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 $100,000 per Unit, each consisting of (i) a
$100,000 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 (each a
“Warrant,” or collectively, the “Warrants”) to purchase 200,000
shares of the Company’s common stock, $0.001 par value (the “Common
Stock”), 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 twenty (20) 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 automatically convert into shares of Common Stock on
the
first anniversary of the Closing Date at a price equal to 70% 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 3 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 $150,000 of
$50,000 principal amount secured convertible promissory notes of the Company
bearing interest at 10% per annum issued on June 27, 2007 (the “June Notes”),
with the security interest granted to Xxxxx X. Xxxxxxx, a director, the Chairman
of the Board of Directors, our President and Chief Executive Officer, for an
aggregate principal amount of $550,000 in secured convertible promissory notes
of the Company bearing interest at 10% per annum issued on April 23, 2007,
June
30, 2007 and July 30, 2007 (the “Hayward Notes”), and 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 August 8, 2007 (the “August Note”). The Company may
issue up to $19,200,000 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 June Notes, the Hayward Notes and the August Note.
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.”
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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, 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. The Company
may issue up to $17,700,000 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 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 Units in the Company on or before October 31, 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.
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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
September 8, 2007. 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 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.
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6. Representations
of Subscriber. In connection with the purchase of the Units, the
Subscriber hereby represents and warrants to the Company as
follows:
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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
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.
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c.
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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.
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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 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 and (ii) issued and sold
in
reliance on the exemption from registration under the Nevada Securities
Act, as amended (the “Nevada
Act”).
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f.
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The
Subscriber is aware that any resale of the Unit(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
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.
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h.
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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.
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i.
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The
Subscriber understands that the Company is an early stage Company,
has
little or no operating funds 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 dated September 8, 2007 and in the Company’s Annual Report on Form
10-KSB, filed on January 16, 2007, and in its subsequent quarterly
reports
on Form 10-QSB. Copies of such material are attached to the
Confidential Private Placement Term Sheet and can be obtained by
visiting
the Securities and Exchange Commission’s website at
xxxx://xxx.xxx.xxx.
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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 and Warrants included in the Units or
the
Common Stock issuable upon conversion of the Notes and exercise of
the
Warrants 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
and Warrants included in the Units and the Common Stock issuable
upon
conversion of the Notes and exercise of the Warrants 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 and Warrants included in the
Units
and the Common Stock issuable upon conversion of the Notes and exercise
of
the Warrants 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 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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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
Unit(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
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.
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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:
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c.
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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 dated September 8,
2007.
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d.
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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.
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e.
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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).
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f.
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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.
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g.
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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.
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h.
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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.
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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.
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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
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2.
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all
conveyances or other instruments or documents necessary, appropriate
or
convenient to effect the dissolution and termination of the
Company.
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b.
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Such
a power of attorney:
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1.
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is
a special power of attorney coupled with an interest and is irrevocable;
and;
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2.
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shall
survive the death or disability of the
Subscriber.
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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
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
6
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: September __, 2007
IF
INDIVIDUAL
INVESTOR:
____________________________________________________
(Signature)
____________________________________________________
(Printed
Name)
IF
CORPORATION,
TRUST,
ESTATE
OR
REPRESENTATIVE:
____________________________________________________
Name
of
Investor
By:
________________________________________________________
Name:
Title:
(Investors
do not write below this line)
APPROVED
THIS ____ DAY OF SEPTEMBER, 2007
APPLIED
DNA SCIENCES, INC.
By:
_____________________________
Name:
Title:
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