Exhibit 4.2
Generation Capital Associates
0000 Xxxxxxxxx Xxxxx, Xxxxxxx, XX 00000
Tel 404/000-0000 Fax 404/000-0000
Implant Sciences Corp. (IMX)
000 Xxxxxxx Xxxx, #0, Xxxxxxxxx, XX 00000
Tel 781/000-0000 Fax 781/000-0000
Financing Terms Agreement
December 11, 2001
1. Amount of Financing $1,500,000 (Purchase Price).
2. Purchaser(s) Generation Capital Associates (GCA) and other
accredited investors (collectively
Purchaser(s)), and their transferees and
assigns (Holder(s)).
3. Securities - Units Units (Units) consisting of one share of IMX
Common Stock and one warrant (IMX Warrant).
Two IMX Warrants are exercisable into one
share of IMX common stock. The per unit
purchase price for the Units (Unit Purchase
Price) shall be 80% of the Market Price. The
Market Price shall be the average closing bid
price of the IMX common stock for the 20
trading days commencing on the day following
the mutual execution (Execution Date) of this
Financing Terms Agreement (Agreement). The
twentieth such trading day shall be the
Market Price Determination Date.
- IMX Warrants The strike price of the IMX Warrants shall be
the Market Price. The IMX Warrants shall be
exercisable for five years commencing from
the Execution Date and shall contain
customary anti-dilution provisions. The IMX
Warrants shall be exercisable for cash;
provided however, commencing one year from
the Execution Date, the IMX Warrants shall be
"cashless exercise," at the option of the
Holder(s), unless the underlying shares (IMX
Warrants Shares) may be sold without
restriction pursuant to an effective
registration statement with current
prospectus available.
4. Number of Units The number of Units shall be $1,500,000
divided by the Unit Purchase Price, provided
however, IMX shall not be required to issue
Units comprising more than 20% of the
aggregate number of shares of IMX common
stock (including shares issuable upon
exercise of the IMX Warrants) outstanding on
the Execution Date without obtaining
shareholder approval.
5. Document Preparation Fee IMX shall pay to GCA a document preparation
fee of $5,000 and 20,000 IMX Warrants. The
$5,000 fee shall be paid to GCA within two
business days following the Closing Date (as
defined herein); and the 20,000 IMX Warrants
shall be delivered to GCA within two business
days following the Market Price Determination
Date.
6. Placement Agent IMX and GCA acknowledge that Investors
Capital Corp. has acted as the placement
agent (Placement Agent) in arranging this
transaction and that the Placement Agent
shall be compensated solely by IMX in
accordance with the terms of a separate
agreement between IMX and Placement Agent.
[Cash compensation of $105,000 (payable on
the Closing Date), plus 24,000 IMX Warrants.]
7. Escrow Xxxxx X. Xxxxxxxx, General Counsel of GCA,
shall act as Escrow Agent for the IMX Shares,
the IMX Warrants, and the IMX Warrants
Shares. The address of the Escrow Agent is
000 Xxxxx Xxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxx,
XX 00000. (Tel 404/000-0000, Fax
404/257-9125).
8. Registration (a) IMX shall file a Registration Statement
on Form S-3 for the IMX Shares, the IMX
Warrants and the IMX Warrants Shares as soon
as reasonably possible, but within 30 days
following the Closing Date.
(b) IMX shall use its best efforts to have
the registration statement made effective
with a current prospectus available within 90
days following the Closing Date.
(c) If the Registration Statement is not
filed within 30 days following the Closing
Date and/or is not effective within 90 days
following the Closing Date, IMX shall issue
2% more IMX Units for each month or part
thereof that the Registration Statement has
not been filed and/or is not made effective
with a current prospectus available for up to
twenty-four months following the Closing
Date, or until the IMX Shares, the IMX
Warrants and the IMX Warrants Shares may be
sold under SEC Rule 144, subject only to
Holder(s) compliance with the Form 144 filing
and manner of sale requirements. In addition,
the strike price of the IMX Warrants shall be
reduced 5% for the first month or part
thereof, and 2% for each additional month or
part thereof, that the Registration Statement
has not been filed and/or is not made
effective with a current prospectus available
for up to twenty-four months following the
Closing Date, or until the IMX Shares, the
IMX Warrants and the IMX Warrants Shares may
be sold under SEC Rule 144, subject only to
Holder(s) compliance with the Form 144 filing
and manner of sale requirements.
8. Registration (cont'd.) (d) As soon as reasonably possible after the
effective date of the Registration Statement,
Escrow Agent shall submit the Escrow
Certificates (as defined herein) with legend
to the IMX transfer agent. IMX shall cause
the IMX transfer agent to return the
unlegended Escrow Certificates to Escrow
Agent registered in the name of Escrow Agent
within seven days of receipt by transfer
agent, so that Escrow Agent can deposit the
IMX Shares into a securities escrow account
at a brokerage firm. IMX shall issue 2% more
Units for each week or part thereof beyond
such seven day time period that the Escrow
Agent has not received the unlegended Escrow
Certificates. If at any time Escrow Agent is
required to deliver IMX Shares, IMX Warrants
or IMX Warrants Shares that are not covered
by a current prospectus under a valid
registration statement, or eligible to be
transferred pursuant to a valid exemption
from registration, Escrow Agent shall request
IMX or its transfer agent to place a standard
144 restrictive legend on the certificates
for such securities prior to transfer and
delivery of such certificates.
9. Accuracy of IMX SEC IMX represents and warrants that its filings
filings with the SEC in the last two years are true
and complete and do not omit any material
information or fail to include any
information which is necessary to make the
information set forth therein not misleading.
10. Time Schedule (a) This Agreement shall not be valid unless
signed by each of the parties by December 12,
2001.
(b) Within ten business days following the
Execution Date, Purchaser(s) shall deposit
the $1,500,000 Purchase Price with Escrow
Agent.
(c) Within ten business days following the
Execution Date, IMX shall deposit
certificate(s) (Escrow Certificates and
Escrow Shares) for 300,000 shares of IMX
common stock (20 x 10,000 plus 20 x 5,000),
as a deposit for delivery to Purchaser(s)
and/or Holder(s) of the IMX Shares and IMX
Warrant Shares (upon exercise of the IMX
Warrants). The Escrow Certificates shall be
registered in the name of Escrow Agent and
shall bear a standard Rule 144 restrictive
legend.
(d) Within ten business days following the
Execution Date, IMX shall deposit ten IMX
Warrants forms, which shall be blank as to
the name of the Purchaser(s), the number of
warrants, the strike price and the date of
issue. Within two business days of the Market
Price Determination Date, Escrow Agent shall
complete the blank terms in accordance with
Sections 3 and 4 above, and deliver the
completed IMX Warrants forms to Purchaser(s)
and a copy of the completed IMX Warrants
forms to IMX. Escrow Agent shall also return
to IMX any uncompleted IMX Warrants forms.
(e) Within two business days of the receipt
of the Purchase Price from Purchaser(s) and
of the receipt of the Escrow Certificates and
the ten blank IMX Warrants forms from IMX,
Escrow Agent shall wire the $1,500,000
Purchase Price to IMX. The date upon which
the Escrow Agent wires the $1,500,000
Purchase Price to IMX is the Closing Date.
(f) Within two business days following the
Market Price Determination Date, Escrow Agent
shall return to IMX the certificates for any
excess Escrow Shares, which is the difference
between the number of IMX Shares purchased by
Purchaser(s) in accordance with Sections 3
and 4 above plus the number of IMX Warrants
Shares issuable to Purchaser(s) upon exercise
of the IMX Warrants, and the 300,000 Escrow
Shares.
(g) On the Closing Date the Purchaser(s)
shall be deemed to be the owners of the IMX
Shares and the IMX Warrants.
11. Binding Agreement The parties shall be legally bound by the
above terms and shall execute such further
documents as may be required to implement the
provisions of this Agreement.
Implant Sciences Corporation
By: /s/ Xxxxxxx X. Arminin Date: December 12, 2001
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Xxxxxxx X. Xxxxxx, President, CEO & Chairman
Generation Capital Associates
By: /s/ Xxxxx X. Xxxx Date: December 12, 2001
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Xxxxx X. Xxxx, General Partner
Escrow Agent
/s/ Xxxxx X. Xxxxxxxx Date: December 12, 2001
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Xxxxx X. Xxxxxxxx
