SUBSCRIPTION AGREEMENT
EXHIBIT
10.1
Applied
DNA Sciences, Inc.
00
Xxxxxx
Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxx
Xxxxx, Xxx Xxxx 00000
Gentlemen
and Ladies:
The
undersigned (the “Subscriber”) hereby subscribes for ________ unit(s)
(the “Units”), at a price of $50,000 per Unit, each consisting of (i) a $50,000
principal amount 10% Secured Convertible Promissory Note (each a “Note,” or
collectively, the “Notes”) of Applied DNA Sciences, Inc., a Nevada corporation
(the “Company”), and (ii) a warrant to purchase 100,000 shares of common stock
of the Company (each a “Warrant,” or collectively, the “Warrants”), exercisable
for a period of four years commencing on the first anniversary of the date
of
the closing of the first purchase and sale of such Units (the “Closing Date”) at
a price of $0.50 per share. These Units are part of an offering of up to forty
such Units by the Company to one or more subscribers (the "Offering"). Each
Warrant may be redeemed at the option of the Company at a redemption price
of
$0.01 upon the earlier of (i) the date three years from issuance and (ii) the
date the Company’s stock has traded on The Over the Counter Bulletin Board or a
national securities exchange at or above $1.00 per share for 20 consecutive
trading days. The Notes and accrued but unpaid interest thereon are convertible
into shares of common stock of the Company at a price of $0.50 per share by
the
holder of the Notes at any time from their date of issuance through the first
anniversary of such date and shall automatically convert on such anniversary
at
a 20% discount to the average volume weighted average price of the Company’s
common stock for the ten trading days prior to the Closing Date. In addition,
at
any time prior to conversion, the Company will have the right to prepay the
Notes and accrued but unpaid interest thereon upon 3 days notice, such notice
to
allow the holders of the Notes to convert the Notes into shares of common stock
of the Company prior to such repayment.
Until
the
principal and interest owed under the Notes are paid in full, or converted
into
common stock of the Company, the Notes will be secured by a security interest
in
all of the assets of the Company. This security interest will be pari
passu
with the
security interest granted to the holders of $1,500,000 of $50,000 principal
amount secured convertible promissory notes of the Company, bearing interest
at
10% per annum issued as part of an offering completed on March 8, 2006 (the
“March Notes”) and the holders of $2,950,000 of $50,000 principal amount secured
convertible promissory notes of the Company, bearing interest at 10% per annum
issued as part of offerings completed on May 2, 2006 and June 15, 2006 (the
“May
and June Notes”). The Company may issue up to $20,000,000 of debt in addition to
the amounts sold in the offering that may be secured by a security interest
in
all of the Company’s assets, which would be pari
passu to
the
security interest granted to the holders of the Notes, the May and June Notes,
and the March Notes.
The
Notes
bear interest at the rate of 10% per annum. All principal and all accrued and
unpaid interest under the Notes shall be payable in full on the date 12-months
subsequent to the Closing Date, referred to hereinafter as the “Maturity
Date.”
1. Subscription.
Subject
to the terms and conditions hereof, the Subscriber agrees to pay
$__________________ by check or wire transfer of immediately available funds
as
consideration for the Subscriber’s Note(s) and the Warrant(s). The Subscriber
tenders herewith a check made payable at the direction of the Company or wire
transfer, in the amount of $__________________. The Subscriber acknowledges
and
agrees that this subscription is irrevocable by the Subscriber but is subject
to
acceptance by the Company.
2. Security.
Until
the
principal and interest owed under the Notes are paid in full, or converted
into
common stock of the Company, the Notes will be secured by a security interest
in
all of the assets of the Company. This security interest will be pari passu
with
the security interest granted to the holders of $1,500,000 of $50,000 principal
amount secured convertible promissory notes of the Company, bearing interest
at
10% per annum issued as part of an offering completed on March 8, 2006 (the
“March Notes”) and the holders of $2,950,000 of $50,000 principal amount secured
convertible promissory notes of the Company, bearing interest at 10% per annum
issued as part of offerings completed on May 2, 2006 and June 15, 2006 (the
“May
and June Notes”). The Company may issue up to $8,050,000 of debt in addition to
the amounts sold in the offering that may be secured by a security interest
in
all of the Company’s assets, which would be pari passu to the security interest
granted to the holders of the Notes, the May and June Notes, and the March
Notes.
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3. Closing.
The
Subscriber understands and agrees that the Company intends to make an initial
closing of this offering of Units in the Company on or before June 30, 2007,
but
that the same may be extended for three additional periods, each such period
not
to exceed thirty (30) days, at the sole decision of the Company, without notice
to any Subscriber. If the Company does not accept the Subscriber prior to
Closing Date, this Subscription Agreement and Confidential Offering
Questionnaire, together with the Subscriber’s funds and any other documents
delivered to the Company, shall be promptly returned to the
Subscriber.
4. Subscription
Compliance.
The
Subscriber agrees that this subscription is subject to the following terms
and
conditions:
The
Company shall have the right, in its sole discretion, to: (i) accept or reject
this subscription; (ii) determine whether this Subscription Agreement has been
properly completed by the Subscriber and (iii) determine whether the Subscriber
has met all of the Company’s requirements for investment in a Unit. If the
Company deems this subscription to be defective, deficient or otherwise
non-compliant with the terms of this offering, the Subscriber’s funds will be
returned promptly to the Subscriber without interest or deduction.
5. Receipt
of Information.
a. The
Subscriber and Subscriber’s purchaser representative, if any, have received a
copy of the Confidential Private Placement Term Sheet. The Subscriber, either
alone or together with Subscriber’s purchaser representative, if any, have such
knowledge and experience in financial and business matters as to be able to
evaluate the merits and risks of an investment in the Company.
b. The
Subscriber and Subscriber’s representative, if any, have had the opportunity to
ask questions of and receive answers from the Company concerning the terms
and
conditions of the offering of the Units by the Company and to obtain any
additional information Subscriber has requested which is necessary to verify
the
accuracy of the information furnished to the Subscriber concerning the Company
and such offering.
6. Representations
of Subscriber.
In
connection with the purchase of the Units, the Subscriber hereby represents
and
warrants to the Company as follows:
a.
If
the
Subscriber is an individual purchaser of the Unit(s), the Subscriber represents
and warrants that he/she is at least 25 years of age and a resident of the
Country of _______________ and is not nor has ever been a “U.S. person,” as
defined in Rule 902 promulgated under the Securities Act of 1933, as amended
(the “Act”).
b. If
the
Subscriber is a Company, trust or other corporate entity purchaser of the
Unit(s), the Subscriber represents and warrants that it is duly organized and
validly existing under the laws of the Country of _______________, and has
all
requisite powers to purchase the Unit(s). If the subscriber is a trust, none
of
the trustees are a “U.S. person,” as defined in Rule 902 promulgated under the
Act.
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c. The
Subscriber is an “accredited investor” as defined in Rule 501 of Regulation D
promulgated under the Act.
d. The
Unit(s) is being purchased for the Subscriber’s own account without the
participation of any other person, with the intent of holding the Unit(s) for
investment and without the intent of participating, directly or indirectly,
in a
distribution of the Unit(s) and not with a view to, or for a resale in
connection with, any distribution of the Unit(s) or any portion thereof, nor
is
the undersigned aware of the existence of any distribution of the Company’s
securities. Furthermore, the undersigned has no present intention of dividing
such Unit(s) with others or reselling or otherwise disposing of any portion
of
such Unit(s), either currently or after the passage of a fixed or determinable
period of time, or upon the occurrence or nonoccurrence of any predetermined
event or circumstance.
e. The
Subscriber has no need for liquidity with respect to his purchase of a Unit(s)
and is able to bear the economic risk of an investment in the Unit(s) for an
indefinite period of time and is further able to afford a complete loss of
such
investment.
f. The
Subscriber represents that his financial commitment to all investments
(including his investment in the Company) is reasonable relative to his net
worth and liquid net worth.
g. The
Subscriber recognizes that the Unit(s) will be: (i) sold to the Subscriber
without registration under any United States federal or other law relating
to
the registration of securities for sale; (ii) issued and sold in reliance on
the
exemption from registration under the Nevada Securities Act, as amended (the
“Nevada Act”); and (iii) issued and sold to non-United States persons, as
defined in Rule 902(k) promulgated under the Act.
h. The
Subscriber is aware that any resale of the Unit(s) cannot be made except in
accordance with the registration requirements of the Act or an exemption
therefrom.
i. The
Subscriber represents and warrants that all offers and sales of the Unit(s)
shall be made pursuant to an exemption from registration under the Act or
pursuant to registration under the Act, and the Subscriber will not engage
in
any hedging or short selling transactions with regard to the Unit(s) or the
underlying common stock.
j. The
Subscriber is not acquiring the Unit(s) based upon any representation, oral
or
written, by any person with respect to the future value of, or income from,
the
Unit(s) but rather upon an independent examination and judgment as to the
prospects of the Company.
k. The
Subscriber understands that the Company is an early stage Company and has a
minimal operating history. The Subscriber appreciates and understands the risks
involved with investing in a Company with a limited operating history and has
read and understands the risk factors set forth in the Confidential Private
Placement Term Sheet and in the Company’s Annual Report on Form 10-KSB, filed on
January 16, 2007, and in its subsequent quarterly report on Form 10-QSB, and
current reports on Form 8-K. Copies of such material are attached to the Term
Sheet and can be obtained by visiting the Securities and Exchange Commission’s
website at xxxx://xxx.xxx.xxx.
l. The
Company, by and through itself and/or legal counsel, has made no representations
or warranties as to the suitability of the Subscriber’s investment in the
Company, the length of time the undersigned will be required to own the Unit(s),
or the profit to be realized, if any, as a result of investment in the Company.
Neither the Company nor its counsel has made an independent investigation on
behalf of the Subscriber, nor has the Company, by and through itself and
counsel, acted in any advisory capacity to the Subscriber.
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m. The
Company, by and through itself and/or legal counsel, has made no representations
or warranties that the past performance or experience on the part of the
Company, or any partner or affiliate, their partners, salesmen, associates,
agents, or employees or of any other person, will in any way indicate the
predicted results of the ownership of the Unit(s).
n. The
Company has made available for inspection by the undersigned, and his purchaser
representative, if any, the books and records of the Company. Upon reasonable
notice, such books and records will continue to be made available for inspection
by investors upon reasonable notice during normal business hours at the
principal place of business of the Company.
o. The
Unit(s) was not offered to the Subscriber by means of publicly disseminated
advertisement or sales literature, nor is the Subscriber aware of any offers
made to other persons by such means.
p. All
information which the Subscriber has provided to the Company concerning the
Subscriber is correct and complete as of the date set forth at the end of this
Subscription Agreement, and if there should be any material adverse change
in
such information prior to receiving notification that this subscription has
been
accepted, the undersigned will immediately provide the Company with such
information.
7. Agreements
of Subscriber.
The
Subscriber agrees as follows:
a. The
sale
of the Unit(s) by the Company has not been recommended by any United States
federal or other securities commission or regulatory authority. Furthermore,
the
foregoing authorities have not confirmed the accuracy or determined the adequacy
of this Subscription Agreement or the Confidential Private Placement Term
Sheet.
b. The
Unit(s) and the underlying common stock will not be offered for sale, sold,
or
transferred other than pursuant to: (i) an effective registration under the
Nevada Act or in a transaction which is otherwise in compliance with the Nevada
Act; (ii) an effective registration under the Act or in a transaction otherwise
in compliance with the Act; and (iii) evidence satisfactory to the Company
of
compliance with the applicable securities laws of other jurisdictions. The
Company shall be entitled to rely upon an opinion of counsel satisfactory to
it
with respect to compliance with the above laws.
c. The
Company is under no obligation to register the Unit(s) or to comply with any
exemption available for sale of the Unit(s) without registration, and the
information necessary to permit routine sales of securities of the Company
under
Rule 144 of the Act may not be available when you desire to resell them pursuant
to Rule 144 of the Act. The Company is under no obligation to act in any manner
so as to make Rule 144 available with respect to the Unit(s).
d. There
is
no established market for the Units and it is not anticipated that any public
market for the Units will develop in the future.
e. The
Company may, if it so desires, refuse to permit the transfer of the Unit(s)
unless the request for transfer is accompanied by an opinion of counsel
acceptable to the Company to the effect that neither the sale nor the proposed
transfer will result in any violation of the Act or the applicable securities
laws of any other jurisdiction.
f. A
legend
indicating that the Unit(s) and the underlying common stock have not been
registered under such securities laws and referring to the restrictions and
transferability of Unit(s) and the underlying common stock may be placed on
the
certificates or instruments delivered to the Subscriber or any substitutes
thereof and any transfer agent of the Company may be instructed to require
compliance therewith.
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8. Indemnification
of the Company.
The
undersigned understands the meaning and legal consequences of the
representations and warranties contained herein, and hereby agrees to indemnify
and hold harmless, the Company, its respective agents, officers,
managers
and affiliates from and against any and all damages, losses, costs and expenses
(including reasonable attorneys’ fees) which they or any of them may incur by
reason of the failure of the Subscriber to fulfill any of the terms of this
Subscription Agreement, or by reason of any breach of the representations and
warranties made by the Subscriber herein, or in any document provided by the
Subscriber to the Company.
9. Representative
Capacity.
If an
investment in the Company is being made by a corporation, trust or estate,
the
undersigned individual signing on behalf of the Subscriber, represents that
he
has all right and authority, in his capacity as an officer, managing member,
trustee, executor or other representative of such corporation, trust or estate,
as the case may be, to make such decision to invest in the Company and to
execute and deliver this Subscription Agreement on behalf of such corporation,
trust or estate as the case may be, enforceable in accordance with its terms.
The undersigned individual also represent that any such corporation, trust
or
estate was not formed for the purpose of buying the Unit(s) hereby
subscribed.
10. Special
Power of Attorney.
a. The
Subscriber, by executing this Subscription Agreement, irrevocably makes,
constitutes and appoints any executive officer of the Company, and each of
them
individually, as the undersigned’s true and lawful attorney, for the undersigned
and in the undersigned’s name, place and stead, and for the use and benefit of
the undersigned, to execute and acknowledge and, to the extent necessary, to
file and record:
1. such
certificates, instruments and documents as may be required to be filed by the
Company or which the Company deems advisable to file under the laws of the
State
of Nevada or any other state or jurisdiction in which the Company transacts
business; and
2. all
conveyances or other instruments or documents necessary, appropriate or
convenient to effect the dissolution and termination of the
Company.
b. Such
a
power of attorney:
1. is
a
special power of attorney coupled with an interest and is irrevocable;
and;
2. shall
survive the death or disability of the Subscriber.
c. The
Subscriber hereby agrees to be bound by any representations made by the Company
or its substitutes acting pursuant to this Special Power of Attorney, and the
undersigned hereby waives any and all defenses which may be available to him
to
contest, negate or disaffirm its actions or the actions of his substitutes
under
this Special Power of Attorney. The powers herein granted are granted for the
sole and exclusive benefit of the undersigned and not on behalf of any other
person, in whole or in part.
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11. Subscription
Not Revocable.
The
undersigned hereby acknowledges and agrees that the undersigned is not entitled
to cancel, terminate or revoke this Subscription Agreement or any agreements
of
the undersigned hereunder and that this Subscription Agreement shall survive
the
dissolution, death or disability of the undersigned.
12. Restrictions
on Transferability.
The
undersigned understands and agrees that the Unit(s) shall not be sold, pledged,
hypothecated or otherwise transferred unless the Unit(s) is registered under
the
Act and applicable state securities laws or an exemption from such registration
is available.
13. Governing
Law. This
Subscription Agreement is being delivered and is intended to be performed in
the
State of New York, and shall be construed and enforced in accordance with,
and
the law of such state shall govern the rights of parties.
14. Numbers
and Gender.
In this
Agreement, the masculine gender includes the feminine gender and the neuter
and
the singular includes the plural, where appropriate to the context.
THIS
SPACE INTENTIONALLY LEFT BLANK; SIGNATURE PAGE FOLLOWS
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APPLIED
DNA SCIENCES , INC.
SIGNATURE
PAGE TO
SUBSCRIPTION
AGREEMENT
Subscriber
hereby elects to subscribe under the Subscription Agreement for a total of
$______________ Units (NOTE: to be completed by subscriber) and executes the
Subscription Agreement.
IN
WITNESS WHEREOF,
the
undersigned has executed this Subscription Agreement on the date set forth
below.
Date
of
Execution: June __, 2007
IF
INDIVIDUAL INVESTOR:
(Signature)
IF
CORPORATION, TRUST,
ESTATE
OR REPRESENTATIVE:
Name
of Investor
By:
Name:
Title:
(Investors
do not write below this line)
APPROVED
THIS ____ DAY OF JUNE, 2007
APPLIED
DNA SCIENCES, INC.
By:
______________________________
Name:
Title:
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