MICROHELIX,
INC.
SERIES B
PREFERRED
STOCK PURCHASE
AGREEMENT
(November
2005)
This SERIES B PREFERRED STOCK
PURCHASE AGREEMENT (the " Agreement ") is made by
and between MICROHELIX, INC., an Oregon corporation (the "
Company "), and the purchaser of the Company's
securities hereunder that has executed this Agreement ("
Investor "). The date of this Agreement is set
forth on the Investor's signature page hereto.
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, as amended,
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 2,750,000 shares of
Series B Preferred Stock, no par value (the " Series B
Preferred Stock "), of which up to 500,000 shares are
being offered in this offering (the " Offering ").
A total of 2,250,000 shares of Series B Preferred Stock were
previously issued by the Company on April 8, 2005 and remain
outstanding.
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 . There is
no minimum number of shares of Series B Preferred Stock the Company
must sell in this Offering before it will accept this Agreement.
The Company does not intend to sell more than 500,000 shares of
Series B Preferred Stock during this Offering. As of November 1,
2005, the Company has sold 310,000 shares of Series B Preferred
Stock during this Offering.
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 the day this Agreement is Accepted by the Company,
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 March 31, 2006 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.
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, by certified or cashiers check, in
immediately available funds, payable to "microHelix, Inc.", or by
conversion of outstanding debt owed to the Investor by the
Company.
1000 SW
Broadway, Suite 1100
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 April 8, 2005 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 2,116,246 shares were issued and outstanding as
of November 1, 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 2,750,000 shares are
designated Series B Preferred Stock, 2,560,000 shares of which are
issued and outstanding prior to Closing. In this Offering the
Company will issue up to 500,000 shares of Series B Preferred
Stock. Following this Offering, and assuming that all of the
500,000 shares of Series B Preferred Stock offered in the Offering
are issued, the Company will have substantially the following
capitalization:
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Existing
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Post
Offering
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Common
Stock
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Series B
Preferred Stock*
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Outstanding Public Warrants**
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Other
Options & Warrants***
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12,524,724
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* On an as
converted basis (4-to-1).
** Exercise
price is $21.60 per share.
*** Exercise
prices range from $0.25 to $27.18 per share.
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 Moore Electronics, Inc., 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.
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 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
does not expect to pay more than eight percent (8%) with respect to
finders or brokers fees in connection with this
Offering.
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 identified on
Investor's attached signature page:
(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 Shares, with total
assets in excess of $5 million;
(iv)
A trust, with total assets in
excess of $5 million, not formed for the specific purpose of
acquiring the Shares, whose purchase is directed by a sophisticated
person as described in Regulation D; or
(v)
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.
(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 intention.
(e)
Investment
Experience . Investor is experienced in
evaluating and investing in private placement transactions of
securities of companies in a similar stage of development as the
Company and acknowledges that Investor is able to fend for itself,
can bear the
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