- --------------------------------------------------------------------------------
Exhibit 4.1
SUBSCRIPTION AGREEMENT
Investor Financial Questionnaire
- --------------------------------------------------------------------------------
Before you make an investment, you must complete this questionnaire. Please
check the appropriate box below and sign this questionnaire before a
notary. We require that this be returned with your Subscription Agreement
for your purchase of Common Shares of Applied DNA Sciences, Inc. (the
"Company"). Information will be held in strict confidence and used solely
to ensure that all prospective investors are qualified under the relevant
sections of the Securities Act of 1933.
[ ] I am a natural person who has had individual income of more than Two
Hundred Thousand US Dollars (US $200,000.00) in each of the most recent two
years, or joint income with my spouse in excess of Three Hundred Thousand
US Dollars (US $300,000.00) in each of the most recent two years and
reasonably expect to reach that same income level for the current year
("income" for purposes hereof should be computed as follows: individual
adjusted gross income as reported, or to be reported, on a federal income
tax return, increased by (i) any deduction of long-term capital gains under
section 1202 of the Internal Code of 1936 (the "Code"), (ii) any deduction
or depletion under Section 611 et. seq. of the Code, (iii) any exclusion
for interest under Section 103 of the Code and (iv) any losses of a
partnership as reported in Schedule E of Form 1040;
[ ] The Subscriber is a natural person whose individual net worth (i.e.
total assets in excess of total liabilities), or joint net worth with my
spouse, will at the time of purchase of the Common Shares be in excess of
One Million US Dollars (US $1,000,000.00);
[ ] The Subscriber is an investor satisfying the requirements of Section
501(a)(1)(2) or (3) of Regulation D promulgated under the Securities Act of
1933, which includes, but is not limited to, a self-directed employee
benefit plan where investment decisions are made solely by persons who are
"accredited investors" as otherwise defined in Regulation D;
[ ] The Subscriber is a trust, which trust has total assets in excess of
Five Million US Dollars (US $5,000,000.00) which was not formed for the
specific purpose of acquiring the Common Shares offered hereby and whose
purchase is directed by a sophisticated person as described in Rule
506(b)(ii) of Regulation D and who has such knowledge and experience in
financial and business matters that he is capable of evaluating the risks
and merits of an investment in the Common Shares;
[ ] The Subscriber is a director or executive officer of the Company;
[ ] The Subscriber is an entity (other than a trust) in which all of the
equity owners meet the requirements of at least one of the above
paragraphs; or
[ ] The Subscriber is not a resident of the United State of America, but
acknowledges he/she meets or exceeds at least one of the minimum financial
requirements set forth above.
I represent that I have reviewed the Company's information as filed with
the US Securities and Exchange Commission, and that I understand the merits
and the risks involved in this offering, that I have sufficient knowledge
and experience in similar programs or investments to evaluate the merits
and risks of an investment in the Company (or that I have retained an
attorney, accountant, financial advisor or consultant as my purchaser
representative); that because of my background, employment experience,
family or financial situation or economic bargaining power,
1
I have received and have had access to material and relevant information
enabling me to make an informed investment decision, and that all
information I have requested has been furnished to me; and that I am able
to bear the economic risk of loss of the entire investment which I may make
in the Company.
By,_______________________________________
PRINT NAME
________________________________________
Investor Signature
With a current address of__________________________________________________
In the City of____________________________, State/Province of ____________,
Country of_______________
DATE:_____, December, 2004
IN WITNESS WHEREOF, I have hereunto witnessed the signature of the
above Investor;
By,___________________________________________
______________________________________________
Witness Signature
Date:___________________
2
- --------------------------------------------------------------------------------
APPLIED DNA SCIENCES, INC. SUBSCRIPTION AGREEMENT
- --------------------------------------------------------------------------------
1. Subscription. Subject to the terms and conditions hereof,
__________________ __________________________, the undersigned Investor
("Investor") hereby subscribes to purchase _____ units of the Private
Placement offering by Applied DNA Sciences Inc., dated December 30, 2004.
to which the terms and conditions of the offer are:
Applied DNA Sciences, Inc., a Nevada corporation (the "Company"), is
offering up to One Hundred and twenty (120 units (the "Units") for sale to
accredited investors at a price of US Dollars Fifty Thousand US
($50,000.00) per Unit (the "Offering") on a "best efforts" no minimum, with
a maximum offering basis of Six Million US Dollars (US $6,000,000.00). Each
Unit consists of (i) a US Dollars Fifty Thousand US ($50,000.00) Principal
Amount Ten Percent (10.0%) Secured Convertible Promissory Note ("Note" or
"Notes") and (ii) warrants to purchase One Hundred Thousand (100,000)
shares of the Company's common stock, exercisable for a period of five (5)
years at a price of US Seventy Five Cents (US $0.75) per share
("Warrants"). The warrants are callable anytime after the underlying shares
are registered if the stock trades above $1.25 per share for twenty (20)
trading days. The Notes are convertible into shares of common stock of the
Company at a price of US Fifty Cents (US $0.50) per share, and shall
automatically convert on the filing of the registration statement indicated
below.
2. Private Placement. The parties acknowledge that this offering has
been made and this Subscription Agreement has been entered into as a
private placement negotiated between the parties dated December 30, 2004.
3. Registration Rights. By accepting this subscription, and as set
forth in greater detail in the Registration Rights Agreement, the Company
hereby agrees to include any shares purchased in its next registration
statement filed with the Securities and Exchange Commission under the
Securities Act of 1933, as amended and which registration statement the
Company commits to file on Form S-1, SB2 or other required form on or
before February 15th, 2005. The Company will pay liquidated damages in the
amount of Three and a Half Percent (3.5%) per month for each month or part
thereof that the registration statement is delayed beyond February 15th,
2005 and said penalty will also take effect if the company does not have
the Registration statement declared effective within 120 days of February
15, 2005.
4. Knowledge of Financial and Business Status of Company. Investor
acknowledges that he has been involved with the Company for a period of
time, has met in person or telephonically with management immediately prior
to this investment, and has reviewed the current financial condition of the
Company and its business plan. Investor is aware that the Company and the
Company's subsidiary requires net capital and the Company, as a whole,
needs operating capital without which it may become insolvent.
5. Representations and Warranties. In consideration of the sale of
such common shares, intending to be legally bound and intending the Company
to rely thereupon, Investor hereby represents, warrants, and covenants, to
the Company as follows:
Neither the Company nor any person acting on behalf of the Company has
offered to sell, offered for sale or sold the Units, Notes, Warrants or
Underlying Common Stock (collectively, the "Securities") by means of
general solicitation or general advertising. Investor has not received,
paid or given, directly or indirectly, any commission or remuneration for
or because of any sale or the solicitation of any sale of the Securities.
3
Company represents and warrants that the Common Shares being issued herein
are restricted under SEC Rule 144, and Investor is aware of restricted sale
provisions that make up Rule 144.
Investor has been offered full access to all underlying documents in
connection with this transaction as well as such other information as
Investor has deemed necessary or appropriate for a prudent and
knowledgeable investor to evaluate the purchase of the Common Shares.
Investor acknowledges that the Company has made available to Investor the
opportunity to obtain additional information from, to ask questions of, and
receive satisfactory answers from the officers of the Company concerning
the terms and conditions of the private placement and to verify the
information given. Investor is satisfied that there is no material
information concerning the condition, properties, operations and prospects
of the Company of which Investor is unaware. In making his or her
investment decision, Investor has relied solely upon his or her independent
investigation of the investment.
Investor is aware that an investment in the Securities is a highly
speculative investment that involves a substantial degree of risk. Investor
warrants that he/she has such sufficient requisite knowledge and experience
in business and financial matters that Investor is capable of evaluating
the merits and risks of an investment in the Company, which is an early
stage business. Investor understands that the Company is relying on
Investor's representations for the purposes of confirming Investor's
suitability as an investor in the Company.
Investor is aware that the Securities have not been registered under the
Securities Act of 1933 (the "Act"), and that Investor must therefore bear
the economic risk of the investment indefinitely because the Securities
cannot be sold unless subsequently registered under the Act or under an
available exemption from registration. Investor agrees not to sell his
Common Shares without registration under the Act and applicable state
securities laws unless in a transaction exempt therefrom.
The Units for which Investor hereby subscribes are being acquired for
investment purposes, solely for Investor's own account and not on behalf of
other persons, and not with a view to or for the resale, distribution,
subdivision, or fractionalization thereof; Investor has no present plans to
enter into any contract, undertaking, agreement, or arrangement for any
such resale, distribution, subdivision, or fractionalization thereof.
Investor agrees that he or she will not sell, assign, pledge, give,
transfer or otherwise dispose of any or all of the Common Shares or any
interest therein unless and until Investor has complied with all applicable
provisions of federal and state securities laws.
Investor has reviewed his or her financial condition and commitments. Based
upon such review, Investor is satisfied that he or she has adequate means
of providing for his or her financial needs and possible contingencies as
well as those of any dependents, and that he or she does not have any
current or foreseeable future need for liquidity of the funds being
utilized in the purchase of the Common Shares. Investor is capable of
bearing the economic risk of the investment in the Common Shares for the
indefinite future. At this time, Investor has assets or sources of income
that, if taken together, are more than sufficient so that Investor could
bear the risk of loss of its, his or her entire investment in the Common
Shares.
4
Investor is aware that this transaction is a "private placement" and has
not been reviewed by the United States Securities and Exchange Commission
or by any state securities authorities. No agency, federal or state, has
passed upon the fairness or merits of this investment.
Investor is aware that the assets of the Company are presently encumbered
by the Bridge Note investors and that up to US Dollars One Million Six
Hundred Thousand (US $1,600,000.00) of this investment may be allocated to
pay back the Bridge Note holders. On December 10th 2004 the Company signed
a letter agreement with Vertical Capital Partners to act on a non-exclusive
basis as a Placement Agent for all or part of this Placement. Further, the
Investor acknowledges as does the Company that a pre-existing relationship
exists between the parties that dates back prior to the engagement of
Vertical. As part of the Agreement, Vertical has committed to use its best
efforts to raise Two Million US Dollars (US $2,000,000.00) of the Six
Million US Dollars (US $6,000,000.00) contemplated in this Subscription
Agreement. Vertical has also committed to use its best efforts to cause its
Bridge Note Holders to convert on or about December 31st, 2004, thereby
removing the need to repay the Bridge Note holders referred to herein.
Neither this Subscription Agreement nor Investor's rights hereunder, may be
assigned, sold or transferred in any manner and this Subscription Agreement
may not be altered, amended or revoked without the prior written consent of
the President of the Company.
Investor is a bona fide resident as set forth next to Investor's signature,
such location is Investor's principal residence, and Investor is at least
18 years of age.
Investor understands and agrees that if Investor's subscription is
accepted, Investor will be required to execute such additional documents as
may be necessary to effect the issuance of the Company's Common Shares
which Investor has purchased.
The foregoing representations, warranties and covenants are true and
accurate as of the date hereof and shall be true and accurate as of the
date of completion of the Private Placement. If such representations and
warranties shall not be true and accurate in any respect prior to
completion of the Private Placement, Investor shall give written notice of
such fact to the Company, specifying which representations and warranties
are not true and accurate and the reasons therefore.
6. Escrow Account. Funds should be sent by wire transfer to the
following escrow account: Bank: Bank of New York, Mt. Freedom New Jersey
Name: Escrow Account Applied DNA Sciences Inc. Account # 2 Routing number:
021000018 Account Number: 6175822540
7. Miscellaneous.
This Subscription Agreement constitutes the entire agreement between the
parties with respect to the subject matter hereof and supersedes all prior
negotiations and understandings which are deemed to have been merged
herein. No representations were made or relied upon by either party, other
than those expressly set forth herein. The investor has been provided with
a copy of the Private Placement Memorandum outlining the business of the
Company along with the terms of the offering.
5
This writing shall be amended only by a further writing. No agent,
employee, or other representative of any party is empowered to alter any of
the terms hereof, including specifically this Paragraph, unless done in
writing and signed by both parties.
Whenever required by the context hereof: the masculine gender shall be
deemed to include the feminine and neuter; and the singular member shall be
deemed to include the plural. Time is expressly declared to be of the
essence of this Agreement. This Agreement shall be deemed to have been
mutually prepared by all parties and shall not be construed against any
particular party as the draftsman. The invalidity of any one or more of the
words, phrases, sentences, clauses, sections or subsections contained in
this Agreement shall not affect the enforceability of the remaining
portions of this Agreement or any part hereof, all of which are inserted
conditionally on their being valid in law, and, in the event that any one
or more of the words, phrases, sentences, clauses, sections or subsections
contained in this Agreement shall be declared invalid by a court of
competent jurisdiction, this Agreement shall be construed as if such
invalid word or words, phrase or phrases, sentence or sentences, clause or
clauses, section or sections, or subsection or subsections had not been
inserted.
The validity, interpretation, and performance of this Agreement shall be
controlled by and construed under the laws of the State of Nevada. Venue
and jurisdiction of any controversy or claim arising out of, or relating to
this Subscription Agreement, or the breach thereof, that cannot be resolved
by negotiation, shall be in the County of Las Vegas, State of Nevada. In
any legal action or other proceeding involving, arising out of or in any
way relating to this Agreement, the prevailing party shall be entitled to
recover reasonable attorneys' fees, costs, and expenses of litigation.
The failure of any party to object to, or to take affirmative action with
respect to, any conduct of any other party which is in violation of the
terms of this Agreement shall not be construed as a waiver of such
violation or breach, or of any future breach, violation, or wrongful
conduct. No delay or failure by any party to exercise any right under this
Agreement, and no partial or single exercise of that right, shall
constitute a waiver or exhaustion of that or any other right, unless
otherwise expressly provided herein.
Headings in this Subscription Agreement are for convenience only and shall
not be used to interpret or construe its provisions.
This Subscription 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. The provisions of this Subscription
Agreement shall be binding upon and inure to the benefit of each of the
parties and their respective successors and assigns.
8. Company Contact Details.
Applied DNA Sciences, 9229 West Sunset Boulevard, Suite #830, Los Angeles,
CA 90069
Facsimile: 818-860-1303
Tel: 310-860-1362
President: Peter Brocklesby, ext 123 or
COO & Secretary: Ms. Karin Klemm, ext 124
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
6
IN WITNESS WHEREOF, the undersigned has executed and delivered this
Subscription Agreement dated this day of December, in the year 2004.
By, _______________________________________
PRINT NAME:
__________________________
(Signature of INVESTOR)
With a current address of _________________________________________________
In the City of_________________________, State/Province of _______________,
Country of_______________
ACCEPTED: APPLIED DNA SCIENCES, INC.
By, __________________ Title:____________________________
Signature of Officer
________________________
Name:
DATE,__________ __, December, 200__
7
- --------------------------------------------------------------------------------
Securities Issuance Instructions
- --------------------------------------------------------------------------------
THE UNDERSIGNED, AS A CONDITION TO PURCHASE ________ UNITS (THE
"SECURITIES") OF APPLIED DNA SCIENCES, INC., A NEVADA CORPORATION (THE
"COMPANY"), HEREBY CERTIFIES TO THE COMPANY AS FOLLOWS:
1. I, __________________________ (Purchaser Name) am purchasing the Units
(the "Securities") on this ________day of ____________, in the year 20____,
in my own name and for my own account (or for a trust account if I am a
trustee), and no other person has any interest in or right with respect to
the Securities, nor have I agreed to give any person any such interest or
right in the future.
2. I am acquiring the Securities for investment and not with a view to or
for sale in connection with any distribution of the Securities. I recognize
that the Securities have not been registered under the Federal Securities
Act of 1933, that any disposition of the Securities is subject to
restrictions imposed by federal and state law and that the certificates
representing the Securities will bear a restrictive legend. I also
recognize that I cannot dispose of the Securities absent registration and
qualification, or an available exemption from registration and
qualification. I understand that the availability of an exemption in the
future will depend in part on circumstances outside my control and that I
may be required to hold the Securities for a substantial period. I
understand that the United States Securities and Exchange Commission has
made no finding or determination relating to the fairness for investment of
the Securities offered by the Company and that the Commission has not and
will not recommend or endorse the Securities.
3. I have not seen or received any advertisement or general solicitation
with respect to the sale of the Securities.
4. I believe, by reason of my business or financial experience that I am
capable of evaluating the merits and risks of this investment and of
protecting my own interests in connection with this investment.
5. I acknowledge that during the course of this transaction and prior to
purchasing the Securities I have been provided with financial and other
written information about the Company, I have been given the opportunity by
the Company to obtain such information and ask such questions concerning
the Company, the Securities, and my investment as I felt necessary, and to
the extent I availed myself of such opportunity, I received satisfactory
information and answers. If I requested any additional information, which
the Company possessed or could acquire without unreasonable effort or
expense and which was necessary to verify the accuracy of the financial and
other written information furnished to me by the Company, that additional
information was provided to me. In reaching the decision to invest in the
Securities, I have carefully evaluated my financial resources and
investment position and the risks associated with this investment, and I
acknowledge that I am able to bear the economic risks of this investment. I
further acknowledge that my financial condition is such that I am not under
any present necessity or constraint to dispose of the Securities to satisfy
any existent or contemplated debt or undertaking.
8
Please PRINT below the exact information regarding the Purchaser:
INDIVIDUAL
___________________________________________________________________________
Individual Name(s)
___________________________________________________________________________
Citizenship
___________________________________________________________________________
Street Address, City, State/Province/Country and Postal Code
___________________________________________________________________________
Signature (All record holders should sign)
Telephone Number: ______________ Fax Number:__________________________
E-Mail Address: ___________________________________________________________
I wish to receive news announcements and information about the company
YES ____ NO ______ (check one)
If yes to the above, Applied DNA, Inc. may contact me via:
Fax: _____e-mail ____Telephone ___ (check one or more)
CORPORATION, PARTNERSHIP, TRUST, OR OTHER ENTITY
___________________________________________________________________________
Name of Entity
Name, Address(es), and Country of Citizenship of each of the beneficial
Owners of the Entity:
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
Address(es) to Which Correspondence should be Directed
___________________________________________________________________________
___________________________________________________________________________
Type of Entity (i.e., corporation, partnership etc)
___________________________________________________________________________
State/Province/ Country of Formation of Entity
By:____________________________________ Printed Name:______________________
Its:____________________________________
Title: _________________________________
Telephone Number: ____________________Fax Number:__________________________
E-Mail Address: ___________________________________________________________
I wish to receive news announcements and information about the company
YES ____ NO ______ (check one)
If yes to the above, Applied DNA, Inc. may contact me via:
Fax: _____e-mail ____ Telephone ______(check one or more)
If Securities are being subscribed for by an entity, the Certificate of
Signatory below must be completed.
CERTIFICATE OF SIGNATORY
To be completed if Securities are being subscribed for by an entity.
I,________________________________, am the ________________________________
of_________________________________________________________(the "Entity ").
I certify that I am empowered and duly authorized by the Entity to execute
and carry out the terms of the Subscription Agreement and Securities
Issuance Instructions to purchase and hold the Securities, and certify that
the Subscription Agreement and Securities Issuance Instructions have been
duly and validly executed on behalf of the Entity and constitute legal and
binding obligations of the Entity.
IN WITNESS WHEREOF, I have hereto set my hand this ____day of______, 20___.
__________________________________
Signature