EXHIBIT 10.1
SUBSCRIPTION AGREEMENT
Applied DNA Sciences, Inc.
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Gentlemen and Ladies:
The undersigned (the "Subscriber") hereby subscribes for ________ 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, exercisable for a period of four years commencing on the first
anniversary of the date of the initial closing of the Offering at a price of
$0.50 per share (each a "Warrant," or collectively, the "Warrants"). Each
Warrant may be redeemed at the option of the Company at a redemption price of
$0.001 upon the earlier of (i) the date three years from issuance and (ii) the
date a registration statement for the resale of the underlying common stock has
been declared or remains effective by the U.S. Securities and Exchange
Commission, and the Company's stock has traded on The Over the Counter Bulletin
Board 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
of the closing bid prices of the Company's common stock on trading days during
the 12 months prior to such conversion. 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 to shares of common stock of the Company or be
repaid their respective principal and interest.
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
bearing interest at 10% per annum issued as part of an offering completed on
March 8, 2006 (the "March Notes"). The Company may issue up to $4,500,000 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 and the March Notes.
The Notes bear interest at the rate of 10% per annum payable on the
Maturity Date (as defined below). Any principal payment of or interest payment
on the unpaid principal amount of the Notes, whether at the Maturity Date,
acceleration or otherwise, shall bear interest at the lesser of 12% or the
maximum rate permissible by law. All principal and all accrued and unpaid
interest under the Notes shall be payable in full on the date 15-months
subsequent to the date of the initial closing of the Offering, 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
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notes bearing interest at 10% per annum issued as part of an offering completed
on March 8, 2006 (the "March Notes"). The Company may issue up to $4,500,000 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 and the March Notes.
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
April 26, 2006, 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 the initial closing, 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. The Subscriber and Subscriber's purchaser representative, if any,
have received a copy of the Confidential Private Placement Offering
Memorandum. 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
Note, 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 of Regulation S 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 of Regulation S promulgated under the Act.
c. The Subscriber is an "accredited investor" as defined in Rule 501
of Regulation D promulgated under the Act.
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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"); (iii) issued and sold in
reliance on the exemption from registration under the Act provided by
Section 4(2) of the Act; and (iv) issued and sold to non-United States
persons, as defined in Section 902(k) under Regulation S promulgated under
the Act.
h. The Subscriber is aware that any resale of the unit(s) cannot be
made except in accordance with Regulation S promulgated under the Act, the
registration requirements of the Act or another exemption therefrom.
i. The Subscriber represents and warrants that all offers and sales
of the unit(s) shall be made in accordance with Regulation S, 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 lacks an 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 Memorandum and the exhibits thereto.
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.
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
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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 Offering Memorandum.
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
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the Company may be instructed to require compliance therewith. The unit(s)
is further subject to restriction of transfer as set forth in the By-laws.
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.
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.
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12. Restrictions on Transferability. The undersigned understands and
agrees that the purchase and resale, pledge, hypothecation or other transfer of
the unit(s) is restricted by certain provisions of the By-laws of the Company
and 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
APPLIED DNA SCIENCES , INC.
SIGNATURE PAGE TO
SUBSCRIPTION AGREEMENT
Subscriber hereby elects to subscribe under the Subscription Agreement
for a total of $______________ 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: ___________, 2006
IF INDIVIDUAL INVESTOR:
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(Signature)
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(Printed Name)
IF CORPORATION, TRUST,
ESTATE OR REPRESENTATIVE:
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Name of Investor
By:
--------------------------------
Name:
Title:
(Investors do not write below this line)
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APPROVED THIS ____ DAY OF ___________, 2006
APPLIED DNA SCIENCES, INC.
By:
--------------------------
Name:
Title:
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