EXHIBIT 4.2
XXXXXXX 0
XXXX XXXXXXXX AGREEMENT
This Unit Purchase Agreement (this "Agreement") is made as of
______________________, 200_ between Applied NeuroSolutions, Inc. (the
"Company"), and the parties listed on Schedule I hereto (the "Purchasers").
The Company and the Purchasers hereby agree as follows:
SECTION 1
AUTHORIZATION, PURCHASE AND SALE OF THE UNITS
1.1 AUTHORIZATION OF ISSUANCE AND SALE OF THE UNITS. Prior to
the initial Closing (as defined herein), the Company will have authorized the
issuance and sale of an aggregate of up to 24,000,000 Units (each Unit
consisting of one share of common stock ("Shares") and a warrant ("Warrant") to
purchase one Share).
1.2 SALE AND PURCHASE OF THE UNITS. At the initial Closing,
subject to the terms and conditions hereof and in reliance upon the
representations, warranties and agreements contained herein, the Purchasers will
purchase an aggregate of up to 16,000,000 Units.
SECTION 2
CLOSING, PAYMENT AND DELIVERY
2.1 CLOSING. The initial Closing of the sale of the Units will
occur by December 31, 2003 or such later date as may be determined by the
Company and Moors & Cabot, Inc. (the "Placement Agent"), but in no event later
than March 31, 2004. At the initial Closing, investors will purchase a minimum
of 16,000,000 Units and a maximum of 24,000,000 Units. If the maximum number of
Units offered is not sold by the initial Closing, the Company may continue the
offering until all Units are sold, but not later than March 31, 2004, at which
time the final Closing shall occur (the initial Closing and the final Closing
are sometimes referred to as the "Closing"). If the minimum of 16,000,000 Units
is not sold and this offering is terminated, all funds delivered by prospective
investors pursuant to this offering will be returned.
2.2 PAYMENT AND DELIVERY. At the Closing, the Purchasers will
pay to the Company by check or wire funds transfer the aggregate purchase price
and the Company will deliver to the Purchasers the following documents
registered in such name or names as Purchasers may reasonably designate,
representing all of the Units being purchased by the Purchasers:
(i) copies of an executed Unit Purchase
Agreement;
(ii) Common Stock certificate;
(iii) Warrant; and
(iv) copies of an executed Registration Rights
Agreement, in the form annexed hereto as
Section 3 of the Subscription Documents (the
"Registration Rights Agreement").
2.3 COVENANT OF BEST EFFORTS AND GOOD FAITH. The Company and
the Purchasers agree to use their respective best efforts and to act in good
faith to cause to occur all conditions to Closing which are in their respective
control.
SECTION 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Purchasers
that:
3.1 CORPORATE POWER, QUALIFICATION AND STANDING. The Company
is validly existing and in good standing under the laws of the State of Delaware
and is qualified to transact business in each jurisdiction in which its
ownership of property or conduct of activities requires such qualification. The
Company has all requisite corporate power and authority to enter into this
Agreement, to sell the Shares and the Warrants included in the Units, to execute
and deliver the Registration Rights Agreement and to carry out and perform its
other obligations under this Agreement and the Registration Rights Agreement.
3.2 AUTHORIZATION; NO CONFLICT; ENFORCEABILITY. Execution and
delivery of this Agreement and the Registration Rights Agreement and issuance
and sale of the Shares and Warrants included in the Units have been duly
authorized by all necessary corporate action of the Company. The Shares included
in the Units and issuable upon exercise of the Warrants included in the Units
will be validly issued, fully paid and non-assessable shares of common stock.
Performance by the Company of its obligations under this Agreement will not
conflict with or violate the charter documents or bylaws of the Company, or
conflict with or violate, in any material respect, (i) any indenture, loan
agreement, lease, mortgage or other agreement binding on the Company, (ii) any
order of a court or administrative agency binding on the Company, or (iii) any
applicable law or governmental regulation, the effect of any of which would have
a material adverse effect on the Company or its subsidiaries, taken as a whole,
or materially impair or restrict the Company's power to perform its obligations
as contemplated hereby. This Agreement and the Registration Rights Agreement are
valid and binding obligations of the Company, enforceable against the Company in
accordance with their terms, except as enforcement thereof may be limited by
bankruptcy, insolvency, fraudulent conveyance and transfer, reorganization or
other similar laws affecting the enforcement of creditors' rights generally and
by general equitable principles (regardless of whether the issue of
enforceability is considered in a proceeding in equity or at law).
3.3 CAPITALIZATION.
The capitalization of the Company immediately prior
to the conversion of all currently outstanding bridge notes, plus accrued
interest, including warrants and options to purchase capital stock of the
Company, as well as the capitalization of the Company immediately after the
conversion of all outstanding bridge notes, plus accrued interest, but
immediately prior to the Closing (the "As Adjusted" column), including warrants
and options to purchase capital stock of the Company, is as follows:
Security No. Authorized Outstanding As Adjusted
-------- -------------- ----------- -----------
Common stock 200,000,000 47,701,098 68,364,786
Convertible preferred stock 5,000,000 -0- -0-
Convertible bridge notes (1) n/a $2,582,961 -0-
Warrants to purchase shares
of common stock (2) n/a 4,858,109 4,858,109
Options to purchase shares
of common stock n/a 9,919,636 9,919,636
(1) The convertible bridge notes, plus accrued interest, are convertible into
shares of common stock at $0.125 per share. The conversion is automatic upon
raising a minimum of $3,000,000 in this Offering.
(2) Warrants will be issued to the Purchasers in the Offering as part of the
Units, as well as to the Placement Agent and/or Selected Dealers.
All outstanding shares of common stock have been duly authorized and validly
issued and are fully paid and non-assessable.
SECTION 4
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Each Purchaser, as to itself only, represents and warrants to the
Company that:
4.1 Purchaser has sufficient available financial resources to
provide adequately for Purchaser's current needs, including possible personal
contingencies, and can bear the economic risk of a complete loss of Purchaser's
investment hereunder without materially affecting Purchaser's financial
condition.
4.2 Purchaser has been furnished with all materials relating
to the Company and its proposed activities which Purchaser has requested and has
been afforded the opportunity to obtain any additional information necessary to
verify the accuracy of any representations or information relating to the
Company and its proposed activities.
4.3 The Company has answered all inquiries made by Purchaser
concerning the Company and its proposed activities, or any other matters
relating to the offering and the proposed operations of the Company.
4.4 Purchaser has not been furnished any offering literature
other than any materials and/or information made available to Purchaser by the
Company as described in subsections 4.2 and 4.3 above, and Purchaser has relied
only on such materials and/or information. Furthermore, other than as set forth
in this Agreement, no representations or warranties have been made to Purchaser
by the Company, or by its officers or employees with respect to the intended
business of the Company, the financial condition, prospects, profitability,
operations and/or potential of the Company, and/or the economic or any other
aspects of the consequences of an investment in the Units, and Purchaser has not
relied upon any information concerning the offering, written or oral, other than
information contained in this Agreement or provided by the Company to Purchaser.
4.5 Purchaser is acquiring the Units for which Purchaser
hereby subscribes for Purchaser's own account, as principal, for investment and
not with a view to the resale or distribution of all or any part of such Units.
4.6 A Purchaser, if a corporation, partnership, or other form
of business entity, is authorized and otherwise duly qualified to purchase and
hold the Units, and such entity has not been formed for the specific purpose of
acquiring the Units.
4.7 If a Purchaser is more than one person, the obligations of
such Purchaser shall be joint and several and the representations and warranties
herein contained shall be deemed to be made by and be binding upon each such
person and his heirs, executors, administrators, successors and assigns.
4.8 Purchaser is an accredited investor, as defined in
rule 501 of Regulation D under the Securities Act.
SECTION 5
ACKNOWLEDGMENTS OF PURCHASERS
Each Purchaser, as to itself only, understands and acknowledges that:
5.1 The offering involves a high degree of risk and there can be no assurance
that the Company will be successful with its current business strategy.
Therefore, the possibility exists that Purchasers may lose their entire
investment in the Company.
5.2 The offering of the Units to Purchasers has not been
registered under the Securities Act of 1933, as amended (the "Securities Act"),
or any state securities laws or regulations, and the Units issuable will be
restricted securities which must be held for an indefinite period of time unless
they are subsequently so registered or an exemption from such registration is
available.
5.3 The Units are being offered and sold without registration
under the Securities Act in reliance upon applicable exemptions under the
Securities Act and similar exemptions under state securities laws for private
offerings. The availability of the aforesaid exemptions depends in part upon the
accuracy of certain of the representations, declarations and warranties which
are made by Purchasers herein and in any other information furnished by
Purchasers to the Company, and the same may be relied upon in determining the
suitability of Purchasers to invest in the Company.
5.4 Trading in the Company's securities is presently conducted
in the over-the-counter market on the OTC Bulletin Board. As a result, an
investor may find it difficult to dispose of, or to obtain accurate quotations
as to the price of the securities. There is a limited established market for the
common stock and it is possible that no greater public market for such
securities will develop.
SECTION 6
LEGEND ON COMMON STOCK; RESTRICTIONS ON TRANSFERABILITY
6.1 Unless registered pursuant to the Registration Rights
Agreement between the Company and the Purchasers dated as of the date hereof,
each certificate representing Shares or Warrants shall be stamped or otherwise
imprinted with a legend substantially in the following form (in addition to any
legend required under any applicable state securities laws):
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD OR OFFERED FOR
SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE
SECURITIES UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAW OR AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION
IS NOT REQUIRED.
Upon request of a holder of Shares or Warrants, the Company
shall remove the foregoing legend or issue to such holder a new certificate
therefore free of any such legend, if the Company shall have received either an
opinion of counsel or a "no-action" letter of the SEC, in either case reasonably
satisfactory in substance to the Company and its counsel, to the effect that
such legend is no longer required.
6.2 In addition to the restrictions on transferability set
forth herein, each Purchaser further covenants and agrees to the following
transfer restrictions with respect to such Shares or Warrants. Each Purchaser
will not, directly or indirectly, issue, offer, agree or offer to sell, sell,
make short sales of, grant an option for the purchase or sale of, transfer,
pledge, assign, hypothecate, distribute or otherwise encumber or dispose of
(collectively, "Transfer") any Shares or Warrants, or any options, rights,
warrants or other securities convertible into, exchangeable or exercisable for
or evidencing any right to purchase or subscribe for such Shares or Warrants,
until a registration statement covering the resale to the public of the Shares
and/or Warrants and prepared in accordance with the provisions of the
Registration Rights Agreement is declared effective by the Securities and
Exchange Commission (the "Registration Date").
Notwithstanding the foregoing, there shall be no restrictions on any (i)
Transfer as a gift or gifts, or to trusts for the benefit of family members of a
Purchaser, provided that the transferee agrees in writing to be bound by the
restrictions on Transfer set forth herein, or by will or the laws of descent and
distribution, provided that prior to such Transfer of the Shares the transferee
agrees in writing to be bound by the restrictions on Transfer set forth herein,
or (ii) the Transfer is made with the prior written approval of the Company.
SECTION 7
MISCELLANEOUS
7.1 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware. Any action or
proceeding relating to this Agreement may be brought in the courts of Illinois,
or in the United States courts located in Illinois, and each of the parties
irrevocably consents to the jurisdiction of such courts in any such action or
proceeding.
7.2 SUCCESSORS AND ASSIGNS. Except as otherwise expressly
provided herein, the provisions hereof shall inure to the benefit of and be
binding upon the successors and assigns of the parties.
7.3 ENTIRE AGREEMENT; AMENDMENT. This Agreement (including any
Schedules hereto) and the other documents delivered pursuant hereto constitute
the full and entire understanding and agreement between the parties with regard
to the subjects hereof and thereof. Neither this Agreement nor any term hereof
may be amended, waived, discharged or terminated except by a written instrument
signed by the Company and the Purchasers.
7.4 NOTICES. All notices and other communications required or
permitted hereunder shall be mailed by either an express mail carrier,
first-class mail, postage prepaid, or facsimile, or delivered either by hand or
by messenger, addressed (a) if to the Purchasers, as indicated on Schedule I
hereto, or at such other address as the Purchasers shall have furnished to the
Company in writing, or (b) if to any other holder of any Units, at the address
of such holder as shown on the records of the Company, or (c) if to the Company,
at its address set forth below (with copy to: Xxxxxxxxxx Xxxxxxxxx & Xxxxxx LLP,
00 Xxxx 00xx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, XX 00000, Attn.: Xxxx X. Xxxxxxxxx,
Esq.) or at such other address as the Company shall have furnished to the
Purchasers and each such other holder in writing. All such notices or
communications shall be deemed given when actually delivered by hand, messenger,
express mail carrier or facsimile or, if mailed, three days after deposit in the
U.S. mail.
7.5 DELAYS OR OMISSION. No delay or omission to exercise any
right, power or remedy accruing to any party to this Agreement (including any
holder of the Shares), upon any breach or default of another party under this
Agreement, shall impair any such right, power or remedy of such party nor shall
it be construed to be a waiver of any such breach or default, or an acquiescence
therein, or of or in any similar breach or default thereafter occurring; nor
shall any waiver of any single breach or default be deemed a waiver of any other
breach or default theretofore or thereafter occurring. All remedies, either
under this Agreement or by law or otherwise afforded to any party, shall be
cumulative and not alternative.
7.6 SEVERABILITY. In case any provision of the Agreement shall
be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
7.7 TITLES AND SUBTITLES. The titles of the sections and
subsections of this Agreement are for convenience of reference only and are not
to be considered in construing this Agreement.
7.8 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.
IN WITNESS WHEREOF, the parties have caused this Unit Purchase
Agreement to be executed and delivered by their duly authorized officers or
partners, as the case may be, as of the day and year first above written.
PURCHASER APPLIED NEUROSOLUTIONS, INC.
______________________________ By: _______________________________
Signature
______________________________ Title: ____________________________
Print Name
______________________________ Address: 00 Xxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxx Xxxxxxx Xxxxxx Xxxxx, XX 00000
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City, State, Zip Code
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Date
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Number of Units (at ($0.25 per Unit)
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Amount of Subscription
SCHEDULE I
Purchaser Number of Units Amount
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