Exhibit 10.1

 

Subscription Agreement

 

THE NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR THE
SECURITIES LAWS OF ANY STATE OR ANY OTHER JURISDICTION. THERE ARE FURTHER
RESTRICTIONS ON THE TRANSFERABILITY OF THE NOTE DESCRIBED HEREIN.  THE PURCHASE
OF THE NOTE INVOLVES A HIGH DEGREE OF RISK AND SHOULD BE CONSIDERED ONLY BY
PERSONS WHO CAN BEAR THE RISK OF THE LOSS OF THEIR ENTIRE INVESTMENT.

 

Drone Aviation Holding Corp.

11651 Central Parkway #118

Jacksonville, FL 32224

 

Ladies and Gentlemen:

 

The undersigned understands that Drone Aviation Holding Corp., a Nevada
corporation (the “Company”), is offering Convertible Promissory Notes Series
2016 due October 1, 2017 (the “Notes”) in a private placement and that the
Company is seeking to sell Notes in the aggregate original principal amount of
$5,000,000 for a minimum investment of $100,000, unless otherwise determined by
the Company in its sole discretion.

 

The undersigned acknowledges that the offering is made pursuant to a Summary of
Terms, dated September 22, 2016, and the form of Note attached thereto
(collectively, the “Offering Documents”), and that subscriptions shall be
accepted or rejected by the Company in its sole and absolute discretion in light
of the requirements of Section 4(a)(2) of the Securities Act of 1933, as amended
(the “Securities Act”), and Rule 506 of Regulation D under the Securities Act.
The undersigned further understands that the offering is being made without
registering the Note under the Securities Act or any securities law of any state
of the United States or of any other jurisdiction, and is being made only to
“accredited investors” (as defined in Rule 501 of Regulation D under the
Securities Act).

 

1.          Subscription. Subject to the terms and conditions of this
Subscription Agreement (this “Subscription Agreement”), on the date of the
Closing described in Section 3 hereof, the undersigned shall purchase from the
Company, and the Company shall sell and issue to the undersigned, a Note in an
original principal amount equal to the “Accepted Subscription Amount” set forth
on the undersigned’s signature page to this Subscription Agreement (the
“Subscription Amount”).

 

2.          Acceptance of Subscription and Issuance of Note. It is understood
and agreed that the Company shall have the sole right, in its complete
discretion, to accept or reject this subscription, in whole or in part, for any
reason and that this subscription shall be deemed to be accepted by the Company
only when it is countersigned by a duly authorized officer of the Company and
delivered to the undersigned at the Closing referred to in Section 3 hereof.
Subscriptions need not be accepted in the order received, and Notes may be
allocated among subscribers in the sole and absolute discretion of the Company.
Notwithstanding anything in this Subscription Agreement to the contrary, the
Company shall have no obligation to issue any of the Notes to any person who is
a resident of, or any entity that is incorporated or formed in, a jurisdiction
in which the issuance of a Note to such person or entity would constitute a
violation of the securities, “blue sky,” or other similar laws of such
jurisdiction (collectively, the “State Securities Laws”).

 

 

 

 

3.          The Closing. The closing of the purchase and sale of the Notes (the
“Closing”) shall take place at the offices of Holland & Knight LLP, 50 North
Laura Street, Suite 3900, Jacksonville, Florida 32202, at 11:00 a.m. (Eastern)
on September 27, 2016, or at such other time and place as the Company may
designate by notice to the undersigned.

 

4.          Payment for Notes. The Subscription Amount for the Note to be
purchased by the undersigned shall be received by the Company from the
undersigned by certified or bank check payable to the order of “Drone Aviation
Holding Corp.” or wire transfer of immediately available funds in accordance
with the wire instructions set forth in the instructions attached to this
Subscription Agreement. The Company shall deliver the Note to the undersigned at
the Closing.

 

5.          Representations and Warranties of the Company. As of the Closing,
the Company represents and warrants to the undersigned that:

 

(a)           The Company is duly formed and validly existing under the laws of
Nevada, with full power and authority to conduct its business as it is currently
being conducted and to own its assets. The Company has the corporate power and
authority to operate its business as it is currently being conducted and to own,
lease, and operate its properties, and is duly qualified and is in good standing
as a foreign corporation authorized to do business in each jurisdiction in which
the nature of its business or its ownership or leasing of property requires such
qualification, except where the failure to be so qualified would not have a
material adverse effect on the Company.

 

(b)          All corporate action on the part of the Company, its officers,
directors, and shareholders necessary for the authorization, execution, and
delivery of this Subscription Agreement and the Note, the performance of all
obligations of the Company hereunder and thereunder, and the authorization,
issuance, and delivery of the Note and shares of common stock, par value $0.0001
per share, of the Company (“Common Stock”) issuable upon conversion of the Note
has been taken or will be taken prior to Closing, and this Subscription
Agreement and the Note, when executed and delivered by the Company, shall
constitute valid and legally binding obligations of the Company, enforceable
against the Company in accordance with their respective terms, except (i) as
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance, and other laws of general application affecting
enforcement of creditors’ rights generally, or (ii) as limited by laws relating
to the availability of specific performance, injunctive relief, or other
equitable remedies.

 

6.          Representations, Warranties and Covenants of the Undersigned. The
undersigned hereby represents and warrants to and covenants with the Company
that:

 

(a)         General. 

 

(i)        The undersigned has all requisite authority (and, in the case of an
individual, the capacity) to purchase the Note, enter into this Subscription
Agreement, and to perform all of the obligations required to be performed by the
undersigned hereunder, and such purchase will not contravene any law, rule, or
regulation binding on the undersigned or any investment guideline or restriction
applicable to the undersigned. All representations and warranties of the
undersigned herein regarding the Note apply equally to the shares of Common
Stock issuable upon conversion of the Note.

 

2

 

 

(ii)       If the undersigned is an individual, the undersigned: (A) is not
acquiring the Note as a nominee or agent or otherwise for any other person; (B)
is at least 21 years of age; (C) has adequate means of providing for the
undersigned’s current needs and personal contingencies; (D) has no need for
liquidity in the undersigned’s investment in the Note; (E) maintains the
undersigned’s principal residence at the address set forth on Appendix A hereto;
(F) confirms that all investments in and commitments to non-liquid investments
are, and after the purchase of the Note will be, reasonable in relation to the
undersigned’s net worth and current needs; and (G) confirms that any financial
information that is provided prior to, contemporaneous with, or after the
execution and delivery of this Subscription Agreement and the undersigned’s
investment in the Note accurately reflect the undersigned’s financial condition.

 

(iii)      The undersigned will comply with all applicable laws and regulations
in effect in any jurisdiction in which the undersigned purchases or sells the
Note and obtain any consent, approval, or permission required for such purchase
or sale under the laws and regulations of any jurisdiction to which the
undersigned is subject or in which the undersigned makes such purchase or sale,
and the Company shall have no responsibility therefor.

 

(b)          Information Concerning the Company. 

 

(i)        The undersigned has received and reviewed a copy of the Offering
Documents and understands the terms and conditions thereof. The undersigned is
familiar with and has reviewed the Company’s annual, quarterly, and current
reports and other filings with the United States Securities and Exchange
Commission (“SEC”), including, but not limited to, the Company’s Annual Report
on Form 10-K for the fiscal year ended December 31, 2015, the Company’s
Quarterly Reports on Form 10-Q for the fiscal quarters ended March 31, 2016, and
June 30, 2016, and all Current Reports on Form 8-K filed by the Company in 2016
(collectively, the “SEC Filings”). The undersigned has not been furnished any
offering materials other than the Offering Documents and has relied only on the
information contained therein and in the SEC Filings.

 

(ii)       The undersigned understands that no public market now exists for the
Note, and that the Company has made no assurances that a public market will ever
exist for the Note. The undersigned has no contract, undertaking, agreement, or
arrangement to sell or otherwise transfer or dispose of the Note or any portion
thereof or interest therein.

 

(iii)      The undersigned understands and accepts that the purchase of the Note
involves various risks, including, but not limited to, the risks outlined in the
Offering Documents and in this Subscription Agreement and the Company’s “Risk
Factors” outlined in its SEC Filings. The undersigned represents that it is able
to bear any loss associated with an investment in the Note.

 

3

 

 

(iv)      The undersigned confirms that it is not relying on any communication
(written or oral) of the Company or any of its officers, directors,
shareholders, or affiliates as investment or tax advice or as a recommendation
to purchase the Note. It is understood that information and explanations related
to the terms and conditions of the Note provided in the Offering Documents or
otherwise by the Company or any of its officers, directors, shareholders, or
affiliates shall not be considered investment or tax advice or a recommendation
to purchase the Note, and that neither the Company nor any of its officers,
directors, shareholders, or affiliates is acting or has acted as an advisor to
the undersigned in deciding to invest in the Note. The undersigned acknowledges
that neither the Company nor any of its officers, directors, shareholders, or
affiliates has made any representation regarding the proper characterization of
the Note for purposes of determining the undersigned’s authority to invest in
the Note.

 

(v)       The undersigned is familiar with the business and financial condition
and operations of the Company, all as generally described in the Offering
Documents and SEC Filings. The undersigned has had access to such information
concerning the Company (including, but not limited to, the SEC Filings) as the
undersigned deems necessary to enable the undersigned to make an informed
investment decision concerning the purchase of the Note.

 

(vi)      The undersigned understands that, unless the undersigned notifies the
Company in writing to the contrary at or before the Closing, each of the
undersigned’s representations and warranties contained in this Subscription
Agreement will be deemed to have been reaffirmed and confirmed as of the
Closing.

 

(vii)     The undersigned acknowledges that the Company has the right in its
sole and absolute discretion to abandon this private placement at any time prior
to the completion of the offering. This Subscription Agreement shall thereafter
have no force or effect and the Company shall return the previously paid
Subscription Amount for the Note, without interest thereon, to the undersigned.

 

(viii)    The undersigned understands that no federal or state agency has passed
upon the merits or risks of an investment in the Note or made any finding or
determination concerning the fairness or advisability of an investment in the
Note.

 

(c)           Non-Reliance. 

 

(i)        The undersigned represents that it is not relying on (and will not at
any time rely on) any communication (written or oral) of the Company, as
investment advice or as a recommendation to purchase the Note, it being
understood that information and explanations related to the terms and conditions
of the Note and the other transaction documents that are described in the
Offering Documents shall not be considered investment advice or a recommendation
to purchase the Note. The undersigned acknowledges, accepts, and agrees that, if
the undersigned’s subscription for the Note is accepted by the Company, the
undersigned shall become legally bound by the terms and conditions of the Note.

 

(ii)       The undersigned confirms that neither the Company nor any of its
officers, directors, shareholders, or affiliates has: (A) given any guarantee or
representation as to the potential success, return, effect, or benefit (either
legal, regulatory, tax, financial, accounting, or otherwise) of an investment in
the Note; or (B) made any representation to the undersigned regarding the
legality of an investment in the Note under applicable legal investment or
similar laws or regulations. In deciding to purchase the Note, the undersigned
is not relying on the advice or recommendations of the Company or any officer,
director, shareholder, or affiliate of the Company, and the undersigned has made
its own independent decision that the investment in the Note is suitable and
appropriate for the undersigned.

 

4

 

 

(d)          Status of Undersigned. 

 

(i)        The undersigned has such knowledge, skill, and experience in
business, financial, and investment matters that the undersigned is capable of
evaluating the merits and risks of an investment in the Note. With the
assistance of the undersigned’s own professional advisors, to the extent that
the undersigned has deemed appropriate, the undersigned has made its own legal,
tax, accounting, and financial evaluation of the merits and risks of an
investment in the Note and the consequences of this Subscription Agreement. The
undersigned has considered the suitability of the Note as an investment in light
of its own circumstances and financial condition and the undersigned is able to
bear the risks associated with an investment in the Note and its authority to
invest in the Note. The undersigned understands that the payment on the Note at
maturity or earlier redemption may be less, and perhaps significantly less, than
the principal amount of the Note.

 

(ii)       The undersigned is an “accredited investor,” as defined in Rule
501(a) under the Securities Act. The undersigned agrees to furnish any
additional information requested by the Company or any of its affiliates to
assure compliance with applicable U.S. federal and state securities laws in
connection with the purchase and sale of the Note. The undersigned has completed
the Confidential Purchaser Questionnaire contained in Appendix A and the
information contained therein is complete and accurate as of the date thereof
and is hereby affirmed as of the date hereof. Any information that has been
furnished or that will be furnished by the undersigned to evidence its status as
an accredited investor is accurate and complete, and does not contain any
misrepresentation or material omission.

 

(e)           Restrictions on Transfer or Sale of the Note. 

 

(i)        The undersigned is acquiring the Note solely for the undersigned’s
own beneficial account, for investment purposes, and not with a view to, or for
resale in connection with, any distribution of the Note. The undersigned
understands that the Note has not been registered under the Securities Act or
any State Securities Laws by reason of specific exemptions under the provisions
thereof, which depend in part upon the investment intent of the undersigned and
of the other representations made by the undersigned in this Subscription
Agreement. The undersigned understands that the Company is relying upon the
representations and agreements contained in this Subscription Agreement (and any
supplemental information) for the purpose of determining whether this
transaction meets the requirements for such exemptions.

 

5

 

 

(ii)       The undersigned understands that the Notes are “restricted
securities” under applicable federal securities laws and that the Securities Act
and the rules of the SEC provide in substance that the undersigned may dispose
of the Note only pursuant to an effective registration statement under the
Securities Act or an exemption therefrom. The undersigned understands that the
Company has no obligation or intention to register any of the Notes or to take
action so as to permit sales pursuant to the Securities Act (including Rule 144
thereunder). Accordingly, the undersigned understands that under the SEC’s
rules, the undersigned may dispose of the Note primarily only in “private
placements” that are exempt from registration under the Securities Act, in which
event the transferee will acquire “restricted securities” subject to the same
limitations as in the hands of the undersigned. Consequently, the undersigned
understands that the undersigned must bear the economic risks of the investment
in the Note for an indefinite period of time.

 

(iii)      The undersigned agrees: (A) that the undersigned will not sell,
assign, pledge, give, transfer, or otherwise dispose of the Note or any interest
therein, or make any offer or attempt to do any of the foregoing, except
pursuant to a registration of the Note under the Securities Act and all
applicable State Securities Laws, or in a transaction that is exempt from the
registration provisions of the Securities Act and all applicable State
Securities Laws; (B) that the Note will bear a legend making reference to the
foregoing restrictions; and (C) that the Company and its affiliates shall not be
required to give effect to any purported transfer of the Note except upon
compliance with the foregoing restrictions. While the undersigned is the holder
of the Note, the undersigned will not sell shares of Common Stock short, buy
“puts” to sell Common Stock, or buy or sell any security that is substantially
equivalent to a short position in the Common Stock.

 

(iv)      The undersigned acknowledges that neither the Company nor any other
person or entity offered to sell the Note to the undersigned by means of any
form of general solicitation or advertising, including, but not limited to: (A)
any advertisement, article, notice, or other communication published in any
newspaper, magazine, or similar media or broadcast over television or radio; or
(B) any seminar or meeting whose attendees were invited by any general
solicitation or general advertising.

 

(v)       The undersigned (A) is not, and for so long as the undersigned holds
the Note will not, be (I) an employee benefit plan or other plan subject to
Section 406 of the U.S. Employee Retirement Income Security Act of 1974, as
amended (“ERISA”) or Section 4975 of the Internal Revenue Code of 1986, as
amended (the “Code”), or any entity or other person whose assets constitute (or
are deemed for purposes of ERISA or the Code to constitute) the assets of any
such plan or (II) another employee benefit plan subject to U.S. federal, state
or local laws, or non U.S. laws, which are substantially similar to Section 406
of ERISA or Section 4975 of the Code unless the undersigned’s purchase and
holding of the Note would not violate such substantially similar laws; or (B) is
not, and for so long as the undersigned holds the Note will not, be subject to
ERISA and, with respect to the undersigned’s purchase and holding of the Note,
is eligible for coverage under one or more statutory or administrative
exemptions from the prohibited transaction rules of ERISA and the Internal
Revenue Code.

 

(vi)      Either (A) the undersigned is not and, for so long as the undersigned
holds the Note, will not be, an employee benefit plan or other plan subject to
Section 406 of ERISA or Section 4975 of the Code, another employee benefit plan
subject to U.S. federal, state or local laws, or non-U.S. laws, which are
substantially similar to Section 406 of ERISA or Section 4975 of the Code, or
any entity or other person whose assets constitute (or are deemed for purposes
of ERISA or the Code to constitute) the assets of any such plan; or (B) the
undersigned’s purchase and holding of the Note will not constitute or result in
a non-exempt prohibited transaction under Section 406 of ERISA or Section 4975
of the Code, or a non-exempt violation of any such substantially similar laws.

 

6

 

 

7.          Conditions to Obligations of the Undersigned and the Company. The
obligations of the undersigned to purchase and pay the Subscription Amount and
of the Company to sell the Note are subject to the representations and
warranties of the Company contained in Section 5 hereof and of the undersigned
contained in Section 6 hereof being true and correct as of the Closing in all
respects with the same effect as though such representations and warranties had
been made as of the Closing.

 

8.          Obligations Irrevocable. The obligations of the undersigned
hereunder shall be irrevocable.

 

9.          Legend. The Note sold pursuant to this Subscription Agreement will
be imprinted with a legend in substantially the following form:

 

“THIS CONVERTIBLE PROMISSORY NOTE AND THE SHARES OF COMMON STOCK ISSUABLE
HEREUNDER HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT FOR DISTRIBUTION, AND HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. NEITHER THE
CONVERTIBLE PROMISSORY NOTE NOR THE SHARES OF COMMON STOCK MAY BE SOLD, PLEDGED
OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH
ACT OR PURSUANT TO AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO DRONE
AVIATION HOLDING CORP. AND ITS COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED.
THIS CONVERTIBLE PROMISSORY NOTE MUST BE SURRENDERED TO DRONE AVIATION HOLDING
CORP. OR ITS REGISTRAR DESCRIBED HEREIN AS A CONDITION PRECEDENT TO THE SALE OR
OTHER TRANSFER.”

 

10.        Waiver, Amendment. Neither this Subscription Agreement nor any
provisions hereof shall be modified, changed, discharged, or terminated except
by an instrument in writing and signed by the Company and the undersigned.

 

11.        Assignability. Neither this Subscription Agreement nor any right,
remedy, obligation, or liability arising hereunder or by reason hereof shall be
assignable by either the Company or the undersigned without the prior written
consent of the other party.

 

12.        Waiver of Jury Trial. THE UNDERSIGNED IRREVOCABLY WAIVES ANY AND ALL
RIGHTS TO TRIAL BY JURY WITH RESPECT TO ANY LEGAL PROCEEDING ARISING OUT OF THE
TRANSACTIONS CONTEMPLATED BY THIS SUBSCRIPTION AGREEMENT. EACH PARTY TO THIS
SUBSCRIPTION AGREEMENT CERTIFIES AND ACKNOWLEDGES THAT: (A) NO REPRESENTATIVE OF
ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY
WOULD NOT SEEK TO ENFORCE THE FOREGOING WAIVER IN THE EVENT OF A LEGAL ACTION;
(B) SUCH PARTY HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER; (C) SUCH PARTY
MAKES THIS WAIVER VOLUNTARILY; AND (D) SUCH PARTY HAS BEEN INDUCED TO ENTER INTO
THIS SUBSCRIPTION AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION.

 

7

 

 

13.        Submission to Jurisdiction; Dispute Resolution. With respect to any
suit, action, or proceeding relating to any offer, purchase, or sale of the Note
by the undersigned (“Proceedings”), the undersigned irrevocably submits to the
jurisdiction of the federal or state courts located in Duval County, Florida,
which submission shall be exclusive unless none of such courts has lawful
jurisdiction over such Proceedings. The undersigned acknowledges and agrees that
any dispute concerning the offering described in the Offering Documents, this
Subscription Agreement, or the Note, including the issue of whether the dispute
is subject to arbitration, will be resolved by arbitration in Duval County,
Florida, under the Commercial Arbitration Rules of the American Arbitration
Association (“AAA”) by a single arbitrator selected by the Company from the
AAA’s panel of arbitrators.

 

14.        Applicable Law. This Subscription Agreement shall be governed by and
construed in accordance with the laws of the State of Florida.

 

15.        Section and Other Headings. The section and other headings contained
in this Subscription Agreement are for reference purposes only and shall not
affect the meaning or interpretation of this Subscription Agreement.

 

16.        Notices. All notices and other communications provided for herein
shall be in writing and shall be deemed to have been duly given if delivered
personally or sent by registered or certified mail, return receipt requested,
postage prepaid: (a) if to the undersigned, to the address set forth on Appendix
A or at such other address as the undersigned shall have specified by notice in
writing to the Company; and (b) if to the Company, to Drone Aviation Holding
Corp., 11651 Central Parkway #118, Jacksonville, Florida 32224, Attn: Kendall
Carpenter, CFO, with a copy (which shall not constitute notice) also delivered
to Holland & Knight LLP, 50 North Laura Street, Suite 3900, Jacksonville,
Florida 32224, Attn: Ivan Colao and Edward S. Sarnowski.

 

17.        Binding Effect. The provisions of this Subscription Agreement shall
be binding upon and accrue to the benefit of the parties hereto and their
respective heirs, legal representatives, successors, and permitted assigns.

 

18.        Survival. All representations, warranties, and covenants contained in
this Subscription Agreement shall survive: (a) the acceptance of the
subscription by the Company and the Closing; (b) changes in the transactions,
documents, and instruments described in the Offering Documents that are not
material or that are to the benefit of the undersigned; and (c) the death or
disability of the undersigned.

 

8

 

 

19.        Notification of Changes. The undersigned shall notify the Company
upon the occurrence of any event prior to the Closing of the purchase of the
Note pursuant to this Subscription Agreement that would cause any
representation, warranty, or covenant of the undersigned contained in this
Subscription Agreement to be false or incorrect.

 

20.        Severability. If any term or provision of this Agreement is invalid,
illegal, or unenforceable in any jurisdiction, such invalidity, illegality, or
unenforceability shall not affect any other term or provision of this Agreement
or invalidate or render unenforceable such term or provision in any other
jurisdiction.

 

21.        Counterparts. This Subscription Agreement may be executed in
counterparts, each of which will be deemed an original, but all of which
together will be deemed to be one and the same agreement. Counterparts may be
delivered via fax, e-mail (including as a .pdf or with any electronic signature
complying with the U.S. federal ESIGN Act of 2000) or other transmission method,
and any counterpart so delivered will be deemed to have been duly and validly
delivered and be valid and effective for all purposes.

 

22.        Undertaking for Costs. The Company and the undersigned, by purchasing
the Note, agree that any court or arbitrator, as the case may be, may in its
discretion require, in any suit for the enforcement of any right or remedy under
this Subscription Agreement or the Note, of any party litigant in such suit an
undertaking to pay the costs of such suit, and that such court or arbitrator may
in its discretion assess reasonable costs, including reasonable attorneys’ fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant.

 

[Remainder of Page Left Blank – Signatures Follow]

 

 

 

 

IN WITNESS WHEREOF, the undersigned has executed this Subscription Agreement as
of the date set forth below.

 

Subscription Amount:
$                                                               

 

INVESTOR (if an individual):

 

By:                                                                             

 

Name:                                                                        

 

Date:                                                                          

 

State of Residence:                                                 

 

 

INVESTOR (if an entity):

 

                                                                                      

Legal Name of Entity

 

By:
                                                                               

Name:                                                                           

Title:
                                                                            

Date:
                                                                            

 

State of Incorporation/Formation:                           

 

Drone Aviation Holding Corp., a Nevada corporation, hereby accepts a
subscription for a Note in the original principal amount of the “Accepted
Subscription Amount” set forth below or, if the Accepted Subscription Amount
below is left blank, for the “Subscription Amount” set forth above by the
Investor.

 

Accepted Subscription Amount:
$                                                               

 

 

COMPANY:

      DRONE AVIATION HOLDING CORP., a Nevada corporation     Date:  September
      , 2016 By:  /s/ Kendall Carpenter     Name: Kendall Carpenter
Title: EVP and CFO     Date:                             , 2016

  

Signature Page to Subscription Agreement 

 

 

 

 

APPENDIX A

 

Confidential Purchaser Questionnaire

 

Drone Aviation Holding Corp.

11651 Central Parkway #118

Jacksonville, FL 32224

 

Re:Confidential Purchaser Questionnaire (this “Questionnaire”) for Private
Offering of Convertible Promissory Notes Series 2016 by Drone Aviation Holding
Corp., a Nevada corporation

 

Ladies and Gentlemen:

 

The information contained herein is furnished to you so that you may determine
whether the undersigned’s Subscription Agreement to purchase a Convertible
Promissory Note Series 2016 (the “Notes”) issued by Drone Aviation Holding
Corp., a Nevada corporation (the “Company”), may be accepted by you in light of
the requirements of Section 4(a)(2) of the Securities Act of 1933, as amended
(the “Securities Act”), and Rule 506 of Regulation D under the Securities Act,
and an exemption contained in the securities laws of certain states.

 

The undersigned prospective investor (the “Investor”) understands that the
information in this Appendix A is needed in order to satisfy various suitability
requirements, including the requirement that the Company must have reasonable
grounds to believe that the Investor is an “accredited investor,” as defined in
Rule 501 of Regulation D (which, in the case of a corporation, limited liability
company, or partnership that the Investor formed for the purpose of investing in
the Note requires each shareholder, member, or partner thereof to be an
accredited investor), and that the Investor has knowledge and experience in
financial and business affairs such that the Investor is capable of evaluating
the merits and risks of the proposed investment.

 

The Investor understands that (a) the Company will rely on the information
contained herein for purposes of such determination, (b) the Note distributed in
connection therewith will not be registered under the Securities Act in reliance
upon the exemption from registration afforded by Section 4(a)(2) of the
Securities Act and Rule 506 of Regulation D promulgated thereunder, (c) the Note
will not be registered under the securities laws of any state in reliance upon a
similar exemption, and (d) this Questionnaire is not an offer of the Note or any
other securities.

 

The Investor understands that, although this Questionnaire and the responses
provided herein will be kept confidential, the Company or its legal counsel may
need to present it to such parties as the Company deems advisable in order to
establish the applicability under any federal or state securities laws of an
exemption from registration.

 

A-1

 

 

In accordance with the foregoing, the following representations and information
are hereby made and furnished:

 

(Please answer all questions. If the answer to any question is “None” or “Not
Applicable,” please so state. Each shareholder, member, or partner of an
investing corporation, limited liability, or partnership formed for the purpose
of investing in the Note must submit a completed Questionnaire.)

 

1.             General Information.

 

Name of Prospective Investor:
                                                                                                             

 

State of Domicile:
                                                                                                                                   

 

Maximum Amount of Potential Investment: $
                                                                                    

 

Type of Prospective Investor. The undersigned is:

          ☐         An individual

          ☐         A corporation

          ☐         A partnership or limited liability company

          ☐         A trust

          ☐         Other

 

Address. The address of the undersigned
is:                                                                                      

                                                                                                                                   
                                

                                                                                                                                   
                                

 

Contact Information. The contact information of the undersigned is:

 

Address:
                                                                                                                         

                                                                                                                                   
     

                                                                                                                                   
     

Telephone:
                                                                                                                     

Email:
                                                                                                                               

Facsimile:
                                                                                                                        

Contact Person (if the undersigned is an entity):
                                                    

 

Tax I.D. Number. The social security number or federal tax identification number
(i.e., employer identification number) of the undersigned is:
                                                                

 

Entities. If the undersigned is an entity:

 

Nature of business:                       
                                                                                  

 

Date of inception of business:
                                                                                     

 

Was the undersigned formed for the specific purpose of acquiring the Note?

 

                                                            ☐          Yes             ☐          No

 

A-2

 

               

2.            Representations as to Accredited Investor Status. The undersigned
has read the definition of “accredited investor” from Rule 501 of Regulation D,
as set forth in Exhibit A, and certifies that either (check one):

 

☐  The undersigned is an “accredited investor” for one or more of the following
reasons:

 

☐          (a)         the undersigned is an individual (not a partnership,
corporation, etc.) whose individual net worth (excess of total assets at fair
market value, including homes (but excluding the value of the primary residence
of such individual), automobiles, and personal property, over total liabilities
(but excluding the amount of indebtedness secured by the individual’s primary
residence up to its fair market value, and including the amount of any such
indebtedness in excess of such fair market value)), or joint net worth with his
or her spouse, presently exceeds $1,000,000;

 

☐          (b)         the undersigned is an individual (not a partnership,
corporation, etc.) who had an income in excess of $200,000 in each of the two
most recent years, or joint income with his or her spouse in excess of $300,000
in each of those years (in each case including foreign income, tax exempt income
and full amount of capital gains and losses but excluding any income of other
family members and any unrealized capital appreciation) and has a reasonable
expectation of reaching the same income level in the current year;

 

☐          (c)         the undersigned is a director or executive officer (e.g.,
President or any vice president in charge of a principal business unit, division
or function such as sales, administration or finance) of the Company;

 

☐          (d)        The undersigned is a corporation, partnership,
Massachusetts business trust, or non-profit organization within the meaning of
Section 501(c)(3) of the Internal Revenue Code, in each case not formed for the
specific purpose of acquiring the Notes and with total assets in excess of
$5,000,000;

 

                                             ______________________________________________

                                             ______________________________________________

                                             (describe entity)

 

☐          (e)         the undersigned is a trust with total assets in excess of
$5,000,000, not formed for the specific purpose of acquiring the Notes, whose
purchase would be directed by a “sophisticated person” as described in Rule
506(b)(2)(ii);

 

☐          (f)          the undersigned is a revocable trust which may be
amended or revoked by the grantors, and all of the grantors satisfy the
conditions of clauses (a), (b) or (c) above and have completed copies of this
Questionnaire, which copies are delivered to the Company herewith;

 

A-3

 

 

☐          (g)         the undersigned is an entity, all the equity owners of
which are “accredited investors” within one or more of the above categories. If
relying upon this category alone, each equity owner must complete a separate
copy of this Questionnaire;

 

                                             ______________________________________________

                                             ______________________________________________

                                             (describe entity)

 

☐  The undersigned is not an “accredited investor.”

                                        

           By signing below, the undersigned hereby acknowledges that the
representations set forth in this Questionnaire are accurate and complete in all
respects, and undertakes to immediately notify the Company in writing regarding
any material change in the information set forth herein prior to the date and
time that the undersigned purchases any Notes. The undersigned understands that
the Company and its legal counsel, Holland & Knight LLP, will rely on the
accuracy and completeness of these representations for the purpose of
determining my suitability as a prospective investor under applicable securities
laws, and that a false representation may constitute a violation of law and that
any person who suffers damage as a result of a false representation may have a
claim against me for damages.

 

INVESTOR (if an individual):

 

By:                                                                             

 

Name:                                                                        

 

Date:                                                                          

 

INVESTOR (if an entity):

 

                                                                                      

Legal Name of Entity

 

By:
                                                                               

Name:                                                                           

Title:
                                                                            

Date:
                                                                            

  

A-4

 

 

Exhibit A

 

Rule 501.          Definitions and Terms Used in Regulation D.

 

As used in Regulation D, the following terms have the meaning indicated:

 

(a)       Accredited Investor. “Accredited investor” shall mean any person who
comes within any of the following categories, or who the issuer reasonably
believes comes within any of the following categories, at the time of the sale
of the securities to that person:

 

(1)       Any bank as defined in section 3(a)(2) of the Act or any savings and
loan association or other institution as defined in Section 3(a)(5)(A) of the
Act whether acting in its individual or fiduciary capacity; any broker dealer
registered pursuant to Section 15 of the Securities Exchange Act of 1934;
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 that Act; Small Business Investment
Company licensed by the U.S. Small Business 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 the Employee Retirement Income Security Act of
1974, if the investment decision is 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 if the employee benefit
plan has total assets in excess of $5,000,000; or, if a self-directed plan, with
investment decisions made solely by persons that are accredited investors;

 

(2)       Any private business development company as defined in Section
202(a)(22) of the Investment Advisers Act of 1940;

 

(3)       Any organization described in Section 501(c)(3) of the Internal
Revenue Code, corporation, Massachusetts or similar business trust, or
partnership, not formed for the specific purpose of acquiring the securities
offered, with total assets in excess of $5,000,000;

 

(4)       Any director, executive officer, or general partner of the issuer of
the securities being offered or sold, or any director, executive officer, or
general partner of a general partner of that issuer;

 

(5)       Any natural person whose individual net worth, or joint net worth with
that person’s spouse, at the time of his purchase exceeds $1,000,000;

 

(6)       Any natural person who had an individual income in excess of $200,000
in each of the two most recent years or joint income with that person’s spouse
in excess of $300,000 in each of those years and has a reasonable expectation of
reaching the same income level in the current year;

 

(7)       Any trust with total assets in excess of $5,000,000, not formed for
the specific purpose of acquiring the securities offered, whose purchase is
directed by a sophisticated person as described in Rule 506(b)(2)(ii); and

 

(8)       Any entity in which all of the equity owners are accredited investors.

 

 

[Remainder of Page Left Blank]

 

 

 

 

SUBSCRIPTION INSTRUCTIONS

 

Enclosed herewith are the documents necessary to subscribe for a Convertible
Promissory Note Series 2016 (the “Notes”) of Drone Aviation Holding Corp., a
Nevada corporation (the “Company”). The Notes are being offered to “accredited
investors” pursuant to the Summary of Terms, dated September 22, 2016, and the
form of Convertible Promissory Note Series 2016 attached thereto (collectively,
the “Offering Documents”). Set forth below are instructions for the execution of
the enclosed documents.

 

A. Instructions. 

 

Each person considering subscribing for a Note should review the following
instructions:

 

●Subscription Agreement: Two (2) originals of the Subscription Agreement and
Appendix A attached to the Subscription Agreement must be completed, signed, and
delivered to the Company at the address set forth below. Before delivering your
original, signed Subscription Agreements to the Company at the address below,
please also e-mail a copy of your completed, signed Subscription Agreement (and
Appendix A attached to the Subscription Agreement) to Kendall Carpenter
(kcarpenter@droneaviationcorp.com), Ivan Colao (Ivan.Colao@hklaw.com), and
Edward S. Sarnowski (Edward.Sarnowski@hklaw.com).

 

If your subscription is accepted, the Company will execute both originals of
your Subscription Agreement and return one original to you for your records.

 

●Payment: Payment of the “Accepted Subscription Amount” set forth on the
signature page of your completed, signed Subscription Agreement shall be made by
delivery on or before the date of Closing (as defined in Section 3 of the
Subscription Agreement) of a certified or bank check payable to the order of
“Drone Aviation Holding Corp.” or wire transfer of immediately available funds
in accordance with the wire instructions set forth below:

 

Account Name:   Drone Aviation Holding Corp Wire Account Account Number: Routing
Number: Bank: Bank Address:

  

●Acceptance or Rejection of Subscription: The Company shall have the right to
accept or reject any subscription, in whole or in part. An acknowledgment of the
Company’s acceptance of your subscription for the Note subscribed for will be
returned to you promptly after acceptance.

 

B. Communications.

 

All documents and checks should be forwarded to Drone Aviation Holding Corp.,
11651 Central Parkway #118, Jacksonville, FL 32224, Attn: Kendall Carpenter.