MICROHELIX, INC.
SERIES B PREFERRED
STOCK PURCHASE AGREEMENT
This
SERIES B PREFERRED STOCK PURCHASE AGREEMENT (the "AGREEMENT") is
made
as of April 8, 2005 by and among
MICROHELIX, INC., an Oregon corporation (the
"COMPANY"), and the purchaser of the
Company's securities hereunder that has
executed this Agreement ("INVESTOR").
The
parties hereby agree as follows:
1. AUTHORIZATION OF SERIES B PREFERRED
STOCK; PURCHASE AND SALE OF SERIES B
PREFERRED STOCK.
1.1
AUTHORIZATION OF SERIES B PREFERRED STOCK. The Company has adopted
and
filed with the Secretary of State of the
State of Oregon the Certificate of
Designation substantially in the form
accompanying this Agreement setting forth
the rights, privileges and preferences of
the Series B Preferred Stock (the
"AMENDMENT"). The Company has authorized
the issuance and sale of up to
2,250,000 shares of Series B Preferred
Stock, no par value (the "SERIES B
PREFERRED STOCK"), of which up to 2,000,000
shares are being offered in this
offering (the "OFFERING").
1.2
PURCHASE AND SALE OF THE SERIES B PREFERRED STOCK.
(a) SUBSCRIPTION. Subject to the terms and conditions of this
Agreement and on the basis of the
representations and warranties set forth
herein, Investor agrees to purchase from
the Company that number of shares of
Series B Preferred Stock (collectively, the
"SHARES") set forth on Investor's
signature page hereto at a purchase price
of $1.00 per Share.
(b) AGREEMENT NON-BINDING ON THE COMPANY UNTIL ACCEPTED.
Investor
understands and agrees that the Company has
the right to reject this Agreement,
in whole or in part, and for any reason
whatsoever. To the extent this Agreement
is rejected by the Company, the
consideration for the rejected Shares shall be
refunded to Investor without interest.
1.3
MINIMUM AND MAXIMUM OFFERING. The Company must sell a minimum
of
1,200,000 shares of Series B Preferred
Stock in this Offering before it will
accept this Agreement. The Company will not
sell more than 2,000,000 shares of
Series B Preferred Stock during this
Offering (excluding 250,000 shares of
Series B Preferred Stock to be issued as
consideration in the MEI Acquisition
(defined below)).
2. CLOSING; DELIVERY.
2.1 The
closing of the purchase and sale of the Shares (the "CLOSING")
will occur at 9:00 a.m., Pacific Time, on
Friday, April 8, 2005, or such later
time and date as the Company may advise
Investor in writing; provided, that in
no event may the Closing be postponed later
than April 15, 2005 without the
consent of Investor. The Closing will take
place at the offices of Tonkon Torp
LLP, 1600 Pioneer Tower, 888 SW Fifth
Avenue, Portland, OR 97204.
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2.2 At or
promptly following the Closing, the Company will deliver to
Investor a certificate, registered in
Investor's name, representing the number
of Shares acquired by Investor pursuant to
this Agreement, in each case against
payment of the purchase price of the Shares
by wire transfer to the following
Company account or by certified or cashiers
check, in immediately available
funds, payable to "microHelix, Inc."
West Coast Bank
Portland Branch
1000 SW Broadway, Suite 1100
Portland, OR 97205
ABA No.: 1232000088
Account No. 560001281
Account Name:
microHelix, Inc.
3. REPRESENTATIONS AND WARRANTIES. In order
to induce Investor to enter into
this Agreement and to purchase the Shares
hereunder, the Company hereby
represents and warrants to each
Investor:
3.1
ORGANIZATION AND CORPORATE POWER. The Company is a corporation
duly
organized and validly existing under the
laws of the State of Oregon. The
Company has all required corporate power
and authority to own its property, to
carry on its business as presently
conducted or contemplated to be conducted and
to carry out the transactions contemplated
hereby.
3.2
AUTHORIZATION. This Agreement and the Registration Rights
Agreement
dated as of the date hereof in
substantially the form accompanying this
Agreement (together, the "TRANSACTION
DOCUMENTS") have been or will prior to
Closing be duly executed and delivered by
the Company and will be the legal,
valid and binding obligations of the
Company, enforceable in accordance with
their respective terms, subject to
applicable bankruptcy, insolvency,
reorganization and moratorium laws and
other laws of general application
affecting enforcement of creditors' rights
generally. The execution, delivery
and performance of each of the Transaction
Documents has been or prior to
Closing will be duly authorized by all
necessary corporate action of the
Company.
3.3
CAPITALIZATION. The entire authorized capital stock of the
Company
consists of 20,000,000 shares of Common
Stock, no par value, of which 1,959,746
shares were issued and outstanding as of
March 31, 2005, and 3,500,000 shares of
Preferred Stock, no par value, of which
500,000 shares have been designated
Series A Preferred Stock (no shares of
which are issued and outstanding), and of
which 2,250,000 shares will be designated
Series B Preferred Stock, no shares of
which will be issued and outstanding prior
to Closing. At Closing, the Company
will issue 250,000 shares of Series B
Preferred Stock as partial consideration
for the acquisition of all of the
outstanding capital stock (the "MEI
ACQUISITION") of Moore Electronics, Inc.,
an Oregon corporation ("MEI").
Following the Closing, the Company will
have substantially the following
capitalization:
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<TABLE>
<CAPTION>
Minimum
Maximum
Existing
Offering
Offering
--------
--------
--------
<S>
<C>
<C>
<C>
<C> <C>
<C>
Common Stock
1,959,746
67.8%
1,959,746
21.9% 1,959,746
16.0%
Series B Preferred Stock*
0
5,800,000
64.7% 9,000,000
73.6%
Outstanding Public Warrants**
812,611
28.1%
812,611 9.1%
812,611
6.6%
Other Options & Warrants***
117,867 4.1%
387,867 4.3%
451,867
3.7%
---------
---------
----------
2,890,224
8,960,224
12,224,224
</TABLE>
-----------
* On as converted
basis; includes 250,000 shares to be issued as purchase
price
consideration in MEI acquisition.
** Exercise price is
$21.60 per share.
*** Exercise prices range from
$1.02 to $27.18 per share. An additional
270,000
warrants (minimum offering) or 334,000 warrants (maximum
offering)
will be
granted to the Company's financial advisor at Closing in
connection
with services rendered with respect to the sale of Series B
Preferred
Stock in this Offering, the new BFI Finance credit facility and
the
sale/leaseback transaction with VenCore Solutions, LLC.
All outstanding capital stock is duly
authorized, validly issued and fully paid
and non-assessable. When issued in
accordance with the terms of this Agreement,
the Shares will be duly authorized, validly
issued and outstanding, fully paid
and nonassessable.
3.4
SUBSIDIARIES. Except for microHelix Acquisition Corp., an
Oregon
corporation wholly owned by the Company,
the Company has no subsidiaries and
does not own or control any interest in any
other corporation, association or
business organization. At or immediately
following Closing, microHelix
Acquisition Corp. will be merged with and
into MEI, with MEI as the surviving
corporation. At Closing MEI will become a
wholly-owned subsidiary of the
Company.
3.5
INTELLECTUAL PROPERTY. To the Company's Knowledge, the Company owns
a
valid right, title, interest or license in
and to the intellectual property
necessary for the operation of its
business, which includes, but is not limited
to, all copyrights, common law copyrights,
trade names, trademarks, service
marks, trade secrets, technology, know-how,
processes, or any other intangible
property rights ("INTELLECTUAL PROPERTY")
of the Company. There are no claims
pending or, to the Company's Knowledge,
threatened against the Company regarding
any claim or infringement of any
Intellectual Property belonging to any other
person, firm or corporation and the Company
has not received any written notice
or other indication of any claim of any
such infringement. The "COMPANY'S
KNOWLEDGE" means the actual knowledge,
after reasonable investigation, of Tyram
H. Pettit.
3.6
LICENSES AND PERMITS. The Company possesses all material licenses
and
permits necessary for the present conduct
of its business. Each of such licenses
and permits is in full force and effect,
and there are no pending or, to the
Company's Knowledge, threatened claims or
proceedings challenging the validity
of, or seeking to revoke or discontinue,
any license or permit of the Company.
3.7 TAXES.
The Company has (a) timely filed all federal, state, local and
foreign franchise, income, sales, gross
receipts and all other tax returns and
statements which are required to be filed
by it and which were due prior to the
date hereof ("TAX RETURNS AND STATEMENTS"),
and (b) paid within the time and in
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the manner prescribed by law or established
reasonable reserves for the payment
of all taxes, levies, assessments, fees,
penalties, interest and other
governmental charges accrued or payable for
all periods ending on or prior to
the date hereof. The Tax Returns and
Statements are complete and accurate in all
material respects, and no tax assessment or
deficiency which has not been paid
or for which an adequate reserve has not
been set aside, has been made or
proposed against the Company, nor are any
of the Tax Returns and Statements now
being examined or audited nor, to the
Company's Knowledge, is there a threat
that any of the Tax Returns and Statements
will be examined or audited, and no
consents waiving or extending any
applicable statues of limitations for the Tax
Returns and Statements, or any taxes
required to be paid thereunder, have been
filed.
3.8
COMPLIANCE WITH LAWS. The business of the Company has been
conducted
in material compliance with all applicable
laws, statutes, ordinances, rules,
regulations, orders and other requirements
of all national governmental
authorities, and of all territories,
states, municipalities and other political
subdivisions and agencies thereof, having
jurisdiction over it, except for
violations that individually, or in the
aggregate, would have no material
adverse effect on the business, operations
or financial condition of the
Company.
3.9
RESERVATION OF UNDERLYING SHARES. The shares of Common Stock
issuable
on conversion of the Shares have been, or
will be prior to Closing, duly and
validly reserved for issuance and, upon
conversion of the Shares into shares of
Common Stock, will be duly and validly
issued, fully paid and nonassessable.
3.10
LITIGATION. There is no claim, action, lawsuit, proceeding,
complaint, charge or investigation pending
or, to the Company's Knowledge,
threatened against the Company which
questions the validity of any of the
Transaction Documents or the right of the
Company to enter into them or to
consummate the transactions contemplated
hereby or thereby, or which might
result, either individually or in the
aggregate, in any material adverse change
in the business, assets, conditions,
operations, affairs, or prospects of the
Company, financial or otherwise, or any
change in the current equity ownership
of the Company, nor to the Company's
Knowledge is there any basis for the
foregoing.
3.11 1934
ACT REPORTS. The Company's Common Stock is traded on the Nasdaq
OTC Bulletin Board under the symbol
"MHLX.OB." The Company has filed all reports
required to be filed by it through the date
hereof under the Securities Exchange
Act of 1934, as amended, (collectively, the
"1934 ACT REPORTS"). The Company's
1934 Act Reports are available at
www.sec.gov.
3.12
TRANSACTION COSTS. The Company engaged Windstone Capital
Partners,
Inc. ("WINDSTONE") to represent it in
connection with raising funds for the MEI
Acquisition, among other purposes. Upon the
Closing, the Company will pay
Windstone a minimum of $120,000 and a
maximum of $184,000 and warrants with an
exercise price of $0.25 per share to
purchase a minimum of 270,000 and a maximum
of 334,000 shares of the Company's Common
Stock as compensation for services
rendered with respect to the sale of Series
B Preferred Stock in this Offering,
the Company's new BFI Finance credit
facility and a sale/leaseback transaction
between the Company and VenCore Solutions,
LLC.
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4. REPRESENTATIONS AND WARRANTIES AND OTHER
AGREEMENTS OF INVESTOR.
4.1
REPRESENTATIONS AND WARRANTIES. Investor hereby represents and
warrants to the Company that:
(a) ACCREDITED INVESTOR. Investor is an "accredited investor"
as
defined in Rule 501(a) of Regulation D
promulgated under the Securities Act of
1933, as amended (the "SECURITIES ACT") as
noted below (INVESTOR TO INITIAL ALL
THAT APPLY):
(i) ________ An individual whose individual net worth, or joint
net
worth with that person's spouse, at the time of the purchase
exceeds
$1,000,000;
(ii) ________ An individual who had an individual income in
excess
of $200,000 in each of the two most recent years or joint
income
with that person's spouse in excess of $300,000 in each of
those
years and who reasonably expects to reach the same income level
in
the current year;
(iii) _______ A corporation or partnership, not formed for the
specific purpose of acquiring the Securities, with total assets
in
excess of $5 million; or
(iv) _______ An entity in which all of the equity owners are
accredited investors as set forth above.
As used in this paragraph, the term "net
worth" means the excess of total assets
over total liabilities. For the purpose of
determining a person's net worth, the
principal residence owned by an individual
should be valued at fair market
value, including the cost of improvements,
net of current encumbrances. As used
in this paragraph, "income" means actual
economic income, which may differ from
adjusted gross income for income tax
purposes. Accordingly, Investor should
consider whether it should add any or all
of the following items to its adjusted
gross income for income tax purposes in
order to reflect more accurately its
actual economic income: any amounts
attributable to tax-exempt income received,
losses claimed as a limited partner in any
limited partnership, deductions
claimed for depletion, contributions to an
IRA or Keogh retirement plan, and
alimony payments.
(b) AUTHORIZATION; RESIDENCY. Investor has full power and
authority
to execute, deliver and perform the
Transaction Documents and to acquire the
Shares. The Transaction Documents
constitute the valid and legally binding
obligations of Investor, enforceable
against Investor in accordance with their
respective terms, subject to applicable
bankruptcy, insolvency, reorganization
and moratorium laws and other laws of
general application affecting enforcement
of creditors' rights generally. Investor is
a resident of the jurisdiction set
forth under its name on Investor's
signature page hereto.
(c) PURCHASE ENTIRELY FOR OWN ACCOUNT. The Shares to be purchased
by
Investor and the Common Stock issuable upon
conversion of the Shares
(collectively, the "SECURITIES") will be
acquired for investment for Investor's
own account, not as a nominee or agent, and
not with a view to the resale or
distribution of any part thereof, and
Investor has no present intention of
selling, granting any participation in or
otherwise distributing the same.
Investor does not have any contract,
undertaking, agreement or arrangement with
any person or entity to sell, transfer or
grant participation to such person or
to any third party with respect to any of
the Securities.
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(d) RELIANCE UPON INVESTOR'S REPRESENTATIONS. Investor
understands
that the Securities have not been
registered under the Securities Act on the
ground that the sale provided for in this
Agreement and the issuance of
securities hereunder is exempt from
registration, and that the Company's
reliance on such exemption is predicated on
Investor's representations set forth
herein. Investor realizes that the basis
for the exemption may not be present
if, notwithstanding such representations,
Investor has in mind merely acquiring
shares of the Securities for a fixed or
determinable period in the future, or
for a market rise, or for sale if the
market does not rise. Investor has no such
in
