EXHIBIT 10.1
 
ISLET SCIENCES, INC.

SUBSCRIPTION AGREEMENT

 
As of ____________, 2012                  
Mr. John Steel
Chief Executive Officer
Islet Sciences, Inc.
1370 Avenue of the Americas, Suite 902
New York, New York 10019
 
 
1.  
Subscription; Escrow Arrangement.

 
(a)
The undersigned subscriber (the “Subscriber”) hereby irrevocably subscribes for
and agrees to purchase the number of shares (the “Shares”) of the Company’s
common stock, par value $.001 per share (“Common Stock”), set forth on the
signature page hereto from Islet Sciences, Inc., a Nevada corporation (the
“Company”) for the purchase price of $0.45 per share in connection with the
Company’s offering of up to $2,170,000 in Common Stock together with the right
to receive warrants for no additional consideration (the “Offering”), in the
form of Exhibit B hereto, granting subscriber the right to purchase a number of
shares of common stock, par value $.001 per share, of the Company (the “Common
Stock”) equal to fifty percent (50%) of the number of shares of Common Stock
subscribed for hereunder (such warrants, the “Warrants;” together with the
Shares, the “Securities”).  The Warrants will have an initial exercise price
equal to $1.00 per share and shall be exercisable for a five (5) year
period.  In addition, the Shares and shares issuable upon exercise of the
Warrants (the “Warrant Shares”) shall have the registration rights as provided
in Section 4 hereof.
 
This Subscription Agreement (the “Subscription Agreement”) together with the
Exhibits constitutes the “Offering Documents.”

 
This subscription is based solely upon the information provided in the Offering
Documents and upon the Subscriber’s own investigation as to the merits and risks
of this investment.  The Subscriber shall deliver herewith duly executed copies
of the signature pages to the following documents: (i) the Subscription
Agreement, and (ii) the Accredited Investor Questionnaire & Form W-9.

The Offering may be consummated at more than one closing to occur on a date as
may be determined by the Company’s Board of Directors. Each such closing is
referred to as a “Closing” and the date of each such Closing is referred to as
the “Closing Date.”  A final Closing shall be held by the Company on or before
March 31, 2012 (the “Final Closing Date”).  At each Closing with respect to the
Shares subscribed for hereby and accepted by the Company, the Escrow Agent shall
release and turn over the subscription payments for the Shares to the Company
and the Company shall promptly thereafter deliver to the Subscriber, the stock
certificate for the Shares.  If the Company does not accept this subscription,
in whole or in part, the Escrow Agent will promptly refund to the Subscriber,
without deduction therefrom, any subscription payment received from the
Subscriber for the Shares, the subscription for which was not accepted by the
Company.
 
 
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(b)
Subject to the terms and conditions hereinafter set forth, the Subscriber hereby
subscribes for and agrees to purchase the number of Shares from the Company set
forth on the signature page hereof, and when this Agreement is accepted and
executed by the Company, the Company agrees to issue such Shares to the
Subscriber.  The subscription price is payable by wire transfer to “Signature
Bank, as Escrow Agent for Islet Sciences, Inc.” pursuant to the following wire
instructions.

 
WIRING INSTRUCTIONS
 

Bank’s Name and Address:   Signature Bank   261 Madison Avenue   New York, NY
10016     Account #: 1501724943     ABA Routing #: 026013576

 
2.  
Subscriber Representations, Warranties and Agreements.  The Subscriber hereby
acknowledges, represents and warrants as follows (with the understanding that
the Company will rely on such representations and warranties in determining,
among other matters, the suitability of this investment for the Subscriber in
order to comply with federal and state securities laws):

 
(a)
In connection with this subscription, the Subscriber has read this Subscription
Agreement and the other Offering Documents.  The Subscriber acknowledges that
this Subscription Agreement is not intended to set forth all of the information
which might be deemed pertinent by an investor who is considering an investment
in the Securities.  It being the responsibility of Subscriber (i) to determine
what additional information he desires to obtain in evaluating this investment
and (ii) to obtain such information from the Company.

 
(b)
THIS OFFERING IS LIMITED TO PERSONS WHO ARE “ACCREDITED INVESTORS,” AS THAT TERM
IS DEFINED IN REGULATION D UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), AND WHO HAVE THE FINANCIAL MEANS AND THE BUSINESS, FINANCIAL
AND INVESTMENT EXPERIENCE AND ACUMEN TO CONDUCT AN INVESTIGATION AS TO, AND TO
EVALUATE, THE MERITS AND RISKS OF THIS INVESTMENT. THE SUBSCRIBER HEREBY
REPRESENTS THAT HE HAS READ, IS FAMILIAR WITH AND UNDERSTANDS RULE 501 OF
REGULATION D UNDER THE ACT.  THE SUBSCRIBER IS AN “ACCREDITED INVESTOR” AS
DEFINED IN RULE 501(A) OF REGULATION D.

 
 
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(c)
The Subscriber has had full access to all the information which the Subscriber
(or the Subscriber’s advisor) considers necessary or appropriate to make an
informed decision with respect to the Subscriber’s investment in the
Securities.  The Subscriber acknowledges that the Company has made available to
the Subscriber and the Subscriber’s advisors the opportunity to examine and copy
any contract, matter or information which the Subscriber considers relevant or
appropriate in connection with this investment and to ask questions and receive
answers relating to any such matters including, without limitation, the
financial condition, management, employees, business, obligations, corporate
books and records, budgets, business plans of and other matters relevant to the
Company.  To the extent the Subscriber has not sought information regarding any
particular matter, the Subscriber represents that he or she had and has no
interest in doing so and that such matters are not material to the Subscriber in
connection with this investment.  The Subscriber has accepted the responsibility
for conducting the Subscriber’s own investigation and obtaining for itself such
information as to the foregoing and all other subjects as the Subscriber deems
relevant or appropriate in connection with this investment.  The Subscriber is
not relying on any representation other than that contained herein.  The
Subscriber acknowledges that no representation regarding projected financial
performance or a projected rate of return has been made to it by any party.

 
(d)
The Subscriber understands that the offering of the Securities has not been
registered under the Securities Act, in reliance on an exemption for private
offerings provided pursuant to Section 4(2) of the Securities Act and that, as a
result, the Shares, as well as the securities issuable upon conversion of the
Shares as set forth in the Certificate of Designations and the  securities
issuable in connection with such securities (collectively, the “Conversion
Securities”), will be “restricted securities” as that term is defined in Rule
144 under the Act and, accordingly, under Rule 144 as currently in effect, that
the Shares or the Conversion Securities must be held until the latest of (i) at
least one (1) year after the investment has been made (or indefinitely if the
Subscriber is deemed an “affiliate” within the meaning of such rule), or (ii)
January 6, 2013, unless the Shares or Conversion Securities are subsequently
registered under the Securities Act and qualified under any other applicable
securities law or exemptions from such registration and qualification are
available.  The Subscriber understands that the Company is under no obligation
to register the Securities under the Securities Act or to register or qualify
the Securities under any other applicable securities law, or to comply with any
other exemption under the Securities Act or any other securities law, and that
the Subscriber has no right to require such registration.  The Subscriber
further understands that the Offering of the Securities has not been qualified
or registered under any foreign or state securities laws in reliance upon the
representations made and information furnished by the Subscriber herein and any
other documents delivered by the Subscriber in connection with this
subscription; that the Offering has not been reviewed by the Commission or by
any foreign or state securities authorities; that the Subscriber’s rights to
transfer the Securities will be restricted, which includes restrictions against
transfers unless the transfer is not in violation of the Act and applicable
state securities laws (including investor suitability standards); and that the
Company may in its sole discretion require the Subscriber to provide at
Subscriber’s own expense an opinion of its counsel to the effect that any
proposed transfer is not in violation of the Act or any state securities laws.

 
 
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(e)
The Subscriber is empowered and duly authorized to enter into this Subscription
Agreement which constitutes a valid and binding agreement of the Subscriber
enforceable against the Subscriber in accordance with its terms; and the person
signing this Subscription Agreement on behalf of the Subscriber is empowered and
duly authorized to do so.

 
(f)
The Subscriber has liquid assets sufficient to assure that the purchase price of
the Securities will cause no undue financial difficulties and that, after
purchasing the Securities the Subscriber will be able to provide for any
foreseeable current needs and possible personal contingencies; the Subscriber is
able to bear the risk of illiquidity and the risk of a complete loss of this
investment.

 
(g)
The information in any documents delivered by the Subscriber in connection with
this subscription, including, but not limited to the Investor Questionnaire, is
true, correct and complete in all respects as of the date hereof.  The
Subscriber agrees promptly to notify the Company in writing of any change in
such information after the date hereof.

 
(h)
The offering and sale of the Securities to the Subscriber were not made through
any advertisement in printed media of general and regular paid circulation,
radio or television or any other form of advertisement, or as part of a general
solicitation.

 
(i)
The Subscriber recognizes that an investment in the Securities involves
significant risks, including the Risk Factors annexed hereto as Exhibit E.  The
Subscriber has read and understands such risks and that such risks, and others,
can result in the loss of the Subscriber’s entire investment in the Securities.

 
(j)
The Subscriber is acquiring the Securities, as principal, for the Subscriber’s
own account for investment purposes only, and not with a present intention
toward or for the resale, distribution or fractionalization thereof, and no
other person has a beneficial interest in the Securities.  The Subscriber has no
present intention of selling or otherwise distributing or disposing of the
Securities, and understands that an investment in the Securities must be
considered a long-term illiquid investment.

 
 
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3.  
Representations, Warranties and Covenants of the Company.  As a material
inducement of the Subscribers to enter into this Subscription Agreement and
subscribe for the Securities, the Company represents and warrants to the
Subscriber, as of the date hereof, as follows:

 
(a)
Organization and Standing.  The Company is a duly organized corporation, validly
existing and in good standing under the laws of the State of Nevada, has full
power to carry on its business as and where such business is now being conducted
and to own, lease and operate the properties and assets now owned or operated by
it and is duly qualified to do business and is in good standing in each
jurisdiction where the conduct of its business or the ownership of its
properties requires such qualification except where the failure to be so
qualified would not have a Material Adverse Effect on the Company.  “Material
Adverse Effect” means any circumstance, change in, or effect on the Company
that, individually or in the aggregate with any other similar circumstances,
changes in, or effects on, the Company taken as a whole: (i) is, or is
reasonably expected to be, materially adverse to the business, operations,
assets, liabilities, employee relationships, customer or supplier relationships,
prospects, results of operations or the condition (financial or otherwise) of
the Company taken as a whole, or (ii) is reasonably expected to adversely affect
the ability of the Company to operate or conduct the Company’s business in the
manner in which it is currently operated or conducted or proposed to be operated
or conducted by the Company; provided, however, that none of the following shall
be deemed in and of themselves, either alone or in combination, to constitute,
and none of the following shall be taken into account in determining whether
there has been or will be, a Material Adverse Effect: (i) any change, event,
state of facts or development generally affecting the general political,
economic or business conditions of the United States; (ii) any change, event,
state of facts or development generally affecting the medical device industry;
(iii) any change, event, state of facts or development arising from or relating
to compliance with the terms of this Subscription Agreement; (iv) acts of war
(whether or not declared), the commencement, continuation or escalation of a
war, acts of armed hostility, sabotage or terrorism or other international or
national calamity or any material worsening of such conditions; (v) changes in
laws or Generally Accepted Accounting Principles after date hereof or
interpretation thereof; or (vi) any matter set forth in the Offering Documents
or the Schedules or Exhibits thereto.

 
 
(b)
Subsidiaries.  Except for Islet Sciences, Inc., a Delaware corporation (“ISI”),
as of the date herein, the Company does not own or control any subsidiaries. For
purposes of this Agreement, “Subsidiary” means, with respect to any entity at
any date, any corporation, limited or general partnership, limited liability
company, trust, estate, association, joint venture or other business entity of
which more than 30% of (i) the outstanding capital stock having (in the absence
of contingencies) ordinary voting power to elect a majority of the board of
directors or other managing body of such entity, (ii) in the case of a
partnership or limited liability company, the interest in the capital or profits
of such partnership or limited liability company or (iii) in the case of a
trust, estate, association, joint venture or other entity, the beneficial
interest in such trust, estate, association or other entity business is, at the
time of determination, owned or controlled directly or indirectly through one or
more intermediaries, by such entity.

 
 
(c)
Authority.  The execution, delivery and performance of this Subscription
Agreement and the Offering Documents by the Company and the consummation of the
transactions contemplated hereby have been duly authorized by the Board of
Directors of the Company. Each of the documents contained in the Offering
Documents has been (or upon delivery will be) duly executed by the Company is
or, when delivered in accordance with the terms hereof, will constitute,
assuming due authorization, execution and delivery by each of the parties
thereto, the valid and binding obligation of the Company enforceable against the
Company in accordance with its terms.

 
 
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(d)
No Conflict.  The execution, delivery and performance of this Subscription
Agreement and the consummation of the transactions contemplated hereby do not
(i) violate or conflict with the Company’s Certificate of Incorporation, By-laws
or other organizational documents, (ii) conflict with or result (with the lapse
of time or giving of notice or both) in a material breach or default under any
material agreement or instrument to which the Company is a party or by which the
Company is otherwise bound, or (iii) violate any order, judgment, law, statute,
rule or regulation applicable to the Company, except where such violation,
conflict or breach would not have a Material Adverse Effect on the
Company.  This Subscription Agreement when executed by the Company will be a
legal, valid and binding obligation of the Company enforceable in accordance
with its terms (except as may be limited by bankruptcy, insolvency,
reorganization, moratorium and similar laws and equitable principles relating to
or limiting creditors’ rights generally).

 
 
(e)
Authorization.  Issuance of the Securities to Subscriber has been duly
authorized by all necessary corporate actions of the Company.

 
 
(f)
Litigation and Other Proceedings.  There are no actions, suits, proceedings or
investigations pending or, to the knowledge of the Company, threatened against
the Company at law or in equity before or by any court or Federal, state,
municipal or their governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign which could materially adversely affect the
Company.  The Company is not subject to any continuing order, writ, injunction
or decree of any court or agency against it which would have a material adverse
effect on the Company.

 
 
(g)
Use of Proceeds.  The proceeds of this Offering and sale of the Securities, net
of payment of placement expenses, will be used by the Company for working
capital and general corporate purposes.

 
 
(h)
Consents/Approvals.  No consents, filings (other than Federal and state
securities filings relating to the issuance of the Securities pursuant to
applicable exemptions from registration, which the Company hereby undertakes to
make in a timely fashion), authorizations or other actions of any governmental
authority are required to be obtained or made by the Company for the Company’s
execution, delivery and performance of this Subscription Agreement which have
not already been obtained or made or will be made in a timely manner following
the initial Closing.

 
 
(i)
No Commissions.  The Company has not incurred any obligation for any finder’s,
broker’s or agent’s fees or commissions in connection with the transaction
contemplated hereby other than those fees payable to the Placement Agent
pursuant to that certain Placement Agent Agreement, dated April 24, 2011.

 
 
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(j)
Capitalization. A capitalization table illustrating the authorized and
outstanding capital stock of the Company as of the date hereof is attached as
Schedule 3(j).  All of such outstanding shares have been, or upon issuance will
be, validly issued, fully paid and nonassessable.  As of the date hereof, except
as disclosed in Schedule 3(j), and except for Securities issued in the Offering
(i) no shares of the Company’s capital stock are subject to preemptive rights or
any other similar rights or any liens or encumbrances suffered or permitted by
the Company, (ii) there are no outstanding debt securities, (iii) there are no
outstanding options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into, any shares of capital stock of the Company or any of its
subsidiaries, or contracts, commitments, understandings or arrangements by which
the Company or any of its subsidiaries is or may become bound to issue
additional shares of capital stock of the Company or any of its subsidiaries or
options, warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into, any
shares of capital stock of the Company or any of its subsidiaries, (iv) except
for its obligations under Section 4 of this Agreement, there are no agreements
or arrangements under which the Company or any of its subsidiaries is obligated
to register the sale of any of their securities under the Act, (v) there are no
outstanding securities of the Company or any of its subsidiaries which contain
any redemption or similar provisions, and there are no contracts, commitments,
understandings or arrangements by which the Company or any of its subsidiaries
is or may become bound to redeem a security of the Company or any of its
subsidiaries, and (vi) there are no securities or instruments containing
anti-dilution or similar provisions that will be triggered by the issuance or
exercise of the Securities as described in this Subscription Agreement.  The
Company has furnished to the Subscriber true and correct copies of the Company’s
Certificate of Incorporation, as amended and as in effect on the date hereof
(the “Certificate of Incorporation”), and the Company’s By-laws, as in effect on
the date hereof (the “By-laws”), and the terms of all securities convertible or
exchangeable into or exercisable for Common Stock and the material rights of the
holders thereof in respect thereto.  Schedule 3(j) also lists all outstanding
debt of the Company with sufficient detail acceptable to Subscriber.

 
(k)
Intellectual Property Rights. The Company owns or possesses adequate rights or
licenses to use all trademarks, trade names, service marks, service mark
registrations, service names, patents, patent rights, copyrights, inventions,
licenses, approvals, governmental authorizations, trade secrets and rights
necessary to conduct its businesses as now conducted.  The Company does not have
any knowledge of any infringement by the Company of trademark, trade name
rights, patents, patent rights, copyrights, inventions, licenses, service names,
service marks, service mark registrations, trade secret or other similar rights
of others, or of any such development of similar or identical trade secrets or
technical information by others and there is no claim, action or proceeding
being made or brought against, or to the Company’s knowledge, being threatened
against, the Company regarding trademarks, trade name rights, patents, patent
rights, inventions, copyrights, licenses, service names, service marks, service
mark registrations, trade secrets or other infringement.

 
(l)
Disclosure. No representation or warranty by the Company in this Subscription
Agreement, the Offering Documents, nor in any certificate, Schedule or Exhibit
delivered or to be delivered pursuant to this Subscription Agreement or the
Offering Documents: contains or will contain any untrue statement of material
fact or omits or will omit to state a material fact necessary to make the
statements contained herein or therein not misleading.  To the knowledge of the
Company at the time of the execution of this Subscription Agreement and at each
Closing, there is no information concerning the Company which has not heretofore
been disclosed to the Subscribers that would have a Material Adverse Effect.

 
 
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(m)
Title.  The Company has good and marketable title to all personal property owned
by it which is material to the business of the Company, in each case free and
clear of all liens, encumbrances and defects.

 
(n)
Tax Status.  The Company has made or filed all United States federal and state
income and all other tax returns, reports and declarations required by any
jurisdiction to which it is subject and all such returns, reports and
declarations are true, correct and accurate in all material respects.  The
Company has paid all taxes and other governmental assessments and charges, shown
or determined to be due on such returns, reports and declarations, except those
being contested in good faith, for which adequate reserves have been
established, in accordance with generally accepted accounting principles
(“GAAP”).

 
(o)
Compliance with Laws. The business of the Company has been and is presently
being conducted so as to comply with all applicable material federal, state and
local governmental laws, rules, regulations and ordinances.

 
(p)
Restrictions on Business Activities.  There is no judgment, order, decree, writ
or injunction binding upon the Company or any subsidiary or, to the knowledge of
the Company or any subsidiary, threatened that has or could prohibit or impair
the conduct of their respective businesses as currently conducted or any
business practice of the Company or any subsidiary, including the acquisition of
property, the provision of services, the hiring of employees or the solicitation
of clients, in each case either individually or in the aggregate.

 
(r)
Issuances. The Company’s common stock issuable upon conversion of the Shares and
exercise of Warrants will be validly issued, fully paid and nonassessable.

 
(s)
USA PATRIOT Act and Money Laundering Laws. The operations of the Company are and
have been conducted at all times in compliance with the money laundering
requirements of all applicable governmental authorities and any related or
similar rules, regulations or guidelines, issued, administered or enforced by
any governmental authority (collectively, the “Money Laundering Laws”) and the
Uniting and Strengthening America by Providing Appropriate Tools Required to
Intercept and Obstruct Terrorism Act of 2001 (Title III of Pub. L. 107-56
(signed into Law October 26, 2001) (the “USA PATRIOT Act”) and no action, suit
or proceeding by or before any court or governmental authority or any arbitrator
involving any of the Company or any of its Subsidiaries with respect to the
Money Laundering Laws or USA PATRIOT Act is pending or, to the best knowledge of
the Company, threatened.

 
 
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Section 4.   Registration Rights.

 
(a)
Registration Rights.

 
(i)  
If at any time after the Closing , when there is not an effective Registration
Statement providing for the resale of the Shares and the Warrant Shares (the
“Registrable Securities”), and any of the Registrable Securities may not be sold
pursuant to Rule 144 under the Securities Act, and the Company shall determine
to prepare and file with the Commission a Registration Statement relating to an
offering for its own account or the account of others under the Act of any of
its equity securities (other than for an underwritten offering or on Form S-4 or
Form S-8, each as promulgated under the Securities Act, or their then
equivalents), the Company shall send to each holder of Registrable Securities
written notice of such determination.  If within thirty (30) days after receipt
of such notice, or within such shorter period of time as may be specified by the
Company in such written notice as may be necessary for the Company to comply
with its obligations with respect to the timing of the filing of such
Registration Statement, any such holder shall so request in writing, (which
request shall specify the Registrable Securities intended to be registered), the
Company shall use commercially reasonable efforts to cause the registration
under the Act of all Registrable Securities which the Company has been so
requested to register by the holder; and

 
(ii)  
the Company will pay all expenses associated with the registration, including,
without limitation, filing and printing fees, accounting fees and expenses,
costs, if any, associated with clearing the Registrable Securities for sale
under applicable state securities laws.

 
(b)
Subscriber Information. Each Subscriber shall (A) furnish to the Company such
information regarding itself, the Registrable Securities, other securities of
the Company held by it and the intended method of disposition of the Registrable
Securities held by it, as shall be reasonably requested by the Company to effect
and maintain the effectiveness of the Registration Statement, (B) execute such
documents in connection with the Registration Statement as the Company may
reasonably request and (C) immediately discontinue disposition of Registrable
Securities pursuant to any registration statement upon notice from the Company
of (x) the issuance of any stop order or other suspension of effectiveness of
the Registration Statement by the Commission, or the suspension of the
qualification of any of the Registrable Securities for sale in any jurisdiction
by the applicable regulatory authorities or (y) the happening of any event, as
promptly as practicable after becoming aware of such event, as a result of which
the prospectus included in the Registration Statement, as then in effect,
includes an untrue statement of a material fact or omission to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading or (z)
the failure of the prospectus included in the Registration Statement, as then in
effect, to comply with the requirements of the Securities Act until the
Subscriber’s receipt of a supplemented or amended prospectus or receipt of
notice that no supplement or amendment is required.

 
 
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(c)
Indemnification.

 
(i)  
In the event any Registrable Securities are included in the Registration
Statement under this Section 4, to the extent permitted by law, the Company will
indemnify and hold harmless each of the Subscribers (including their officers,
directors, members and partners), any underwriter (as defined in the Securities
Act) for the Subscribers and each person, if any, who controls such Subscriber
or underwriter within the meaning of the Securities Act or the Exchange Act
(each a “Subscriber Indemnified Person”), against any losses, claims, damages,
or liabilities (joint or several) to which they may become subject under the
Securities Act, the Exchange Act or other federal or state law (“Claims”),
insofar as such losses, claims, damages, or liabilities (or actions in respect
thereof) arise out of or are based upon any of the following statements,
omissions or violations (collectively a “Violation”): (i) any untrue statement
or alleged untrue statement of a material fact contained in the Registration
Statement, including any preliminary prospectus or final prospectus contained
therein or any amendments or supplements thereto, (ii) the omission or alleged
omission to state therein a material fact required to be stated therein, or
necessary to make the statements therein not misleading, or (iii) any violation
or alleged violation by the Company of the Securities Act, the Exchange Act, any
state securities law or any rule or regulation promulgated under the Securities
Act, the Exchange Act or any state securities law; and the Company will pay to
the Subscriber Indemnified Person, as incurred, any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
Claim; provided, however, that the indemnity agreement contained in this Section
4 shall not apply to amounts paid in settlement of any such Claim if such
settlement is effected without the consent of the Company (which consent shall
not be unreasonably withheld or delayed), nor shall the Company be liable to any
Subscriber Indemnified Person for any such Claim to the extent that it arises
out of or is based upon a Violation which occurs in reliance upon and in
conformity with written information furnished expressly for use in connection
with such registration by the Subscriber Indemnified Person. Such indemnity
shall remain in full force and effect regardless of any investigation made by or
on behalf of such Subscriber Indemnified Person and shall survive the transfer
of the Registrable Securities by the Subscribers.

 
(ii)  
In the event any Registrable Securities are included in the Registration
Statement under this Section 4 to the extent permitted by law, each Subscriber
shall, severally and not jointly, indemnify, hold harmless and defend, to the
same extent and in the same manner as is set forth in Section 4, the Company,
each of its directors, each of its officers who signs the registration statement
and each Person, if any, who controls the Company within the meaning of the
Securities Act or the Securities Exchange Act  of 1934, as amended (the
“Exchange Act”), (each, a “Company Indemnified Person”), against any Claim,
insofar as such Claims arise out of or are based upon any Violation, in each
case to the extent, and only to the extent, that such Violation occurs in
reliance upon and in strict conformity with written information furnished to the
Company by such Subscriber expressly for use in the Registration Statement; and,
subject to Section 4, such Subscriber will reimburse any legal or other expenses
reasonably incurred by any Company Indemnified Person in connection with
investigating or defending any such Claim; provided, however, that the indemnity
agreement contained in this Section 4 shall not apply to amounts paid in
settlement of any Claim if such settlement is effected without the prior written
consent of the indemnifying Subscriber, which consent shall not be unreasonably
withheld or delayed. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of such Company Indemnified
Person and shall survive the transfer of the Registrable Securities by the
Subscribers.

 
 
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(iii)  
Promptly after receipt by a Subscriber Indemnified Person or Company Indemnified
Person (each, an “Indemnified Person”) under this Section 4 of notice of a
Claim, such Indemnified Person shall, if a Claim in respect thereof is to be
made against any indemnifying party under this Section 4, deliver to the
indemnifying party a written notice of the commencement thereof, and the
indemnifying party shall, by giving written notice to the Indemnified Party
within fifteen days after the Indemnified Party has given notice of the Claim,
have the right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly noticed, to assume
control of the defense thereof with counsel mutually satisfactory to the
indemnifying party and the Indemnified Person; provided, however, that an
Indemnified Person shall have the right to retain its own counsel with the fees
and expenses of not more than one counsel for such Indemnified Person to be paid
by the indemnifying party, if, in the reasonable opinion of counsel retained by
the indemnifying party, the representation by such counsel of the Subscriber
Indemnified Person or Company Indemnified Person and the indemnifying party
would be inappropriate due to actual or potential differing interests between
such Indemnified Person and any other party represented by such counsel in such
proceeding. In the case of any Company Indemnified Person, legal counsel
referred to in the proviso of the immediately preceding sentence shall be
selected by the holders holding at least a majority in interest of the
Registrable Securities included in the registration statement to which the Claim
relates. The Indemnified Person shall cooperate fully with the indemnifying
party in connection with any negotiation or defense of any such action or Claim
by the indemnifying party and shall furnish to the indemnifying party all
information reasonably available to the Indemnified Person that relates to such
action or Claim. The indemnifying party shall keep the Indemnified Person
reasonably apprised at all times as to the status of the defense or any
settlement negotiations with respect thereto. No indemnifying party shall be
liable for any settlement of any action, claim or proceeding effected without
its prior written consent, provided, however, that the indemnifying party shall
not unreasonably withhold, delay or condition its consent. No indemnifying party
shall, without the prior written consent of the Indemnified Person, consent to
entry of any judgment or enter into any settlement or other compromise that does
not include as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Person of a full and general release from all
liability in respect to such Claim or litigation, and such settlement (a) shall
provide for the payment by the Indemnifying Party of money as sole relief for
the claimant, (b) shall not include any finding or admission as to fault on the
part of the Indemnified Person and (c) shall have no effect on any other claims
that may be made against the Indemnified Party.
 
Following indemnification as provided for hereunder, the indemnifying party
shall be subrogated to all rights of the Indemnified Person with respect to all
third parties, firms or corporations relating to the matter for which
indemnification has been made. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action shall not relieve such indemnifying party of any liability to the
Indemnified Person under this Section 4, except to the extent that the
indemnifying party is materially prejudiced in its ability to defend such
action.

 
5.
Legends.  The Subscriber understands and agrees that the Company will cause any
necessary legends to be placed upon any instruments(s) evidencing ownership of
the Securities, together with any other legend that may be required by federal
or state securities laws or deemed necessary or desirable by the Company.

6.
General Provisions.

 
(a)
Confidentiality.  The Subscriber covenants and agrees that it will keep
confidential and will not disclose or divulge any confidential or proprietary
information that such Subscriber may obtain from the Company pursuant to
financial statements, reports, and other materials submitted by the Company to
such Subscriber in connection with this offering or as a result of discussions
with or inquiry made to the Company, unless such information is known, or until
such information becomes known, to the public through no action by the
Subscriber; provided, however, that a Subscriber may disclose such information
(i) to its attorneys, accountants, consultants, and other professionals to the
extent necessary in connection with his or her investment in the Company so long
as any such professional to whom such information is disclosed is made aware of
the Subscriber’s obligations hereunder and such professional agrees to be
likewise bound as though such professional were a party hereto, (ii) if such
information becomes generally available to the public through no fault of the
Subscriber, or (iii) if such disclosure is required by applicable law or
judicial order.

 
(b)
Successors.  The covenants, representations and warranties contained in this
Subscription Agreement shall be binding on the Subscriber’s and the Company’s
heirs and legal representatives and shall inure to the benefit of the respective
successors and assigns of the Company.  The rights and obligations of this
Subscription Agreement may not be assigned by any party without the prior
written consent of the other party.

 
(c)
Counterparts.  This Agreement may be executed in counterparts, each of which
shall be deemed an original agreement, but all of which together shall
constitute one and the same instrument.

 
(d)
Execution by Facsimile.  Execution and delivery of this Agreement by facsimile
transmission (including the delivery of documents in Adobe PDF format) shall
constitute execution and delivery of this Agreement for all purposes, with the
same force and effect as execution and delivery of an original manually signed
copy hereof.

 
 
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(e)
Governing Law and Jurisdiction.  This Subscription Agreement shall be governed
by and construed in accordance with the laws of the State of New York applicable
to contracts to be wholly performed within such state and without regard to
conflicts of laws provisions.  Any legal action or proceeding arising out of or
relating to this Subscription Agreement and/or the Offering Documents may be
instituted in the courts of the State of New York sitting in New York County or
in the United States of America for the Southern District of New York, and the
parties hereto irrevocably submit to the jurisdiction of each such court in any
action or proceeding.  Subscriber hereby irrevocably waives and agrees not to
assert, by way of motion, as a defense, or otherwise, in every suit, action or
other proceeding arising out of or based on this Subscription Agreement and/or
the Offering Documents and brought in any such court, any claim that Subscriber
is not subject personally to the jurisdiction of the above named courts, that
Subscriber’s property is exempt or immune from attachment or execution, that the
suit, action or proceeding is brought in an inconvenient forum or that the venue
of the suit, action or proceeding is improper.

 
(f)
(i)
Indemnification Generally.  The Company, on the one hand, and the Subscriber, on
the other hand (for the purpose of this Section 6(f) only, each an “Indemnifying
Party”), shall indemnify the other from and against any and all losses, damages,
liabilities, claims, charges, actions, proceedings, demands, judgments,
settlement costs and expenses of any nature whatsoever (including, without
limitation, reasonable attorneys’ fees and expenses) resulting from any breach
of a representation and warranty, covenant or agreement by the Indemnifying
Party and all claims, charges, actions or proceedings incident to or arising out
of the foregoing.  Notwithstanding any provision herein to the contrary, the
indemnification obligation of any Subscriber shall be limited to the investment
amount in the Shares purchased by said Subscriber, except to the extent that
such indemnification obligation relates to a breach of Section 2(b).

 
(ii)
Indemnification Procedures.  Each person entitled to indemnification under this
Section 6 (for the purpose of this Section 6(f) only, an “Indemnified Party”)
shall give notice as promptly as reasonably practicable to each party required
to provide indemnification under this Section 6 of any action commenced against
or by it in respect of which indemnity may be sought hereunder, but failure to
so notify an Indemnifying Party shall not release such Indemnifying Party from
any liability that it may have, otherwise than on account of this indemnity
agreement so long as such failure shall not have materially prejudiced the
position of the Indemnifying Party.  Upon such notification, the Indemnifying
Party shall assume the defense of such action if it is a claim brought by a
third party, and, if and after such assumption, the Indemnifying Party shall not
be entitled to reimbursement of any expenses incurred by it in connection with
such action except as described below.  In any such action, any Indemnified
Party shall have the right to retain its own counsel, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Party unless (i) the
Indemnifying Party and the Indemnified Party shall have mutually agreed to the
contrary or (ii) the named parties in any such action (including any impleaded
parties) include both the Indemnifying Party and the Indemnified Party and
representation of both parties by the same counsel would be inappropriate due to
actual or potential differing or conflicting interests between them.  The
Indemnifying Party shall not be liable for any settlement of any proceeding
effected without its written consent (which shall not be unreasonably withheld
or delayed by such Indemnifying Party), but if settled with such consent or if
there be final judgment for the plaintiff, the Indemnifying Party shall
indemnify the Indemnified Party from and against any loss, damage or liability
by reason of such settlement or judgment.

 
 
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g.
Notices.  All notices, requests, demands, claims and other communications
hereunder shall be in writing and shall be delivered by certified or registered
mail (first class postage pre-paid), guaranteed overnight delivery, or facsimile
transmission if such transmission is confirmed by delivery by certified or
registered mail (first class postage pre-paid) or guaranteed overnight delivery,
to the following addresses and facsimile numbers (or to such other addresses or
facsimile numbers which such party shall subsequently designate in writing to
the other party):

 

  (i) if to the Issuer:           Islet Sciences, Inc.     1370 Avenue of the
Americas, Suite 902     New York, New York 10019     Tel.: 858-699-8313    
Facsimile: 212-245-4165         (ii) if to the Subscriber to the address set
forth next to its name on the signature page hereto.

 
 
h.
Entire Agreement.  This Subscription Agreement (including the Exhibits attached
hereto) and other Offering Documents delivered at  a Closing pursuant hereto,
contain the entire understanding of the parties in respect of its subject matter
and supersede all prior agreements and understandings between or among the
parties with respect to such subject matter.  The Exhibits constitute a part
hereof as though set forth in full above.

 
i.
Amendment; Waiver.  This Subscription Agreement may not be modified, amended,
supplemented, canceled or discharged, except by written instrument executed by
the Company and the holders of not less than a majority of theShares.  No
failure to exercise, and no delay in exercising, any right, power or privilege
under this Subscription Agreement shall operate as a waiver, nor shall any
single or partial exercise of any right, power or privilege hereunder preclude
the exercise of any other right, power or privilege.  No waiver of any breach of
any provision shall be deemed to be a waiver of any proceeding or succeeding
breach of the same or any other provision, nor shall any waiver be implied from
any course of dealing between the parties.  No extension of time for performance
of any obligations or other acts hereunder or under any other agreement shall be
deemed to be an extension of the time for performance of any other obligations
or any other acts.  The rights and remedies of the parties under this
Subscription Agreement are in addition to all other rights and remedies, at law
or equity, that they may have against each other.

 
j.
No Impairment.  At all times after the date hereof, the Company will not take or
permit any action, or cause or permit any subsidiary to take or permit any
action that materially impairs or adversely affects the rights of the
Subscribers under the this Agreement or any of the other Offering Documents.

[SIGNATURE PAGES FOLLOW]
 
 
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IN WITNESS WHEREOF, the Company has executed this Subscription Agreement as of
the date first written above.
 
 

  ISLET SCIENCES, INC.                  
 
By:
/s/        Name:  John Steel       Title:   Chief Executive Officer  

 
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SIGNATURE PAGE TO SUBSCRIPTION AGREEMENT

INFORMATION IN RESPONSE TO THIS SECTION WILL BE KEPT STRICTLY CONFIDENTIAL

DOLLAR AMOUNT INVESTED $_____________________________
 

NAME IN WHICH SHARES AND WARRANT SHOULD BE ISSUED:  

 

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AMOUNT INVESTED TO BE SENT VIA:  o Check (enclosed)  o Wire

 
Address Information
For individual subscribers this address should be the Subscriber’s primary legal
residence.  For entities other than individual subscribers, please provide
address information for the entities primary place of business.  Information
regarding a joint subscriber should be included in the column at right.

 
_________________________________
Legal Address
 
_________________________________
Legal Address
 
_________________________________
City, State, and Zip Code
 
_________________________________
City, State, and Zip Code

Alternate Address Information
Subscribers who wish to receive correspondence at an address other than the
address listed above should complete the Alternate Address section on the
following page.
 
_________________________________
Tax ID # or Social Security #
 
 
_________________________________
Tax ID # or Social Security #
 
AGREED AND SUBSCRIBED
 
 
This __ day of ______________________, 2012
 
By:_________________________________
Name:
Title (if any):
AGREED AND SUBSCRIBED
SIGNATURE OF JOINT SUBSCRIBER (if any)
 
This __ day of ______________________, 2012
 
By:_________________________________
Name:
Title (if any):
 
 
__________________________________
Subscriber Name (Typed or Printed)
 
__________________________________
Additional Subscriber Name (Typed or Printed)

 
 
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ACCEPTED:
 
ISLET SCIENCES, INC.
 
 
By:_________________________________
Name: John Steel
Title: Chief Executive Officer
Date of Acceptance:  ____________________
 
 

 
Alternate Address Information (if applicable)

 
_________________________________
Alternate Address for Correspondence
 
_________________________________
Alternate Address for Correspondence
 
_________________________________
City, State and Zip Code
 
_________________________________
City, State and Zip Code
 
_________________________________
Telephone
 
_________________________________
Telephone
 
_________________________________
Facsimile
 
_________________________________
Facsimile
 
_________________________________
Tax ID # or Social Security #
 
 
_________________________________
Tax ID # or Social Security #
 

 
 
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CERTIFICATE OF SIGNATORY

(To be completed if the Shares are
being subscribed for by an entity)

I,____________________________ , am the____________________________of
_____________________________________________ (the “Entity”).
 
I certify that I am empowered and duly authorized by the Entity to execute and
carry out the terms of the Subscription Agreement and to purchase and hold the
Shares, and certify further that the Subscription Agreement has been duly and
validly executed on behalf of the Entity and constitutes a legal and binding
obligation of the Entity.
 
IN WITNESS WHEREOF, I have set my hand this ____ day of ______________, 2012.
 
 

            (Signature)  

 
 
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