EXHIBIT 10.20 TO FORM-10KSB FOR FISCAL YEAR
ENDING DECEMBER 31, 1995
SPECTRASCIENCE, INC
SUBSCRIPTION AGREEMENT
THIS SUBSCRIPTION AGREEMENT (the "Agreement") dated as of
______________, 1995, is made by and between SPECTRASCIENCE, INC., a Minnesota
corporation (the "Company"), and _____________________________
___________________________________ (the "Investor").
RECITALS
(a) Whereas, the Company needs additional cash to fund its 1995
Business Plan; and
(b) Whereas, the Investor desires to subscribe for shares of the
Company's preferred stock and certain warrants on the terms and conditions set
forth in this Agreement,
Accordingly, in consideration of the foregoing, the mutual promises set
forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties thereto agree as
follows:
1. PREFERRED STOCK. Pursuant to the terms hereof, the Company shall
sell to the Investor, and the Investor shall purchase from the Company, shares
of the Company's Series B preferred stock (the "Preferred Shares").
(a) Purchase Price. The purchase price for the Preferred Shares
shall be Five Dollars ($5.00) per share.
(b) Convertibility. At any time during the period commencing on
the first anniversary of the closing of the sale of the
Preferred Shares and ending on the third anniversary of such
event, the Investor may convert all or any number of the
Preferred Shares into an equivalent number of shares of the
Company's common stock.
(c) Voting Rights. The Investor shall have no voting rights with
respect to the Preferred Shares other than the right to vote
on matters which specifically change the rights of holders of
the same series of the Company's preferred stock.
* THIS WARRANT IS SUBJECT TO THE RESTRICTIONS ON TRANSFER SET FORTH AT
THE BOTTOM OF THE LAST PAGE HEREOF.
(d) Liquidation Preference. Upon liquidation of the Company, the
Preferred Shares shall have a liquidation preference as to the
par value of such shares.
(e) Dividends. In the event that the Company has not increased the
number of authorized shares of its common stock to the extent
sufficient to enable the Company to reserve a number of shares
of common stock sufficient to cover the conversion of the
shares of Series B Preferred Stock and the exercise of all
Warrants issued in connection with the offering of the Series
B Preferred Stock by December 15, 1996, the Series B Preferred
Stock shall bear an 8% cumulative annual dividend, payable
quarterly, commencing upon the Company's failure to satisfy
such condition and terminating on the date compliance with
such condition is satisfied.
2. WARRANTS. In partial consideration of the Investor's subscription
for the Preferred Shares, the Company shall issue to the Investor concurrently
with delivery of each three shares of preferred stock, a warrant, in the form
attached hereto as Exhibit A (the "Warrant"), to purchase one share of common
stock of the Company ("Warrant Stock"). Each Warrant shall have an exercise
price equal to $9.50 per share of Warrant Stock . Each Warrant shall have a term
of three years.
3. CLOSING. The closing of the sale and purchase of the Preferred
Shares and the issuance of the Warrants shall take place at 10:00 a.m.,
Minnesota time, on or before December 15, 1995. At the closing, the Investor
will pay the purchase price for the Preferred Shares and Warrants by a wire
transfer into an account designated by the Company or by the delivery of a
certified or bank cashiers' check payable to the order of the Company in the
amount of such purchase price. At the closing, the Company shall deliver to the
Investor a certificate for the Preferred Shares and the Warrants.
4. REGISTRATION. The Company shall register the shares of common stock
issuable upon conversion of the Preferred Shares and shall use its best efforts
to have such registration declared effective by the SEC no later than one year
from the date of closing.
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to the Investor that this Agreement has been duly
authorized by all necessary corporate action on behalf of the Company, has been
duly executed and delivered by an authorized officer of the Company, and is a
valid and binding agreement on the part of the Company. All corporate action
necessary to authorize, issue and deliver the Preferred Shares, the Warrants and
the Warrant Stock has been or will be taken on or prior to the date thereof.
6. REPRESENTATIONS, WARRANTIES, AND ACKNOWLEDGMENTS OF THE INVESTOR.
The Investor represents, warrants, and acknowledges to the Company as follows:
(a) That the Investor has received and carefully reviewed the
Business Plan of the company, dated March, 1995 and has had
the opportunity to discuss with officers of the Company events
and facts relating to the Company's business and prospects;
(b) That the Investor believes the Investor is able to bear the
economic risk of the investment in the Preferred Shares and
the Warrants;
(c) That the Investor believes that the Investor has knowledge and
experience in financial and business matters, that the
Investor is capable of evaluating the merits and risks of the
prospective investment in the Preferred Shares, the Warrants
and Warrant Stock and that the Investor is able to bear such
risks;
(d) That the Investor understands investments in the Preferred
Shares and the Warrants are highly speculative but believes
that the investments are suitable for the Investor based upon
the investment objectives and financial needs of the Investor,
and has adequate means for providing for his current financial
needs and personal contingencies and has no need for liquidity
of investment with respect to the Preferred Shares and the
Warrants;
(e) That the Investor has been given access to full and complete
information regarding the Company (including the opportunity
to meet with Company officers and review all the documents as
the Investor may have requested in writing) and has utilized
such access to his satisfaction for the purpose of obtaining
information in addition to, verifying information included in,
the Business Plan;
(f) That the Investor recognizes that the Preferred Shares and the
Warrants, as investments, involve a high degree of risk;
(g) That the Investor recognizes that (i) the purchase of the
Preferred Shares and the Warrants is a long-term investment,
(ii) the purchaser of the Preferred Shares and the Warrants
must bear the economic risk of investment for an indefinite
period of time because neither the Preferred Shares, the
Warrants nor the Warrant Stock have been registered under the
Act of 1933 (the "Act") and, therefore, cannot be sold unless
they are subsequently registered under said Act or an
exemption from such registration is available and (iii) the
transferability of the Preferred Shares, the Warrants and the
Warrant Stock is restricted and (A) requires conformity with
the restrictions contained herein and (B) will be further
restricted by a legend placed on the Preferred Shares, the
Warrants and certificate(s) representing the Warrant Stock
stating that such have not been registered under the Act and
referring to the restrictions on transferability, and by stop
transfer orders or notations on the Company's records
referring to the restrictions on transferability.
(h) Except as provided in Section 4 above or in Section 8 of the
Warrant, the Investor has been advised that neither the
Preferred Shares, the Warrants nor the Warrant Stock are being
registered under the Act or the relevant state securities laws
pursuant to exemptions from the Act and laws, and that the
Company's reliance upon such exemptions is predicated in part
on the representations of the Investor to the Company as
contained herein. The Investor represents and warrants that
the Preferred Shares and the Warrants are being purchased for
the Investor's own account and for investment and without the
intention of reselling or redistributing the same of the
Preferred Shares and the Warrant Stock, that the investor has
made no agreement with others regarding the Preferred Shares
and the Warrants or any of the Warrant Stock and that the
financial condition of the Investor is such that it is not
likely that it will be necessary to dispose of the Preferred
Shares, the Warrants or the Warrant Stock in the foreseeable
future. The Investor is aware that, in the view of the
Securities and Exchange Commission and applicable state bodies
that administer state securities laws, a purchase of a
security with an intent to resell by reason of any foreseeable
specific contingency or anticipated change in market values,
or any change in the condition of a company or its business,
or in with a contemplated liquidation or settlement of any
loan obtained for the acquisition of the shares and for which
the shares were pledged as security, would represent an intent
inconsistent with the representations set forth above. The
Investor further represents and agrees that if, contrary to
his foregoing intentions, the Investor should later desire to
dispose of or transfer the Preferred Shares, the Warrants or
any of the Warrant Stock in any manner, the Investor shall not
do so without first obtaining (a) the opinion of counsel
designated by the Company that such proposed disposition or
transfer lawfully may be made without the registration of the
Preferred Shares, the Warrants or the Warrant Stock for such
purpose pursuant to the Act, as then in effect, and applicable
state securities laws or (b) such registrations (it being
expressly understood that the Company shall not have any
obligation except as otherwise provided in Section 4 above, to
register the Preferred Shares, the Warrants or the Warrant
Stock for such purpose).
(i) The Investor agrees that the Company may place a restrictive
legend on the Preferred Shares, the Warrants and
certificate(s) representing the Warrant Stock, containing
substantially the following language:
"The shares represented by this Certificate were
issued without registration under the Securities Act
of 1933, as amended (the "Act") and without
registration under Minnesota securities laws, and
reliance upon exemptions contained in the Act and
such laws. No transfer of these shares or any
interest therein may be made except pursuant to
effective registration statements under said laws
unless this Corporation has received an opinion of
counsel satisfactory to it that such transfer or
disposition does not require registration under said
laws and, for any sales under Rule 144 of the Act,
such evidence as it shall request for compliance with
that rule."
(j) The Investor agrees and consents that the Company may place a
stop transferorder on the Preferred Shares, the Warrants and
certificate(s) representing the Warrant Stock when issued, to
assure the Investor's compliance with this Agreement and the
matters referenced above.
(k) The Investor agrees to save and hold harmless, defend and
indemnify theCompany and its directors, officers and agents
from any claims, liabilities, damages, losses, expenses or
penalties arising out of any misrepresentation of information
furnished by the Investor to the Company in this Agreement.
(l) The Investor represents and warrants that at the time of the
execution of this Agreement, the Investor is a bona fide
resident of, and is domiciled in, the State of
________________ and that the Warrants are being acquired
solely for the beneficial interest of the Investor and not as
nominee for, or on behalf of, or for the beneficial interest
of, or with the intention to transfer to, anyother person,
trust or organization, except as specifically set forth
herein.
(m) The Investor represents, warrants and agrees that the Investor
is an "Accredited Investor' within the meaning of Section
501(a) of Regulation D of the Act, and acknowledges,
represents and warrants that the following responses, if
applicable, are true and correct:
(i) The yearly income of the Investor from all sources
for each of the two most recent calendar years was:
1993 1994
Less than $200,000 ____ ____
More than $200,000 ____ ____
(ii) The Investor reasonably expects that the yearly
income of the Investor for the current calendar year
will be:
1995
Less than $200,000 ____
More than $200,000 ____
(iii) The yearly joint income of the Investor and the
spouse of the Investor (if married) from all sources
during the two most recent years was:
1993 1994
Less than $300,000 ____ ____
More than $300,000 ____ ____
(iv) The Investor together with the spouse of the Investor
reasonably expects that the joint income of the
Investor and the spouse of the Investor for the
current year will be:
1995
Less than $300,000 ____
More than $300,000 ____
(v) The individual net worth of the Investor, or joint
net worth with the spouse of the Investor, at fair
market value is:
____ Less than $1,000,000
____ Greater than $1,000,000
(vi) If the Investor is not an individual, and the entity
was formed for the purpose of this investment, all of
the equity owners qualify as an accredited investor
under paragraphs (1), (2), (3), (4), (5), (6), or (7)
of Section 501(a) or Regulation D.
(vii) The Investor is one of the following types of
accredited investors (check type of investor
applicable):
____ Any Bank defined in Section 3(a)(2) or a
savings and loan association or other
institution defined in Section 3(a)(5)(A) of
the Act;
____ Insurance Company as defined in Section
2(13) of the Act;
____ Investment Company registered under the
Investment Company Act of 1940 or a business
development company as defined in Section
2(a)(48) of the Act;
____ Small Business Investment Company licensed
by U.S. SmallBusiness Administration under
Section 301(c) or (d) of the Small Business
Investment Act of 1958;
____ Employee Benefit Plan within the meaning of
Title I of theEmployee Retirement Security
Act of 1974 and the investment decision to
purchase the Shares is being made by a plan
fiduciary as defined in Section 3(21) of
such Act, which is either a bank, savings
and loan association, insurance company or
registered investment adviser, or said
employee benefit plan has total assets in
excess of $5,000,000 or if a self-directed
plan, a plan whose investment decisions are
made solely by persons who are accredited
investors;
____ Any private business development company
defined in Section 202(a)(22) of the
Investment Advisers Act of 1940;
____ Any organization described in Section
501(c)(3) of the Internal Revenue Code,
Corporation, Massachusetts or similar
business trust, or partnership with total
assets in excess of $5,000,000;
____ Any Director or Executive Officer of the
Company;
____ A trust with total assets in excess of
$5,000,000 whose purchase is directed by a
sophisticated person as described in Rule
506(b)(2)(ii) of the Act;
____ An entity, all of whose members are
Accredited Investors. All of the foregoing
information which the Investor has provided
concerning the investor and the financial
position of the Investor and the Investor's
knowledge of financial and business matters
or in the case of a corporation,
partnership, trust or other entity,
concerning the knowledge of financial and
business matters of the person making the
investment decision on behalf of such
entity, is correct and complete as of the
date hereof, and if there should be any
adverse change in such information prior to
the acceptance of the subscription of the
Investor, the Investor will immediately
provide theCompany with such information.
The Investor is informed of the significance
to the Company of the foregoing
representations, and they are made with the
intention that the Company will rely upon
them.
(n) Type of Ownership (check one):
____ Individual Ownership ____ Joint Tenant with Right
of Survivorship (both
parties must sign)
____ Trust or Estate ____ Other (attach
(describe and description)
enclose authority)
The Investor further represents and warrants that if the
Preferred Shares and the Warrant are to be acquired by a
corporation, general partnership, limited partnership or other
entity, the Investor has the requisite authority to sign this
Agreement on behalf of such entity and bind such entity
hereunder; the description of such entity attached hereto is
true and correct; and each of the equity owners of such entity
is a natural person (1) who had an individual income in excess
of $200,000, or together with any spouse had a joint income in
excess of $300,000, in each of the years 1993 and 1994 and
reasonable expects an income in excess of $200,000, or joint
income in excess of $300,000 in 1995 or (2) whose individual
net worth, or joint net worth with such person's.spouse, as of
the date hereof and at the time of purchase exceeds
$1,000,000.
(o) The Investor acknowledges and understands that:
(i) This Agreement is and shall be irrevocable, but the
Investor shall not have any obligations hereunder if
this agreement is not accepted by the Company.
(ii) The Company shall have the right to accept or reject
this Agreement, in whole or in part, and the Investor
will be notified of its decision.
(p) Other:
(i) This Agreement and the rights and obligations of the
parties hereunder shall not be assignable, in whole
or in part, by any party without the prior written
consent of the other party, and neither this
Agreement nor any provision hereof may be amended,
modified, waived or discharged without the written
consent of the party against whom enforcement of such
amendment, modification, waiver, or discharge is
sought.
(ii) This Agreement, including the exhibits attached
hereto, constitutes the entire agreement of the
parties relative to the subject matter hereof and
supersedes any and all other agreements and
understandings, whether written or oral, relative to
the matters discussed herein.
(iii) This Agreement shall be construed and enforced in
accordance with the laws of the State of Minnesota.
(iv) This Agreement may be executed in two or more
counterparts, each of which shall be deemed an
original, but all of which together shall constitute
one and the same instrument.
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
executed.
INVESTOR: COMPANY:
SPECTRASCIENCE, INC.
______________________________________
______________________________________ By:
Brain X. XxXxxxx
Its: President & CEO
Print Names: ________________________ Social Security Number(s) or
________________________ Taxpayer Identification
Address: ________________________ Number(s): ___________________
Telephone #: ________________________ ___________________
