EXHIBIT 10.1
MICROISLET, INC.
A NEVADA CORPORATION
AMENDED AND RESTATED SECURITIES PURCHASE AGREEMENT
THIS AMENDED AND RESTATED SECURITIES PURCHASE AGREEMENT (this
"Agreement") dated as of October 31, 2003 is entered into between MicroIslet,
Inc., a Nevada corporation (the "Company"), and the purchasers identified on the
signature pages hereto (each, a "Purchaser" and collectively, the "Purchasers").
1. PURCHASE. Subject to the terms and conditions of this Agreement,
each Purchaser hereby agrees, severally and not jointly, to purchase and the
Company hereby agrees to sell and issue the number of shares of Common Stock of
the Company (the "Shares") at Fifty Cents ($0.50) per Share, represented by the
purchase price indicated below such Purchaser's name on the signature page of
this Agreement (the "Purchase Price"). In addition, each Purchaser shall be
granted a warrant, in the form attached hereto as EXHIBIT A (the "Warrant"), to
purchase a number of shares (the "Warrant Shares") of the Common Stock of the
Company equal to Forty Percent (40%) of the Shares purchased by such Purchaser,
at an exercise price of One Dollar ($1.00) per share, exercisable until the
third anniversary of the Initial Closing (as defined below). The Shares, the
Warrants and the Warrant Shares are collectively referred to herein as the
"Securities".
2. CLOSING.
(a) The initial closing of the sale and purchase of the
Securities under this Agreement (the "Initial Closing") shall take place on
October 31, 2003, at the offices of Xxxxxxxx, Xxxx, Xxxxxxxxxx & Xxxxxxx LLP,
000 X Xxxxxx, Xxx Xxxxx Xxxxxxxxxx, or at such other time and place as the
parties may agree.
(b) At any time on or before the tenth (10th) day following
the Initial Closing, the Company may sell up to an aggregate of Three Million
(3,000,000) Shares and associated Warrants, inclusive of Shares sold at the
Initial Closing. All such sales shall be made at one or more closings (each of
the Initial Closing and such subsequent closings, a "Closing") on the terms and
conditions set forth in this Agreement, including, without limitation, the
representations and warranties by such Purchasers as set forth in Section 6. Any
Shares, Warrants and Warrant Shares sold pursuant to this Section 2(b) shall be
deemed to be Shares, Warrants and Warrant Shares for all purposes under this
Agreement, and any purchasers thereof shall be deemed to be Purchasers for all
purposes under this Agreement.
3. DELIVERIES. Subject to the terms and conditions hereof, the Company
will deliver to each Purchaser a certificate representing the number of Shares
to be purchased and the Warrant, and each Purchaser will deliver to the Company
payment of the Purchase Price in immediately available funds to a bank account
to be designated by the Company.
4. INFORMATION. Each Purchaser has been furnished with and has been
given the opportunity to review all information regarding the Company which it
has requested and which it deemed necessary for an investment in the Company.
Without limiting the generality of the foregoing, each Purchaser has been given
access to and has reviewed the Company's Registration Statement on Form SB-2
filed with the Securities Exchange Commission (the "SEC") on September 26, 2003
(the "Form SB-2"). Each Purchaser represents that it is aware that all of the
Company's material public filings with the SEC since November 14, 2001 are
available via the Internet through the web site maintained by the SEC at
xxx.xxx.xxx. Each Purchaser understands that: (i) the Form SB-2 and the
prospectus therein do not apply to the offer or sale of the Securities, and are
provided for information only, (ii) no federal or state agency has passed upon
the Securities or has made any finding or determination concerning the fairness
or value of the Securities, and (iii) the books and records of the Company are
and will continue to be available for inspection by such Purchaser, and any
purchaser representative of such Purchaser, at the Company's address listed
above.
5. ILLIQUIDITY OF INVESTMENT; SECURITIES LAWS. Each Purchaser
understands that the Securities are not a liquid investment. In particular, each
Purchaser understands and acknowledges that:
(a) The offering and proposed sale of Securities herein have
not been registered or qualified under the Securities Act of 1933, as
amended (the "Act") nor under the securities laws of California or any
other state. This offering has not been reviewed by the SEC nor has the
SEC or any state securities commission or regulatory authority
approved, passed upon or endorsed the merits of this offering. The
offering and proposed sale of the Securities herein is being made in
reliance upon certain securities exemptions, including (i) SEC
Regulation D, Rule 506, promulgated under Section 4(2) of the Act, and
(ii) the exemption set forth in Section 25102(f) of the California
Corporate Securities Law of 1968, as amended, and the regulations
promulgated thereunder.
(b) It is believed that the offering and proposed sale of the
Securities currently qualifies and will continue to qualify under each
such claimed exemption. Because the availability of these exemptions is
based upon subjective factors, however, and because the criteria for
exemption are subject to interpretation by state or federal regulatory
agencies and courts, there is no assurance that such exemptions will be
available. If and to the extent that suits for rescission are brought
for failure to register this offering or for acts or omissions
constituting offenses under the Act or the securities laws of any
state, the capital and financial condition of the Company could be
adversely affected. In addition, the Company could be adversely
affected by the need to defend any such private or governmental action
even where the Company ultimately is exonerated.
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(c) Except as set forth in Section 10 below, the Purchasers
will have no right to require registration of the Securities offered
and sold hereby under the Act.
(d) Each Purchaser's right to transfer the Securities offered
and sold hereby will be restricted. These restrictions will require a
Purchaser to hold the Securities indefinitely, unless the Securities
are subsequently registered under the Act and qualified or registered
under other applicable state laws, or unless an exemption from such
qualification or registration is available and confirmed by an opinion
of counsel acceptable to the Company. After periods of time described
below, there may, but will not necessarily, be an exemption available
under Section 4(1) of the Act in accordance with SEC Rule 144. As of
the date of Agreement, Rule 144 allows for limited sales of restricted
securities pursuant to Section 4(1) of the Act after the securities
have been held for one year, provided certain conditions are satisfied,
including availability of public information about the issuer,
restrictions on the amount of securities sold within a three month
period, restrictions on the manner of sale, and the filing of a notice
with the SEC. Rule 144 currently provides that the foregoing
restrictions do not apply to a person who has held securities for two
years and who not been an "affiliate" of the issuer during the three
months preceding the sale. The term "affiliate" is defined in Rule 144
as a person who directly or indirectly controls, is controlled by or is
under common control with the issuer. Executive officers, directors and
persons who directly or indirectly own or control over 10% of the stock
of an issuer are often deemed to be affiliates. The Company is under no
obligation to take steps to ensure the availability of Rule 144, and
the Purchasers should not assume that the Securities may be resold at
any particular time in the future.
6. REPRESENTATIONS AND WARRANTIES. Each Purchaser hereby represents and
warrants, for itself and not for other Purchasers, as follows:
(a) All documents, records, and books pertaining to the
investment in the Company and its proposed business, including without
limitation the Form SB-2, have been made available to such Purchaser
for review.
(b) Such Purchaser, or the representatives or advisors of such
Purchaser, have had the opportunity to ask questions of and receive
answers from the officers of the Company, or persons acting on its
behalf, concerning the terms and conditions of this investment, and all
such questions have been answered to the full satisfaction of such
Purchaser or the representatives or advisors of such Purchaser.
(c) Such Purchaser has not been presented with or solicited by
any leaflet, public promotional meeting, circular, newspaper or
magazine article, radio, television or internet advertisement, or any
other form of advertising concerning the Securities or the Company.
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(d) Such Purchaser has received no representations or
warranties from the Company, or from any directors, officers, agents,
or employees of the Company, and in purchasing the Securities, such
Purchaser is relying solely on the investigations made by it.
(e) Such Purchaser acknowledges that neither the SEC nor any
other state or federal agency has made any determination as to the
merits of purchasing the Securities or as to the value of the
Securities, and that the purchase of the Securities involves a high
degree of risk.
(f) Such Purchaser is acquiring the Securities for investment
and for such Purchaser's own account or in the capacity set forth on
the signature page hereof, and not with a view to any distribution
thereof.
(g) Such Purchaser understands that the Securities must be
held indefinitely unless subsequently registered under the Act and
qualified or registered under other applicable state laws or unless an
exemption from such qualification or registration is available. Such
Purchaser agrees that a notation of these restrictions shall be placed
upon the Securities and in the appropriate records of the Company. Such
Purchaser understands that except as set forth in Section 10, the
Company has made no commitment to take actions to register the
Securities or to make available the safe harbor of SEC Rule 144.
(h) Such Purchaser understands the risks and other
considerations related to the purchase by such Purchaser of the
Securities, including without limitation the risk factors set forth in
the Form SB-2 under the heading "Risk Factors," and such Purchaser has
such knowledge and experience in financial and business matters that
such Purchaser (alone or with the aid of the investment advisors of
such Purchaser) is capable of evaluating the merits and risks of
purchasing the Securities.
(i) Such Purchaser has consulted with and relied entirely on
such Purchaser's business, financial, and tax advisors in purchasing
the Securities and in evaluating the merits and risks of an investment
in the Company.
(j) Such Purchaser is an accredited investor as that term is
defined under Regulation D promulgated under the Act, and has provided
true and correct information on the Accredited Investor Questionnaire
attached hereto as Exhibit B (the "Accredited Investor Questionnaire").
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(k) Such Purchaser is able to bear the economic risk of an
investment in the Company, has the ability to hold the Securities
indefinitely, such Purchaser's overall commitment to investments which
are not readily marketable (such as the Securities) is not
disproportionate to its net worth, and such Purchaser has the financial
ability to suffer a complete loss of its investment in the Securities.
(l) Such Purchaser has all requisite power, authority and
capacity to purchase and hold the Securities and to execute, deliver
and comply with the terms of this Agreement, and such execution,
delivery and compliance do not conflict with or constitute a default
under any instruments governing such Purchaser, any law, regulation, or
order, or any agreement to which such Purchaser is a party or by which
such Purchaser may be bound.
(m) Such Purchaser understands the meaning and legal
consequences of the representations, warranties, covenants and other
agreements contained in this Agreement, and understands that the
Company has relied upon such representations, warranties, covenants and
agreements, including those with respect to compliance with applicable
securities laws, rules and regulations, and such Purchaser hereby
agrees to indemnify and hold harmless the Company and its respective
directors, officers, agents, attorneys and employees, from and against
any and all loss, damage or liability, together with all costs and
expenses (including attorneys' fees and disbursements), which any of
them may incur by reason of any breach of the representations,
warranties, covenants or agreements of such Purchaser contained in this
Agreement. All representations, warranties and covenants contained in
this Agreement, and the indemnification contained in this Section,
shall survive the acceptance of this Agreement.
(n) Such Purchaser understands that the Company will require
substantially more capital than the amount raised in this offering in
order to complete the steps necessary to bring any products to market
and generate revenues. Such Purchaser acknowledges that these matters
are discussed in more detail in the Form SB-2 under the heading "Plan
of Operation." Such Purchaser understands that any additional capital
raised by the Company may be on terms similar to or different from the
terms of this Agreement, and such terms may be more or less favorable
to investors than the terms of this Agreement.
(o) If the Purchaser is an entity, such Purchaser represents
that it was not formed for the sole purpose of making an investment in
the Securities.
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EACH PURCHASER HEREBY SWEARS AND AFFIRMS THAT THE REPRESENTATIONS AND
STATEMENTS OF SUCH PURCHASER CONTAINED HEREIN ARE TRUE AND ACCURATE.
7. CONDITIONS TO CLOSING.
(a) The obligation of each Purchaser to purchase the
Securities is subject to the satisfaction, on or prior to the respective
Closing, of the following conditions:
(i) The Company shall have performed all obligations
and conditions herein required to be performed or
observed by it on or prior to the Closing;
(ii) The Company shall have obtained any and all
consents, permits and waivers necessary or appropriate for consummation of the
transactions contemplated by this Agreement (except for such as may be properly
obtained subsequent to the Closing); and
(iii) The Warrant shall have been executed and
delivered by the Company.
(b) The obligation of the Company to sell the Securities is
subject to the satisfaction, on or prior to the Closing, of the following
conditions:
(i) The representations and warranties of such
Purchaser contained in Section 6, shall be true on and as of the Closing with
the same effect as though such representations and warranties have been made on
and as of the Closing; and such Purchaser shall have performed and complied with
all agreements and conditions herein required to be performed or complied with
by such Purchaser on or before the Closing;
(ii) Such Purchaser shall have completed the
Accredited Investor Questionnaire, and the responses thereto shall be
satisfactory to the Company;
(iii) Such Purchaser shall have obtained any and all
consents, permits and waivers necessary or appropriate for consummation of the
transactions contemplated by this Agreement (except for such as may be properly
obtained subsequent to the Closing);
(iv) Such Purchaser shall have paid the Purchase
Price.
8. USE OF PROCEEDS. The proceeds from the transactions contemplated by
the Agreement will be used for working capital.
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9. BROKER'S FEES. The Company has agreed to pay a placement fee to
World Link Asset Management in the amount of seven percent (7%) of the gross
proceeds received under this Agreement by Purchasers introduced to the Company
by World Link Asset Management. In addition, the Company has agreed to issue to
World Link Asset Management a warrant to purchase a number of shares equal to
six percent (6%) of the number of Shares sold under this Agreement to Purchasers
introduced to the Company by World Link Asset Management. Such warrant will have
an exercise price of One Dollar ($1.00), and will be exercisable for three years
following the Initial Closing. Except as set forth above, each party hereto
represents and warrants that no agent, broker, investment banker, person or firm
acting on behalf of or under the authority of such party hereto is or will be
entitled to any broker's or finder's fee or any other commission directly or
indirectly in connection with the transactions contemplated herein. Each party
hereto further agrees to indemnify each other party for any claims, losses or
expenses incurred by such other party as a result of the representation in this
Section 9 being untrue.
10. REGISTRATION RIGHTS.
(a) Within forty (40) days after the Initial Closing, the
Company shall use commercially reasonable efforts to file a Registration
Statement under the Act (the "Registration Statement") with the SEC covering the
registration of the Shares and the Warrant Shares. In the event the Registration
Statement is not filed within such forty (40) day period, the Company shall
issue to each Purchaser a number of additional shares of the Company's common
stock equal to thirty-three thousandths of one percent (0.033%) of the number of
the Shares purchased by such Purchaser, for each day after such forty (40) day
period prior to the date of filing of the Registration Statement. The Company
shall issue each Purchaser such additional shares, rounded to the nearest whole
share, immediately prior to the filing of the Registration Statement.
(b) The provisions of this Section 10 shall be the sole and
exclusive remedy of the Purchasers for the Company's failure to file the
Registration Statement within the time frames set forth above, or otherwise with
respect to the registration of the Shares and the Warrant Shares.
(c) The Company may require each Purchaser to furnish to the
Company a certified statement as to the number of Shares beneficially owned by
such Purchaser, the natural person or persons who has or have voting and
dispositive control over the Shares held by such Purchaser, and such other
information as the Company shall reasonably require, within three business days
of the Company's request. During any periods that the Company is unable to meet
its obligations hereunder with respect to the registration of the Shares because
any Purchaser has failed to furnish such information within three business days
of the Company's request, any additional shares to be issued in accordance with
paragraph (a) above that are accruing at such time shall be tolled and the
obligation to issue such shares shall be suspended, until such information is
delivered to the Company.
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11. SUBSEQUENT PLACEMENTS.
(a) Prior to the date which is ninety (90) days after the
Initial Closing, the Company will not, directly or indirectly, sell, grant any
option to purchase, or otherwise dispose of (or announce any sale, grant or any
option to purchase or other disposition of any of Common Stock or Common Stock
Equivalents (as defined below) pursuant to a private placement (such offer,
sale, grant, disposition or announcement being referred to as "Subsequent
Placement"), unless the Company delivers to each Purchaser a written notice (the
"Subsequent Placement Notice") of its intention to effect such Subsequent
Placement, which specifies in reasonable detail all of the material terms of
such Subsequent Placement, the amount of proceeds intended to be raised
thereunder, the names of the investors (including the investment manager of such
investors, if any) and the investment bankers with whom such Subsequent
Placement is proposed to be effected, and attached to which shall be a term
sheet or similar document. If a Purchaser wises to participate in the Subsequent
Placement, it must notify the Company by 6:30 p.m. (New York City time) on the
third business day after delivery of the Subsequent Placement Notice of its
willingness to provide a stated investment amount, subject to completion of
mutually acceptable documentation, up to fifty percent (50%) of such financing
to the Company on the same terms set forth in the Subsequent Placement Notice.
The Company may consummate the remaining portion of such Subsequent Placement on
the terms and to the persons set forth in the Subsequent Placement Notice. The
Company shall provide each Purchaser with a second Subsequent Placement Notice
and each Purchaser will again have the right of first refusal set forth in this
Section 11(a), if the Subsequent Placement subject to the initial Subsequent
Placement Notice is not consummated for any reason on the terms set forth in
such Subsequent Notice within sixty (60) days after the date of the initial
Subsequent Placement Notice with the person(s) identified in the Subsequent
Placement Notice. If the Purchasers indicate in the aggregate a willingness to
provide financing in excess of fifty percent (50%) of the amount set forth in
the Subsequent Placement Notice, then each participating Purchaser will be
entitled to provide financing pursuant to such Subsequent Placement Notice up to
an amount equal to such Purchaser's Pro Rata Portion (as defined below) of the
Common Stock or Common Stock Equivalents to be issued in such Subsequent
Placement. "Pro Rata Portion" is the ratio of (x) fifty percent (50%) of such
Purchaser's Purchase Price and (y) the sum of the Purchase Prices paid by
Purchasers providing financing pursuant to the Subsequent Placement Notice.
(b) The Company's obligations under Section 11(a) shall not
apply to any grant or issuance by the Company of any of the following: (i) the
sale of Securities pursuant to this Agreement; (ii) the issuance of securities
upon the exercise or conversion of any Common Stock Equivalents or any other
debt instrument, or the issuance of securities due to the effect of any
anti-dilution or repricing provisions contained in securities, issued by the
Company prior to the date of this Agreement (or to any amendments or
modifications thereof), (iii) the grant of options or warrants, or the issuance
of additional securities, under any duly authorized Company stock option,
restricted stock plan or stock purchase plan, including any inducement grant to
a new executive officer or director, (iv) the issuance of Common Stock or Common
Stock Equivalents pursuant to a Strategic Transaction or (v) the issuance of
securities to Fusion Capital Fund II pursuant to the Common Stock Purchase
Agreement dated April 1, 2003.
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(c) The term "Strategic Transaction" means a transaction or
relationship in which the Company issues shares of Common Stock or Common Stock
Equivalents (i) to a person which is, itself or through its subsidiaries, an
operating company in a business synergistic with the business of the Company and
in which the Company receives benefits in addition to the investment of funds,
but shall not include a transaction in which the Company is issuing securities
primarily for the purpose of raising working capital or to an entity whose
primary business is investing in securities, or (ii) to a person in connection
with any equipment lease or other asset-based lending transaction approved by
the Company's Board of Directors in accordance with reasonable business
practices.
(d) The term "Common Stock Equivalents" means any securities
of the Company which entitle the holder thereof to acquire the Company's Common
Stock at any time, including without limitation, 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,
the Company's Common Stock or other securities that entitle the holder to
receive, directly or indirectly, the Company's Common Stock.
12. GOVERNING LAW. This Agreement is made in San Diego, California and
it shall be construed in accordance with and governed in all respects by the
laws of the State of California.
13. SECURITIES LAWS. THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), NOR HAVE THEY BEEN QUALIFIED
UNDER CALIFORNIA OR ANY OTHER STATE SECURITIES LAWS, RULES OR REGULATIONS, AND
MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION UNDER
THE ACT AND QUALIFICATION OR REGISTRATION UNDER OTHER APPLICABLE SECURITIES
LAWS, RULES, AND REGULATIONS, OR AN OPINION OF COUNSEL ACCEPTABLE TO THE
CORPORATION THAT SUCH REGISTRATION AND QUALIFICATION ARE NOT REQUIRED.
14. SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto.
15. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
16. ENTIRE AGREEMENT. This Agreement, the Accredited Investor
Questionnaire and the Warrant constitute the entire agreement among the parties
with respect to the subject matter hereof.
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17. AMENDMENTS AND WAIVERS. Any term of this Agreement may be amended
or waived only with the written consent of the Company and Purchasers
representing a majority of the total Purchase Price under this Agreement, which
amendments or waivers will bind the Company and all Purchasers.
18. NOTICES. Any notice required or authorized to be given hereunder or
any other communications between the parties provided for under the terms of
this Agreement shall be in writing and shall be served personally, or by
reputable express courier service, or by facsimile transmission addressed to the
relevant party at the address stated on the signature page hereto or at any
other address provided by that party to the other as its address for service.
Any notice so given personally shall be deemed to have been served on delivery,
any notice so given by express courier service shall be deemed to have been
served two (2) business days after the same shall have been delivered to the
relevant courier, and any notice so given by facsimile transmission shall be
deemed to have been received on dispatch. In proving such service, it shall be
sufficient to produce the receipt of a reputable courier company showing the
correct address of the addressee or prove that the facsimile transmission was
followed by an activity report showing the correct facsimile number of the party
on whom notice is served and the correct number of pages transmitted.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK -
SIGNATURE PAGES TO FOLLOW]
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IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND
RESTATED SECURITIES PURCHASE AGREEMENT as of the date first above written.
COMPANY:
MicroIslet, Inc., a
Nevada corporation
By: _______________________________________
Printed Name:______________________________
Its:_______________________________________
Address: 0000 Xxxxx Xxxxx Xxxxx, Xxxxx 000
Xxx Xxxxx, XX 00000
[AMENDED AND RESTATED SECURITIES PURCHASE AGREEMENT SIGNATURE PAGE]
IN WITNESS WHEREOF, the parties have executed this SECURITIES PURCHASE
AGREEMENT as of the date first above written.
PURCHASER:
[_____________________________________]
By:
Printed Name:
Its:
Address:______________________________
______________________________
Telephone: ___________________________
Facsimile: ___________________________
E-mail: ______________________________
Purchase Price: $_____________________ in cash
$_____________________ in cancellation of indebtedness
Total: $_____________________
[AMENDED AND RESTATED SECURITIES PURCHASE AGREEMENT SIGNATURE PAGE]
