SPECTRUMDNA,INC. SUBSCRIPTIONAGREEMENT

 

 

The undersigned (hereinafter “Subscriber”) hereby confirms his/her/its subscription for the purchase of Units (the “Units”) of SpectrumDNA, Inc., a Delaware corporation (the “Company”), with each Unit consisting of one million (1,000,000) shares of Common Stock, par value $.001 per share (the “Common Stock”), of the Company, and one million (1,000,000) Common Stock Purchase Warrants (individually, the “Warrant”, and collectively, the “Warrants”). Each Warrant will entitle the holder thereof to purchase at any time from the final closing of the Private Placement (as hereinafter defined) through five (5) years thereafter one share of Common Stock at a price of twenty five cents ($0.25) per share. (The Units, Common Stock, Warrants and Common Stock underlying the Warrants are sometimes herein collectively referred to as the “Securities”).

In connection with this subscription, the Subscriber and the Company agree as follows:

1. Sale and Purchase of Securities.

(a)           The Company hereby agrees to sell to the Subscriber and the Subscriber hereby agrees to purchase from the Company the number of Units of the Company set forth on the signature page hereof. The Subscriber has hereby delivered and paid concurrently herewith the purchase price (the “Purchase Price”) set forth on the signature page hereof required to purchase the Units subscribed for hereunder which amount has been paid in U.S. Dollars by wire transfer or check, subject to collection.

(b)           The Subscriber understands and acknowledges that this subscription is part of a proposed placement (the “Private Placement”) by the Company of up to twenty (20) Units at a purchase price of one hundred thousand dollars ($100,000) per Unit, subject to an over-allotment of up to an additional five (5) Units, with each Unit consisting of one million (1,000,000) shares of Common Stock and one million (1,000,000) Common Stock Purchase Warrants, which offering is being made on a “best efforts minimum/maximum” basis, meaning fifteen (15) Units ($1,500,000) must be sold, and that upon acceptance of subscriptions totaling at least fifteen (15) Units a closing will occur and the funds net of expenses will be immediately available to the Company.  Thereafter, additional closings may occur until the maximum number of Units is fully subscribed for during the offering period or until the offering is terminated.  The Subscriber understands that until payment for at least fifteen (15) Units ($1,500,000) has been received, all moneys paid by investors for the Units will be promptly deposited in a non-interest bearing escrow account.  If fifteen (15) Units are not sold and paid for within ninety (90) days from the date of the Private Placement Memorandum (the “Private Placement Memorandum”) delivered with this Subscription Agreement, which period may be extended for an additional thirty (30) days by mutual consent of the Company and the Placement Agent, all funds received from investors will be promptly returned to investors in full, without interest thereon or deduction therefrom.  During the period of escrow, investors will have no right to demand return of any amounts paid for the Units.

2.           Representations and Warranties of Subscriber. The Subscriber represents and warrants to the Company as follows:

(a)           The Subscriber is an “accredited investor” as defined by Rule 501 under the Securities Act of 1933, as amended (the “Act”), and the Subscriber is capable of evaluating the merits and risks of the Subscriber’s investment in the Company and has the capacity to protect the Subscriber’s own interests.

(b)           The Subscriber understands that the Securities to be purchased have not been, and will not be, registered under the Act or the securities laws of any state by reason of a specific exemption from the registration provisions of the Act and the applicable state securities laws, the availability of which depends upon, among other things, the bona fide nature of the investment intent and the accuracy of the Subscriber’s representations as expressed herein.

 

 

(c)           Subscriber acknowledges and understands that the Securities are being purchased for investment purposes and not with a view to distribution or resale, nor with the intention of selling, transferring or otherwise disposing of all or any part of the Securities for any particular price, or at any particular time, or upon the happening of any particular event or circumstances, except selling, transferring, or disposing the Securities made in full compliance with all applicable provisions of the Act, the rules and regulations promulgated by the Securities and Exchange Commission (“SEC”) thereunder, and applicable state securities laws; and that the Securities are not liquid investments. The Company has no obligation or intention to register the Securities for resale at this time, nor has the Company made any representations, warranties, or covenants regarding the registration of the Securities or compliance with Regulation A or some other exemption under the Act.

(d)           The Subscriber acknowledges that the Securities must be held indefinitely unless subsequently registered under the Act or unless an exemption from such registration is available. The Subscriber is aware of the provisions of Rule 144 promulgated under the Act which permit investors who have satisfied a certain holding period to resell under certain conditions such securities or a portion of such securities purchased in a private placement. The Subscriber acknowledges that the Subscriber is not relying on the Company in any way to satisfy the conditions precedent for resale of securities pursuant to Rule 144 under the Act.

(e)           The Subscriber acknowledges that the Subscriber has had the opportunity to ask questions of, and receive answers from the Company or any person acting on its behalf concerning the Company and its business and to obtain any additional information, to the extent possessed by the Company (or to the extent it could have been required by the Company without unreasonable effort or expense) necessary to verify the accuracy of the information received by the Subscriber. In connection therewith, the Subscriber acknowledges that the Subscriber has had the opportunity to discuss the Company’s business, management and financial affairs with the Company’s management or any person acting on its behalf. The Subscriber has received and reviewed the Private Placement Memorandum, and all the information, both written and oral, that it desires. Without limiting the generality of the foregoing, the Subscriber has been furnished with or has had the opportunity to acquire, and to review, (i) copies of the Company’s most recent Annual Report on Form 10-K filed with the SEC and any Form 10-Q and Form 8-K filed thereafter, and other publicly available documents, and (ii) all information, both written and oral, that it desires with respect to the Company’s business, management, financial affairs and prospects. In determining whether to make this investment, the Subscriber has relied solely on the Subscriber’s own knowledge and understanding of the Company and its business based upon the Subscriber’s own due diligence investigations and the information furnished pursuant to this paragraph. The Subscriber understands that no person has been authorized to give any information or to make any representations which were not furnished pursuant to this paragraph and the Subscriber has not relied on any other representations or information.

(f)           The Subscriber has all requisite legal and other power and authority to execute and deliver this Subscription Agreement and to carry out and perform the Subscriber’s obligations under the terms of this Subscription Agreement. This Subscription Agreement constitutes a valid and legally binding obligation of the Subscriber, enforceable in accordance with its terms, and subject to laws of general application relating to bankruptcy, insolvency and the relief of debtors and rules of law governing specific performance, injunctive relief or other general principals of equity, whether such enforcement is considered in a proceeding in equity or law.

(g)           The Subscriber has not, and will not, incur, directly or indirectly, as a result of any action taken by the Subscriber, any liability for brokerage or finders’ fees or agents’ commissions or any similar charges in connection with this Subscription Agreement.

 

 

(h)           To the extent the Subscriber deems necessary, the Subscriber has reviewed with the Subscriber’s own tax advisors the federal, state, local and foreign tax consequences of this investment and the transactions contemplated by this Agreement. The Subscriber relies solely on such advisors and not on any statements or representations of the Company or any of its agents. The Subscriber understands that the Subscriber (and not the Company) shall be responsible for the Subscriber’s own tax liability that may arise as a result of this investment or the transactions contemplated by this Subscription Agreement.

(i)           This Subscription Agreement does not contain any untrue statement of a material fact concerning the Subscriber.

(j)           There are no actions, suits, proceedings or investigations pending against the Subscriber or the Subscriber’s properties before any court or governmental agency (nor, to the Subscriber’s knowledge, is there any threat thereof) which would impair in any way the Subscriber’s ability to enter into and fully perform the Subscriber’s commitments and obligations under this Agreement or the transactions contemplated hereby.

(k)           The execution, delivery and performance of and compliance with this Subscription Agreement, and the issuance of the Securities will not result in any material violation of, or conflict with, or constitute a material default under, any of Subscriber’s articles  of incorporation or bylaws, if applicable, or any of the Subscriber’s material agreements nor result in the creation of any mortgage, pledge, lien, encumbrance or charge against any of the assets or properties of the Subscriber or the Securities.

(l)           Subscriber acknowledges that the Securities are speculative and involve a high degree of risk and that the Subscriber can bear the economic risk of the purchase of the Securities, including a total loss of his/her/its investment. Subscriber acknowledges that he/she/it has carefully reviewed and considered the risk factors discussed in the Private Placement Memorandum under the caption “Risk Factors”, as well as the risks and uncertainties described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2008 in Part I, Item 1A “Risk Factors”.

(m)            The Subscriber recognizes that no federal, state or foreign agency has recommended or endorsed the purchase of the Securities.

(n)           Subscriber is aware that the Securities are and will be, when issued, “restricted securities” as that term is defined in Rule 144 of the general rules and regulations under the Act.

(o)            Subscriber understands that any and all certificates representing the Securities and any and all securities issued in replacement thereof or in exchange therefore shall bear the following legend, or one substantially similar thereto, which Subscriber has read and understands:

“The securities represented by this certificate have not been registered under the Securities Act of 1933. The securities have been acquired for investment and may not be sold, transferred or assigned in the absence of an effective registration statement for these securities under the Securities Act of 1933 or an opinion of the Company’s counsel that registration is not required under said Act.”

(p)           In addition, the certificates representing the Securities, and any and all securities issued in replacement thereof or in exchange therefore, shall bear such legend as may be required by the securities laws of the jurisdiction in which the Subscriber resides.

(q)           Because of the restrictions imposed on resale, Subscriber understands that the Company shall have the right to note stop-transfer instructions in its stock transfer records, and Subscriber has been informed of the Company’s intention to do so. Any sales, transfers, or any other dispositions of the Securities by Subscriber, if any, will be in compliance with the Act.

 

 

(r)           Subscriber acknowledges that Subscriber has such knowledge and experience in financial and business matters that he/she/it is capable of evaluating the merits and risks of an investment in the Securities and of making an informed investment decision.

(s)           Subscriber represents that (i) Subscriber is able to bear the economic risks of an investment in the Securities and to afford the complete loss of the investment; and (ii) (a) Subscriber could be reasonably assumed to have the capacity to protect his/her/its own interests in connection with this subscription; or (b) Subscriber has a pre-existing personal or business relationship with either the Company or an affiliate thereof of such duration and nature as would enable a reasonably prudent purchaser to be aware of the character, business acumen and general business and financial circumstances of the Company or such affiliate and is otherwise personally qualified to evaluate and assess the risks, nature and other aspects of this subscription.

(t)           Subscriber further represents that the address set forth below is his/her principal residence (or, if the Subscriber is a corporation, partnership or other entity, the address of its principal place of business); that Subscriber is purchasing the Securities for Subscriber’s own account and not, in whole or in part, for the account of any other person; Subscriber is purchasing the Securities for investment and not with a view to public resale or distribution; and that Subscriber has not formed any entity for the purpose of purchasing the Securities.

(u)           Subscriber understands that the Company and the Placement Agent shall have the unconditional right to accept or reject this subscription, in whole or in part, for any reason or without a specific reason (even after receipt and clearance of Subscriber’s funds). This Subscription Agreement is not binding upon the Company until accepted by an authorized officer of the Company (the “Acceptance Date”). In the event that the subscription is rejected, then Subscriber’s subscription funds will be returned without interest thereon or deduction therefrom.

(v)           The Subscriber represents that Subscriber has not received any general solicitation or general advertising regarding the purchase of the Securities.

(w)           The Subscriber represents that he/she/it has accurately completed the Purchaser Questionnaire.

(x)           The Subscriber represents and warrants that Subscriber has: (i) not distributed or reproduced the Private Placement Memorandum, in whole or in part, at any time, without the prior written consent of the Company and the Placement Agent, and (ii) kept confidential the existence of the Private Placement Memorandum and the information contained therein or made available in connection with any further investigation of the Company.

3.           Representations and Warranties of the Company. The Company represents and warrants to the Subscriber as follows:

(a)           The Company has been duly organized and is validly existing as a corporation in good standing under the laws of the State of Delaware.

(b)           The Company has all such corporate power and authority to enter into, deliver and perform this Subscription Agreement.

(c)           At or prior to the Acceptance Date, all necessary corporate action will have been duly and validly taken by the Company to authorize the execution, delivery and performance of this Subscription Agreement by the Company, and the issuance and sale of the Securities to be sold by the Company pursuant to this Subscription Agreement, and this Agreement shall have been duly and validly authorized, executed and delivered by the Company and shall constitute the legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except as the enforceability thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors’ rights generally and by general equitable principles.

 

 

4.            Indemnification.

The Subscriber agrees to indemnify and hold harmless the Company, its officers, directors, employees, shareholders and affiliates, and any person acting on behalf of the Company, from and against any and all damage, loss, liability, cost and expense (including reasonable attorneys’ fees) which any of them may incur by reason of the failure by the Subscriber to fulfill any of the terms and conditions of this Subscription Agreement, or by reason of any breach of the representations and warranties made by the Subscriber herein, or in any other document provided by the Subscriber to the Company. All representations, warranties and covenants of each of the Subscriber and the Company contained herein shall survive the acceptance of this subscription.

5.           Miscellaneous.

(a) The Subscriber agrees not to transfer or assign this Subscription Agreement, or any of the Subscriber’s interest herein, and further agrees that the transfer or assignment of the Securities acquired pursuant hereto shall be made only in accordance with all applicable laws.

(b) The Subscriber agrees that the Subscriber cannot cancel, terminate, or revoke this Subscription Agreement or any agreement of the Subscriber made hereunder, and this Subscription Agreement shall survive the death or legal disability of the Subscriber and shall be binding upon the Subscriber’s heirs, executors, administrators, successors, and permitted assigns.

(c) The Subscriber has read and has accurately completed this entire Subscription Agreement.

(d) This Subscription Agreement constitutes the entire agreement among the parties hereto with respect to the subject matter hereof and may be amended only by a written execution by all parties.

(e) This Subscription Agreement shall be enforced, governed and construed in all respects in accordance with the laws of the State of Delaware.

(f) Subscriber acknowledges that it has been advised to consult with his/her/its own attorney regarding this subscription and Subscriber has done so to the extent that Subscriber deems appropriate.

(g) This Subscription Agreement may be executed simultaneously in counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same instrument.

 

 

IN WITNESS WHEREOF, the Subscriber has caused this Subscription Agreement to be executed as of the date indicated below.

 

 

* * * * * * * *

 

 

IN WITNESS WHEREOF, the Company has caused this Subscription Agreement to be executed, and the foregoing subscription accepted, as of the date indicated below.