Document:

Note and Warrant Purchase Agreement

    Exhibit
      10.1

    

    NOTE
      AND WARRANT PURCHASE AGREEMENT

    

    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 EDGAR 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):

    

    
      	 	
              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: Eilenberg & Krause LLP, 11 East 44th
      Street,
      17th Floor, New York, NY 10017, Attn.: Adam D. Eilenberg, Esq., fax number:
      (212) 986-2399) 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:
      50 Lakeview Parkway, Suite 111 

    Vernon
      Hills, IL 60061

    Fax
      Number: 847-573-8030 

    

    

    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.Form of Bridge Note

            

                                                                     Exhibit
      10.2

    
 

    
      	 	
              THIS
                NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR
                ANY STATE
                SECURITIES LAWS. THIS NOTE MAY NOT BE TRANSFERRED WITHOUT THE PRIOR
                WRITTEN CONSENT OF THE COMPANY, PURSUANT TO THAT CERTAIN NOTE AND
                WARRANT
                PURCHASE AGREEMENT, DATED AS OF ______, 2006 BY AND BETWEEN THE HOLDER
                HEREOF AND APPLIED NEUROSOLUTIONS,
                INC.

            

    

    

    

    APPLIED
      NEUROSOLUTIONS, INC.

    

    _____________
      __, 2006                                                Vernon
      Hills, Illinois

    No.
      APNS _________                                                   $_________________
      

    

     

    12%
      SENIOR UNSECURED PROMISSORY NOTE

    

    APPLIED
      NEUROSOLUTIONS, INC., a Delaware corporation with an address at 50 Lakeview
      Parkway, Suite 111, Vernon Hills, Illinois 60061 (the "Maker"), for value
      received, hereby promises to pay to _______________________ (the "Holder")
      on or
      before _____________, 2006 [six
      months from date of note]
      (the
“Maturity Date”) the principal sum of $____________________ and interest
      (computed on the basis of a 360 day year of twelve months) on the outstanding
      principal sum hereof at the rate of 12% per annum from the date hereof until
      the
      Maturity Date. If an Event of Default (as defined below) pursuant to Section
      3(a) hereof shall occur, then the outstanding principal balance of this Note
      shall bear interest (computed on the basis of a 360 day year of twelve months)
      at the rate of 15% per annum until such principal shall be paid in full. No
      interest shall accrue with respect to accrued but unpaid interest hereon.

    

    Subject
      to the terms hereof, the principal and interest shall be payable on the Maturity
      Date in such coin or currency of the United States of America as at the time
      of
      payment shall be legal tender for the payment of public and private debts to
      the
      Holder at the office of the Maker as hereinafter set forth. 

    

    This
      Note
      shall be senior to all other indebtedness of Maker incurred after the date
      hereof. 

    

    This
      12%
      Senior Unsecured Promissory Note (this “Note”) is one of a series of Notes of
      the Maker in the aggregate principal amount of up to $1,000,000
      (the "Aggregate Principal Amount") issued or to be issued in connection with
      a
      private placement (the "Offering") of the Maker of up to 20 units of its
      securities ("Units"), each Unit consisting of a Note in denominations of $50,000
      per Note (collectively the "Notes") and warrants (the "Warrants") to purchase
      shares of Common Stock of the Maker (“Common Stock”) all as described in the
      Note and Warrant Purchase Agreement dated as of the date hereof to which the
      Maker is a party (the “Subscription Agreement”). This Note shall rank
pari passu
      with all
      of the other Notes issued by the Maker pursuant to one or more Subscription
      Agreements. 

    

    1. Non-Transferability
      of Note

    

    This
      Note
      is non-negotiable. The Holder agrees that this Note may not be sold,
      transferred, pledged, hypothecated or otherwise disposed of.

    

    2. Payment
      and Prepayment

    

    The
      Maker
      may prepay all or any part of the principal sum hereof from time to time without
      penalty at its sole discretion, provided that any such principal prepayment
      shall be accompanied by all interest then accrued but unpaid and shall be made
      on a pro rata basis with all of the other Notes then outstanding.
      Notwithstanding anything herein or in the Subscription Agreement to the
      contrary, the Company shall pay or prepay, as the case may be, the principal
      and
      all accrued but unpaid interest thereon solely from the proceeds of one or
      more
      equity offerings of the Maker if the Maker receives an aggregate amount of
      at
      least $1,500,000 in gross proceeds (the “Private Equity Placement”). The Maker
      acknowledges and agrees that this Note shall only be paid out of the proceeds
      of
      a Private Equity Placement, except if an Event of Default (as defined in Section
      3 hereof) occurs pursuant to Section 3(b), 3(c) or 3(d). 

    

    3. Events
      of Default

    

    The
      entire unpaid principal sum and all accrued interest shall automatically become
      immediately due and payable, without notice or demand, upon the occurrence
      of
      any one or more of the following events of default ("Events of Default"):

    

    (a) The
      Maker
      shall fail to make payment of principal or interest hereunder for a period
      of
      five business days after the Maturity Date;

    

    (b) The
      Maker
      shall be unable, or admit in writing its inability, to pay its debts or shall
      not pay its debts generally as they come due, or shall make any assignment
      for
      the benefit of creditors;

    

    (c) The
      Maker
      shall take action to liquidate, wind up or dissolve or shall sell all or
      substantially all of its assets;

    

    (d) The
      Maker
      shall commence, or there shall be commenced against the Maker, any case,
      proceeding or other action seeking to have an order for relief entered with
      respect to the Maker or to adjudicate the Maker as a bankrupt or insolvent;
      or

    

    (e)
       The
      Maker
      shall fail to comply with any of its covenants or agreements hereunder or the
      Subscription Agreement and such breach shall not be cured within 30 days after
      notification of such breach or the Chief Financial Officer of the Company (or
      similar officer) having obtained knowledge thereof.

    

    4. Penalty
      Warrant

    

    (a) Upon
      the
      occurrence of an Event of Default pursuant to Section 3(a) hereof (the “Payment
      Default”), the Maker shall issue to the Holder a warrant on terms identical to
      the Warrants (as defined in the Subscription Agreement) except as to the number
      of shares of Common Stock issuable upon exercise (the “Penalty Warrant”). The
      number of shares of Common Stock issuable upon the exercise of the Penalty
      Warrant (the “Penalty Warrants Shares”) shall be equal to 20% of the Warrant
      Shares (as defined in the Subscription Agreement) issuable pursuant to the
      Warrants purchased by the Holder under the Subscription Agreement. If the
      Payment Default continues for 90 consecutive calendar days after the occurrence
      thereof, then the Maker shall issue to Holder an additional Penalty Warrant
      exercisable to purchase Penalty Warrant Shares equal to 30% of the Warrant
      Shares issuable pursuant to the Warrants purchased by the Holder under a
      Subscription Agreement.

    

    (b) In
      the
      event that the Holder becomes entitled to any Penalty Warrants under this Note,
      the Holder shall have piggyback registration rights with respect to the Penalty
      Warrant Shares as set forth on Schedule II of the Subscription Agreement, which
      registration rights provisions are incorporated by reference herein as if set
      forth in full herein. 

    

    5. Registration

    

    This
      Note
      is registered on the books of the Maker as to both principal and interest and
      can only be transferred on the books of the Maker. Prior to due presentment
      for
      registration of transfer, the Maker may treat the person in whose name the
      Note
      is registered as the absolute owner of this Note for the purpose of receiving
      payment of principal and interest on the Note and for all other purposes.

     

    

    6. Miscellaneous

    

    No
      delay
      on the part of the Holder in exercising any option, power or right shall
      constitute a waiver thereof.

    

    No
      recourse under or upon any obligation, covenant or agreement of this Note,
      or
      for any claim based thereon or in respect thereof, shall be had against any
      incorporator, stockholder, officer or director of the Maker or of any successor
      corporation, either directly or through the Maker; it being expressly agreed
      that this Note and the obligations hereunder are solely corporate obligations
      of
      the Maker and any successor corporation. The Holder further acknowledges and
      agrees that this Note shall only be payable from the proceeds of the Private
      Equity Placement, and from no other source.

    

    This
      Note
      shall be governed as to validity, interpretation, construction, effect and
      in
      all other respects by the laws and decisions of the State of New York. The
      Maker, and any endorsers, sureties and guarantors, agree that the state courts
      located in the State of New York shall have subject matter jurisdiction to
      entertain any action brought to enforce or collect upon this Note and, by
      execution hereof, voluntarily submit to personal jurisdiction of such courts;
      provided, however such jurisdiction shall not be exclusive and, at its option,
      the Holder may commence such action in any other court which otherwise has
      jurisdiction.

    

    The
      Maker
      waives service of process upon it and consents that all service of process
      may
      be made by certified mail (return receipt requested) directed to it, and service
      so shall be completed ten days after the same shall have been deposited in
      the
      US mail.

    

       The
      Maker
      waives demand for payment, presentment for payment, notice of nonpayment or
      dishonor, protest and notice of protest, and agrees to any extension of time
      of
      payment and partial payments before, at or after maturity. No renewal or
      extension of this Note, no release or surrender of any security for this Note,
      no release of any person liable hereon, no delay in the enforcement hereof
      and
      no delay or omission in exercising any right or power hereunder shall affect
      the
      liability of the Maker. No delay or omission by the Holder in exercising any
      power or right hereunder shall impair such right or power or be construed to
      be
      a waiver of any default, nor shall any single or partial exercise of any power
      or right hereunder preclude any or full exercise thereof or the exercise of
      any
      other right or power. Each legal holder hereof shall have and may exercise
      all
      the rights and powers given to Holder herein. This Note may only by amended
      or
      terminated in writing signed by both the Maker and the Holder.

    

    The
      Maker
      hereby waives any right to trial by jury of any claim, demand, action or cause
      of action arising under or in any way connected with or related to this Note.
      

    

    If
      any
      term or provision of this Note shall be held invalid, illegal or unenforceable,
      the validity of all other terms and provisions hereof shall in no way be
      affected thereby.

    

    

    IN
      WITNESS WHEREOF,
      the
      Maker has duly executed this Promissory Note on the date first above
      written.

    

    APPLIED
      NEUROSOLUTIONS, INC. 

    

    By:______________________________

    Name:

    Title:

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