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 $______________ of $100,000 principal amount 10% secured
convertible promissory notes (each a “Note,” or
collectively, the “Notes”) of Applied
DNA Sciences, Inc., a Delaware corporation (the “Company”). This
is an offering by the Company of up to a maximum aggregate amount of S1,500,000
in Notes to one or more subscribers (the “Offering”); provided
that the Company may increase the size of the Offering, in its discretion, to
$2.500,000. The Notes and accrued but unpaid interest thereon
automatically convert into shares of the Company’s common stock, $0.001 par
value (the “Common
Stock”), on the first anniversary of the date of the closing of the
purchase and sale of such Notes (the “Closing Date”) at a
price equal to 80% of the average volume weighted average price of the Common
Stock for the ten trading days prior to the Closing Date (the “Automatic Conversion
Price”). The Notes are convertible at the option of the holder
into shares of Common Stock at a price equal to the greater of (i) 50% of the
average price of the Common Stock for the ten trading days prior to the date of
the notice of conversion and (ii) the Automatic Conversion Price, at any time
prior to the first anniversary of 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 three days notice, such
notice to allow the holders of the Notes to convert the Notes into shares of
Common Stock prior to such repayment.
Until the
principal and interest owed under the Notes are paid in full, or converted into
the Common Stock, 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 an aggregate principal amount of $250,000 of
secured convertible promissory notes of the Company bearing interest at 10% per
annum issued on March 4, 2008 (the “March Notes”), with the security interest
granted to the holder of a $100,000 principal amount secured convertible
promissory note of the Company bearing interest at 10% per annum issued on May
7, 2008 (the “May Note”), with the security interest granted to the holders of
an aggregate principal amount of $250,000 of secured convertible promissory
notes of the Company bearing interest at 10% per annum issued on July 31, 2008
(the “July Notes”), and with the security interest granted to Xxxxx X. Xxxxxxx,
the Chairman of the Board of Directors and the Company’s President and Chief
Executive Officer, for an aggregate principal amount of $650,000 of secured
convertible promissory notes of the Company bearing interest at 10% per annum
issued on October 21, 2008 and January 29, 2009 (the “Hayward
Notes”). Upon the automatic conversion (or earlier payment) of the
March Notes, the May Note, the July Notes and the Hayward Notes, all of the
Company’s obligations will be discharged, including the termination of the
noteholders’ security interest in the Company’s assets. The Company
may issue 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 March Notes, the May
Note, the July Notes and the Hayward Notes.
The Notes
bear interest at the rate of 10% per annum, and the principal and all accrued
and unpaid interest shall be payable in full on the first anniversary of their
issuance in shares of Common Stock, unless paid in cash at the Company’s sole
discretion.
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). 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, 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 the March Notes, the June Notes, the Hayward
Notes and the August Note.
3.
Closing. The
Subscriber understands and agrees that the Company intends to make an initial
closing of this offering of Notes of the Company on or before March 15, 2009,
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
Note. 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.
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The
Subscriber and Subscriber’s purchaser representative, if any, have
received a copy of the Confidential Private Placement Term Sheet dated
February 20, 2009 and all exhibits thereto, including the Company’s most
recent Annual Report on Form 10-K, Quarterly Report on Form 10-Q and
current reports on Form 8-K. 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.
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b.
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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 Notes 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.
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6.
Representations of
Subscriber. In connection with the purchase of the Notes, the Subscriber
hereby represents and warrants to the Company as follows:
a.
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The
Subscriber is an “accredited investor” as defined in Rule 501 of
Regulation D promulgated under the Act.
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b.
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The
Note(s) is being purchased for the Subscriber’s own account without the
participation of any other person, with the intent of holding the Note(s)
for investment and without the intent of participating, directly or
indirectly, in a distribution of the Note(s) and not with a view to, or
for a resale in connection with, any distribution of the Note(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 Note(s) with others
or reselling or otherwise disposing of any portion of such Note(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.
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c.
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The
Subscriber has no need for liquidity with respect to his purchase of a
Note(s) and is able to bear the economic risk of an investment in the
Note(s) for an indefinite period of time and is further able to afford a
complete loss of such investment.
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d.
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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.
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e.
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The
Subscriber recognizes that the Note(s) will be sold to the Subscriber
without registration under any United States federal or other law relating
to the registration of securities for sale.
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f.
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The
Subscriber is aware that any resale of the Note(s) cannot be made except
in accordance with the registration requirements of the United States
Securities Act of 1933, as amended (the “Securities Act”) or an exemption
therefrom.
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g.
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The
Subscriber represents and warrants that all offers and sales of the
Note(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
Note(s) or the underlying common stock.
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h.
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The
Subscriber is not acquiring the Note(s) based upon any representation,
oral or written, by any person with respect to the future value of, or
income from, the Note(s) but rather upon an independent examination and
judgment as to the prospects of the Company.
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i.
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The
Subscriber understands that the Company is an early stage company, has
limited operating funds and has a limited 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 and other information set forth
in the Confidential Private Placement Term Sheet dated February 20, 2009
and in the Company’s Annual Report on Form 10-K, filed on December 16,
2008, the Company’s subsequent current reports on Form 8-K, and the
Company’s Quarterly Report on Form 10-Q, filed on February 17,
2009. Copies of such material are attached to the Confidential
Private Placement Term Sheet and these reports and any future filings made
with the SEC under Section 15(d) of the Securities Exchange Act of 1934,
as amended, can be obtained by visiting the Securities and Exchange
Commission’s website at xxxx://xxx.xxx.xxx. The
Subscriber is not relying on any other written information which may have
been provided by the Company or the Company’s placement
agent.
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j.
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The
Subscriber represents, warrants and agrees that it will not sell or
otherwise transfer the Notes without registration under the Securities Act
or an exemption therefrom, and fully understands and agrees that the
Subscriber must bear the economic risk of its purchase because, among
other reasons, the Notes have not been registered under the Securities Act
or under the securities laws of any state and, therefore, cannot be
resold, pledged, assigned or otherwise disposed of unless they are
subsequently registered under the Securities Act and under the applicable
securities laws of such states, or an exemption from such registration is
available. In particular, the Subscriber is aware that the
Notes are “restricted securities,” as such term is defined in Rule 144
promulgated under the Securities Act (“Rule
144”), and they may not be sold pursuant to Rule 144 unless all of
the conditions of Rule 144 are met.
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k.
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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 Note(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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l.
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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
Note(s).
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m.
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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.
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n.
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The
Note(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.
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o.
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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.
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7.
Agreements of
Subscriber. The Subscriber agrees as
follows:
c.
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The
sale of the Note(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 dated February 20, 2009.
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d.
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The
Note(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 Act or in a transaction otherwise in compliance with the Act;
and (ii) 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.
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e.
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The
Company is under no obligation to register the Note(s) or to comply with
any exemption available for sale of the Note(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 Note(s).
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f.
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There
is no established market for the Notes and it is not anticipated that any
public market for the Notes will develop in the future.
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g.
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The
Company may, if it so desires, refuse to permit the transfer of the
Note(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.
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h.
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A
legend indicating that the Note(s) and the underlying common stock have
not been registered under such securities laws and referring to the
restrictions and transferability of Note(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 Note(s) hereby
subscribed.
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10.
Special Power of
Attorney.
a.
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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:
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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 Delaware 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.
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Such
a power of attorney:
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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.
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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 Note(s)
shall not be sold, pledged, hypothecated or otherwise transferred unless the
Note(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
$______________ of $100,000 principal amount 10% secured convertible promissory
notes (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: ______________, 2009
IF
INDIVIDUAL INVESTOR:
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(Signature)
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(Printed
Name)
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IF CORPORATION, TRUST, | ||||
ESTATE OR REPRESENTATIVE: | ||||
Name
of Investor
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By:
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Name:
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Title:
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(Investors do not write below this
line)
APPROVED
THIS ____ DAY OF ______________, 2009
APPLIED
DNA SCIENCES, INC.
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By:
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Name:
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Title:
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