NOTE AND WARRANT PURCHASE AGREEMENT
Exhibit
10.1
This
Note
and Warrant Purchase Agreement (this "Agreement") is made as of July __, 2006
between Applied NeuroSolutions, Inc., Delaware corporation (the "Company"),
and
each of the purchasers listed on Schedule
I
hereto
(each a “Purchaser” and, collectively, the "Purchasers").
The
Company and each of the Purchasers hereby agree as follows:
SECTION
1
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 20 units of the Company's securities
("Units," the offering of the Units are referred to as the "Offering"), each
Unit consisting of (i) a non-negotiable, senior, unsecured promissory note
in
the principal amount of $50,000, in the form annexed hereto as Exhibit 1
(individually, a "Bridge Note" and collectively, the "Bridge Notes"), and (ii)
warrants to purchase 92,250 shares of the Company's common stock par value
$0.0025 ("Common Stock"), in the form annexed hereto as Exhibit 2 (the
"Warrants").
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, each of the
Purchasers will purchase the number of Units set forth opposite such purchasers
name on Schedule
I
annexed
hereto at a purchase price of $50,000 per Unit (the "Purchase Price").
SECTION
2
Closing,
Payment and Delivery
2.1 Closing.
The
initial Closing of the sale of the Units will occur by July 10, 2006 or such
later date as may be determined by the Company, but in no event later than
July
24, 2006. At the Closing, the Purchasers will purchase a minimum of 10 Units
and
a maximum of 20 Units.
2.2 Payment
and Delivery.
At the
Closing, (a) the Purchasers will pay to the Company by check or wire funds
transfer the aggregate Purchase Price set forth opposite such Purchaser’s name
on Schedule
I
annexed
hereto, and (b) 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) a
Warrant; and
(ii) a
Bridge
Note.
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 Units, to execute and deliver the Bridge Notes and the
Warrants and to carry out and perform its other obligations under this Agreement
and under the Bridge Notes and the Warrants.
3.2 Authorization;
No
Conflict;
Enforceability.
Execution and delivery of this Agreement, the Bridge Notes and the Warrants,
the
issuance and sale of the Units and the issuance of the Common Stock upon the
exercise of the Warrants have been duly authorized by all necessary corporation
action of the Company. Performance by the Company of its obligations under
this
Agreement, the Bridge Notes and the Warrants 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, the Bridge Notes and the Warrants 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 Valid
Issuance.
The
Warrants have been duly and validly authorized, and each Purchaser may
immediately exercise the Warrants upon the issuance thereof. Upon the due
exercise of the Warrants, the shares of Common Stock issuable thereupon (the
“Warrant Shares”) will be validly issued, fully paid and non-assessable free and
clear of all encumbrances and restrictions, except for restrictions on transfer
set forth in this Agreement or imposed by applicable securities laws. The
Company has reserved a sufficient number of shares of Common Stock for issuance
upon the exercise of the Warrants, free and clear of all encumbrances and
restrictions, except for restrictions on transfer set forth in this Agreement
or
imposed by applicable securities laws.
3.4 Consents.
The
execution, delivery and performance by the Company of this Agreement and the
offer, issuance and sale of the Units, the Bridge Notes and the Warrants
(collectively, the “Securities”) require no consent of, action by or in respect
of, or filing with, any person, governmental body, agency, or official other
than filings that have been made pursuant to applicable state securities laws
and post-sale filings pursuant to applicable state and federal securities laws
which the Company undertakes to file within the applicable time periods.
3.5 Delivery
of SEC Filings; Business.
The
Company has made available to the Purchasers through the XXXXX system, true
and
complete copies of the Company’s most recent Annual Report on Form 10-KSB for
the fiscal year ended December 31, 2005 (the “10-KSB”), and all other reports
filed by the Company pursuant to the 1934 Act since the filing of the 10-KSB
and
prior to the date hereof (collectively, the “SEC Filings”). The SEC Filings are
the only filings required of the Company pursuant to the Securities Exchange
Act
of 1934 for such period.
3.6 Use
of
Proceeds.
The net
proceeds of the sale of the Units hereunder shall be used by the Company for
working capital and general corporate purposes.
3.7 Brokers
and Finders.
No
person will have, as a result of the transactions contemplated by this
Agreement, any valid right, interest or claim against or upon the Company,
or a
Purchaser for any commission, fee or other compensation pursuant to any
agreement, arrangement or understanding entered into by or on behalf of the
Company.
3.8 No
Directed Selling Efforts or General Solicitation.
Neither
the Company nor any person acting on its behalf has conducted any general
solicitation or general advertising (as those terms are used in Regulation
D) in
connection with the offer or sale of any of the Securities.
3.9 Private
Placement.
The
offer and sale of the Securities to the Purchasers as contemplated hereby are
exempt from the registration requirements of the Securities Act of 1933 (the
“Securities Act”).
SECTION
4
Representations
and Warranties of the Purchasers
Each
Purchaser, severally and not jointly, represents and warrants to the Company
that:
4.1 Purchase
Entirely for Own Account.
The
Securities to be received by the Purchaser hereunder will be acquired for the
Purchaser’s own account, not as nominee or agent, and not with a view to the
resale or distribution of any part thereof in violation of the Securities Act,
and the Purchaser has no present intention of selling, granting any
participation in, or otherwise distributing the same in violation of the
Securities Act. The Purchaser is not a registered broker dealer or an entity
engaged in the business of being a broker dealer.
4.2 Investment
Experience.
The
Purchaser acknowledges that it can bear the economic risk and complete loss
of
its investment in the Securities and has such knowledge and experience in
financial or business matters that it is capable of evaluating the merits and
risks of the investment contemplated hereby.
4.3 Disclosure
of Information.
Each
Purchaser has had an opportunity to receive all additional information related
to the Company requested by it and to ask questions of and receive answers
from
the Company regarding the Company, its business and the terms and conditions
of
the offering of the Securities. The Purchaser acknowledges that it has access
to, and an opportunity to inspect, copies of the SEC Filings.
4.4 Restricted
Securities.
The
Purchaser understands that the Securities are characterized as “restricted
securities” under the U.S. federal securities laws inasmuch as they are being
acquired from the Company in a transaction not involving a public offering
and
that under such laws and applicable regulations such securities may be resold
without registration under the Securities Act only in certain limited
circumstances. Furthermore, the Purchaser also understands that the Bridge
Notes
are non-negotiable and non-transferable and the Warrants may not be transferred
until after the first anniversary of the issuance thereof, and then only in
compliance with the Securities Act and applicable state securities
laws.
4.5 Accredited
Purchaser; No General Solicitation.
The
Purchaser is an accredited Purchaser as defined in Rule 501(a) of Regulation
D,
as amended, under the Securities Act. The Purchaser did not learn of the
investment in the Securities as a result of any public advertising or general
solicitation.
4.6 Brokers
and Finders.
No
Person will have, as a result of the transactions contemplated by this
Agreement, any valid right, interest or claim against or upon the Company or
the
Purchaser for any commission, fee or other compensation pursuant to any
agreement, arrangement or understanding entered into by or on behalf of the
Purchaser.
SECTION
5
Registration
Rights; Legend; Restrictions on Transfer
5.1 Registration
Rights.
The
Purchasers shall have the piggyback registration rights set forth on
Schedule
II
annexed
hereto with respect to the Warrant Shares and Penalty Warrant Shares (as defined
in the Notes).
5.2 Legend.
Each
Bridge Note and each certificate representing Warrant Shares 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):
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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.
|
5.3 Restriction
on Transfer.
Notwithstanding anything to the contrary set forth in this Agreement, the Bridge
Notes shall be non-negotiable and non-transferable. The Purchasers shall not
transfer any Warrants until after the first anniversary of the issuance thereof,
and then only in compliance with the Securities Act and applicable state
securities laws.
SECTION
6
Miscellaneous
6.1 Governing
Law; Consent to Jurisdiction; Waiver of Jury Trial.
This
Agreement shall be governed by, and construed in accordance with, the internal
laws of the State of New York without regard to the choice of law principles
thereof. Each of the parties hereto irrevocably submits to the exclusive
jurisdiction of the courts of the State of New York located in New York County
and the United States District Court for the Southern District of New York
for
the purpose of any suit, action, proceeding or judgment relating to or arising
out of this Agreement and the transactions contemplated hereby. Service of
process in connection with any such suit, action or proceeding may be served
on
each party hereto anywhere in the world by the same methods as are specified
for
the giving of notices under this Agreement. Each of the parties hereto
irrevocably consents to the jurisdiction of any such court in any such suit,
action or proceeding and to the laying of venue in such court. Each party hereto
irrevocably waives any objection to the laying of venue of any such suit, action
or proceeding brought in such courts and irrevocably waives any claim that
any
such suit, action or proceeding brought in any such court has been brought
in an
inconvenient forum. EACH
OF THE PARTIES HERETO WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY
LITIGATION WITH RESPECT TO THIS AGREEMENT AND REPRESENTS THAT COUNSEL HAS BEEN
CONSULTED SPECIFICALLY AS TO THIS WAIVER.
6.2 Successors
and Assigns.
Except
as otherwise expressly provided herein, this Agreement shall inure to the
benefit of and be binding upon the successors and permitted assigns of the
parties. No Purchaser shall transfer this Agreement without the prior written
consent of the Company.
6.3 Entire
Agreement; Amendment.
This
Agreement (including any Schedules hereto) and the other documents delivered
pursuant hereto constitute a separate and full and entire understanding and
agreement between the Company, on one hand, and each Purchaser on the other
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 each such Purchaser.
6.4 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
any
such Purchaser shall have furnished to the Company in writing, or (b) if to
any
other holder of any of the Securities, 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: Xxxxxxxxx & Xxxxxx LLP, 00 Xxxx 00xx
Xxxxxx,
00xx Xxxxx, Xxx Xxxx, XX 00000, Attn.: Xxxx X. Xxxxxxxxx, Esq., fax number:
(000) 000-0000) 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.
6.5 Delays
or Omission.
No
delay or omission to exercise any right, power or remedy accruing to any party
to this Agreement, 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.
6.6 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.
6.7 Publicity.
No
public release or announcement concerning the transactions contemplated hereby
shall be issued, directly or indirectly, by any Purchaser without the prior
written consent of the Company. The Company shall make such announcements and
filing with the SEC to the extent required by law or the applicable rules or
regulations of any securities exchange or securities market.
6.8 Expenses.
The
parties hereto shall pay their own costs and expenses in connection herewith,
including, but not limited to, accountants’ and attorneys’ fees and
disbursements, in connection with any amendment, modification or waiver of
this
Agreement, the Bridge Notes and/or the Warrants.
6.9 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.
6.10 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.
[Signatures
appear on next page]
IN
WITNESS WHEREOF, the parties have caused this Note and Warrant 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.
APPLIED
NEUROSOLUTIONS, INC.
By:
_________________________________
Title:
____________________________
Address:
00 Xxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxx
Xxxxx, XX 00000
Fax
Number: 000-000-0000
PURCHASER
________________________________
Signature
_________________________________
Print
Name
_________________________________
Street
Address
________________________________
City,
State, Zip Code
_________________________________
Date
_________________________________
No.
Units
(at $_________ per Unit)
_________________________________
Amount
of
Subscription
SCHEDULE
I
|
Name
and Address of Purchaser
|
Number
of Units Purchased
|
Aggregate
Purchase Price
|
||
SCHEDULE
II - REGISTRATION RIGHTS
Piggyback
Registrations.
(a)
If
(and on each occasion that) the Company proposes to register any of its
securities under the Securities Act, either for the Company’s own account or for
the account of any of its security holders (each such registration not withdrawn
or abandoned prior to the effective date thereof, a “Piggyback
Registration”),
the
Company will give written notice to each of the Purchasers at least ten (10)
business days prior to the anticipated filing date of such Piggyback
Registration. Notwithstanding the foregoing, the Company will not be obligated
to give notice to Purchasers as to or to include any Warrant Shares in any
registration (i) on Form S-8 or similar limited-purpose form of registration
statement effected solely to implement an employee benefit plan, (ii) on Form
S-4 or similar limited-purpose form of registration statement effected solely
to
implement an acquisition or (iii) any registration for which the Company is
not
permitted to include the securities of other persons (such as the Warrant
Shares) , whether pursuant to contract, law or otherwise.
(b)
Subject to the provisions contained in paragraphs (c) and (d) of this Schedule
II and in the last sentence of this paragraph (b): (A) the Company will be
obligated to include in each Piggyback Registration all Warrant Shares with
respect to which the Company receives, within 10 business days after the date
on
which the Company gives written notice of such Piggyback Registration to the
Purchasers pursuant to Section (a) above, the written requests of such
Purchasers for inclusion in such Piggyback Registration, and (B) the
Company will use its reasonable efforts to effect promptly the registration
of
all such Warrant Shares. The Company and its underwriters will be permitted,
on
any registration initiated by the Company, to terminate or withdraw such
registration or to reduce the total number of shares proposed to be registered
thereunder.
(c)
If a
Piggyback Registration is an underwritten registration, and the managing
underwriters thereof give written advice to the Company that the total amount
of
securities, including the Warrant Shares and other securities to be registered
pursuant to the Piggyback Registration exceeds the amount of securities that
the
underwriters reasonably believe compatible with the success of the offering
(the
“Underwriters’
Maximum Number”),
then:
(i) If
such
registration was initiated by the Company, (x) the Company will be entitled
to
include in such registration that number of securities that the Company proposes
to offer and sell for its own account in such registration and which does not
exceed the Underwriters’ Maximum Number and, to the extent such securities are
less than the Underwriters’ Maximum Number (y) the Company will be obligated to
include in such registration that number of Warrant Shares of the Company that
are requested by the Purchasers and by other persons and which does not exceed
the difference between the Underwriters’ Maximum Number and the number of
securities of the Company that the Company is entitled under clause (x) above
to
include in such registration, and such number of securities of the Company
will
be allocated pro
rata among
the
Purchasers and other persons in proportion to the number of securities of the
Company held by each such Purchaser or other person.
SCHEDULE
II - REGISTRATION RIGHTS (Continued)
(ii) If
such
registration was initiated by a person other than the Company or a Purchaser,
(w) the Company will be obligated to include in such registration that number
of
securities that are requested by the person(s) initiating such registration
and
which is not more than the Underwriters’ Maximum Number, and such number of
securities will be allocated pro
rata among
such other person(s) in proportion to the number of securities of the Company
held by each such other person; (x) the Company will be entitled to include
in
such registration that number of securities that the Company proposes to offer
and sell for its own account in such registration and which does not exceed
the
difference between the Underwriters’ Maximum Number and the number of securities
that the Company is required under clause (w) above to include in such
registration; (y) and thereafter the Company will be obligated to include in
such registration that number of Warrant Shares that are requested by the
Purchasers requesting registration and which is not more than the Underwriters’
Maximum Number, and such number of securities will be allocated pro
rata among
the
Purchasers requesting registration in proportion to the number of Warrant Shares
held by each such Purchaser; and (z) if the Underwriters’ Maximum Number exceeds
the sum of the number of securities that the Company is obligated to include
in
such registration for the account of other persons pursuant to clause (w) above
and the number of securities that the Company proposes to offer and sell for
its
own account in such registration, then the Company may include in such
registration that number of other securities that persons referred to in clause
(w) above have requested be included in such registration and which is not
greater than such excess.
For
purposes of this Section (c), the numbers of securities of the Company held
by
any Purchaser or other person will be calculated on a fully diluted basis
assuming the full exercise, conversion, or exchange of all outstanding
securities that are exercisable, convertible or exchangeable for shares of
the
Company’s Common Stock.
(d)
In
any Piggyback Registration, the Company will select, in its sole discretion,
the
investment bankers and managing underwriters in such registration.
(e)
Each
Purchaser, if the Company or the managing underwriters so request of such
Purchasers in connection with such registration, will not, without the prior
written consent of the Company or such underwriters, effect any sale or other
distribution of any equity securities of the Company, including any sale
pursuant to Rule 144, during the seven days prior to, and during the 180-day
period, commencing on the effective date of such underwritten registration,
except pursuant to such underwritten registration.
