisement, article, notice or other
communication regarding the Securities published in any newspaper, magazine or
similar media or broadcast over television or radio or presented at any seminar
or any other general solicitation or general advertisement.
(d) ACCESS TO INFORMATION. Such Purchaser acknowledges that it
has reviewed the Disclosure Materials and has been afforded (i) the opportunity
to ask such questions as it has deemed necessary of, and to receive answers
from, representatives of the Company concerning the terms and conditions of the
offering of the Securities and the merits and risks of investing in the
Securities; (ii) access to information about the Company and the Subsidiaries
and their respective financial condition, results of operations, business,
properties, management and prospects sufficient to enable it to evaluate its
investment; and (iii) the opportunity to obtain such additional information that
the Company possesses or can acquire without unreasonable effort or expense that
is necessary to make an informed investment decision with respect to the
investment.
(e) KNOWLEDGE AND EXPERIENCE OF SUCH PURCHASER. Such
Purchaser, either alone or together with its representatives, has such
knowledge, sophistication and experience in business and financial matters so as
to be capable of evaluating the merits and risks of the prospective investment
in the Securities, and has so evaluated the merits and risks of such investment.
Such Purchaser is able to bear the economic risk of an investment in the
Securities and is able to afford a complete loss of such investment.
(f) RESTRICTIONS ON SECURITIES. Such Purchaser understands
that the Securities have not been registered under the Securities Act and may
not be offered, resold, pledged or otherwise transferred except (i) pursuant to
an exemption from registration under the Securities Act or pursuant to an
effective registration statement in compliance with Section 5 under the
Securities Act, and (ii) in accordance with all applicable securities laws of
the states of the United States and other jurisdictions.
13
(g) INVESTMENT INTENT. Such Purchaser is acquiring the
Securities as principal for its own account for investment purposes only and not
with a view to or for distributing or reselling such Securities or any part
thereof, without prejudice, however, to such Purchaser's right at all times to
sell or otherwise dispose of all or any part of such Securities in compliance
with applicable federal and state securities laws. Nothing contained herein
shall be deemed a representation or warranty by such Purchaser to hold the
Securities for any period of time. Such Purchaser is acquiring the Securities
hereunder in the ordinary course of its business. Such Purchaser does not have
any agreement or understanding, directly or indirectly, with any Person to
distribute any of the Securities.
(h) INVESTMENT DECISION. Such Purchaser is not relying on the
Company, any other potential Purchaser, or on any legal or other opinion in the
materials reviewed by such Purchaser with respect to the financial or tax
considerations of such Purchaser relating to its investment in the Securities.
Such Purchaser has relied solely on the representations and warranties,
covenants and agreements of the Company in this Agreement (including the
Schedules and Exhibits hereto) and on its examination and independent
investigation in making its decision to acquire the Securities.
(i) NO OTHER REPRESENTATIONS. No oral or written
representations have been made to such Purchaser in connection with its
acquisition of Securities which were in any way inconsistent with the
information reviewed by such Purchaser. Such Purchaser acknowledges that no
representations or warranties of any type or description have been made to it by
any Person with regard to the Company, any of its Subsidiaries, any of their
respective businesses, properties or prospects or the investment contemplated
herein, other than the representations and warranties set forth in SECTION 3.1.
(j) NO PRIOR SHORT SELLING. At no time since the date 30 days
prior to the date hereof has such Purchaser engaged in or effected, in any
manner whatsoever, directly or indirectly, any sale of Common Stock which such
Purchaser is not deemed to own under the provisions of Rule 200(b) of Regulation
SHO promulgated under the Exchange Act.
(k) COMPLIANCE WITH LAWS. Such Purchaser is in compliance with
all securities laws applicable to it in connection with the transactions
contemplated by the Transaction Documents, including all securities laws, rules
and regulations in respect of the stabilization or manipulation of the price of
the Common Stock.
(l) PRIVATE PLACEMENT. Such Purchaser understands and
acknowledges that (i) the Securities are offered and sold without registration
under the Securities Act in a private placement that is exempt from the
registration provisions of the Securities Act, and (ii) the availability of such
exemption depends in part on, and that the Company and its counsel will rely
upon, the accuracy and truthfulness of the foregoing representations and each
Purchaser hereby consents to such reliance.
(m) REGISTRATION STATEMENT QUESTIONNAIRE. Such Purchaser has
completed or will cause to be completed the Registration Statement Questionnaire
attached hereto as Appendix 1, for use in preparation of the Registration
Statement, and the answers thereto are or will be true and correct as of the
date hereof and will be true and correct as of the effective date of the
Registration Statement, or as applicable, any amendment thereto, and such
Purchaser will notify the Company immediately of any material change in any such
information provided in the Registration Statement Questionnaire until such time
as the Registration Statement has been declared effective (and thereafter at the
Company's reasonable request in connection with preparation of a prospectus
supplement, amendment to the Registration Statement, or otherwise).
(n) COMMISSIONS. Such Purchaser has not incurred any
obligation for any finder's or broker's or agent's fees or commissions in
connection with the transactions contemplated hereby at such Closing.
14
(o) RESIDENCE. If the Purchaser is an individual, such
Purchaser resides in the state identified in the address of such Purchaser set
forth on the signature pages hereof for such Closing; if such Purchaser is a
partnership, corporation, limited liability company or other entity, then the
office or offices of such Purchaser in which its investment decision was made is
located at the address or addresses of such Purchaser set forth on such
signature pages.
The Company acknowledges and agrees that each Purchaser does
not make or has not made any representations or warranties with respect to the
transactions contemplated hereby other than those specifically set forth in this
SECTION 3.2 or elsewhere in this Agreement or any other Transaction Document.
ARTICLE IV.
OTHER AGREEMENTS OF THE PARTIES
4.1 TRANSFERS OF SECURITIES; LEGENDS.
(a) Securities may be disposed of only in compliance with
state and federal securities laws. In connection with any transfer of the
Securities other than pursuant to an effective registration statement, to the
Company, to an Affiliate of the Purchaser or in connection with a pledge as
contemplated in SECTION 4.1(b), the Company may require the transferor thereof
to provide to the Company an opinion of counsel selected by the transferor and
reasonably acceptable to the Company, the form and substance of which opinion
shall be reasonably satisfactory to the Company, to the effect that such
transfer does not require registration of such transferred Securities under the
Securities Act.
(b) Certificates evidencing the Securities will contain the
following legend, so long as is required by this SECTION 4.1(b):
[NEITHER] THIS SECURITY [, NOR THE SECURITIES FOR WHICH THIS SECURITY
MAY BE EXERCISED, ] HAS [NOT] BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR UNDER ANY STATE
SECURITIES OR BLUE SKY LAWS. THIS SECURITY [IS] [AND SUCH SECURITIES
ARE] SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT
BE OFFERED, SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED EXCEPT
AS PERMITTED UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES
OR BLUE SKY LAWS, PURSUANT TO REGISTRATION OR QUALIFICATION OR
EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE
REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN
INDEFINITE PERIOD OF TIME. THE ISSUER OF THIS SECURITY [OR SUCH OTHER
SECURITIES] MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE
SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER IS
IN COMPLIANCE WITH THE SECURITIES ACT AND ANY APPLICABLE STATE
SECURITIES OR BLUE SKY LAWS. THIS SECURITY [AND THE SECURITIES ISSUABLE
UPON EXERCISE OF THIS SECURITY] MAY BE PLEDGED IN CONNECTION WITH A
BONA FIDE MARGIN ACCOUNT.
15
The Company acknowledges and agrees that a Purchaser may from time to time
pledge Securities pursuant to a BONA FIDE margin account and, if required under
the terms of such account, such Purchaser may transfer pledged or secured
Securities to the pledgees or secured parties. Such pledge or transfer would not
be subject to approval or consent of the Company and no legal opinion of legal
counsel to the pledgee, secured party or pledgor shall be required in connection
with the pledge, but the legend shall remain on the pledged Securities and such
legal opinion may be required in connection with a subsequent transfer following
default by the Purchaser transferee of the pledge. Further, no notice shall be
required of such pledge. At the appropriate Purchaser's expense, the Company
will execute and deliver such reasonable documentation as a pledgee or secured
party of Securities may reasonably request in connection with a pledge or
transfer of the Securities including the preparation and filing of any required
prospectus supplement under Rule 424(b)(3) of the Securities Act or other
applicable provision of the Securities Act to appropriately amend the list of
selling stockholders thereunder.
(c) Certificates evidencing the Warrant Shares shall not
contain any legend (including the legend set forth in SECTION 4.1(b)): (i) while
a registration statement (including the Registration Statement) covering the
resale of such Warrant Shares is effective under the Securities Act, or (ii)
following any sale of such Warrant Shares pursuant to Rule 144, or (iii) if such
Warrant Shares are eligible for sale under Rule 144(k), or (iv) if such legend
is not required under applicable requirements of the Securities Act (including
judicial interpretations and pronouncements issued by the Staff of the
Commission). The Company shall cause its counsel to issue a legal opinion to the
Company's transfer agent promptly after the Effective Date if requested by the
Company's transfer agent to effect the removal of the legend hereunder.
Following the Effective Date or at such earlier time as a legend is no longer
required for the Warrant Shares under this SECTION 4.1(c), the Company will, no
later than three (3) Trading Days following the delivery by a Purchaser to the
Company or the Company's transfer agent of a certificate representing Warrant
Shares containing a restrictive legend, deliver or cause to be delivered to such
Purchaser a certificate representing such Warrant Shares that is free from all
restrictive and other legends. The Company may not make any notation on its
records or give instructions to any transfer agent of the Company that enlarge
the restrictions on transfer set forth in this SECTION 4.1. Upon a Purchaser's
request, certificates for Securities subject to legend removal hereunder shall
be transmitted by the transfer agent of the Company to such Purchaser by
crediting the account of such Purchaser's prime broker with the Depository Trust
Company system.
4.2 FURNISHING OF INFORMATION. As long as any Purchaser owns the
Securities, the Company covenants to use its best efforts to timely file (or
obtain extensions in respect thereof and file within the applicable grace
period) all reports required to be filed by the Company after the date hereof
pursuant to the Exchange Act which are required to be filed in order to satisfy
the current public information requirements of Rule 144(c)(1). As long as any
Purchaser owns Securities, if the Company is no longer subject to the periodic
reporting requirements of the Exchange Act and Rule 144(k) is not available to
any Purchaser (other than any Purchaser who has waived compliance with this
provision) with respect to any Securities held, the Company will prepare and
furnish to the Purchasers and make publicly available in accordance with Rule
144(c)(2) such information as is required for the Purchasers to sell the Warrant
Shares under Rule 144.
4.3 SECURITIES LAWS DISCLOSURE; PUBLICITY. The Company shall, within
four Trading Days of the date of the execution and delivery hereof, issue a
press release or file a Current Report on Form 8-K, or both, disclosing the
material transactions contemplated hereby and any other information set forth in
SCHEDULE 3.1(w). In addition, the Company will make such other filings and
notices in the manner and time required by the Commission and the Trading Market
on which the Common Stock is listed. Notwithstanding the foregoing, the Company
shall not publicly disclose the name of any Purchaser, or include the name of
any Purchaser in any filing with the Commission or any regulatory agency or
Trading Market, without the prior written consent of such Purchaser, except to
the extent such disclosure (but not any disclosure as to the controlling Persons
thereof) is required by law or Trading Market regulations, in which case the
Company shall provide the Purchasers with prior notice of such disclosure.
16
4.4 INDEMNIFICATION.
(a) INDEMNIFICATION OF PURCHASERS. In addition to the
indemnity provided in the Registration Rights Agreement, the Company will
indemnify and hold the Purchasers and their directors, officers, shareholders,
partners, employees and agents (each, a "PURCHASER PARTY") harmless from any and
all losses, liabilities, obligations, claims, contingencies, damages, costs and
expenses, including all judgments, amounts paid in settlements, court costs and
reasonable attorneys' fees and costs of investigation (collectively, "Losses")
that any such Purchaser Party may suffer or incur as a result of or relating to
any misrepresentation, breach or inaccuracy of any representation, warranty,
covenant or agreement made by the Company in any Transaction Document; PROVIDED
that such indemnity (other than as to any indemnity called for under the
Registration Rights Agreement) does not exceed, in the aggregate, the aggregate
amount of money advanced by such Purchaser to the Company under its Notes and
not repaid by the Company, together with its reasonable attorneys' fees and
costs of investigation subject to indemnification above. Except as set forth
above, the mechanics and procedures with respect to the rights and obligations
under this SECTION 4.4(a) will be the same as those set forth in the
Registration Rights Agreement.
(b) INDEMNIFICATION OF COMPANY. In addition to the indemnity
provided in the Registration Rights Agreement, the Purchasers will, severally
and not jointly, indemnify and hold the Company and its directors, officers,
shareholders, partners, employees and agents (each, a "COMPANY PARTY") harmless
from any and all Losses that any such Company Party may suffer or incur as a
result of or relating to any misrepresentation, breach or inaccuracy of any
representation, warranty, covenant or agreement made by the Purchasers in any
Transaction Document; PROVIDED that such indemnity (other than as to any
indemnity called for under the Registration Rights Agreement) does not exceed,
with respect to each Purchaser in the aggregate, the aggregate amount of money
advanced by such Purchaser to the Company under its Notes and not repaid by the
Company, together with the Company's reasonable attorneys' fees and costs of
investigation subject to indemnification above. Except as set forth above, the
mechanics and procedures with respect to the rights and obligations under this
SECTION 4.4(b) will be the same as those set forth in the Registration Rights
Agreement.
4.5 CONFIDENTIAL INFORMATION; STANDSTILL.
(a) CONFIDENTIAL INFORMATION. The Purchasers agree that the
existence, terms and provisions of this Agreement and the other Transaction
Documents and the transactions contemplated hereby and thereby constitute
confidential information (the "CONFIDENTIAL INFORMATION") and agree not to
disclose such information to third parties, except as may be required by law,
without the prior written consent of the Company; PROVIDED that the Purchasers
may share Confidential Information with such of their officers, managers,
co-trustees, and professional advisors as may need to know such information to
assist the Purchasers in their evaluation thereof on the condition that such
parties agree to be bound by the terms hereof; and PROVIDED, FURTHER, that any
Confidential Information shall cease to be confidential or subject to this
SECTION 4.5(a) upon becoming publicly available. All Confidential Information
received by the Purchasers shall be promptly returned or destroyed, as directed
by the Company. The Company and the Purchasers acknowledge and agree that,
except as set forth in SCHEDULE 3.1(w) of the Schedules, the Company has not
provided any material non-public information to the Purchasers in connection
with this Agreement and the other Transaction Documents which will remain
material and non-public following the disclosure contemplated by SECTION 4.3.
17
(b) STANDSTILL. For a period of one (1) year from the last
Closing Date hereunder in which a Purchaser participates, such Purchaser will
not, without the prior written consent of the Company (i) propose to enter into
any acquisition of all or substantially all of the assets or stock of the
Company or a merger or other business combination involving the Company; (ii)
seek to control the management, board of directors or policies of the Company;
or (iii) form, join or in any way participate in a "group" (within the meaning
of Section 13(d)(3) of the Exchange Act) with respect to any securities of the
Company in connection with any of the foregoing.
4.6 USE OF PROCEEDS. The Company shall use the net proceeds from the
sale of the Securities hereunder (i) to prepare for an IND application (or
equivalent applications in other countries) with the US Food and Drug
Administration for human trials for the Company's xenotransplantation candidate,
and (ii) for working capital purposes.
4.7 CERTAIN TRADING RESTRICTIONS.
(a) RESTRICTIONS. So long as a Purchaser continues to hold any
Securities acquired hereunder, such Purchaser will not, nor will it knowingly
through its Affiliates, engage in any "short sale" of Common Stock as such term
is defined in Rule 200(a) of Regulation SHO promulgated under the Exchange Act
(a "SHORT SALE"), except on those days (each a "PERMITTED DAY") on which the
aggregate short position with respect to the Common Stock of such Purchaser
prior to giving effect to any Short Sales by such Purchaser on such Permitted
Day does not exceed such Purchaser's Permitted Share Position (as defined below)
on such Permitted Day; PROVIDED, HOWEVER, that a Purchaser will only be entitled
to engage in transactions that constitute Short Sales on a Permitted Day to the
extent that following such transaction, the aggregate short position with
respect to the Common Stock of such Purchaser does not exceed such Purchaser's
Permitted Share Position. For purposes of this SECTION 4.7, a Purchaser's
"PERMITTED SHARE POSITION" means, with respect to any date of determination, the
number of shares of Common Stock owned by such Purchaser (including Warrant
Shares) plus the maximum number of Warrant Shares then issuable (including at
future Closings or as to portions of Warrants not yet exercised and without
regard to any exercise caps or other exercise restrictions applicable to the
Warrants) to such Purchaser.
(b) OTHER TRANSACTIONS PERMITTED. Subject to SECTION 4.7(a)
and applicable securities laws, the Company acknowledges and agrees that nothing
in this SECTION 4.7 or elsewhere in any Transaction Document prohibits any
Purchaser from, and each Purchaser is permitted to, engage, directly or
indirectly, in hedging transactions involving the Securities and the Common
Stock (including by way of short sales, purchases and sales of options, swap
transactions and synthetic transactions) at any time.
4.8 INTEGRATION. The Company shall not sell, offer for sale or solicit
offers to buy or otherwise negotiate in respect of any security (as defined in
Section 2 of the Securities Act) that would be integrated with the offer or sale
of the Securities in a manner that would require the registration under the
Securities Act of the sale of the Securities to the Purchasers or that would be
integrated with the offer or sale of the Securities for purposes of the rules
and regulations of any Trading Market such that it would require stockholder
approval of the sale of the Securities to the Purchasers unless stockholder
approval is obtained before the closing of such subsequent transaction.
4.9 STOCKHOLDER RIGHTS PLAN. No claim will be made or enforced by the
Company or, to the knowledge of the Company, any other Person that any Purchaser
is an "Acquiring Person" under any stockholder rights plan or similar plan or
arrangement in effect or hereafter adopted by the Company, or that any Purchaser
could be deemed to trigger the provisions of any such plan or arrangement, by
virtue of receiving Securities under the Transaction Documents.
4.10 INVESTMENT COMPANY ACT. The Company shall conduct its business in
a manner so that it will not be required to register as an "investment company"
under the Investment Company Act.
18
4.11 NON-PUBLIC INFORMATION. The Company covenants and agrees that
following the announcement contemplated in SECTION 4.3, neither it nor any other
Person acting on its behalf will provide any Purchaser (other than a Purchaser
who is a director or officer of the Company or an Affiliate of a director or
officer of the Company) or its agents or counsel with any information that the
Company believes constitutes material non-public information, unless prior
thereto such Purchaser shall have executed a written agreement regarding the
confidentiality and use of such information. The Company understands and
confirms that each Purchaser shall be relying on the foregoing representations
in effecting transactions in securities of the Company.
4.12 RESERVATION OF COMMON STOCK. The Company has reserved and shall
continue to reserve and keep available at all times, free of preemptive rights,
a sufficient number of shares of Common Stock for the purpose of enabling the
Company to issue Warrant Shares pursuant to any exercise of the Warrants.
4.13 LISTING OF COMMON STOCK. The Company hereby agrees to use best
efforts to maintain the listing of the Common Stock on a Trading Market, and, if
required by the rules and regulations of the principal Trading Market, to list
all of the Warrant Shares on such Trading Market as promptly as practicable
after the Closing. The Company further agrees that, if the Company applies to
have the Common Stock traded on any other Trading Market, it will include in
such application all of the Warrant Shares, and will take such other action as
is necessary to cause all of the Warrant Shares to be listed on such other
Trading Market as promptly as reasonably practicable. The Company will take all
action reasonably necessary to continue the quotation or listing and trading of
its Common Stock on a Trading Market and will comply in all material respects
with the Company's reporting, filing and other obligations under the bylaws or
rules of the applicable Trading Market.
4.14 EQUAL TREATMENT OF PURCHASERS. 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 the Transaction Documents unless the same consideration is
also offered to all of the parties to the Transaction Documents. For
clarification purposes, this provision constitutes a separate right granted to
each Purchaser by the Company and negotiated separately by each Purchaser, and
is intended to treat the Purchasers as a class and shall not in any way be
construed as the Purchasers acting in concert or as a group with respect to the
purchase, disposition or voting of Securities or otherwise.
4.15 DELIVERY OF SECURITIES AFTER CLOSING. The Company shall deliver,
or cause to be delivered, the respective Securities purchased by each Purchaser
at any Closing to such Purchaser within three (3) Trading Days of the applicable
Closing Date.
ARTICLE V.
MISCELLANEOUS
5.1 FEES AND EXPENSES. Except as expressly set forth in the Transaction
Documents to the contrary, each party shall pay the fees and expenses of its
advisers, 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. The Company shall pay all transfer
agent fees, stamp taxes and other taxes and duties levied in connection with the
issuance of the Securities.
5.2 ENTIRE AGREEMENT. The Transaction Documents, together with the
Exhibits and Schedules thereto, contain the entire understanding of the parties
with respect to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and schedules.
19
5.3 NOTICES. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earliest of (i) the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile number
or via email at the email address specified pursuant to this SECTION 5.3 prior
to 6:30 p.m. (New York City time) on a Trading Day, (ii) the next Trading Day
after the date of transmission, if such notice or communication is delivered via
facsimile at the facsimile number or via email at the email address specified
pursuant to this SECTION 5.3 on a day that is not a Trading Day or later than
6:30 p.m. (New York City time) on any Trading Day, (iii) the Trading Day
following the date of mailing, if sent by U.S. nationally recognized overnight
courier service to the address specified pursuant to this SECTION 5.3, or (iv)
upon actual receipt by the party to whom such notice is required to be given.
The address for such notices and communications shall be as follows:
If to the Company: MicroIslet, Inc.
0000 Xxxxx Xxxxx Xxxxx, Xxxxx 000
Xxx Xxxxx, XX 00000
Attn: Chief Executive Officer
Email: [ omitted ]
Facsimile No.: [ omitted ]
With a copy to: Sheppard, Mullin, Xxxxxxx & Hampton LLP
00000 Xx Xxxxxx Xxxx, Xxxxx 000
Xxx Xxxxx, Xxxxxxxxxx 00000-0000
Attn: Xxxx X. Xxxxxxx, Esq.
Email: [ omitted ]
Facsimile No.: [ omitted ]
If to a Purchaser: To the address set forth under such
Purchaser's name on the signature pages hereof;
or such other address as may be designated in writing hereafter, in the same
manner, by such Person.
5.4 AMENDMENTS; WAIVERS. No provision of this Agreement may be waived
or amended except (i) as provided in Section 5.10, or (ii) in a written
instrument signed, in the case of an amendment, by the Company and the Required
Purchasers or, in the case of a waiver, by the party against whom enforcement of
any such waiver is sought; PROVIDED, HOWEVER, that any such amendment that
adversely affects any Purchaser or class of Purchasers in a manner that does not
apply uniformly to all Purchasers, Notes, Warrants, or Warrant Shares, as
applicable, shall require the written consent of such adversely affected
Purchaser or class. No waiver 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 subsequent default or a waiver of any
other provision, condition or requirement hereof, nor shall any delay or
omission of either party to exercise any right hereunder in any manner impair
the exercise of any such right.
5.5 CONSTRUCTION. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof. The language used in this Agreement will be deemed
to be the language chosen by the parties to express their mutual intent, and no
rules of strict construction will be applied against any party. This Agreement
shall be construed as if drafted jointly by the parties, and no presumption or
20
burden of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any provisions of this Agreement or any of the Transaction
Documents. The words "include," "includes," and "including" shall be deemed to
be followed by the words "without limitation". Pronouns in masculine, feminine,
and neuter genders shall be construed to include any other gender. The words
"this Agreement," "herein," "hereof," "hereby," "hereunder," and words of
similar import refer to this Agreement as a whole and not to any particular
Section or other subdivision.
5.6 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and permitted assigns.
The Company may not assign this Agreement or any rights or obligations hereunder
without the prior written consent of the Required Purchasers. Any Purchaser may
assign any or all of its rights under this Agreement to any Person to whom such
Purchaser assigns or transfers any Securities (in accordance with the terms
thereof); PROVIDED that such transfer is in accordance with this Agreement and
the transferee agrees in writing to be bound, with respect to the transferred
Securities, by the provisions hereof that apply to the "Purchasers".
5.7 NO THIRD-PARTY BENEFICIARIES. This Agreement is intended for the
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person.
5.8 GOVERNING LAW. All questions concerning the construction, validity,
enforcement and interpretation of this Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of New
York, without regard to the principles of conflicts of law thereof. Each party
agrees that all Proceedings concerning the interpretations, enforcement and
defense of the transactions contemplated by this Agreement and any other
Transaction Documents (whether brought against a party hereto or its respective
Affiliates, employees or agents) shall be commenced exclusively in the state and
federal courts sitting in the City of New York, Borough of Manhattan (the "NEW
YORK COURTS"). Each party hereto hereby irrevocably submits to the exclusive
jurisdiction of the New York Courts for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein (including with respect to the enforcement of any of the
Transaction Documents), and hereby irrevocably waives, and agrees not to assert
in any Proceeding, any claim that it is not personally subject to the
jurisdiction of any such New York Court, or that such Proceeding has been
commenced in an improper or inconvenient forum. Each party hereto hereby
irrevocably waives personal service of process and consents to process being
served in any such Proceeding by mailing a copy thereof via registered or
certified mail or overnight delivery (with evidence of delivery) 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 contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. Each party hereto hereby
irrevocably waives, to the fullest extent permitted by applicable law, any and
all right to trial by jury in any legal proceeding arising out of or relating to
this Agreement or the transactions contemplated hereby. If any party shall
commence a Proceeding to enforce any provisions of a Transaction Document, then
the prevailing party in such Proceeding shall be reimbursed by the other party
for its attorney's fees and other costs and expenses actually incurred with the
investigation, preparation and prosecution of such Proceeding.
5.9 SURVIVAL. The representations, warranties, agreements and covenants
contained herein shall survive the applicable Closing for a period of two (2)
years; PROVIDED that the provisions of SECTION 4.4 shall survive with respect to
Proceedings brought against an indemnified party by a third party.
21
5.10 EXECUTION. This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
the Company and Purchasers whose aggregate Aggregate Commitment (for any
Closing) is not less than $1.0 million, and such counterparts have been
delivered to the signing Purchasers (in the case of the Company's signature) or
the Company (in the case of the Purchasers' respective signatures), it being
understood that (i) the parties need not sign the same counterpart, and (ii)
after the effectiveness hereof, the Company may, without the consent of any
other party hereto, permit additional Persons to sign this Agreement, with
respect to an existing or a new Closing Date and become a party hereto and a
"Purchaser" hereunder. In the event that any signature is delivered by facsimile
or electronic transmission, such signature shall create a valid and binding
obligation of the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such facsimile or electronic
signature page were an original thereof.
5.11 SEVERABILITY. If any provision of this Agreement is held to be
invalid or unenforceable in any respect, the validity and enforceability of the
remaining terms and provisions of this Agreement shall not in any way be
affected or impaired thereby and the parties will attempt to agree upon a valid
and enforceable provision that is a reasonable substitute therefor, and upon so
agreeing, shall incorporate such substitute provision in this Agreement.
5.12 REPLACEMENT OF SECURITIES. If any certificate or instrument
evidencing any Securities is mutilated, lost, stolen or destroyed, the Company
shall issue or cause to be issued in exchange and substitution for and upon
cancellation thereof, or in lieu of and substitution therefor, a new certificate
or instrument, but only upon receipt of evidence reasonably satisfactory to the
Company of such loss, theft or destruction and customary and reasonable
indemnity, if requested. The applicants for a new certificate or instrument
under such circumstances shall also pay any reasonable third-party costs
associated with the issuance of such replacement Securities. If a replacement
certificate or instrument evidencing any Securities is requested due to a
mutilation thereof, the Company may require delivery of such mutilated
certificate or instrument as a condition precedent to any issuance of a
replacement.
5.13 REMEDIES. In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, each of the
Purchasers and the Company will be entitled to specific performance under the
Transaction Documents. The parties agree that monetary damages may not be
adequate compensation for any loss incurred by reason of any breach of
obligations described in the foregoing sentence and hereby agrees to waive in
any action for specific performance of any such obligation the defense that a
remedy at law would be adequate.
5.14 RESCISSION AND WITHDRAWAL RIGHT. Notwithstanding anything to the
contrary contained in (and without limiting any similar provisions of) the
Transaction Documents, whenever any Purchaser exercises a right, election,
demand or option under a Transaction Document and the Company does not timely
perform its related obligations within the periods therein provided, then such
Purchaser may rescind or withdraw, in its sole discretion from time to time upon
written notice to the Company, any relevant notice, demand or election in whole
or in part without prejudice to its future actions and rights.
5.15 TERMINATION. This Agreement may be terminated: (i) by any
Purchaser, only as to such Purchaser's obligations hereunder with respect to a
particular Closing and without any effect whatsoever on the obligations between
the Company and the other Purchasers, or between the Company and such Purchaser
with respect to any other Closing, by written notice to the other parties, if
such Closing has not been consummated on or before the date 10 Business Days
after the date originally scheduled for such Closing; PROVIDED, HOWEVER, that no
such termination will affect the right of any party to xxx for any breach by the
other party (or parties); or (ii) by the Company with respect to a particular
Closing, by written notice to the Purchasers, if such Closing has not been
consummated on or before the date 10 Business Days after the date originally
scheduled for such Closing; PROVIDED, HOWEVER, that no such termination will
affect the right of any party to xxx for any breach by the other party (or
parties).
22
5.16 INDEPENDENT NATURE OF PURCHASERS' OBLIGATIONS AND RIGHTS. The
obligations of each Purchaser under any Transaction Document 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 any Transaction Document. The decision of each Purchaser to
purchase Securities pursuant to this Agreement has been made by such Purchaser
independently of any other Purchaser and independently of any information,
materials, statements or opinions as to the business, affairs, operations,
assets, properties, liabilities, results of operations, or condition (financial
or otherwise) of the Company or any Subsidiary which may have been made or given
by any other Purchaser or by any agent or employee of any other Purchaser, and
no Purchaser or any of its agents or employees shall have any liability to any
other Purchaser relating to or arising from any such information, materials,
statements or opinions. Nothing contained herein or in any Transaction Document,
and no action taken by any Purchaser pursuant thereto, 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 syndicate or group with respect to such
obligations or the transactions contemplated by the Transaction Document. The
Company hereby confirms that it understands and agrees that the Purchasers are
not acting as a "group" as that term is used in Section 13(d) of the Exchange
Act. Each Purchaser acknowledges that no other Purchaser has acted as agent for
such Purchaser in connection with making its investment hereunder and that no
other Purchaser will be acting as agent of such Purchaser in connection with
monitoring its investment hereunder. Each Purchaser shall be entitled to
independently protect and enforce its rights, including the rights arising out
of this Agreement or out of the other Transaction Documents (other than rights
the exercise of which requires the consent or action of the Required
Purchasers), and it shall not be necessary for any other Purchaser to be joined
as an additional party in any proceeding for such purpose. Each Purchaser
represents that it has been represented by its own separate legal counsel in its
review and negotiations of this Agreement and the Transaction Documents.
5.17 PAYMENT SET ASIDE. To the extent that the Company makes a payment
or payments to any Purchaser pursuant to any Transaction Document or a Purchaser
enforces or exercises its rights thereunder, and such payment or payments or the
proceeds of such enforcement or exercise or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside, recovered
from, disgorged by or are required to be refunded, repaid or otherwise restored
to the Company, a trustee, receiver or any other person under any law (including
any bankruptcy law, state or federal law, common law or equitable cause of
action), then to the extent of any such restoration the obligation or part
thereof originally intended to be satisfied shall be revived and continued in
full force and effect as if such payment had not been made or such enforcement
or setoff had not occurred.
[ REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGES FOLLOW ]
23
IN WITNESS WHEREOF, the parties hereto have caused this Securities
Purchase Agreement to be duly executed by their respective authorized
signatories as of the date first indicated above.
MICROISLET, INC.
By: /s/ XXXXXXX X. XXXXXXX
-----------------------
Xxxxxxx X. Xxxxxxx
Chief Executive Officer
[ REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGES FOR PURCHASERS FOLLOW ]
IN WITNESS WHEREOF, the undersigned have caused this Securities
Purchase Agreement to be duly executed by their respective authorized
signatories as of the date first indicated below.
PURCHASER:
Name of Purchaser: SMR 1996 TRUST III, a trust organized
under the laws of the State of New York
----------------------------------------
SIGNATURE OF AUTHORIZED SIGNATORY OF PURCHASER: /s/ Xxxxxx Xxxx
----------------------------------------
Name of Authorized Signatory: Xxxxxx Xxxx
----------------------------------------
Title of Authorized Signatory: Trustee
----------------------------------------
SIGNATURE OF AUTHORIZED SIGNATORY OF PURCHASER: /s/ Xxxxxx Xxxxxxx
----------------------------------------
Name of Authorized Signatory: Xxxxxx Xxxxxxx
----------------------------------------
Title of Authorized Signatory: Trustee
----------------------------------------
Email Address of Purchaser: [ omitted ]
----------------------------------------
Address of Purchaser:
----------------------------------------
----------------------------------------
----------------------------------------
Facsimile of Purchaser: [ omitted ]
Aggregate Commitment: $1,000,000.00
Initial Advance: $400,000.00
----------------------------------------
Social Security Number, Employer Identification
Number or Tax Identification Number: [ omitted ]
----------------------------------------
[ REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
ADDITIONAL SIGNATURE PAGES FOR PURCHASERS MAY FOLLOW ]
STOCK CERTIFICATE INFORMATION:
1. The exact name in which your Note and
Warrant are to be registered (this is
the name that will appear on your Note
and Warrant) (the "REGISTERED HOLDER").
You may use a nominee name if appropriate: ___________________________
2. The relationship between the Purchaser
and the Registered Holder listed in
response to item 1 above (if different
from Purchaser): ___________________________
3. The mailing address of the Registered
Holder listed in response to item 1
above (if different from mailing
address of Purchaser): ___________________________
___________________________
___________________________
4. The Social Security Number, Employer
Identification Number or Tax
Identification Number of the Registered
Holder listed in response to item 1
above (if different from Purchaser): ___________________________
APPENDIX 1
----------
REGISTRATION STATEMENT QUESTIONNAIRE
EXHIBIT A
---------
FORM OF SUBORDINATED CONVERTIBLE UNSECURED REVOLVING PROMISSORY NOTE
EXHIBIT B
---------
FORM OF WARRANT
EXHIBIT C
---------
REGISTRATION RIGHTS AGREEMENT
EXHIBIT D
---------
TRANSFER AGENT INSTRUCTIONS
