-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PQJ+KqCbEwzLkwpnB71KK6uyX4hgGdkS5SFisSOy2VHCNSkgoa5ZI5m9D24PZ3yW oESkrkvNeUYmJWkhJLhQAw== 0001013762-05-000879.txt : 20050721 0001013762-05-000879.hdr.sgml : 20050721 20050721170122 ACCESSION NUMBER: 0001013762-05-000879 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 20050715 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Termination of a Material Definitive Agreement ITEM INFORMATION: Completion of Acquisition or Disposition of Assets ITEM INFORMATION: Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant ITEM INFORMATION: Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review ITEM INFORMATION: Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20050721 DATE AS OF CHANGE: 20050721 FILER: COMPANY DATA: COMPANY CONFORMED NAME: APPLIED DNA SCIENCES INC CENTRAL INDEX KEY: 0000744452 STANDARD INDUSTRIAL CLASSIFICATION: BIOLOGICAL PRODUCTS (NO DIAGNOSTIC SUBSTANCES) [2836] IRS NUMBER: 592262718 STATE OF INCORPORATION: NV FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 002-90539 FILM NUMBER: 05966841 BUSINESS ADDRESS: STREET 1: 9229 WEST SUNSET BOULEVARD, SUITE 830 CITY: LOS ANGELES STATE: CA ZIP: 90069 BUSINESS PHONE: 3108601362 MAIL ADDRESS: STREET 1: 9229 WEST SUNSET BLVD, SUITE 830 CITY: LOS ANGELES STATE: CA ZIP: 90069 FORMER COMPANY: FORMER CONFORMED NAME: PROHEALTH MEDICAL TECHNOLOGIES INC DATE OF NAME CHANGE: 20010504 FORMER COMPANY: FORMER CONFORMED NAME: DCC ACQUISITION CORP DATE OF NAME CHANGE: 19990211 FORMER COMPANY: FORMER CONFORMED NAME: DATALINK CAPITAL CORP/TX/ DATE OF NAME CHANGE: 19980306 8-K 1 july2120058k.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): July 15, 2005 Applied DNA Sciences, Inc. (Exact name of registrant as specified in its charter) Nevada 002-90539 59-2262718 - -------------------------------------------------------------------------------- (State or other jurisdiction (Commission File Number) (IRS Employer of incorporation) Identification No.) 9229 Sunset Boulevard, Suite 83, Los Angeles, CA 90069 (Address of principal executive offices and Zip Code) Registrant's telephone number, including area code (310) 860-1362 Copies to: Andrea Cataneo, Esq. Sichenzia Ross Friedman Ference LLP 1065 Avenue of the Americas New York, New York 10018 Phone: (212) 930-9700 Fax: (212) 930-9725 Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 1.01 Entry into a Material Definitive Agreement. Item 1.02 Termination of a Material Definitive Agreement. Item 2.01 Completion of Acquisition of Assets. Item 2.03 Creation of a Direct Financial Obligation. Acquisition of Assets - --------------------- On July 15, 2005, Applied DNA Sciences, Inc. (the "Company") closed upon the stock purchase agreement (the "Agreement") with Biowell Technology Inc., a Taiwan corporation ("Biowell") that was executed on January 28, 2005. Pursuant to the Agreement, the Company, through its wholly-owned subsidiary, APDN (B.V.I.) Inc., a British Virgin Islands company, acquired all of the issued and outstanding shares of Rixflex Holdings Limited, a British Virgin Islands company ("Rixflex"). Pursuant to an asset purchase agreement, Biowell transferred all of its intellectual property (the "Biowell Technology") to Rixflex prior to the Company's acquisition of Rixflex. In exchange for all of the issued and outstanding shares of Rixflex, we issued to the shareholders of Rixflex 36 million shares of our common stock. The Biowell Technology is proprietary DNA-embedded biotechnology solutions that protect corporate and intellectual property from counterfeiting, fraud, piracy, product diversion and unauthorized intrusion. The Biowell Technology offers a cost effective method to detect, deter, interdict and prosecute global counterfeiting organizations. The Biowell Technology provides proprietary DNA-embedded biotechnology solutions to companies to protect corporate and intellectual property from counterfeiting, fraud, piracy, product diversion and unauthorized intrusion. The Biowell Technology uses synthetically created DNA fragments that have unique characteristics and one-of-a-kind sequences. Using various anti-counterfeit technologies, such as ink, microchips, glue, paints and DNA-Holograms, the Biowell Technology can authenticate the DNA fragments to ensure that the product has not been counterfeited or tampered with. In connection with the closing, we terminated the license agreement that we had entered into with Biowell in October 2002, under which we had the exclusive right to sell, market, and sub-license Biowell's technology within the United States, the European Union, Canada, Mexico, Colombia, Saudi Arabia and the United Arab Emirates. In connection with the closing, the Company entered into a license agreement with Biowell, whereby the Company granted Biowell an exclusive license to sell, market, and sub-license the Company's products in selected Asian countries. The exclusive license for such selected territories is for an initial period of until December 31, 2010, and if Biowell meets its performance goals, the license agreement will extend for an additional five year term. The license agreement gives Biowell the initial rights to future anti-fraud biotechnologies developed by the Company and also new applications for the existing technology that may be developed for the marketplace as long as the license agreement remains in effect. In the event that Biowell shall sub-license the products within its territories, Biowell shall pay the Company 50% of all fees, payments or consideration or any kind received in connection with the grant of the sublicense. Biowell is required to pay a royalty of 10% on all net sales made and is required to meet certain minimum annual net sales in its various territories. The territories and minimum net sales are as follows:
- --------------------------- --------------------------------------------------------------------------- COUNTRY MINIMUM ANNUAL NET SALES (US DOLLARS) - --------------------------- -------------- -------------- --------------- -------------- -------------- YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 - --------------------------- -------------- -------------- --------------- -------------- -------------- AUSTRALIA 200,000 250,000 500,000 750,000 1,000,000 - --------------------------- -------------- -------------- --------------- -------------- -------------- AFGHANISTAN ZERO 25,000 50,000 100,000 100,000 - --------------------------- -------------- -------------- --------------- -------------- -------------- BANGLADESH ZERO 25,000 50,000 100,000 100,000 - --------------------------- -------------- -------------- --------------- -------------- -------------- BHUTAN ZERO 25,000 50,000 100,000 100,000 - --------------------------- -------------- -------------- --------------- -------------- -------------- BRUNEI ZERO 100,000 250,000 400,000 500,000 - --------------------------- -------------- -------------- --------------- -------------- -------------- CAMBODIA ZERO 100,000 250,000 400,000 500,000 - --------------------------- -------------- -------------- --------------- -------------- -------------- CHINA 1,000,000 2,000,000 4,000,000 6,000,000 8,000,000 - --------------------------- -------------- -------------- --------------- -------------- -------------- INDIA 500,000 1,000,000 2,000,000 3,000,000 4,000,000 - --------------------------- -------------- -------------- --------------- -------------- -------------- INDONESIA 500,000 1,000,000 2,000,000 3,000,000 4,000,000 - --------------------------- -------------- -------------- --------------- -------------- -------------- JAPAN 500,000 1,000,000 2,000,000 3,000,000 4,000,000 - --------------------------- -------------- -------------- --------------- -------------- -------------- KOREA 250,000 500,000 1,000,000 2,000,000 4,000,000 - --------------------------- -------------- -------------- --------------- -------------- -------------- LAOS ZERO 100,000 250,000 400,000 500,000 - --------------------------- -------------- -------------- --------------- -------------- -------------- MALAYSIA ZERO 250,000 500,000 1,000,000 2,000,000 - --------------------------- -------------- -------------- --------------- -------------- -------------- MYANMAR ZERO 25,000 50,000 100,000 100,000 - --------------------------- -------------- -------------- --------------- -------------- -------------- PAKISTAN ZERO 100,000 250,000 400,000 500,000 - --------------------------- -------------- -------------- --------------- -------------- -------------- PHILIPPINES 100,000 250,000 500,000 750,000 1,000,000 - --------------------------- -------------- -------------- --------------- -------------- -------------- SINGAPORE ZERO 100,000 250,000 400,000 500,000 - --------------------------- -------------- -------------- --------------- -------------- -------------- SRI LANKA ZERO 25,000 50,000 100,000 100,000 - --------------------------- -------------- -------------- --------------- -------------- -------------- TAIWAN 250,000 500,000 1,000,000 2,000,000 4,000,000 - --------------------------- -------------- -------------- --------------- -------------- -------------- THAILAND 250,000 500,000 1,000,000 2,000,000 4,000,000 - --------------------------- -------------- -------------- --------------- -------------- -------------- VIETNAM 250,000 500,000 1,000,000 2,000,000 4,000,000 - --------------------------- -------------- -------------- --------------- -------------- -------------- UAE ZERO 25,000 50,000 100,000 100,000 - --------------------------- -------------- -------------- --------------- -------------- -------------- BAHRAIN ZERO 25,000 50,000 100,000 100,000 - --------------------------- -------------- -------------- --------------- -------------- -------------- CYPRUS ZERO 25,000 50,000 100,000 100,000 - --------------------------- -------------- -------------- --------------- -------------- -------------- IRAN ZERO 25,000 50,000 100,000 100,000 - --------------------------- -------------- -------------- --------------- -------------- -------------- IRAQ ZERO 25,000 50,000 100,000 100,000 - --------------------------- -------------- -------------- --------------- -------------- -------------- JORDAN ZERO 100,000 250,000 500,000 750,000 - --------------------------- -------------- -------------- --------------- -------------- -------------- KUWAIT ZERO 100,000 250,000 500,000 750,000 - --------------------------- -------------- -------------- --------------- -------------- -------------- LEBANON ZERO 25,000 50,000 100,000 100,000 - --------------------------- -------------- -------------- --------------- -------------- -------------- OMAN ZERO 100,000 250,000 500,000 750,000 - --------------------------- -------------- -------------- --------------- -------------- -------------- QATAR ZERO 100,000 250,000 500,000 750,000 - --------------------------- -------------- -------------- --------------- -------------- -------------- SAUDI ARABIA ZERO 500,000 1,000,000 2,000,000 4,000,000 - --------------------------- -------------- -------------- --------------- -------------- -------------- SYRIA ZERO 100,000 250,000 500,000 750,000 - --------------------------- -------------- -------------- --------------- -------------- -------------- YEMEN ZERO 100,000 250,000 500,000 750,000 - --------------------------- -------------- -------------- --------------- -------------- -------------- TOTAL 3,800,000 9,625,000 19,800,000 33,600,000 52,100,000 - --------------------------- -------------- -------------- --------------- -------------- --------------
In addition, we entered into a consulting agreement with Timpix International Limited for the consulting services of three former Biowell employees, Jun-Jei Sheu, Ben Liang and Johnson Chen. The consulting agreement is for the shorter of two years, or until all of the consultants have obtained a visa to work in the United States and execute employment agreements with the Company. Such consulting agreement shall automatically renew for one year periods until terminated. Pursuant to the consulting agreement, the Company shall pay $47,000 per month, which is apportioned at $20,000 per month for Mr. Sheu, $15,000 per month for Mr. Liang and $12,000 per month for Mr. Chen. In the event that either of Messrs. Sheu, Liang or Chen becomes employed by the Company, the monthly consulting fee shall be reduced accordingly. Engagement of Trilogy Capital Partners, Inc. - -------------------------------------------- On June 20, 2005, the Company entered into an agreement with Trilogy Capital Partners, Inc. ("Trilogy") to provide marketing services to the Company for a term of one year, and terminable thereafter by either party upon 30 days prior written notice. In connection with the agreement, we agreed to pay Trilogy a monthly fee of $12,500. The Company also issued to Trilogy a warrant to purchase 7.5 million shares of common stock at $0.55 per share, exercisable for a period of three years from issuance. The warrant contains a "cashless" exercise provision. The shares underlying the warrants contain registration rights. The holder has contractually agreed to restrict its ability to convert or exercise the warrants and receive shares of our common stock such that the number of shares of common stock held by it after such conversion or exercise does not exceed 5% of the then issued and outstanding shares of common stock. Item 4.02 Non-Reliance on Previously Issued Financial Statements In connection with the Company's comment and response process in connection with the registration statement on Form SB-2, the Company determined there were errors in accounting for the valuation of equity consulting service transactions during the January through March 2005 time period. The valuation resulted in the overstatement of approximately $2.9 million in services provided. As a result, our financial statements included in our Quarterly Report on Form 10-QSB for the quarter ended March 31, 2005 should no longer be relied upon. The new financial statements which should be relied upon will be contained in an amended Form 10-QSB filing to be filed by the Company by the end of July 2005. Item 5.02 Departure of Directors or Principal Officers On July 15, 2005, Mr. Robin Hutchison, our Chief Executive Officer and Chairman of the Board of Directors, resigned as an officer and director of the Company. On July 15, 2005, the Board of Directors unanimously appointed Jun-Jei Sheu as a member of the Board of Directors to fill the vacancy created by the resignation of Mr. Hutchison and elected Mr. Sheu as Chairman of the Board. Dr. Jun-Jei Sheu was the founder and President of Biowell Technologies Inc. There are no arrangements or understandings between Mr. Sheu and any other persons. Item 9.01 Financial Statements and Exhibits. (a) Financial statements of business acquired. Not applicable. (b) Pro forma financial information. Pro forma financial information to be provided by amendment. (c) Exhibits. Exhibit Number Description - -------------------------------------------------------------------------------- 4.1 Warrant, dated as of June 20, 2005, issued to Trilogy Capital Partners, Inc. 10.1 Stock Purchase Amendment Agreement, dated as of July 12, 2005, by and between Applied DNA Sciences, Inc. and Biowell Technology, Inc. 10.2 License Agreement, dated as of July 12, 2005, by and between Applied DNA Sciences, Inc. and Biowell Technology, Inc. 10.3 Consulting Agreement, dated as of July 12, 2005, by and between Applied DNA Sciences, Inc. and Timpix International Limited 10.4 Letter of Engagement, dated as of June 20, 2005, by and between Applied DNA Sciences, Inc. and Trilogy Capital Partners, Inc. 99.1 Letter of Resignation from Rob Hutchison SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Applied DNA Sciences, Inc. Date: July 21, 2005 /s/ PETER BROCKELSBY -------------------- Peter Brockelsby President EX-4 2 july2120058kex41.txt Exhibit 4.1 NEITHER THESE WARRANTS NOR THE COMMON STOCK ISSUABLE UPON EXERCISE OF THESE WARRANTS HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD, PLEDGED OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER THE ACT OR UNLESS AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE. 7,500,000 Warrants June 20, 2005 APPLIED DNA SCIENCES, INC. WARRANTS Applied DNA Sciences, Inc., a Nevada corporation ("APDN"), certifies that, for value received, Trilogy Capital Partners, Inc. ("Trilogy"), or registered assigns (the "Holder"), is the owner of Seven Million Five Hundred Thousand (7,500,000) Warrants of APDN (the "Warrants"). Each Warrant entitles the Holder to purchase from APDN at any time prior to the Expiration Date (as defined below) one share of the common stock of APDN (the "Common Stock") for $0.55 per share (the "Exercise Price"), on the terms and conditions hereinafter provided. The Exercise Price and the number of shares of Common Stock purchasable upon exercise of each Warrant are subject to adjustment as provided in this Certificate. 1. Vesting; Expiration Date; Exercise 1.1 Vesting. The Warrants shall vest and become exercisable as of the date of this Certificate. 1.2 Expiration Date. The Warrants shall expire on June 19, 2008 (the "Expiration Date"). 1.3 Manner of Exercise. The Warrants are exercisable by delivery to APDN of the following (the "Exercise Documents"): (a) this Certificate (b) a written notice of election to exercise the Warrants; and (c) payment of the Exercise Price in cash, by check or by "net" exercise as contemplated by Section 1.4 of this Certificate. Within three business days following receipt of the foregoing, APDN shall execute and deliver to the Holder: (a) a certificate or certificates representing the aggregate number of shares of Common Stock purchased by the Holder, and (b) if less than all of the Warrants evidenced by this Certificate are exercised, a new certificate evidencing the Warrants not so exercised. 1.4 Net Exercise. In lieu of the payment methods set forth in Section 1.3 above, the Holder may elect to exchange all or some of the Warrant for the number of shares of Common Stock computed using the following formula: X = Y (A-B) ------- A Where X = the number of shares of Common Stock to be issued to Holder. Y = the number of shares of Common Stock purchasable under the Warrants being exchanged (as adjusted to the date of such calculation). A = the Market Price on the date of receipt by APDN of the exercise documents. B = the Exercise Price of the Warrants being exchanged (as adjusted in accordance with the terms of Section 2 hereof). The "Market Price" on any trading day shall be deemed to be the last reported sale price of the Common Stock on such day, or, in the case no such reported sales take place on such day, the last reported sale price on the preceding trading day on which there was a last reported sales price, as officially reported by the principal securities exchange in which the shares of Common Stock are listed or admitted to trading or by the Nasdaq Stock Market, or if the Common Stock is not listed or admitted to trading on any national securities exchange or the Nasdaq Stock Market, the last sale price, or if there is no last sale price, the closing bid price, as furnished by the National Association of Securities Dealers, Inc. (such as through the OTC Bulletin Board) or a similar organization or if Nasdaq is no longer reporting such information. If the Market Price cannot be determined pursuant to the sentence above, the Market Price shall be determined in good faith (using customary valuation methods) by the Board of Directors of APDN based on the information best available to it, including recent arms-length sales of Common Stock to unaffiliated persons. The Company acknowledges and agrees that for purposes of sales by the Holder of Warrant Shares under Rule 144 under the Securities Act of 1933, as amended, the holding period for Warrant Shares received in a "net exercise" commences upon the date the Warrants were issued. 1.5 Warrant Exercise Limitation. Notwithstanding any other provision of this Agreement, if as of the date of exercise APDN has a class of securities registered under Section 12 of the Securities Exchange Act of 1934, as amended, Holder may not exercise Warrants under this Section 1 to the extent that immediately following such exercise Holder would beneficially own 5% or more of the outstanding Common Stock of APDN. For this purpose, a representation of the Holder that following such exercise it would not beneficially own 5% or more of the outstanding Common Stock of APDN shall be conclusive and binding upon APDN. 2. Adjustments of Exercise Price and Number and Kind of Conversion Shares 2.1 In the event that APDN shall at any time hereafter (a) pay a dividend in Common Stock or securities convertible into Common Stock; (b) subdivide or split its outstanding Common Stock; (c) combine its outstanding Common Stock 2 into a smaller number of shares; then the number of shares to be issued immediately after the occurrence of any such event shall be adjusted so that the Holder thereafter may receive the number of shares of Common Stock it would have owned immediately following such action if it had exercised the Warrants immediately prior to such action and the Exercise Price shall be adjusted to reflect such proportionate increases or decreases in the number of shares. 2.2 In case of any reclassification of the outstanding shares of Common Stock (other than a change covered by Section 2.1 hereof or a change which solely affects the par value of such shares) or in the case of any merger or consolidation or merger in which APDN is not the continuing corporation and which results in any reclassification or capital reorganization of the outstanding shares), the Holder shall have the right thereafter (until the Expiration Date) to receive upon the exercise hereof, for the same aggregate Exercise Price payable hereunder immediately prior to such event, the kind and amount of shares of stock or other securities or property receivable upon such reclassification, capital reorganization, merger or consolidation, by a Holder of the number of shares of Common Stock obtainable upon the exercise of the Warrants immediately prior to such event; and if any reclassification also results in a change in shares covered by Section 2.1, then such adjustment shall be made pursuant to both this Section 2.2 and Section 2.1 (without duplication). The provisions of this Section 2.2 shall similarly apply to successive reclassifications, capital reorganizations and mergers or consolidations, sales or other transfers. 3. Reservation of Shares. APDN shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock, such number of shares of Common Stock as shall from time to time be issuable upon exercise of the Warrants. If at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to permit the exercise of the Warrants, APDN shall promptly seek such corporate action as may be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purpose. 4. Certificate as to Adjustments. In each case of any adjustment in the Exercise Price, or number or type of shares issuable upon exercise of these Warrants, the Chief Financial Officer of APDN shall compute such adjustment in accordance with the terms of these Warrants and prepare a certificate setting forth such adjustment and showing in detail the facts upon which such adjustment is based, including a statement of the adjusted Exercise Price. APDN shall promptly send (by facsimile and by either first class mail, postage prepaid or overnight delivery) a copy of each such certificate to the Holder. 5. Loss or Mutilation. Upon receipt of evidence reasonably satisfactory to APDN of the ownership of and the loss, theft, destruction or mutilation of this Certificate, and of indemnity reasonably satisfactory to it, and (in the case of mutilation) upon surrender and cancellation of these Warrants, APDN will execute and deliver in lieu thereof a new Certificate of like tenor as the lost, stolen, destroyed or mutilated Certificate. 6. Representations and Warranties of APDN. APDN hereby represents and warrants to Holder that: 6.1 Due Authorization. All corporate action on the part of APDN, its officers, directors and shareholders necessary for (a) the authorization, execution and delivery of, and the performance of all obligations of APDN under, these Warrants, and (b) the authorization, issuance, reservation for issuance 3 and delivery of all of the Common Stock issuable upon exercise of these Warrants, has been duly taken. These Warrants constitute a valid and binding obligation of APDN enforceable in accordance with their terms, subject, as to enforcement of remedies, to applicable bankruptcy, insolvency, moratorium, reorganization and similar laws affecting creditors' rights generally and to general equitable principles. 6.2 Organization. APDN is a corporation duly organized, validly existing and in good standing under the laws of the State referenced in the first paragraph of this Certificate and has all requisite corporate power to own, lease and operate its property and to carry on its business as now being conducted and as currently proposed to be conducted. 6.3 Valid Issuance of Stock. Any shares of Common Stock issued upon exercise of these Warrants will be duly and validly issued, fully paid and non-assessable. 6.4 Governmental Consents. All consents, approvals, orders, authorizations or registrations, qualifications, declarations or filings with any federal or state governmental authority on the part of APDN required in connection with the consummation of the transactions contemplated herein have been obtained. 7. Representations and Warranties of Trilogy. Trilogy hereby represents and warrants to APDN that: 7.1 Trilogy is acquiring the Warrants for its own account, for investment purposes only. 7.2 Trilogy understands that an investment in the Warrants involves a high degree of risk, and Trilogy has the financial ability to bear the economic risk of this investment in the Warrants, including a complete loss of such investment. Trilogy has adequate means for providing for its current financial needs and has no need for liquidity with respect to this investment. 7.3 Trilogy has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of an investment in the Warrants and in protecting its own interest in connection with this transaction. 7.4 Trilogy understands that the Warrants have not been registered under the Securities Act of 1933, as amended (the "Securities Act") or under any state securities laws. Trilogy is familiar with the provisions of the Securities Act and Rule 144 thereunder and understands that the restrictions on transfer on the Warrants may result in Trilogy being required to hold the Warrants for an indefinite period of time. 7.5 Trilogy agrees not to sell, transfer, assign, gift, create a security interest in, or otherwise dispose of, with or without consideration (collectively, "Transfer") any of the Warrants except pursuant to an effective registration statement under the Securities Act or an exemption from registration. As a further condition to any such Transfer, except in the event that such Transfer is made pursuant to an effective registration statement under the Securities Act, if in the reasonable opinion of counsel to APDN any Transfer of the Warrants by the contemplated transferee thereof would not be exempt from the registration and prospectus delivery requirements of the Securities Act, APDN may require the contemplated transferee to furnish APDN with an investment letter setting forth such information and agreements as may be reasonably 4 requested by APDN to ensure compliance by such transferee with the Securities Act. 8. Notices of Record Date In the event: 8.1 APDN shall take a record of the holders of its Common Stock (or other stock or securities at the time receivable upon the exercise of these Warrants), for the purpose of entitling them to receive any dividend or other distribution, or any right to subscribe for or purchase any shares of stock of any class or any other securities or to receive any other right; or 8.2 of any consolidation or merger of APDN with or into another corporation, any capital reorganization of APDN, any reclassification of the capital stock of APDN, or any conveyance of all or substantially all of the assets of APDN to another corporation in which holders of APDN's stock are to receive stock, securities or property of another corporation; or 8.3 of any voluntary dissolution, liquidation or winding-up of APDN; or 8.4 of any redemption or conversion of all outstanding Common Stock; then, and in each such case, APDN will mail or cause to be mailed to the Holder a notice specifying, as the case may be, (a) the date on which a record is to be taken for the purpose of such dividend, distribution or right, or (b) the date on which such reorganization, reclassification, consolidation, merger, conveyance, dissolution, liquidation, winding-up, redemption or conversion is to take place, and the time, if any is to be fixed, as of which the holders of record of Common Stock (or such stock or securities as at the time are receivable upon the exercise of these Warrants), shall be entitled to exchange their shares of Common Stock (or such other stock or securities), for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, conveyance, dissolution, liquidation or winding-up. APDN shall use all reasonable efforts to ensure such notice shall be delivered at least 15 days prior to the date therein specified. 9. Registration Rights. 9.1 Definitions. For purposes of this Section 9, the following terms shall have the meanings set forth below: 9.1.1 A "Blackout Event" means any of the following: (a) the possession by APDN of material information that is not ripe for disclosure in a registration statement or prospectus, as determined reasonably and in good faith by the Chief Executive Officer or the Board of Directors of APDN or that disclosure of such information in the Registration Statement or the prospectus constituting a part thereof would be materially detrimental to the business and affairs of APDN; or (b) any material engagement or activity by APDN which would, in the reasonable and good faith determination of the Chief Executive Officer or the Board of Directors of APDN, be materially adversely affected by disclosure in a registration statement or prospectus at such time. 9.1.2 "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended. 5 9.1.3 "Included Shares" shall mean any Registrable Shares included in a Registration. 9.1.4 "Registrable Shares" shall mean the shares of Common Stock (or such stock or securities as at the time are receivable upon the exercise of these Warrants) issuable upon exercise of the Warrants and any other warrants and or other securities issued to Trilogy in connection with performing investor relations services for APDN, and shares or securities issued as a result of stock split, stock dividend or reclassification of such shares. 9.1.5 "Registration" shall mean a registration of securities under the Securities Act pursuant to Section 9.2 or 9.3 of this Agreement. 9.1.6 "Registration Period" with respect to any Registration Statement the period commencing the effective date of the Registration Statement and ending upon withdrawal or termination of the Registration Statement. 9.1.7 "Registration Statement" shall mean the registration statement, as amended from time to time, filed with the SEC in connection with a Registration. 9.1.8 "SEC" shall mean the Securities and Exchange Commission. 9.2 Demand Registration. No later than the earlier to occur: (i) 15 days following the effectiveness of the Company's current registration statement on Form SB-2 (File No. 333-122848) and (ii) September 19, 2005, APDN shall prepare and file with the SEC a Registration Statement for the purpose of registering the sale of the Registrable Shares under the Securities Act, and shall use its commercially reasonable efforts to cause the Registration Statement to become effective within 60 days of the date of filing. Once effective, APDN shall prepare and file with the SEC such amendments and supplements to the Registration Statement and the prospectus forming a part thereof as may be necessary to keep the Registration Statement effective until the earliest date on which (a) all the Included Shares have been disposed of pursuant to the Registration Statement, or (b) all of the Included Shares then held by Holder may be sold under the provisions of Rule 144 without limitation as to volume, whether pursuant to Rule 144(k) or otherwise. 9.3 Piggyback Registration. Unless the Registrable Shares are then included in a Registration Statement or can be sold under the provisions of Rule 144 without limitation as to volume, whether pursuant to Rule 144(k) or otherwise, if APDN shall determine to register any Common Stock under the Securities Act for sale in connection with a public offering of Common Stock (other than pursuant to an employee benefit plan or a merger, acquisition or similar transaction), APDN will give written notice thereof to Holder and will include in such Registration Statement any of the Registrable Shares which Holder may request be included ("Included Shares") by a writing delivered to APDN within 15 days after the notice given by APDN to Holder; provided, however, that if the offering is to be firmly underwritten, and the representative of the underwriters of the offering refuse in writing to include in the offering all of the shares of Common Stock requested by APDN and others, the shares to be included shall be allocated first to APDN and any shareholder who initiated such Registration and then among the others based on the respective number of shares of Common Stock held by such persons. If APDN decides not to, and does not, file a Registration Statement with respect to such Registration, or after filing determines to withdraw the same before the effective date thereof, APDN will 6 promptly so inform Holder, and APDN will not be obligated to complete the registration of the Included Shares included therein. 9.4 Certain Covenants. In connection with any Registration: 9.4.1 APDN shall take all lawful action such that the Registration Statement, any amendment thereto and the prospectus forming a part thereof does not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they are made, not misleading. Upon becoming aware of the occurrence of any event or the discovery of any facts during the Registration Period that make any statement of a material fact made in the Registration Statement or the related prospectus untrue in any material respect or which material fact is omitted from the Registration Statement or related prospectus that requires the making of any changes in the Registration Statement or related prospectus so that it will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they are made, not misleading (taking into account any prior amendments or supplements), APDN shall promptly notify Holder, and, subject to the provisions of Section 9.5, as soon as reasonably practicable prepare (but, subject to Section 9.5, in no event more than five business days in the case of a supplement or seven business days in the case of a post-effective amendment) and file with the SEC a supplement or post-effective amendment to the Registration Statement or the related prospectus or file any other required document so that, as thereafter delivered to a purchaser of Shares from Holder, such prospectus will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. 9.4.2 At least three business days prior to the filing with the SEC of the Registration Statement (or any amendment thereto) or the prospectus forming a part thereof (or any supplement thereto), APDN shall provide draft copies thereof to Holder and shall consider incorporating into such documents such comments as Holder (and its counsel) may propose to be incorporated therein. Notwithstanding the foregoing, no prospectus supplement, the form of which has previously been provided to Holder, need be delivered in draft form to Holder. 9.4.3 APDN shall promptly notify Holder upon the occurrence of any of the following events in respect of the Registration Statement or the prospectus forming a part thereof: (a) the receipt of any request for additional information from the SEC or any other federal or state governmental authority, the response to which would require any amendments or supplements to the Registration Statement or related prospectus; (b) the issuance by the SEC or any other federal or state governmental authority of any stop order suspending the effectiveness of the Registration Statement or the initiation of any proceedings for that purpose; or (c) the receipt of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Shares for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose. 9.4.4 APDN shall furnish to Holder with respect to the Included Shares registered under the Registration Statement (and to each underwriter, if any, of such Shares) such number of copies of prospectuses and such other documents as Holder may reasonably request, in order to facilitate the public sale or other disposition of all or any of the Included Shares by Holder pursuant to the Registration Statement. 7 9.4.5 In connection with any registration pursuant to Section 9.2, APDN shall file or cause to be filed such documents as are required to be filed by APDN for normal Blue Sky clearance in states specified in writing by Holder; provided, however, that APDN shall not be required to qualify to do business or consent to service of process in any jurisdiction in which it is not now so qualified or has not so consented. 9.4.6 APDN shall bear and pay all expenses incurred by it and Holder (other than underwriting discounts, brokerage fees and commissions and fees and expenses of more than one law firm) in connection with the registration of the Shares pursuant to the Registration Statement. 9.4.7 APDN shall require each legal opinion and accountant's "cold comfort" letter in connection with the Registration, if any, to be rendered to Holder as well as APDN and/or its Board of Directors. 9.4.8 As a condition to including Registrable Shares in a Registration Statement, Holder must provide to APDN such information regarding itself, the Registrable Shares held by it and the intended method of distribution of such Shares as shall be required to effect the registration of the Registrable Shares and, if the offering is being underwritten, Holder must provide such powers of attorney, indemnities and other documents as may be reasonably requested by the managing underwriter. 9.4.9 Following the effectiveness of the Registration Statement, upon receipt from APDN of a notice that the Registration Statement contains an untrue statement of material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances under which they were made, Holder will immediately discontinue disposition of Included Shares pursuant to the Registration Statement until APDN notifies Holder that it may resume sales of Included Shares and, if necessary, provides to Holder copies of the supplemental or amended prospectus. 9.5 Blackout Event. APDN shall not be obligated to file a post-effective amendment or supplement to the Registration Statement or the prospectus constituting a part thereof during the continuance of a Blackout Event; provided, however, that no Blackout Event may be deemed to exist for more than 60 days. Without the express written consent of Holder, if required to permit the continued sale of Shares by Holder, a post-effective amendment or supplement to Registration Statement or the prospectus constituting a part thereof must be filed no later than the 61st day following commencement of a Blackout Event. 9.6 Rule 144. With a view to making available to Holder the benefits of Rule 144, APDN agrees, until such time as Holder can sell all remaining Registrable Shares under the provisions Rule 144(k), to: 9.6.1.1 comply with the provisions of paragraph (c)(1) of Rule 144; and 9.6.1.2 file with the SEC in a timely manner all reports and other documents required to be filed by APDN pursuant to Section 13 or 15(d) under the Exchange Act; and, if at any time it is not required to file such reports but in 8 the past had been required to or did file such reports, it will, upon the request of a Purchaser, make available other information as required by, and so long as necessary to permit sales of its Shares pursuant to, Rule 144. 9.7 APDN Indemnification. APDN agrees to indemnify and hold harmless Holder, and its officers, directors and agents (including broker or underwriter selling Included Shares for Holder), and each person, if any, who controls Holder within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act from and against any and all losses, claims, damages and liabilities caused by (a) any violation or alleged violation by APDN of the Securities Act, Exchange Act, any state securities laws or any rule or regulation promulgated under the Securities Act, Exchange Act or any state securities laws, (b) any untrue statement or alleged untrue statement of a material fact contained in any registration statement or prospectus relating to the Included Shares (as amended or supplemented if APDN shall have furnished any amendments or supplements thereto) or any preliminary prospectus, or (c) caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances under which they were made, except insofar as such losses, claims, damages or liabilities are caused by any such untrue statement or omission or alleged untrue statement or omission based upon information furnished in writing to APDN by Holder or on Holder's behalf expressly for use therein. 9.8 Holder Indemnification. Holder agrees to indemnify and hold harmless APDN, its officers, directors and agents and each person, if any, who controls APDN within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act to the same extent as the foregoing indemnity from APDN to Holder, but only with respect to information furnished in writing by Holder or on Holder's behalf expressly for use in any registration statement or prospectus relating to the Registrable Shares, or any amendment or supplement thereto, or any preliminary prospectus. 9.9 Indemnification Procedures. In case any proceeding (including any governmental investigation) shall be instituted involving any person in respect of which indemnity may be sought pursuant to this Section 9, such person (an "Indemnified Party") shall promptly notify the person against whom such indemnity may be sought (the "Indemnifying Party") in writing and the Indemnifying Party shall assume the defense thereof, including the employment of counsel reasonably satisfactory to such Indemnified Party, and shall assume the payment of all fees and expenses; provided that the failure of any Indemnified Party so to notify the Indemnifying Party shall not relieve the Indemnifying Party of its obligations hereunder except to the extent (and only to the extent that) that the Indemnifying Party is materially prejudiced by such failure to notify. In any such proceeding, any Indemnified Party shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party unless (a) the Indemnifying Party and the Indemnified Party shall have mutually agreed to the retention of such counsel or (b) in the reasonable judgment of such Indemnified Party representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. It is understood that the Indemnifying Party shall not, in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the reasonable fees and expenses of more than one separate firm of attorneys (in addition to any local counsel) at any time for all such Indemnified Parties (including in the case of Holder, all of its officers, directors and controlling persons) and that all such fees and expenses shall be reimbursed as they are incurred. In the case of any such separate firm for the Indemnified Parties, the Indemnified Parties shall designate such firm in writing to the Indemnifying Party. The Indemnifying Party shall not be liable for any settlement of any proceeding effected without its written consent (which consent shall not be unreasonably withheld or delayed), but if settled with such consent, or if there be a final judgment for the plaintiff, the Indemnifying 9 Party shall indemnify and hold harmless such Indemnified Parties from and against any loss or liability (to the extent stated above) by reason of such settlement or judgment. No Indemnifying Party shall, without the prior written consent of the Indemnified Party, effect any settlement of any pending or threatened proceeding in respect of which any Indemnified Party is or could have been a party and indemnity could have been sought hereunder by such Indemnified Party, unless such settlement includes an unconditional release of such Indemnified Party from all liability arising out of such proceeding. 9.10 Contribution. To the extent any indemnification by an Indemnifying Party is prohibited or limited by law, the Indemnifying Party agrees to make the maximum contribution with respect to any amounts for which, he, she or it would otherwise be liable under this Section 9 to the fullest extent permitted by law; provided, however, that (a) no contribution shall be made under circumstances where a party would not have been liable for indemnification under this Section 9 and (b) no seller of Registrable Securities guilty of fraudulent misrepresentation (within the meaning used in the Securities Act) shall be entitled to contribution from any party who was not guilty of such fraudulent misrepresentation. 10. Nontransferability. Trilogy may not sell or transfer any Warrants to any person other than a director, officer, employee, manager or affiliate of Trilogy (or a person controlled by one or more directors, officers, employees, managers or affiliates of Trilogy) or to a person or entity that assists Trilogy in providing services to APDN pursuant to the Letter of Engagement dated June 20, 2005 as the same may be amended from time to time, without the consent of APDN. 11. Severability. If any term, provision, covenant or restriction of these Warrants is held by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of these Warrants shall remain in full force and effect and shall in no way be affected, impaired or invalidated. 12. Notices. All notices, requests, consents and other communications required hereunder shall be in writing and shall be effective when delivered or, if delivered by registered or certified mail, postage prepaid, return receipt requested, shall be effective on the third day following deposit in United States mail: to the Holder, at Trilogy Capital Partners, Inc., 11726 San Vicente Boulevard, Suite 235, Los Angeles, CA 90049; and if addressed to APDN, at Applied DNA Sciences, Inc., 9229 W. Sunset Boulevard, Suite 830, Los Angeles, CA 90069, or such other address as Holder or APDN may designate in writing. 13. No Rights as Shareholder. The Holder shall have no rights as a shareholder of APDN with respect to the shares issuable upon exercise of the Warrants until the receipt by APDN of all of the Exercise Documents. Applied DNA Sciences, Inc. By: /S/ Peter Brocklesby ---------------------------- Peter Brocklesby, President EX-10 3 july2120058kex101.txt Exhibit 10.1 STOCK PURCHASE AMENDMENT AGREEMENT ---------------------------------- THIS STOCK PURCHASE AMENDMENT AGREEMENT, dated as of July 12, 2005, between BIOWELL TECHNOLOGY INC., a Taiwan corporation, located at 18F, No. 959, Chung Cheng Road, Chungho City, Taipei County, Taiwan 235, ROC (the "Company") and APPLIED DNA SCIENCES, INC., a Nevada corporation, located at 9229 West Sunset Boulevard, Suite 830, Los Angeles, California, 90069 ("APDN"). Either one or both is referred to as Party or Parties. RECITALS -------- A. The Company and APDN are parties to a Stock Purchase Agreement, dated as of January 28, 2005 (the "Purchase Agreement"), providing for, among other things, the acquisition by APDN of all of the Company's intellectual property used in, useful to or relating to the Business; such acquisition to be completed through (i) a sale or other transfer of such intellectual property from the Company to a British Virgin Island (BVI) company (the "BVI Sub") and (ii) an acquisition of the stock of the BVI Sub by a wholly-owned BVI subsidiary to be formed by APDN (the "APDN Sub" and together with APDN, the "Buyers") on the terms and subject to the conditions set forth in the Purchase Agreement. Capitalized terms used in this Agreement but not otherwise defined shall have the respective meanings set forth in the Purchase Agreement. B. Pursuant to that certain Asset Purchase Agreement, dated as of December 22, 2004, (the "Asset Purchase Agreement") the Company transferred certain of its assets and liabilities to Rixflex Holdings Limited, a corporation formed under the laws of the British Virgin Islands ("Rixflex"). C. It has been determined by the Company and APDN, that the acquisition of the Purchased Assets contemplated by the Purchase Agreement will be accomplished by a merger of Rixflex with and into APDN Sub (hereinafter referred to as "APDN BVI") (the "Merger"). D. The parties wish to amend the Purchase Agreement to more accurately reflect the Merger and amend certain other portions of the Purchase Agreement including, but not limited to, the definition of Purchased Assets as hereinafter provided. NOW, THEREFORE, in consideration of the premises and the mutual promises herein contained, the parties agree as follows: 1. The following amendments are made to Section 1.1: (a) The following definition is inserted into Section 1.1: "Confidential Information" means all information treated as confidential, non-public information by the Company or Rixflex regarding or pertaining to the Intellectual Property, the Company's methods of doing business, its contemplated methods of doing business in the future, its past and present, and future research and development, test information, product information and service information, as well as customer and sales information." (b) The definition of "Know-how" is hereby amended by inserting (i) the words "equipment arrangements," after the words "trade secrets," and (ii) the words "provided, however, that except as set forth above with respect to equipment arrangements," before the words "Know-how shall not include. . ." 2. Section 2.1 of the Purchase Agreement is amended and restated to read in its entirety as follows: "Section 2.1 (a) At the Closing and subject to and upon the terms and conditions of this Agreement, the Articles of Merger required to be filed to effect the Merger shall be filed with the Registrar of Companies of the British Virgin Islands pursuant to the applicable provisions of The International Business Companies Act of the British Virgin Islands ("BVI Law"), and Rixflex shall be merged with and into APDN BVI and the separate corporate existence of Rixflex shall cease and APDN BVI shall continue as the surviving corporation (the "Effective Time"). APDN BVI as the surviving corporation after the Merger is hereinafter sometimes referred to as the "Surviving Corporation." (b) At the Effective Time, the effect of the Merger shall be as provided in this Agreement and the applicable provisions of BVI Law. Without limiting the generality of the foregoing, and subject thereto, at the Effective Time, all the property, rights, privileges, powers and franchises of Rixflex and APDN BVI shall vest in the Surviving Corporation, and all debts, liabilities and duties of Rixflex and APDN BVI shall become the debts, liabilities and duties of the Surviving Corporation. Notwithstanding anything contained herein to the contrary, in exchange for the Merger Consideration (as such term is defined in Section 2.1(e)(i) below) the property, rights, privileges, powers and franchises of Rixflex shall be free and clear of all Encumbrances (except for Permitted Encumbrances). Without limiting the effect of the foregoing, the Parties hereto acknowledge and agree that prior to the Closing all rights, title and interest of either of the Sellers in, to and under all of the following items of the Company (the "Purchased Assets") shall have been sold or otherwise transferred to Rixflex from the Company and shall remain the property of Rixflex immediately prior to the Effective Time: (i) the Assumed Agreements; (ii) To the extent consented to by the other Party or Parties to such agreements, if such consent is required by the governing law, all confidentiality, non-compete or nondisclosure agreements executed by vendors, suppliers or employees of the Company or other third Parties, in each case, relating to the Purchased Assets; (iii) originals or copies of the Company's operating, safety and maintenance manuals, engineering design plans, blueprints and as-built plans, specifications, procedures and similar items primarily relating to the Purchased Assets; and upon request, all supplier lists relating solely to the Purchased Assets; and (iv) all Intellectual Property and Intellectual Property Rights owned by, or licensed to, the Company related to the Business, together with the right to sue and recover for past infringements or misappropriations thereof, any and all corresponding rights that, now or hereafter, may be secured throughout the world and all copies and tangible embodiments of any such Intellectual Property. 2 (c) At the Effective Time, the Memorandum and Articles of Association of APDN BVI as in effect immediately prior to the Effective Time shall be the Memorandum and Articles of Association of the Surviving Corporation. (d) At the Effective Time, the directors and officers of APDN BVI shall be the Directors and Officers of the Surviving Corporation. (e) At the Effective Time, by virtue of the Merger and without any action on the part of Rixflex, APDN BVI or the holders of the following securities: (i) Each share of Rixflex issued and outstanding immediately prior to the Effective Time shall be cancelled and extinguished and converted and exchanged, without any action on the part of the holders thereof, into the number of validly issued, fully paid and nonassessable shares of the common stock of APDN ("APDN Stock") which equal the amount obtained by dividing thirty-six million (36,000,000) by the number of shares of Rixflex issued and outstanding immediately prior to the Effective Time ("Exchange Ratio"). The APDN Stock is sometimes referred to herein as the "Merger Consideration." Subject to any restrictions on the APDN Stock under the United States Securities laws, such Merger Consideration shall be free and clear of all Encumbrances. (ii) The APDN Stock to be issued pursuant to this Section 2.1 shall not have been registered and shall be characterized as "restricted securities" under the United States federal securities laws, and under such laws such shares may be resold without registration under the Securities Act of 1933, as amended (the "Securities Act"), only in certain limited circumstances. Each certificate evidencing APDN Stock to be issued pursuant to this Section 2.1 shall bear the following legend: THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF (I) AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER SAID ACT OR (II) AN OPINION OF COMPANY COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED. THESE SECURITIES WERE ISSUED IN AN OFFSHORE TRANSACTION TO PERSONS WHO ARE NOT U.S. PERSONS (AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT")) PURSUANT TO REGULATION S UNDER THE SECURITIES ACT. ACCORDINGLY, NONE OF THE SECURITIES TO WHICH THIS CERTIFICATE RELATES HAVE BEEN REGISTERED UNDER THE SECURITIES ACT, OR ANY U.S. STATE SECURITIES LAWS, AND, UNLESS SO REGISTERED, NONE MAY BE OFFERED OR SOLD IN THE UNITED STATES OR, DIRECTLY OR INDIRECTLY, TO U.S. PERSONS (AS DEFINED IN REGULATION S UNDER 3 THE SECURITIES ACT) EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN EACH CASE ONLY IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. IN ADDITION, HEDGING TRANSACTIONS INVOLVING THE SECURITIES MAY NOT BE CONDUCTED UNLESS IN ACCORDANCE WITH THE 1933 ACT. (iii) Following the Closing, the Surviving Corporation shall, within sixty (60) days, deliver to each person, who prior to the Merger was the record and beneficial owner of shares of Rixflex, in substitution and exchange for such shares, one or more certificates evidencing the number of shares of APDN Stock that such person is entitled to receive in accordance with the terms of this Agreement." 3. Section 4.2(f) and 4.3(g) of the Purchase Agreement are deleted in their entirety. 4. Section 5.11 of the Purchase Agreement is amended and restated to read in its entirety as follows: "Section 5.11. Intellectual Property. "Intellectual Property Rights" means all Patents, trademarks, trademark applications, trade names, service marks, service mark applications, copyrights (both registered and unregistered, the "Copyrights"), copyright applications and trade secrets of Rixflex assigned to it by the Company pursuant to the Asset Purchase Agreement with respect to Intellectual Property (as defined below). All intellectual property (other than with respect to "off-the-shelf" or other third party software which is generally commercially available) of Rixflex which has been assigned to it by the Company pursuant to the Asset Purchase Agreement and is used in the conduct of the Business as presently conducted or as presently proposed to be conducted, including, computer programs and other computer software (including, without limitation, all source and object code, algorithms, architecture, structure, display screens, layouts and development tools), inventions, patents, patent applications, designs, samples, specifications, schematics, Know-how, Confidential Information, trade secrets, proprietary processes and formulae, and development tools, promotional materials, databases, supplier lists and marketing research, and all documentation and media constituting, describing or relating to the foregoing, including, without limitation, processes, devices and facilities for manufacturing (including sequencing, imprinting and incorporating DNA), stabilizing DNA, encapsulating DNA, immobilizing DNA, purifying DNA, extracting DNA, detecting the presence of DNA and any DNA sequence, or fragment thereof, the subject of any experiment, test, work, or investigation undertaken by the Company, and any DNA sequence corresponding to a sample of DNA, isolated or otherwise, at any time stored, secured or employed by the Company, and all validation and testing procedures related thereto all collectively constitute the "Intellectual Property" for purposes of this Agreement." 5. Sub-section 5.11(i) is hereby amended by inserting the following sentence at the end of such sub-section: 4 "The Intellectual Property and the Intellectual Property Rights constitute all of the Intellectual Property and Intellectual Property Rights of the Sellers and/or Rixflex existing as of the Closing, and used in the conduct of the Business as presently or as presently conducted proposed to be conducted whether fully developed or in the process of development." 6. Sub-section 5.11(l) is hereby amended to be Section 5.11(k), and a new sub-section, Section 5.11(l) is hereby inserted and shall read in its entirety as follows: "(l) Biological Materials. The Sellers have not, at any time, made any deposit of any biological materials related to the Business in any depository of any type, or transferred biological materials related to the Business to any third party outside of a material transfer agreement that rigidly precludes further transfer of the same." 7. The following is added as subsection (b) under Section 7.2 of the Purchase Agreement and the current Section 7.2(b) is amended to be 7.2(c): "Each of the Buyers agree to defend, indemnify and hold harmless each of the Sellers, and their respective, managers, members, partners, directors, officers, employees and agents of each of the foregoing and each person who controls any of them (Such persons, if receiving the benefit of the indemnification agreement herein shall also collectively be referred to as "Indemnified Parties" and individually as an "Indemnified Party") from and against any Loss or Losses, without regard to any investigation by any of the Indemnified Parties, based upon, arising out of, by reason of or otherwise in respect of or in connection with(i) any material breach of any representation, warranty, covenant or agreement made by either of the Buyers in this Agreement or any agreement or instrument executed by either of the Buyers pursuant to this Agreement, or (ii) any Seller Third Party claim as defined in Section 7.4. 8. Section 7.4 of the Purchase Agreement shall be made by adding the words to the end of the current Section 7.4, "If any third party shall notify any of the Sellers with respect to any matters alleging facts that, if true, would mean that either of the Buyers has breached any of its respective representations, warranties or covenants in this Agreement (a "Seller Third Party Claim"), then the Company shall promptly notify APDN thereof in writing in accordance with Section 7.5. 9. Section 9.3 of the Purchase Agreement is hereby amended and restated to read in its entirety as follows: "(d) it is a condition to the Closing that the Board of Directors of APDN shall be reconstituted in a manner satisfactory to the Company and in connection therewith, the Company shall have the right to approve four (4) members of the initial seven (7) members of the board of directors that will be in place immediately following the Closing;" 10. Section 11.6 of the Purchase Agreement is hereby amended by deleting the words "provided, however, each of the Buyers shall be permitted to assign the Agreement to an affiliate without the consent of the Sellers." 11. Section 7.3 is deleted in its entirety. 12. Section 11.10 of the Purchase Agreement is hereby amended by deleting the words "Den Haag, Holland" and inserting "Honolulu, Hawaii, United States" in their place. 5 13. The Parties acknowledge and agree that the references in the Purchase Agreement to the Employment Agreements shall be deemed to be references to a Consulting Agreement to be entered into between the Company and APDN. 14. The Parties acknowledge and agree that as a result of the modification to the method in which the Purchased Assets will be acquired by APDN BVI (as more fully described in Section 2.1 above), (a) upon the delivery of all documentation entered into between the Company and Rixflex pursuant to the Asset Purchase Agreement, (b) the satisfactory determination by the Buyers and their counsel that the transactions contemplated by the Asset Purchase Agreement were duly authorized and are sufficient to sell, assign and transfer the Purchased Assets to Rixflex and (c) the receipt by APDN BVI and APDN of a representation from each of Rixflex and the Company that such documents remain in effect and that neither the documents nor the transactions contemplated thereby have been amended or modified in any way, then the delivery of certain documents required be delivered to APDN BVI and/or APDN by the Company and/or Rixflex at the Closing to evidence the transfer of the Purchased Assets to APDN BVI, including the Intellectual Property Assignment, the Patent Assignment and the Trademark Assignment, shall be waived by APDN and APDN BVI. 15. The foregoing amendments shall not affect any other term or provision of the Purchase Agreement each of which, as amended hereby, shall continue in full force and effect and is hereby ratified, confirmed and approved by the Parties. 16. This Amendment Agreement shall be construed and enforced in the manner set forth in the Purchase Agreement. This Amendment Agreement may be executed and delivered (including by facsimile transmission) in two or more counterparts, and by the different Parties hereto in separate counterparts, each of which, when executed and delivered, shall be deemed to be an original but all of which taken together shall constitute one and the same agreement. [Signature Page Follows] 6 IN WITNESS WHEREOF, the Parties have executed this Amendment Agreement as of the day and year first above written. BIOWELL TECHNOLOGY INC. By: /s/ JUN-JEI SHEU ---------------- Name: Jun-Jei Sheu, Ph. D. Title: Chairman & CEO APPLIED DNA SCIENCES, INC. By: /s/ ROB HUTCHISON ----------------- Name: Rob Hutchison Title: Chairman and CEO By: /s/ PETER BROCKLESBY -------------------- Name: Peter Brocklesby Title: President 7 EX-10 4 jul2120058kex102.txt Exhibit 10.2 EXCLUSIVE LICENSING AGREEMENT This Exclusive Licensing Agreement ("Agreement") is made as of July 12, 2005 by and between Biowell Technology Inc., a company duly incorporated and organized under the laws of Taiwan, Republic of China ("ROC"), having its principal office at 18F, No. 959, Chung-Cheng Rd., Chung-Ho City, Taipei County, Taiwan, 235 ROC (hereinafter referred to as "Biowell"), APDN (B.V.I.) Inc., a corporation duly incorporated under the laws of the British Virgin Islands, with an office located at Nemours Chambers, P.O. Box 3170, Road Town, Tortola, British Virgin Islands ("Licensor") and Applied DNA Sciences, Inc., a corporation duly incorporated under the laws of the State of Nevada, United States of America having its principal office at 9229 West Sunset Blvd., Suite 830, Los Angeles, California 90069, USA ("APDN"). RECITALS A. Pursuant to that certain Asset Purchase Agreement, dated as of December 22, 2004, (the "Asset Purchase Agreement"), Biowell transferred certain of its assets and liabilities to Rixflex Holdings Limited, a corporation formed under the laws of the British Virgin Islands, the shares of which are owned by the majority existing shareholders for the interests of all of the shareholders of Biowell ("Rixflex"). B. Biowell and APDN are parties to a Stock Purchase Agreement, dated as of January 28, 2005 (the "Purchase Agreement"), providing for, among other things, the acquisition by APDN of all of Biowell's intellectual property used in, useful to or relating to the Business. C. The acquisition of Biowell's intellectual property as contemplated by the Purchase Agreement was accomplished by a merger of Rixflex with and into Licensor, a wholly owned subsidiary of APDN (the "Merger"). D. Licensor (i) has acquired the Intellectual Property and Intellectual Property Rights from Biowell as a result of the Merger and/or (ii) owns various technologies, proprietary knowledge, patents, patent applications, marketing rights and expertise including, without limitation, various DNA based anti-counterfeiting technologies, (all collectively hereafter referred to as the "Technology"). Licensor desires to exclusively license the right to manufacture, market, sell and sub-license the Technology, Product Materials, and Licensed Products (all as hereinafter defined) to Biowell in the Biowell Territory, as defined in Exhibit 1 attached. E. APDN desires to have and Biowell hereby agrees to grant, the perpetual option to purchase finished Licensed Products and other Product Materials from Biowell for resale and other purposes. Biowell agrees to supply these finished Licensed Products and other Product Materials to APDN in accordance with the terms of this Agreement. F. APDN may choose to build lab(s) at its own cost for the purpose of manufacturing APDN Products and analyzing, selling and testing the APDN Products, Technology and Product Materials. Biowell agrees during the term of its license hereunder to fully support APDN, provided that it is reimbursed for all reasonable costs incurred by it in providing these support activities. 1 DEFINITIONS Unless the context requires otherwise, whenever used in this Agreement the following terms and expressions shall have the following meaning: "APDN Products" means products incorporating the Technology or Product Materials that are manufactured by APDN. "Agreement" means this agreement including the Exhibits, as they may be amended from time to time. "Biowell Territory" means the territories specified as the Biowell Territory in Exhibit 1. "Business" means business of developing and manufacturing DNA markers to protect corporate and intellectual property from counterfeiting, fraud, piracy, product diversion or unauthorized intrusion "Business Day" means any day except a Saturday, Sunday or other day on which commercial banks in the city of Taipei or New York are authorized by law to close. "Business Methods" means business methods developed, licensed to, and/or owned by Licensor or Biowell relating to the Technology and Products. "Confidential Information" includes all information, whether written or oral, in whatever form disclosed by the parties, concerning any technologies, products, developments, business methods, business plans, marketing, investment, management, financial and other business affairs in connection with all matters relating to or arising out of this Agreement, including without limitation, its contemplated methods of doing business in the future, its past and present, and future research and development, test information, product information and service information, as well as customer and sales information, the Technology, the Business Methods and Know-How. "Customers" means any natural or legal person(s) or entities primarily solicited by Biowell under this Agreement in the Biowell Territory. 2 "Delivery Date" means the date specified by APDN or Biowell, as the case may be, in a Purchase Order on which a Licensed Product or Product Material is required to be delivered by Biowell to APDN or by APDN to Biowell, as the case may be. "Intellectual Property" means the intellectual property (other than with respect to "off-the-shelf" or other third party software which is generally commercially available) of Licensor and is used in the conduct of the Business as presently conducted or as presently proposed to be conducted, including, computer programs and other computer software (including, without limitation, all source and object code, algorithms, architecture, structure, display screens, layouts and development tools), inventions, patents, patent applications, designs, samples, specifications, schematics, Know-how, Confidential Information, trade secrets, proprietary processes and formulae, and development tools, promotional materials, databases, customer lists, supplier, vendor and dealer lists and marketing research, and all documentation and media constituting, describing or relating to the foregoing, including, without limitation, processes, devices and facilities for manufacturing (including sequencing, imprinting and incorporating DNA), stabilizing DNA, encapsulating DNA, immobilizing DNA, purifying DNA, extracting DNA, detecting the presence of DNA and any DNA sequence, or fragment thereof, the subject of any experiment, test, work, or investigation undertaken by Licensor, and any DNA sequence corresponding to a sample of DNA, isolated or otherwise, at any time stored, secured or employed by Licensor, and all validation and testing procedures related thereto "Intellectual Property Rights" means all Patents, trademarks, trademark applications, trade names, service marks, service mark applications, copyrights (both registered and unregistered, the "Copyrights"), copyright applications and trade secrets of Licensor with respect to Intellectual Property. "Know-How" means all information and materials owned by, or licensed to, Licensor in conducting its business, including any product specifications, technical knowledge, expertise, skill, practice, inventions, procedures, trade secrets, equipment arrangements, Confidential Information, and other data, market studies and all other experience and know-how, in tangible or intangible form, whether or not patented or patentable; provided, however, that except as set forth above with respect to equipment arrangements, Know-how shall not include (i) any plant, property, equipment or employees, and (ii) any items to the extent that any applicable law prohibits their transfer. "Licensed Products" means products, as described in Exhibit 3 (which may be 3 amended from time to time), manufactured by Biowell incorporating the Technology and/or Product Materials. "Net Sales" means Licensee's or any sub-licensee's total gross billings for sales, leases, licenses or other dispositions of Technology, Product Materials, Licensed Products or APDN Products, as the case may be, to any party (including, gross billings for sales or other dispositions thereof to Licensor, APDN and any affiliate thereof notwithstanding the fact that such sale or disposition is outside of the Biowell Territory) which is not an affiliate, less the following deductions where factually applicable: (a) discounts (other than advertising allowances, fees or commissions to salesmen or sales representatives), credits, rebates and other allowances allowed and taken; (b) transportation and insurance charges separately billed to the customer or prepaid; (c) special outbound packing separately billed to the customer or prepaid; (d) sales, use, turnover, and similar taxes and customs duties imposed upon and with specific reference to the particular sales of Licensed Products, excluding income tax of Licensee; (e) amounts refunded or credited for returned merchandise. "Product Materials" means any and all raw materials required to manufacture the Licensed Products or APDN Products. "Purchase Order" means an order for Licensed Products that APDN submits and Biowell accepts or an order for APDN Products that Biowell Submits and APDN accepts, as the case may be. All Purchase Orders will be gathered and controlled by the terms of this Agreement unless otherwise agreed to in writing by Biowell and APDN, as the case may be. 1. Grant of Exclusive Right 1.1 Subject to the terms and conditions of this Agreement and for so long as Biowell is in compliance with all of its obligations hereunder, Licensor hereby grants an exclusive right for Biowell to: (a) use the Technology in connection with the manufacture of Licensed Products in the Biowell Territory; and (b) sell the Licensed Products manufactured by Biowell or APDN Products purchased from APDN in the Biowell Territory; and (c) sub-license the Technology for the purpose of manufacturing and selling Licensed Products in the Biowell Territory (collectively, "Exclusive License"). Except as provided for herein, no express or implied licenses of any type for the Technology, Product Materials or Licensed Products shall be granted to Biowell. 1.2 Biowell acknowledges that the Technology is the sole and exclusive property of Licensor, subject to the license hereby granted. If during the term of this Agreement, Biowell, any sub-licensee (or any employee, consultant or agent thereof) or APDN makes any improvements, modifications, or alterations in or to 4 the Technology, the Licensed Products, the Product Materials or the mode of using same related to the business of developing and manufacturing DNA markers to protect corporate and intellectual property from counterfeiting, fraud, piracy, product diversion or unauthorized intrusion then such party shall communicate such improvements, modifications, and alterations to the Licensor and such party hereby transfers and assigns to Licensor all right, title, and interest in and to the improvements, modifications and alterations, and such improvements, modifications and alterations shall become the sole and exclusive property of Licensor. Any technology or intellectual property developed or acquired by Biowell that does not relate to the business of developing and manufacturing DNA markers to protect corporate and intellectual property from counterfeiting, fraud, piracy, product diversion or unauthorized intrusion shall be the sole and exclusive property of Biowell. 1.3 Licensor hereby agrees to exclusively license to Biowell within the Biowell Territory any new improvements, modifications or alterations owned by Licensor or APDN related to the Technology, the Product Materials or the Licensed Products in this Agreement (related to the business of developing and manufacturing DNA markers to protect corporate and intellectual property from counterfeiting, fraud, piracy, product diversion or unauthorized intrusion) subject to the Parties' negotiations on terms and conditions mutually agreed on. 1.4 In order to maintain the exclusivity of rights granted to it in this Agreement, for each specific territory within the Biowell Territory, Biowell shall make Royalty payments to Licensor as set forth in Section 3.1 below. In each annual period Biowell shall achieve the Net Sales targets for each territory within the Biowell Territory as set forth in Exhibit 1 of this Agreement. Any sales of Licensed Products or APDN Products or any products utilizing the Product Materials or Technology made by directly by Licensor or APDN within the Biowell Territory shall count towards the Biowell's Net Sales target for such territory and Biowell shall not be required to pay any Royalty (as defined below) payments to Licensor for any such sales. For sales made by APDN into the Biowell Territory, APDN shall pay Biowell a Royalty equivalent to ten percent (10.0%) of its Net Sales (calculated by using the definition of Net Sales set forth in this Agreement). Subject to Section 1.6, Net Sales must be met in each territory and payment of the required Royalty shall not be considered sufficient consideration for the retention of rights of exclusivity. 1.5. On each Payment Date (as defined in Section 3.2 below), whether or not payment is received by Licensor on such Payment Date, or as otherwise may be agreed per territory in writing between the parties, and for as long as this Agreement remains in effect, Licensor and Biowell shall review Net Sales. In the 5 event Biowell fails to meet its Net Sales obligations for any specific territory within the Biowell Territory, Licensor reserves the right, at its sole discretion as deemed reasonable under the circumstances, to: (i) If Biowell fails to attain its Net Sales target in a specific territory in any one (1) year period, Licensor may immediately terminate Biowell's exclusive rights as a licensee in such territory; and (ii) If Biowell fails to attain its Net Sales target in a specific territory for two (2) consecutive years, Licensor may terminate all of Biowell's rights as a licensee granted under this Agreement with respect to such territory. 1.6. Licensor shall not terminate or limit Biowell's rights, except for non-performance of its obligations under this Agreement, and as otherwise provided in this Agreement. In the event Biowell is notified in writing by Licensor of the non-performance of its obligations under this Agreement at any time during the period that this Agreement is in effect, Biowell shall be allowed a cure period of sixty (60) Business Days in which to address non-performance and to implement a remedy reasonably acceptable to Licensor; provided, that, in the event that such non-performance is with respect to payment of Royalties under this Agreement, such cure period shall be reduced to thirty (30) Business Days. 1.7 Subject to the requirements set forth in Section 1.4, under no circumstances will (i) APDN or any affiliate thereof or (ii) any sub-licensee approved by Licensor for a territory outside of the Biowell Territory or any affiliate thereof, market or sell in the Biowell Territory: (1) any Licensed Products, APDN Products, or any products utilizing the Product Materials or Technology; (2) any of its products that are competitive with the Licensed Products, (3) products bearing its name from third parties that are competitive with the Licensed Products or (4) products packaged or sold under a private label that are competitive with the Licensed Products; provided, that, it will not be considered a violation of the terms of this a Agreement in those cases where APDN, its sub-licensee, or affiliates of either, enter into an agreement with any multinational corporation or other organization (or a parent or affiliate thereof) headquartered outside of the Biowell Territory for the sale, lease or license of Technology, Product Materials, Licensed Products or APDN Products and such Technology, Product Materials, Licensed Products or APDN Products are subsequently transported into or used in the Biowell Territory by such corporation or organization. 1.8 Under no circumstances will (i) Biowell or any affiliate thereof or (ii) any sub-licensee approved by Licensor for a territory within the Biowell Territory or any affiliate thereof, market or sell: (1) products bearing its name from 6 third parties that are competitive with the Licensed Products or (2) products packaged or sold under a private label that are competitive with the Licensed Products; provided, that, it will not be considered a violation of the terms of this Agreement in those cases where Biowell, its sub-licensee or affiliate of either, enters into an agreement with a multinational corporation or organization (or a parent or affiliate thereof) headquartered in the Biowell Territory for the sale, lease or license of Technology, Product Materials, Licensed Products or APDN Products and such Technology, Product Materials, Licensed Products or APDN Products are subsequently transported outside of the Biowell Territory by such corporation or organization. Biowell shall pay APDN a Royalty of ten percent (10.0%) of its Net Sales from all sales of Licensed Products, APDN Products or Product Materials made by Biowell or any sub-licensee of Biowell outside of the Biowell Territory 1.9 Each party shall provide reasonable telephonic and electronic mail ("e-mail") support to each other party on an as needed basis, during such party's regular business hours. Upon execution of this Agreement each party shall appoint a liaison to communicate with each other party, and the parties shall funnel their inquiries through such appointed liaison so as to minimize any disruption to the staff of each other party. Each party agrees to provide each other party with timely written notification containing the name and contact information for such liaison and when applicable, specific details of problems to enable such other party to diagnose such problems. 1.10 APDN may build a lab(s) at its own cost for the purpose of manufacturing, selling, analyzing, and testing the Technology, Product Materials and APDN Products. During the Initial Term and the Second Term, Biowell agrees to fully support APDN in these activities. It will provide professional guidance, technical support, engineering designs, plans, and all other pertinent documentation and information related to Biowell's facilities, products, and operations together with training, manuals, budgets, cost data and all other relevant disclosures. APDN will reimburse Biowell for all costs incurred by Biowell in providing these support activities. 2. Term 2.1 Unless terminated in accordance with the terms of this Agreement and provided Biowell meets the performance requirements set forth on Exhibit 1, this Agreement shall be effective as of the date of execution of this Agreement and shall remain in effect for the remainder of the year 2005 and the five (5) calendar year period thereafter ("Initial Term"). In the event that Biowell meets the performance requirements set forth on Exhibit 1, this Agreement shall be automatically renewed for an additional five (5) calendar year period 7 following the Initial Term ("Second Term"). Upon the expiration of the Second Term and if Biowell so requests, the Licensor shall negotiate in good faith with Biowell for further renewal of this Agreement or entering into a new license agreement under reasonable commercial terms and conditions. 2.2 In the event of circumvention of this Agreement by a party hereto, directly or indirectly; the circumvented party shall be entitled to a monetary payment equal to the maximum benefit it should have realized from such a transaction, plus any and all expenses including but not limited to all legal costs and expenses incurred to recover the lost revenue. 2.3 In the event of termination not attributable to Biowell, APDN will have the responsibility to continue to honor this Agreement with Biowell in respect of assisting Biowell to fulfill any outstanding agreements with Customers of Biowell. 3. Price and Payment 3.1 In consideration of the license granted to Biowell herein, Biowell shall pay Licensor a royalty ("Royalty" or "Royalties") equal to ten (10%) percent of the Net Sales of the Licensee for orders received by it subsequent to the date hereof. For the purpose of computing Royalties, (i) sales shall be regarded as made when payments are due under Biowell's normal commercial terms of sale, (ii) sales by a sub-licensee of Biowell shall be deemed sales by Biowell, (iii) sales in currencies other than U.S. dollars shall be converted to U.S. dollars at the foreign official conversion rate effective when payment is due and (iv) any sales for a financial consideration other than currency shall be subject to prior approval of Licensor for consideration acceptable to Licensor. 3.2 Royalties shall be paid by Biowell to Licensor on a semi-annual basis, within thirty (30) days after the end of such six (6) month period during the Initial term and Second Term; provided, that, with respect to the first payment of Royalties hereunder, payment shall be made on or prior to January 30, 2006, based upon Net Sales during the period commencing on the date hereof and ending on December 31, 2005. Commencing in January, 2006 and for each year of the Initial Term and the Second Term (and any additional extensions), Biowell shall pay Royalties to Licensor on or before July 30 and January 30 of each year, based upon Net Sales from the preceding six (6) month period (each, a "Payment Date"). 3.3 Royalty payments shall be made to Licensor at its offices at the address set forth above, or by wire transfer of immediately available funds to such banking institution as Licensor may direct from time to time, in legal tender of the United States of America. 3.4 In addition to any other remedy available to the Licensor, if any payment due under this Agreement is delayed for reasons solely attributable to Biowell, interest shall accrue and be payable, to the extent legally enforceable, on such 8 unpaid amounts from and after the date on which the same was due at the rate of one and one half percent (1.5%) per month or any portion thereof. The obligation of Biowell to pay any amounts due hereunder shall be absolute, notwithstanding any claim which Biowell may assert against Licensor. Biowell shall not have the right to set off, compensate, or make any deduction from such payments whatsoever. 3.5 Together with payment of the Royalties, during the Term of this Agreement, Biowell agrees to submit written reports to Licensor stating, in each such report, (i) the total sales for the Biowell Territory and each territory within the Biowell Territory, by Biowell and all sub-licensees of Technology, Product Materials, Licensed Products and APDN Products for the previous six (6) month period, (ii) the total adjustments to such sales in connection with the determination of Net Sales for the Biowell Territory and each territory within the Biowell Territory, and (iii) the Royalty due thereon. In addition, Biowell shall deliver a written report to Licensor within ninety (90) days after the date of termination of this Agreement, stating in such report the information stated above that was not previously reported to Licensor and the Royalty due thereon, and shall accompany such report with payment of the amount of Royalties shown to be due therein. 3.6 Biowell agrees to keep, for at least three (3) years after expiration or termination of this Agreement, full and accurate books of account and records on Biowell's and all sub-licensee's sales of Technology, Product Materials, Licensed Products and APDN Products. Biowell also agrees to permit Licensor or its authorized representative, upon at least ten (10) days prior written notice, to conduct reasonable audits of Biowell's books, records and inventories to verify Biowell's performance, the total sales of Biowell and all sub-licensees from Technology, Product Materials, Licensed Products and APDN Products, the total adjustments to such sales in connection with the determination of Net Sales, the Royalty due thereon and the reports due under this Agreement. Unless otherwise agreed by the parties, such audits shall occur only during business hours at the offices of Biowell, dusirng the term of this Agreement and during the three (3) years immediately following the expiration or termination of this Agreement, and in no event exceed two (2) times per year. If any audit of Biowell's or any sub-licensee's books and records shows a discrepancy of more than five percent (5.0%) from payments and/or reports to Licensor, Biowell will in addition to payment of any unpaid amounts due as disclosed by the audit, immediately reimburse Licensor for the cost of the audit. A final audit may occur once during the year immediately succeeding expiration or termination of this Agreement. Any information provided to Licensor or its accountants pursuant 9 hereto shall be treated as Confidential Information (hereinafter defined) of Biowell to be used only for the purpose of the examination in accordance with this Agreement and shall not be otherwise disclosed. 4. Biowell Obligations 4.1 Biowell will source, solicit, and attract potential Customers in the Biowell Territory for purchasing Licensed Products manufactured by Biowell using Product Materials and APDN Products purchased directly from APDN. Biowell shall promote, market, sell and sub-license the use of the Technology and the manufacture and sale of the Licensed Products and the APDN Products in the Biowell Territory to potential Customers. Biowell shall not bind Licensor or APDN to any express or implied legal obligation with any third parties, including Biowell's Customers, while Biowell is performing this Agreement. Biowell shall perform its obligations under this Agreement on its own behalf as an independent contractor and not as an agent or representative of APDN or Licensor. 4.2 Biowell will, at its expense or at the expense of its Customers, perform any and all post-sale servicing of any type for its Customers. APDN shall not be obligated to perform any support services to Biowell's Customers unless both parties agree otherwise in writing, and for which services APDN shall charge Biowell at cost plus ten percent (10.0%) and vice versa.. 4.3 If any dispute arises in the Biowell Territory under this Agreement, Biowell will use its best efforts to limit the potential damages to APDN and Licensor that could be caused by the dispute. Further, Biowell will inform APDN and Licensor without undue delay of the nature of the dispute and comply with all reasonable directions of Licensor in relation thereto. 4.4 Biowell shall have the right to sub-license in the Biowell Territory in accordance with this Section 4.4. Specifically, Biowell shall have the right to authorize any third party to receive or utilize any benefit derived by Biowell under this Agreement. Each such authorization or sub-licensing must be approved by Licensor, which approval will not be unreasonably withheld and the sub-licensing agreement must be co-signed by Licensor. Pursuant to the sub-licensing agreement, a new sub-licensee shall comply in all respects with the same restrictions placed on Biowell by Licensor in this Agreement. For purposes of this Agreement, if Licensor consents to a sub-license, Biowell and sub-licensee shall be referred to as "Biowell". In addition to the Royalties paid to Licensor hereunder, promptly upon its receipt thereof, Biowell shall pay Licensor fifty (50.0%) of any fees, payments or consideration of any kind received by Biowell in connection with the grant of a sublicense. 4.5 Biowell shall have the right to sell in any unlicensed territory on a per sale basis upon its receipt, prior to any sale, of written authorization from Licensor. If an opportunity arises in a territory not presently licensed, 10 Biowell will seek such authorization, and if granted, Biowell will be required to pay a Royalty to Licensor for Licensed Products sold in such territory in the manner set forth herein. 5. Indemnity 5.1 Indemnity against any Third Party Claims. Subject to Article 13 hereof, each Party ("Indemnifying Party") will indemnify, defend, and hold the other Party, its officers, directors, agents, employees, and affiliates, ("Indemnity Parties") harmless from and against any and all liabilities, damages, losses, expenses, claims, demands, suits, fines or judgments, including reasonable attorney fees, costs and expenses incidental thereto, which may be suffered by, accrued against, charged to or recoverable from the Indemnity Parties, arising out of any third party claim. Promptly after receipt by the Indemnity Parties of a threat of any action, or a notice of the commencement or filing of any action against which the Indemnity Party may be indemnified hereunder, the Indemnity Party shall give written notice thereof to Indemnifying Party; provided, that failure to give such notice shall not relieve the Indemnifying Party of its obligations hereunder, except to the extent such failure prejudices the Indemnifying Party's defense thereof. Indemnifying Party shall have sole control of the defense and of all negotiations for settlement of such action. The Indemnifying Party shall be permitted to enter into a settlement hereunder without the prior written consent of the Indemnity Party provided that the settlement does not result in any attribution of fault or create any liability or obligation on the part of the Indemnity Party and the Indemnity Party shall not enter into any settlement without the prior written consent of the Indemnifying Party. Nothing herein shall limit, diminish or otherwise affect in any way the indemnifications made by the parties pursuant to the Asset Purchase Agreement dated January 28, 2005 and all documents related thereto. 6. Product & Product Materials Ordering Procedure, Change Orders, & Cancellation 6.1 Agreement to Sell. Biowell, within the limitations contained in this Agreement, shall sell to APDN or other purchaser licensed by Licensor, such quantities of Licensed Product and other Product Materials as either may order in accordance herewith. 6.2 Purchase Orders. For as long as Biowell remains a source of Licensed Products and Product Materials, purchases thereof shall be initiated by written or electronically dispatched Purchase Orders referencing the quantity, the Licensed Product, applicable price, shipping instructions and requested Delivery Dates. All Purchase Orders for Products and other Product Materials placed hereunder shall be governed by the terms and conditions of this Agreement unless 11 different terms and conditions of the Purchase Order are accepted by Biowell and acknowledged in writing. Biowell will use commercially reasonble efforts to accept each Purchase Order issued by APDN or other purchaser licensed by Licensor. Biowell will ship all Licensed Product or Product Materials within the "Lead Time" agreed to by the parties prior to the execution of this Agreement, unless the Purchase Order specifically states a delivery schedule different from such Lead Time and such delivery schedule is accepted in writing by Biowell. Biowell shall sell to APDN, or other purchaser licensed by Licensor, all Licensed Products and Product Materials at a price equal to the lowest price and on the best terms, including cash discounts for early payment, or any other discounts, credits or financial incentives then offered by it to any third party with respect to the sale of a Licensed Product or other Product Material. If Licensed Products or Product Materials are sold to any third party at a price that is less than the price then being charged to APDN and/or other purchaser licensed by Licensor, then such party, on a going forward basis, shall be entitled to (i) purchase any Licensed Products or Product Materials at such lower price until such time as Biowell is no longer offering such Licensed Products or Product Materials at such lower price and (ii) if APDN or any other purchaser licensed by APDN purchased any Licensed Products or Product Materials during the period when Biiowell was charging such lower price, Biowell shall promptly refund or credit to such party the difference between the higher price and the lower price. 6.3 Purchase Order Information. Purchase Orders shall, to the extent necessary for Biowell to fulfill the terms thereof, include: (i) description of Licensed Products and other Product Materials, (ii) quantity of Licensed Products and/or other Product Materials, (iii) price per unit of Licensed Products and other Product Materials (iv) total order price, (v) Delivery Date, and (vi) delivery location. Except as otherwise explicitly provided in this Agreement, any changes to or rescheduling of an accepted Purchase Order must be mutually agreed and incorporated into a written Change Order referencing the original Purchase Order. 6.4 Confirmation. Within seven (7) calendar days of its receipt of the Purchase Order, Biowell will use its commercially reasonable efforts to send written notice of acceptance or rejection of the Purchase Order ("Confirmation/Rejection"). 6.5 Delivery Terms. All Licensed Products delivered by Biowell shall be FOB (Taipei, Taiwan, ROC) or other place of shipment as specified in writing by APDN or other purchaser licensed by Licensor and agreed to by Biowell. Biowell may ship partial orders provided Biowell notifies APDN or such other purchaser and both agree prior to shipment. The Purchase Order shall specify the carrier or means of transportation or routing, and Biowell will comply with such 12 instructions. If the order fails to provide shipping instructions, Biowell shall select the best available carrier, on a commercially reasonable basis. 6.6 Change Orders and Rescheduling. Any modification to a Purchase Order shall be made in writing by an authorized representative of APDN or other purchaser licensed by Licensor, as the case may be ("Change Order"), and sent to Biowell, and such Change Order shall be subject to acceptance or rejection in writing by Biowell within seven (7) calendar days of its receipt thereof and shall not be binding until such acceptance. 6.7 APDN agrees to reciprocate to Biowell all terms and conditions set forth in this entire Section 6 in the event that Biowell or its sub-licensee desires to purchase APDN Products. 7. Non-competition & Non-solicitation 7.1 During the term of this Agreement, neither APDN, Licensor, or any of their affiliates shall solicit Customers in the Biowell Territory. APDN, Licensor or any of their affiliates shall use commercially reasonable efforts to promptly refer any entity to Biowell that is interested in Licensed Products, Technology, Product Materials, or APDN Products using or transporting the Licensed Products, Technology, Product Materials or APDN Products into the Biowell Territory. During the term of this Agreement, Biowell and its sub-licensees shall not solicit Customers outside of the Biowell Territory and shall use commercially reasonable efforts to promptly refer any entity to APDN that is interested in Licensed Products, Technology, Product Materials, or APDN Products using or transporting the Licensed Products, Technology, Product Materials or APDN Products into the APDN Territory. 7.2 During the term of this Agreement, each of Biowell, Licensor and APDN shall not, without the prior written consent from the other party, directly or indirectly (including without limitation, through any affiliate of either party), (i) solicit or request any person who is at the time an employee of or a consultant of the other party to leave the employment of or terminate such person's relationship with that party or (ii) employ, hire, engage or be associated with, or endeavor to entice away from the applicable party any such person. 7.3 During the term of this Agreement, each of Biowell, Licensor and APDN shall not, directly or indirectly (including without limitation, through any affiliate of either party) (i) solicit any existing customer of the other party, (ii) intentionally attempt to limit or interfere with any business agreement or 13 relationship existing between either party and/or its affiliates with any third party; or (iii) disparage the business reputation of the other party (or its management team) or (iv) take any actions that are harmful to the other party's goodwill with its customers, providers, vendors, employees, the media or the public, or (v) sell any product that is competitive with the Licensed Products or the APDN Products or engage directly or indirectly in the conduct of business with any company considered by the parties hereto to be competitive with the business as set forth in this Agreement. 7.4 During the two (2) year period following termination of this Agreement, Biowell shall not, directly or indirectly (including without limitation, through any affiliate), solicit any entity that shall have been a customer, supplier, consultant, development or joint venture partner of APDN at any time within two (2) years prior to terminating this Agreement to cease doing business in whole or in part with Licensor or APDN, as the case may be, nor may Biowell or any affiliate do business, directly or indirectly, with any such party during such two (2) year period. 8. Confidentiality 8.1 Biowell shall not use or divulge or communicate to any person (other than those whose province it is to know the same or as permitted or contemplated by this Agreement or with the written approval of the other party or as may be required by law): (i) any Confidential Information; or (ii) any of the terms of this Agreement 8.2 Biowell shall prevent the unauthorized publication or disclosure of any such Confidential Information, materials or documents and ensure that any person, subject to the written approval of Licensor, to whom the information, materials or documents are disclosed is aware that the same is confidential and is covered by a similar duty to maintain confidentiality. Biowell shall ensure that its directors, shareholders, employees, consultants, agents or advisors are aware of and comply with the confidentiality and non-disclosure provisions contained in this Section and shall indemnify Licensor and APDN as the case may be, against any loss or damage which Licensor and APDN may sustain or incur as a result of any breach of the terms hereof by Biowell, its directors, shareholders, employees, consultants, agents or advisors. 8.3 Licensor and APDN agree to reciprocate to Biowell all terms and conditions of Confidentiality as set forth in this Agreement. 9. Reservation of Rights 9.1 Biowell shall be permitted to: (i) make modifications or additions to the Technology, Product Materials, and Licensed Products in respect to any designs and such modifications or additions will be considered an improvement to such Technology, Product Materials or Licensed Products, and such modification and additions shall be governed as set forth in Sec. 1.2 and 1.3 above; (ii) discontinue selling Product Materials and Licensed Products if those products or parts thereof are discontinued or replaced except for those Licensed Products and Product Materials accepted to be delivered under a confirmed Purchase Order. 9.2 Licensor and APDN shall be permitted to: (i) make modifications or additions to the Technology, Product Materials, and APDN Products in respect to any designs as Licensor may in its discretion determine; and such modifications or additions will be considered an improvement 14 to the such Technology, Product Materials or APDN Product line and shall be the sole and exclusive property of Licensor and such Products shall be available for license to Biowell as set forth in Sec. 1.3 above; (ii) require Biowell to discontinue selling Licensed Products if those products or parts thereof are discontinued or replaced, except for those Licensed Products and Product Materials accepted to be delivered under a confirmed Purchase Order; and (iii) require Biowell either not to use or to cease to use any advertising or promotional material in respect to the Product Materials and Licensed Products which Licensor considers not to be in Licensor's best interests, upon ninety (90) days written notice to Biowell. 10. Legal Relationship 10.1 Nothing herein shall contain any facts as to suggest that Licensor and Biowell are engaging in a joint venture or partnership. Biowell shall have no authority to bind Licensor or APDN to any legal obligation. Biowell shall only contract with Customers on its own behalf. 10.2 In the event that Licensor is acquired by another entity, or there is a change of control within Licensor, this Agreement shall continue to exist, with all relative rights, privileges, titles, and shall be assigned and transferred in its entirety to the new or reorganized entity. 11. Termination 11.1 Licensor may terminate this Agreement if Biowell: (a) sells, assigns, or ceases to carry on, its main business or the business related to this Agreement, unless the parties mutually agree otherwise; (b) subject to Section 1.6, fails to meet any material performance requirements set forth on Exhibit 1 during the then current term of the Agreement; (c) sells any product that is competitive 15 with the Licensed Products or the APDN Products or engaged directly or indirectly in the conduct of business with any company considered by the parties hereto to be competitive with the business as set forth in this Agreement, (d) fails to comply with any of its obligations under this Agreement or the Purchase Agreement; 11.2 This Agreement may be terminated immediately by Biowell or Licensor upon written notice to the other party in the event that such other party files any formal petition in bankruptcy or insolvency, has any formal petition in bankruptcy or insolvency filed against it and such petition is not discharged within ninety (90) days of filing, or if such other party makes any general assignment or composition for the benefit of creditors with respect to any material portion of its assets, or if such other party has any trustee, liquidator, receiver or other fiduciary appointed with respect to any material portion of its business or assets and such trustee, liquidator, receiver or other fiduciary is not removed within sixty (60) days of appointment, or commits or suffers any other similar act of bankruptcy or insolvency to occur with respect to it. 11.3 This Agreement may be terminated by Biowell, upon sixty (60) days prior written notice to Licensor if Licensor or APDN breaches any of its material obligations under this Agreement and such breach is not cured within such sixty (60) day period. 12. Effect of Termination On the termination of this Agreement: 12.1 The license grant and all rights and obligations of the parties hereunder shall automatically terminate except for such rights of action as shall have accrued prior to such termination and any obligation which expressly or by implication may be intended to come into or continue in force on or after such termination; 12.2 Biowell shall, (i) at its own expense, return to Licensor or otherwise dispose of as Licensor may instruct, all technical and promotional materials and other documents and papers whatsoever sent to Biowell and relating to the Confidential Information, Technology, Product Materials and Licensed Products or the business of Licensor or APDN (other than correspondence between the parties, copies of which shall be delivered to Licensor) and all property of Licensor or APDN in Biowell's possession or under its control, (ii) immediately cease the use, marketing, distribution and sale of the Technology, Product Materials, Licensed Products and APDN Products, (iii) deliver all Customer information to Licensor, and (iv) cease the use of all trademarks and logos of APDN. 16 13. Exclusion of Liability 13.1 Except as set out in this Agreement, or to the extent required by law, all conditions, warranties and representations, expressed or implied, in relation to any Technology, Product Materials and Licensed Products which may be transferred from Biowell to the Licensor under the Purchase are excluded by Licensor. 13.2 Except as otherwise provided in this Agreement, neither Licensor nor APDN shall be liable to Biowell, whether for negligence, products liability, breach of contract, misrepresentation or otherwise, for: (i) loss or damage incurred by Biowell as a result of third party claims in relation to Intellectual Property Rights originally transferred from Biowell to the Licensor under the Purchase Agreement; or (ii) indirect or consequential damage suffered by a party, including, without limitation, loss of profits, goodwill, business opportunity or anticipated saving. 13.3 No party shall be liable to any other party for any loss, damages, expenses or liabilities arising from an infringement or claim of infringement of third party rights in the Intellectual Property Rights subsisting in the Technology, Product Materials and Licensed Products howsoever arising in connection with this Agreement. 13.4 (i) Biowell warrants that all Licensed Products and Product Materials sold by Biowell under the terms of this Agreement will be materially free from defects in workmanship and materials and substantially conform to the relevant "Specifications", reasonably formulated by Licensor or APDN and set forth on Schedule A attached hereto, as amended from time to time by Licensor and consented to by Biowell, under normal use and service for a period of twelve (12) months after delivery to the carrier for shipment (the "Biowell Warranty Period"). During the Biowell Warranty Period, a party may notify Biowell if all or any portion of such Product Materials or Licensed Products contains a material defect in materials or workmanship, or otherwise fails to conform substantially to the Specifications. Provided that such notice is received during the Biowell Warranty Period, Biowell shall promptly (but not later than thirty (30) days after receiving such notice) correct, at its own expense (which will include all shipping expenses), any such defect by repairing such defective Product Materials and/or Licensed Products or, at Biowell 's discretion, by delivering equivalent Product Materials and/or Licensed Products replacing such defective Product Materials and Licensed Products. Biowell may inspect and verify such alleged defect without need to ship the alleged defective items to Taiwan. (ii) APDN warrants that all APDN Products sold by APDN under the terms of this Agreement will be materially free from defects in workmanship and materials and substantially conform to the relevant "Specifications", reasonably formulated by Licensor or APDN and set forth on Schedule A attached hereto, as amended from time to time by Licensor, under normal use and service for a period 17 of twelve (12) months after delivery to the carrier for shipment (the "APDN Warranty Period"). During the APDN Warranty Period, a party may notify APDN if all or any portion of such Product Materials or APDN Products contains a material defect in materials or workmanship, or otherwise fails to conform substantially to the Specifications. Provided that such notice is received during the APDN Warranty Period, APDN shall promptly (but not later than thirty (30) days after receiving such notice) correct, at its own expense (which will include all shipping expenses), any such defect by repairing such defective Product Materials and/or APDN Products or, at such party's option, by delivering equivalent Product Materials and/or APDN Products replacing such defective Product Materials and APDN Products. APDN may inspect and verify such alleged defect without need to ship the alleged defective items to an APDN facility. (iii) The remedies for any breach of warranty as listed in this Section 13.4 shall be the sole and exclusive remedies available to a party at law or in equity. 13.5 WARRANTY EXCLUSIONS. NEITHER BIOWELL NOR APDN SHALL BE LIABLE UNDER ANY WARRANTY IF ITS TESTING AND EXAMINATION DISCLOSES THAT THE ALLEGED DEFECT IN THE LICENSED PRODUCT, APDN PRODUCT OR PRODUCT MATERIAL DOES NOT EXIST (PROVIDED THAT VERIFIABLE PROOF OF SUCH TESTING AND EXAMINATION IS PROVIDED) OR WAS CAUSED BY MISUSE, NEGLECT, IMPROPER STORAGE OR INSTALLATION OR TESTING, UNAUTHORIZED ATTEMPTS TO REPAIR, OR BY ACCIDENT, FIRE, LIGHTNING OR OTHER HAZARD. 13.6 Biowell will be liable for the Licensed Product manufactured by Biowell. Biowell shall maintain in full force and effect at all times during the term of this Agreement, comprehensive "occurrence" general liability insurance, including "occurrence" product liability and contractual liability insurance coverage with respect to the Licensed Products with minimum limits of liability of One Million US Dollars (US$ 1,000,000.00) or otherwise agreed in writing by both Parties. Such insurance will name Licensor and APDN as additional joint insureds thereon. Biowell will, from time to time upon reasonable request by APDN and Licensor, promptly furnish or cause to be furnished to APDN and Licensor evidence in form and substance satisfactory to APDN and Licensor of the maintenance of the insurance required by this Section, including certificates of insurance and proof of premium payments. APDN and Licensor's customers are not required to go to Biowell directly to file a claim of product liability. Biowell will take all necessary actions to defend APDN and Licensor with respect to any such claim. All expenses in this matter shall be paid by Biowell or Biowell's insurance. 18 13.8 APDN will be liable for the APDN Products manufactured by APDN. APDN shall maintain in full force and effect at all times during the term of this Agreement, comprehensive "occurrence" general liability insurance, including "occurrence" product liability and contractual liability insurance coverage with respect to the Licensed Products with minimum limits of liability of One Million US Dollars (US$ 1,000,000.00) or otherwise agreed in writing by both Parties. Such insurance will name Biowell as additional joint insureds thereon. APDN will, from time to time upon reasonable request by Biowell, promptly furnish or cause to be furnished to Biowell evidence in form and substance satisfactory to Biowell of the maintenance of the insurance required by this Section, including certificates of insurance and proof of premium payments. Customers are not required to go to APDN directly to file a claim of product liability. APDN will take all necessary actions to defend Biowell with respect to any such claim. All expenses in this matter shall be paid by APDN or APDN's insurance. 13.9 EXCEPT FOR THE EXPRESSED WARRANTIES CREATED UNDER THIS AGREEMENT AND EXCEPT AS SET FORTH OTHERWISE IN THIS AGREEMENT, IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER FOR ANY INCIDENTAL, CONSEQUENTIAL, SPECIAL OR PUNITIVE DAMAGES OF ANY KIND OR NATURE ARISING OUT OF THIS AGREEMENT OR THE SALE OF PRODUCTS, WHETHER SUCH LIABILITY IS ASSERTED ON THE BASIS OF CONTRACT, TORT (INCLUDING THE POSSIBILITY OF NEGLIGENCE OR STRICT LIABILITY), OR OTHERWISE, EVEN IF THE PARTY HAS BEEN WARNED OF THE POSSIBILITY OF ANY SUCH LOSS OR DAMAGE, AND EVEN IF ANY OF THE LIMITED REMEDIES IN THIS AGREEMENT FAIL OF THEIR ESSENTIAL PURPOSE. 13.10. In no event shall the aggregate liability of Biowell or APDN and Licensor in connection with this Agreement, or any other materials or services provided under this Agreement, whether arising in contract, tort or under any other legal theory (including, without limitation, negligence or strict liability), exceed the total value of the relevant Purchase Order. 13.11. Biowell will be responsible for any warranty claim received from its customers and shall seek appropriate compensation from APDN for any Products manufactured or delivered by APDN and its associates concerning the Licensed Products and Product Materials provided by APDN. 19 14. Intellectual Property Rights 14.1 All Intellectual Property Rights, including without limitation patents, designs, utility models, copyrights, trade or service marks, Know-How, trade secrets and other proprietary information, in or relating to the Technology, Product Materials, APDN Products and Licensed Products and any other products and services related thereto are and shall remain the sole and exclusive property of Licensor. Except as otherwise provided in this Agreement, Biowell shall have no right to use or obtain for its own benefit or grant any licenses with respect to the Technology, APDN Products, Licensed Products, Product Materials, or any other related products or services or any of the Intellectual Property Rights therein or relating thereto. 14.2 Each party shall notify the other party as soon as it receives any knowledge of any illegal or unauthorized use of any of the Technology, Product Materials, APDN Products and Licensed Products or any of the Intellectual Property Rights therein or relating thereto and Biowell will assist Licensor (at Licensor's expense) in taking all steps necessary to defend Licensor's rights therein. 14.3 Biowell shall not in any way: (a) disassemble or reverse engineer the Technology, Product Materials, APDN Products and Licensed Products and any related products supplied hereunder except as provided for in Sec. 1.2 above; (b) transfer possession of any Technology, Product Materials, APDN Products and Licensed Products and any related products supplied hereunder to another party, except as expressly permitted herein; or (c) use the Technology, Product Materials, APDN Products and Licensed Products and any related products supplied hereunder in any way not expressly provided for in this Agreement. 14.4 (a) Subject to the express prior written approval of Licensor, which approval shall not be unreasonably withheld, Biowell may use the trademarks and logos of Licensor and APDN for the sole purpose of marketing, reselling and promoting the Licensed Products in the Biowell Territory under, and during the term of, this Agreement and (b) Subject to the express prior written approval of Biowell, which approval shall not be unreasonably withheld, Licensor and APDN may use the trademarks and logos of Biowell for the sole purpose of marketing, reselling and promoting the Products during the term of this Agreement. All Licensed Products, packaging, labeling, advertising, promotional or other materials to be used by Biowell, which shall bear or display the trademarks and/or logos of Licensor or APDN, shall be subject to APDN's prior inspection and approval, which approval shall not be unreasonably withheld, delayed or conditioned. 15. General 15.1 The interpretation, validity and performance of the Agreement shall be governed by the laws of the State of Nevada, without regard to its conflicts of 20 laws rules. The Agreement is also subject to the Fair Trade Act in Taiwan and the Principles for Handling Cases Related to Technology Licensing Agreements. Any and all claims, disputes or controversies arising under, out of, or in connection with this Agreement or any breach thereof which cannot be resolved within sixty (60) Business Days of formal notification of default or dispute as set forth in Section 15.2 shall be exclusively submitted to binding arbitration. The arbitration shall be conducted in English language and by the International Chamber of Commerce which shall administer the arbitration under its commercial rules. The arbitration shall take place in Honolulu, Hawaii, United States or other jurisdictions agreed to in writing by the Parties. The parties hereto irrevocably submit to the exclusive jurisdiction of such entity. The parties hereby irrevocably waive, to the fullest extent permitted by applicable law, any objection which they may now or hereafter have to the laying of venue of any such dispute brought in such venue or any defenses of inconvenient forum in connection therewith. The arbitrators shall have no authority to change or modify any provision of this Agreement. Each party shall bear its own expenses and one-half of the expenses and costs of the arbitrators; provided that the arbitrators may award expenses and costs (including attorneys' fees) to either party. 15.2 Notices. All notices and other communications hereunder shall be in writing and shall be deemed given (i) when personally sent/delivered, by facsimile transmission (with hard copy to follow) or sent by express courier (charges prepaid) or (ii) five (5) days following mailing by registered or certified mail postage prepaid and return receipt requested. Unless another address is specified in writing, notices, demands and communications to Biowell, Licensor and APDN shall be sent to the addresses indicated below: If to Biowell to: Biowell Technology, Inc. 18F No 959 Chung Cheng Road Chungho City Taipai County Taiwan 235 ROC with a copy to: Dr. Jun-Jei Sheu Chairman & CEO Fax: 011-886-2-22215258 21 If to APDN or Licensor to: Applied DNA Sciences, Inc. 9229 West Sunset Boulevard, Suite 830 Los Angeles, California 90069 with a copy to: Peter Brocklesby President Fax: 310-860-1303 15.3 This Agreement may be executed in any number of counterparts, each of which will be an original but all of which together will form one agreement. Delivery of an executed copy of this Agreement by facsimile transmission will have the same effect as delivery of an original signed counterpart. 15.4 The failure of either party hereto to insist upon the strict adherence to any term of this Agreement on any occasion shall not be considered as a waiver of any right hereunder nor shall it deprive that party of the right to insist upon the strict adherence to that term or any other term of this Agreement at some other time. 15.5 This Agreement constitutes the entire agreement between the parties concerning the subject matter hereof and supersedes all written and oral prior agreements and understandings with respect thereto. No variation, amendment or modification of the terms of this Agreement nor any waiver of any of the terms or provisions hereof shall be valid unless in writing and signed by an authorized representative of each party. 15.6 If any provision(s) contained herein shall be deemed by any court of competent jurisdiction or arbitrator to be invalid, illegal or unenforceable for any reason (including, but not limited to a violation of, or failure to comply with, the then applicable provisions of the Fair Trade Act and/or the Principles for Handling Cases Related to Technology Licensing Agreements), then the parties hereto agree that said provision(s) shall be modified by the court or arbitrator so as to be enforceable to the maximum extent permitted by law (including the Fair Trade Act and/or the Principles for Handling Cases Related to Technology Licensing Agreements) and in such modified form shall be enforced in the manner contemplated hereby. 15.7 Each of the parties to this Agreement shall be responsible for its own taxes and expenses whether arising from or in connection with the execution and delivery of this Agreement or otherwise. 15.8 Each of the parties hereby acknowledge and agree that money damages may not be an adequate remedy for any breach or threatened breach of any of the provisions of this Agreement and that, in such event, they may, in addition to 22 any other rights and remedies existing in their favor, apply to any court of competent jurisdiction for specific performance, injunctive and/or other relief in aid of arbitration to preserve and protect the rights of the parties pending action by the arbitration panel. 15.9 This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns, but neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by Biowell, including by operation of law, without the prior written consent of Licensor. For purposes hereof, an assignment shall be deemed to have occurred upon (i) any merger or consolidation of Biowell, which merger or consolidation results in the holders of the issued and outstanding voting securities of Biowell immediately prior to such transaction beneficially owning or controlling less than a majority of the voting securities of the continuing or surviving entity immediately following such merger or consolidation, (ii) the sale, transfer or other disposition of all or substantially all of the assets of Biowell, or (iii) the sale, transfer or other disposition of more than fifty percent (50%) of the issued and outstanding equity or voting rights of Biowell. Subject to the exercise of its rights under Section 11.1(a), any assignment of this Agreement or any of the rights, interests or obligations hereunder in contravention of this Section 15.9 shall be null and void and shall not bind or be recognized by the Licensor or APDN. 15.10 Force Majeure. Except for payment of monies, neither party shall be liable for failure to fulfill its obligations under this Agreement or any purchase order issued hereunder or for delays in delivery due to causes beyond its reasonable control, including, but not limited to, acts of God, man-made or natural disasters, earthquakes, fire, riots, flood, material shortages, strikes, delays in transportation or inability to obtain labor or materials through its regular sources, lockouts, civil commotions, and other unforeseeable supervening events; provided that the party claiming any such cause as an excuse for non-performance must provide written notice thereof to the other party within fifteen (15) days of the happening of the event that is the basis for the delay or failure to perform. The time for performance of any such obligation shall be extended for the time period lost by reason of the delay. 15.11 The provisions of this Section and Sections 3.5, 3.6, 4.2, 5.1, 7.4, 8, 12, 13, 14 and 15.1 will survive the termination of this Agreement 23 IN WITNESS WHEREOF, the parties hereto have executed this Agreement in two copies of which each has received one. Biowell Technology Inc. APDN (B.V.I.) Inc. By: /s/ JUN-JEI SHEU By: /s/ PETER BROCKLESBY ---------------- -------------------- Name: Jun-Jei Sheu Name: Peter Brocklesby Title: Chairman & CEO Title: Authorized Signatory Date: Date: Applied DNA Sciences, Inc. Applied DNA Sciences, Inc. By: /s/ PETER BROCKLESBY By: /s/ ROB HUTCHISON -------------------- ----------------- Name: Peter Brocklesby Name: Rob Hutchison Title: President Title: Chairman and CEO Date: Date: EX-10 5 july2120058kex103.txt Exhibit 10.3 CONSULTING AGREEMENT This Consulting Agreement ("Agreement") is being entered into as of this 12th day of July, 2005, between APPLIED DNA SCIENCES, INC., a Nevada corporation (the "Company"), with offices at 9229 West Sunset Bvd, Suite 830, Los Angeles, CA 90069, and Timpix International Limited, a British Virgin Islands corporation, with offices at Sea Meadow House, Blackburne Highway, PO Box 116, Road Town, Tortola, British Virgin Islands, (the "Consultant"). WHEREAS, Consultant desires to provide consulting services for the Company as an independent contractor, and shall not be required to devote its full time to the business of the Company and shall be free to pursue other business interests which are not directly or indirectly competitive with the business of the Company; and WHEREAS, the Company requires, specifically, employees of Consultant, Dr.. Jun-Jei Sheu, Dr. Ben Liang and Dr. Johnson Chen (the "Consultants") provide the consulting services required by the Company on behalf of the Consultant and Consultant agrees that Consultants shall be directed by Consultant to devote their full time to the business of the Company; WHEREAS, Consultant and the Company further agree that upon each of the Consultants obtaining H-1 or other visas (the "Visa") to work in the United States, this Agreement shall be modified and/or terminated as the Company shall enter into Employment Agreements with each of the Consultants, substantially in the form of the Employment Agreements attached as Exhibits "A", "B" and "C" to this Agreement and hereby made a part of this Agreement; NOW, THEREFORE, based upon the premises and the following mutual covenants, conditions, promises and restrictions, the parties hereby agree as follows: 1. Consulting Arrangement. Subject to the conditions and covenants contained elsewhere in this Agreement, the Company hereby contracts for the services of Consultant and Consultant agrees to perform such duties and responsibilities and to render advice and consulting as may be requested by the Company from time to time during the term of this consulting arrangement in connection with the Company's business throughout the United States and world wide, for a term equal to the shorter of (a) two (2) years or (b) such time as Consultants has obtained a Visa, commencing on July 12, 2005 subject to the approval by the Board and Shareholders of Biowell Technology, Inc., a Taiwan corporation ("Biowell") of resolutions to approve the transfer of certain Intellectual Property to Rixflex Holdings Limited ("Rixflex") and approval of a certain Plan of Merger by the Shareholders of Rixflex (the "Consulting Period"), unless sooner terminated as provided for elsewhere in this Agreement; provided, however, that such term shall be automatically renewed for successive one (1) year periods unless any party hereto gives notice of intention not to renew this Agreement at least thirty (30) days prior to the last day of the initial term or any renewal term of this Agreement. 2. Relationship Between Parties. During the term of the Consulting Arrangement, Consultant shall be deemed to be an independent contractor. The Consultant shall be completely responsible for the actions and inactions of the Consultants and shall cause Consultants to perform their duties in accordance with this Agreement. Subject to Section 7 of this Agreement, Consultant may provide services other than services of Consultants to any person, firm or entity as it deems advisable except to the extent it is obligated to devote its time, energy and skill to the Company pursuant to the terms of this Agreement. None of the Consultants shall be considered as having an employee status vis-a-vis the Company, or be entitled to participate in any plans, arrangements or distributions by the Company pertaining to or in connection with any pension, stock, bonus, profit sharing, welfare benefits, or similar benefits for the regular employees of the Company. The Company shall not withhold any taxes in connection with the compensation due Consultant hereunder, and Consultant and Consultants, severally, shall be responsible for the payment of any such taxes and hereby agrees to indemnify the Company against nonpayment thereof. 3. Services of Consultants. During the term of the Consulting Agreement, and until such time as each of the Consultants enters into an Employment Agreement with the Company, Consultant shall cause Consultants to provide consulting services to the Company pursuant to the terms hereof. Consultant is aware that the Company has entered into this Consulting Agreement with the express understanding that Consultants and only Consultants, will provide the consulting services hereunder. During the term of the Consulting Agreement, Consultants shall devote their full time, energy and skill to the Company. 4. Consulting Services. During the term of the Consulting Agreement, the Consultants shall provide consulting services to the Company, which services shall include, but not be limited to, at a location to be determined by the Company, convey and transfer technology under an agreement for Company to acquire intellectual property from Biowell, identify equipment and materials required to establish Laboratory facilities, identify sources of supply for core equipment and materials, establish Laboratory facilities in the United States and elsewhere, select contract laboratories in the United States and elsewhere, establish Standard Laboratory Operating Procedures and Laboratory Quality Assurance Protocols, technical procedures, practices and methods necessary for the production and replication of the core DNA technology and products, assist with the integration of the technologies constituted by the intellectual property acquired by the Company from Biowell with Company's OEM's, Manufacturers and Distributors, assist to make scientific and technology presentations with Company's clients, customers and distribution partners and Licensees, assist with technology development and interface/integration with other security products solely developed by the Company or jointly developed by the Company with partners, or developed under license with third party technologies/products and such other duties as may be assigned by the Board of Directors of the Company. Consultant shall use its best efforts to keep the Company informed of all corporate business opportunities which shall come to its attention and appear beneficial to the Company's business so that the Company can obtain the maximum benefits from Consultant's knowledge, experience, and personal contacts. 5. Compensation. (a) As part of the consideration for the services to be rendered under by Consultants, the Company shall pay Consultant compensation at the aggregate rate of an amount up to US Dollars Forty Seven Thousand (US $47,000) per month 2 for the Consultants, adjusted as set forth below. Each Consultant shall receive a monthly Consultancy Fee equal to that provided in their respective Employment Agreements, attached as Exhibits "A", "B" and "C" to this Agreement and made a part hereto. The Consultant compensation shall commence upon Closing by the Company of the acquisition of the Intellectual Property of Biowell Technologies, Inc., and shall continue each month through the term of the Consulting Agreement. Until the commencement of the Employment Agreement, each Consultant shall receive one hundred percent (100.0%) of his monthly Consulting Fee for each week, or part thereof, for time spent within the US providing full-time services as may be required by the Company under this Agreement. Until the commencement of the Employment Agreement, each Consultant shall receive fifty percent (50.0%) of his monthly Consulting Fee for time spent in Taiwan providing part-time services as may be required by the Company. Additionally, Company shall pay travel and accommodation expenses reasonably incurred by Consultants in their performance of the services outlined herein. (b) In the event that each of the Consultants shall no longer provide the consulting services pursuant to the Consulting Agreement, the compensation listed in Section 5(a) will be reduced pro-rata. 6. Confidentiality Covenants. (a) Acknowledgments by the Consultant. The Consultant acknowledges that (a) during the Consulting Period and as a part of the Consulting Arrangement, the Consultant and Consultants will be afforded access to Confidential Information (as defined below); (b) public disclosure of such Confidential Information could have an adverse effect on the Company and its business; (c) because the Consultants possess substantial technical expertise and skill with respect to the Company's business, the Company desires to obtain exclusive ownership of each Consultant Invention (as defined below), and the Company will be at a substantial competitive disadvantage if it fails to acquire exclusive ownership of each Consultant Invention; (d) the provisions of this Section 6 are reasonable and necessary to prevent the improper use or disclosure of Confidential Information and to provide the Company with exclusive ownership of all Consultant Inventions. (b) Agreements of the Consultant. In consideration of the compensation and benefits to be paid or provided to the Consultant by the Company under this Consulting Agreement, the Consultant and Consultants covenant as follows: (1) Confidentiality. (i) During and following the Consulting Period, the Consultant will hold in confidence and Consultants will hold in Confidence the Confidential Information and will not disclose it to any person except with the specific prior written consent of the Company or except as otherwise expressly permitted by the terms of this Agreement. (ii) Any trade secrets of the Company will be entitled to all of the protections and benefits under California Civil Code Section 3426, Uniform Trade Secrets Act and any other applicable law. If any information that the Company deems to be a trade secret is found by a court of competent jurisdiction 3 not to be a trade secret for purposes of this Agreement, such information will, nevertheless, be considered Confidential Information for purposes of this Agreement. The Consultant hereby waives any requirement that the Company submit proof of the economic value of any trade secret or post a bond or other security. (iii) None of the foregoing obligations and restrictions applies to any part of the Confidential Information that the Consultant demonstrates was or became generally available to the public other than as a result of a disclosure by the Consultant. (iv) The Consultants will not remove from the Company's premises (except to the extent such removal is for purposes of the performance of the Consultants' duties at home or while traveling, or except as otherwise specifically authorized by the Company) any document, record, notebook, plan, model, component, device, or computer software or code, whether embodied in a disk or in any other form (collectively, the "Proprietary Items"). The Consultant recognizes that, as between the Company and the Consultant, all of the Proprietary Items, whether or not developed by the Consultant and/or Consultants, are the exclusive property of the Company. Upon termination of this Agreement by either party, or upon the request of the Company during the Consulting Period, the Consultant will return to the Company all of the Proprietary Items in the Consultant's possession or subject to the Consultant's control, and the Consultant shall not retain any copies, abstracts, sketches, or other physical embodiment of any of the Proprietary Items. (2) Consultant Inventions. Each Consultant Invention will belong exclusively to the Company. The Consultant acknowledges that all of the Consultant's writing, works of authorship, and other Consultant Inventions are works made for hire and the property of the Company, including any copyrights, patents, or other intellectual property rights pertaining thereto. If it is determined that any such works are not works made for hire, the Consultant hereby assigns to the Company all of the Consultant's right, title, and interest, including all rights of copyright, patent, and other intellectual property rights, to or in such Consultant Inventions. The Consultant and Consultants covenant that it/they individually and severally shall promptly: (i) disclose to the Company in writing any Consultant Invention; (ii) assign to the Company or to a party designated by the Company, at the Company's request and without additional compensation, all of the Consultant's right to the Consultant Invention for the United States and all foreign jurisdictions; (iii) execute and deliver to the Company such applications, assignments, and other documents as the Company may request in order to apply for and obtain patents or other registrations with respect to any Consultant Invention in the United States and any foreign jurisdictions; 4 (iv) sign all other papers necessary to carry out the above obligations; and (v) give testimony and render any other assistance in support of the Company's rights to any Consultant Invention. (c) Disputes or Controversies.The Consultant recognizes that should a dispute or controversy arising from or relating to this Agreement be submitted for adjudication to any court, arbitration panel, or other third party, the preservation of the secrecy of Confidential Information may be jeopardized. All pleadings, documents, testimony, and records relating to any such adjudication will be maintained in secrecy and will be available for inspection by the Company, the Consultant, and their respective attorneys and experts, who will agree, in advance and in writing, to receive and maintain all such information in secrecy, except as may be limited by them in writing. (d) Definitions. (1) For the purposes of this Section 6, "Confidential Information" shall mean any and all: (i) trade secrets concerning the business and affairs of the Company, including but not limited to trade secrets related to sequencing, imprinting and incorporating DNA, encapsulating DNA, immobilizing DNA, purifying DNA, extracting DNA, detecting the presence of DNA and any DNA sequence, or fragment thereof, and the subject of any test, work or investigation undertaken by the Company, product specifications, data, know-how, formulae, compositions, processes, designs, sketches, photographs, graphs, drawings, samples, inventions and ideas, past, current, and planned research and development, current and planned manufacturing or distribution methods and processes, customer lists, current and anticipated customer requirements, price lists, market studies, business plans, computer software and programs (including object code and source code), computer software and database technologies, systems, structures, and architectures (and related formulae, compositions, processes, improvements, devices, know-how, inventions, discoveries, concepts, ideas, designs, methods and information, and any other information, however documented, that is a trade secret within the meaning of California Civil Code Section 3426, Uniform Trade Secrets Act; (ii) information concerning the business and affairs of the Company (which includes laboratory manuals, blueprints, engineering design plans, safety and maintenance manuals, historical financial statements, financial projections and budgets, historical and projected sales, capital spending budgets and plans, the names and backgrounds of key personnel, personnel training and techniques and materials, however documented; and (iii) notes, analysis, compilations, studies, summaries, and other material prepared by or for the Company containing or based, in whole or in part, on any information included in the foregoing. 5 (2) For the purposes of this Section 6, "Consultant Invention" shall mean any idea, invention, technique, modification, process, alteration or improvement (whether patentable or not), any industrial design (whether registerable or not), any mask work, however fixed or encoded, that is suitable to be fixed, embedded or programmed in a semiconductor product (whether recordable or not), and any work of authorship (whether or not copyright protection may be obtained for it) created, conceived, or developed by the Consultant and/or Consultants, either solely or in conjunction with others, during the Consulting Period, or a period that includes a portion of the Consulting Period, that relates in any way to, or is useful in any manner in, the business then being conducted or proposed to be conducted by the Company, and any such item created by the Consultant, either solely or in conjunction with others, following termination of this Agreement , that is based upon or uses Confidential Information. 7. Non-Competition And Non-Interference. (a) Acknowledgments by the Consultant. The Consultant acknowledges that: (a) the services to be performed by it under this Agreement are of a special, unique, unusual, extraordinary, and intellectual character; (b) the Company's business is national in scope and its products are marketed throughout the United States and world wide; (c) the Company competes with other businesses that are or could be located in any part of the United States and world wide; (d) the provisions of this Section 7 are reasonable and necessary to protect the Company's business. (b) Covenants of the Consultant. In consideration of the acknowledgments by the Consultant, and in consideration of the compensation and benefits to be paid or provided to the Consultant by the Company, the Consultant and Consultants covenant that it/they may not, directly or indirectly: (1) except as permitted under that certain Exclusive License Agreement between Biowell and APDN (B.V.I.), Inc. during the Consulting Period, and the Post-Consulting Period (as defined below), engage or invest in, own, manage, operate, finance, control, or participate in the ownership, management, operation, financing, or control of, be employed by, associated with, or in any manner connected with, lend the Consultant's or any Consultants' name(s) or any similar name to, lend Consultant's or Consultants' or any Consultants credit to or render services or advice to, any business whose products or activities compete in whole or in part with the products or activities of the Company; provided, however, that the Consultant and Consultants may, in the aggregate, purchase or otherwise acquire up to (but not more than) one percent of any class of securities of any enterprise (but without otherwise participating in the activities of such enterprise) if such securities are listed on any national or regional securities exchange or have been registered under Section 12(g) of the Securities Exchange Act of 1934; (2) whether for the Consultant's own account or for the account of any other person, at any time during the Consulting Period and the Post-Consulting Period, solicit business of the same or similar type being carried on by the Company, from any person known by the Consultant to be a customer of the 6 Company, whether or not the Consultant had personal contact with such person during and by reason of this Agreement; (3) whether for the Consultant's own account or the account of any other person (i) at any time during the Consulting Period and the Post-Consulting Period, solicit, employ, or otherwise engage as an employee, independent contractor, or otherwise, any person who is or was an employee of the Company at any time during the Consulting Period or in any manner induce or attempt to induce any employee of the Company to terminate his employment with the Company; or (ii) at any time during the Consulting Period and for the Post-Consulting Period , interfere with or attempt to interfere with the Company's relationship with any person, including any person who at any time during the Consulting Period was an employee, contractor, supplier, or customer of the Company; or (4) at any time during or after the Consulting Period, disparage the Company or any of its shareholders, directors, officers, employees, or agents. For purposes of this Section 7, the term "Post-Consulting Period" means the three (3) year period beginning on the date of termination of this Agreement. If any covenant in this Section 7 is held to be unreasonable, arbitrary, or against public policy, such covenant will be considered to be divisible with respect to scope, time, and geographic area, and such lesser scope, time, or geographic area, or all of them, as a court of competent jurisdiction may determine to be reasonable, not arbitrary, and not against public policy, will be effective, binding, and enforceable against the Consultant and/or Consultants individually and severally. The period of time applicable to any covenant in this Section 7 will be extended by the duration of any violation by the Consultant or Consultants of such covenant. 8. Termination. (a) Termination by Company. Company may, upon written notice to Consultant, immediately terminate this Consulting Agreement, or the services of Consultants, upon the occurrence of any of the following: (1) Disability (as defined below) for a period of more than three (3) months in any twelve (12) month period or for periods aggregating more than six (6) months during any eighteen month period. or Death of Drs. Sheu, Liang or Johnson; (2) Consultants no longer work for the Consultant, provided, however, this shall not apply in the event that Consultants execute an employment agreement with the Company; (3) The Consultant fails to appoint Drs. Sheu, Liang and Johnson to perform the work under this Consulting Agreement on a full time basis; 7 (4) The Consultant appoints personnel other than Drs. Sheu, Liang and Johnson to perform the work under this Consulting Agreement; (5) The Consultant or any subsidiary of the Consultant shall make an assignment for the benefit of creditors, or apply for or consent to the appointment of a receiver or trustee for it or for a substantial part of its property or business, or such a receiver or trustee shall otherwise be appointed; (6) Bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings for relief under any bankruptcy law or any law for the relief of debtors shall be instituted by or against the Consultant or any subsidiary of the Consultant, Drs. Sheu, Liang and Johnson ; or (7) For Cause, as defined below. (b) Termination by Consultant. Consultant may terminate this Consulting Agreement at any time during the Term for Good Reason, as defined below, upon sixty (60) days advance written notice to Company (during which period, Consultant shall, unless otherwise requested in writing by Company, continue to perform its duties as specified under this Agreement). (c) Definitions. (1) For the purposes of this Section 8, "Disability" shall mean any physical or mental incapacity, illness or infirmity that prevents or significantly restricts Consultants from performing their individual duties on a full-time basis. Any dispute as to whether Consultants have suffered a Disability, as to the date any Disability began or as to the duration of any Disability shall be settled by a medical expert selected and paid by Company and reasonably acceptable to Consultant, whose written report shall be final and binding upon the parties (2) For the purposes of this Section 8, "Cause" shall occur when Consultant or Drs. Sheu, Liang or Johnson commits an act of dishonesty or breach of trust, acts in a manner that is intentionally inimical or injurious to the business or interests of Company, or breaches this Agreement in any material respect (including failure to comply with any lawful directives issued by the Board of Directors of the Company; provided that Consultant is given written notice specifying, in reasonable detail, the nature of the alleged neglect, act, failure or breach specified above, and either (a) Consultant has ten (10) days to take remedial action but fails or refuses to do so, or (b) in Company's reasonable judgment, an opportunity to take remedial action would not be meaningful or appropriate under the circumstances. "Cause" also shall exist if Consultant or Drs. Sheu, Liang and Johnson are convicted of a felony. (3) For the purposes of this Section 8, "Good Reason" shall mean (A) the Company's failure to make any of the payments or provide any of the material benefits owed to Consultant under this Agreement, provided that Company does not make such payment or provide such benefit within ten (10) days of receiving written notice of such failure; (B) Company shall materially breach any material term of this Agreement, provided that Company has not cured or made substantial efforts to cure such material breach within thirty (30) days of receiving 8 written notice of such material breach; or (C) if there shall be a "Change in Control" (as hereinafter defined) of Company. (4) For the purposes of this Section 8, a "Change in Control" shall be deemed to occur upon a sale by Company of substantially all of its assets or greater than fifty percent (50.0%) of its stock to an unaffiliated entity or person or the consolidation or merger of Company with or into an unaffiliated entity. An "affiliate" shall mean any entity or person that directly, or indirectly through on or more intermediaries, controls, or is controlled by, or is under common control with, any other entity or person. (d) Return of Materials upon Termination. Upon termination of this Consulting Agreement, regardless of the reason, Consultant (including its employees and their heirs, personal representatives or estate) shall promptly return to Company all documents (including all copies thereof) and other materials and property of Company, or which pertains to the Company's business in Consultant's possession or control, no matter from whom or in what manner acquired 9. Indemnification. Consultant hereby agrees to hold harmless and indemnify Company from and against any and all loss, damage, expense, and cost (including reasonable attorneys' fees incurred in connection with the same) incurred by Company as a result of Consultant's breach of any covenant or agreement made herein. 10. Non-Disclosure. Except as previously agreed upon in writing between Company and Consultant or unless the same become a matter of public record or public knowledge, Consultant shall not, at any time during the term of this Agreement or after termination of this Consulting Agreement with Company for any reason whatsoever, in any manner whatsoever, either directly or indirectly, divulge, disclose or communicate to any person, firm, association or corporation, or use for his own benefit, gain or otherwise, or for any entity for which Consultant is an employer, officer, director, owner, employee, partner or other participant any Confidential Information or any other like materials or information in the possession of, belonging to or concerning Company, without regard to whether any or all of the foregoing are found to be confidential, material or important, except as may be necessary in the ordinary course of performing Consultant's services hereunder. The parties hereto specifically stipulate that as between them the above listed items are important, material and confidential and gravely affect the effective and successful conduct of the business of Company. 11. Prior Employment. (a) Consultant represents that its performance, and that of Drs. Sheu, Liang and Johnson of any and all the terms of this Agreement as Consultants to the Company does not and will not breach any agreement to keep in confidence proprietary information acquired by it or them in confidence or in trust prior to the execution of this Consulting Agreement. Consultant and Drs. Sheu, Liang and Johnson have not entered into, and they agree none will enter into, any agreement either written or oral in conflict herewith. (b) Consultant understands as part of the consideration for its continued retention by Company, that Drs. Sheu, Liang and Johnson have not brought and will not bring to Company or use in the performance of the responsibilities hereunder any materials or documents of a former employer which are not generally available to the public, unless they have obtained written 9 authorization from the former employer for their possession and use. (c) In the event that prior to entering this Consulting Agreement, Consultants terminated employment with one or more prior employers, the Consultant agrees to indemnify and hold harmless Company, its directors, officers and employees, against any liabilities and expenses, including amounts paid in settlement, incurred by any of them in connection with any claim by any of Drs. Sheu, Liang and Johnson's prior employers that the termination of their individual employment with such employer, their employment by Consultant, or use of any skills and knowledge by Company is a violation of contract or law. On or prior to the date hereof, Consultant has delivered to Company a copy of any contract of employment between Drs. Sheu, Liang and Johnson and each such prior employer. 12. Specific Performance. The Consultant acknowledges that its obligations and the obligations of Consultants hereunder are unique, and that it would be extremely impracticable to measure the resulting damages if he should default in its obligations under this Agreement. Accordingly, in the event of the failure by Consultant to perform its obligations hereunder, which failure constitutes a breach hereof by him, the Company may, in addition to any other available rights or remedies, sue in equity for specific performance of each of the Consultants and, in connection with any such suit, the Consultant and Consultants each expressly waives the defense therein that the Company has an adequate remedy at law. 13. Interpretation. It is the desire and intent of the parties that the provisions of this Agreement shall be enforced to the fullest extent permissible under the laws and public policies applied in each jurisdiction in which enforcement is sought. Accordingly, if any particular provision of this Agreement shall be adjudicated to be invalid or unenforceable, such provision shall be deemed amended to delete there from the portion thus adjudicated to be invalid or unenforceable, such deletion to apply only with respect to the operation of such provision in the particular jurisdiction in which such adjudication is made. In addition, if any one or more of the provisions contained in this Agreement shall for any reason be held to be excessively broad as to duration, geographical scope, activity or subject, it shall be construed by limiting and reducing it so as to be enforceable to the extent compatible with the applicable law as it shall then appear. 14. Entire Agreement; Modification; Waiver. This Agreement constitutes the entire agreement between the parties pertaining to the subject matter contained in it and supersedes all prior agreements, representations and understandings between the parties. No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by both parties. No waiver of any of the provisions of this Agreement shall be deemed to, or shall constitute a waiver of, any other provisions, whether or not similar, nor shall any waiver constitute a continuing waiver. No waiver shall be binding unless executed in writing by the party making the waiver. 15. Notices. All notices, requests, demands or other communications required or desired to be given hereunder shall be in writing and shall be sent by registered or certified mail, with return receipt requested, with a copy by facsimile transmission to the following address (or as the parties shall otherwise direct in writing): If to Company, to: Applied DNA Sciences, Inc. 9229 West Sunset Boulevard 10 Suite 830 Los Angeles, CA 90069 Attn: Peter Brocklesby, President Fax: 310-860-1303 With a copy to: Sichenzia Ross Friedman Ference LLP 1065 Avenue of the Americas 21st Floor New York, New York 10018 Attn: Andrea Cataneo, Esq. Fax: 973-442-9933 If to Consultant, to: Biowell Technology Inc. 18F, No. 959 Chung Cheng Road Chungho City, Taipei County Taiwan 235, ROC Fax: 886-2222-15258 16. Governing Law. This Agreement shall be governed by, and construed in accordance with, the local law of the State of California. If any term of this Agreement is found to invalid by a court of competent jurisdiction, the remaining terms and conditions shall remain in full force and effect. 17. Arbitration; Jurisdiction. Any dispute, controversy or claim arising out of or relating to this Agreement or any other agreement or instrument contemplated hereby or entered into in connection herewith or any of the transactions contemplated hereby or thereby shall be resolved by binding arbitration. The arbitration shall be conducted by a single arbitrator who shall administer the arbitration under the then current commercial rules. The arbitration shall take place in Los Angeles, California. The parties hereto irrevocably submit to the exclusive jurisdiction of such entity. The parties hereby irrevocably waive, to the fullest extent permitted by applicable law, any objection which they may now or hereafter have to the laying of venue of any such dispute brought in such venue or any defense of inconvenient forum in connection therewith. 18. Counterparts. This Agreement may be executed in one or more counterparts, each of which be deemed an original, but all of which when taken together shall constitute one and the same Agreement. 19. Non-Assignability. This agreement shall not be assignable by Consultant or Consultants without the express written consent of the Company. This Agreement supersedes any and all written and oral agreements between the parties hereto. [Remainder of page intentionally left blank] 11 IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of the day and year first above written. For: APPLIED DNA SCIENCES, INC. By: /s/ PETER BROCKLESBY -------------------- Name: Peter Brocklesby Title: President By: /s/ ROB HUTCHISON ----------------- Name: Rob Hutchison Title: Chairman & CEO For: TIMPIX INTERNATIONAL LIMITED By: /s/ JUN-JEI SHEU ---------------- Name: Dr. Jun Jei Sheu, Ph.D. Title: Consultant By: /s/ BENAJMIN LIANG ------------------ Name: Dr. Benjamin Liang, Ph.D. Title: Consultant By: /s/ JOHNSON CHEN ---------------- Name: Dr. Johnson Chen, Ph.D. Title: Consultant 12 EX-10 6 july2120058kex104.txt Exhibit 10.4 trilogy capital partners, inc. Letter of Engagement Applied DNA Sciences, Inc. June 20, 2005 The following sets forth the agreement for the engagement of Trilogy Capital Partners, Inc. ("Trilogy") by Applied DNA Sciences, Inc. ("APDN" or the "Company"): Term and Twelve months, commencing as of the date set forth above Termination (the "Initial Term"), and terminable thereafter by either party upon 30 days' prior written notice. Objective The development and implementation of a proactive marketing program to increase the awareness of APDN and generate a significant increase in liquidity and market capitalization. In addition, upon request, Trilogy will advise APDN in business development and strategic advisory services. The Program Trilogy will structure and implement a marketing program designed to create extensive financial market and investor awareness for APDN to drive long-term shareholder support. The core drivers of the program will be to create institutional and retail buying in the Company's stock through a proactive sales and marketing program emphasizing technology-driven communications, coupled with 1-to-1 selling and leveraging APDN's image to attract additional long term investors and to create additional opportunities in M&A and Business Development. As share price is affected by various factors, Trilogy can give no assurance that the marketing program will result in an increase in APDN's stock price. Trilogy understands that during any period in which the Company is in "registration" for a public offering of securities under the Securities Act of 1933, and during the distribution of such securities, the Company's investor relations and marketing efforts will be severely limited. However, it will be the responsibility of the Company (with the advice of its securities counsel) to determine what investor relations and financial marketing efforts are permissible and non-permissible during such periods, and Trilogy will follow the direction of the Company and its securities counsel. Responsibilities In addition to marketing and financial public relations, Trilogy will assume the responsibilities of an in-house Investor Relations Officer for APDN on a full turnkey basis, including the generation of corporate and shareholder communications, retail and institutional investor contact and media. Trilogy will work in conjunction with the Company's management, securities counsel, investment bankers and auditors and under supervision of management. The content is as follows: o Campaign Development and Execution o Press Announcements: drafting, approval and distribution o Database Development and Management o Image Analysis: recommendations and implementation o Messaging: institutional and retail o Online presentations: drafting and production responsibilities o Website Overhaul - installation and maintenance of auto IR program o Email messaging: targets: Retail and Institutional/Other databases o Media including Interactives and PowerPoints o Direct Mail: shareholder, media, APDN relationship universe o Public Relations o Capital Conferences Trilogy will not publish or publicly release any press release or other document ("IR Documents") regarding the Company that has not been approved in writing by the Company. The Company assumes responsibility for the accuracy and completeness of all IR Documents and the compliance of such Documents with applicable laws, rules and regulations. The Company agrees that Trilogy has no obligation or duty to verify the accuracy or completeness of the IR Documents. Fees $12,500 per month, with first payment due on execution. Wiring information is set forth below. 2 Equity APDN has concurrently herewith issued to Trilogy 7,500,000 Compensation Warrants. Each Warrant represents the right to purchase one share of Common Stock for $0.55 per share at any time through the third year following issuance. The Company agrees to file a Registration Statement with the Securities and Exchange Commission registering the shares underlying the Warrants no later than the earlier to occur of: (i) 15 days following the effectiveness of the Company's current registration statement on Form SB-2 (File No. 333-122848) and (ii) September 19, 2005. Marketing To support the financial marketing program, APDN Budget acknowledges that it will incur certain third party marketing costs. Trilogy will not incur these costs on behalf of the Company except with the approval of the Company or pursuant to a budget approved by the Company (which budget shall not be more than $200,000 unless approved by an officer of the Company). The Company shall have no obligation to reimburse Trilogy for any third party marketing cost that exceeds the approved budget or is otherwise not approved by the Company. The Company understands that prompt payment of these costs is vital to the on-going investor relations program, and therefore shall pay these costs promptly upon invoice, to Trilogy (to enable Trilogy to promptly reimburse these third parties). The Company shall indemnify and hold Trilogy harmless from any losses, claims, costs, expenses, liabilities and damages from failure to timely pay these third party marketing costs. Indemnification The Company agrees to provide the indemnification set forth in "Exhibit A" attached hereto. Corporate The obligations of Trilogy are solely corporate obligations, Obligations and no officer, director, employee, agent, shareholder or controlling person of Trilogy shall be subject to any personal liability whatsoever to any person, nor will any such claim be asserted by or on behalf of any other party to this Agreement. Additional If Trilogy is called upon to render services directly or Services indirectly relating to the subject matter of this Agreement, beyond the services contemplated above (including, but not limited to, production of documents, answering interrogatories, giving depositions, giving expert or other testimony, whether by agreement, subpoena or otherwise), the Company shall pay to Trilogy a reasonable hourly rates for 3 the persons involved for the time expended in rendering such services, including, but not limited to, time for meetings, conferences, preparation and travel, and all related costs and expenses and the reasonable legal fees and expenses of Trilogy's counsel. Survival of The Sections entitled "Indemnification" (including "Exhibit Certain A"), "Corporate Obligations" and "Additional Services" shall Provisions survive any termination of this Agreement and Trilogy's engagement pursuant to this Agreement. In addition, such termination shall not terminate Trilogy's right to compensation accrued through the date of termination and for reimbursement of expenses (including third party marketing costs). Any purported termination of this Agreement by the Company prior to the end of the Initial Term, or any termination by Trilogy as a result of non-payment or other material breach by the Company (including the failure to pay third-party marketing costs), shall not terminate Trilogy's right to the fees through the entire Initial Term (as Trilogy's time and commitment are expected to be greater in the first part of its engagement). Services/Costs The compensation paid to Trilogy under this Agreement will cover all costs for Trilogy personnel. Travel and entertainment costs for Trilogy personnel, in addition to certain third-party costs, will be borne by the Company. Trilogy will provide reasonable documentation to support reimbursement claims. Trilogy will not incur any particular reimbursable cost of $500 or more without the written approval from the Company. These reimbursable costs are not third-party marketing costs under "Marketing Budget." Attorneys' Fees If any action or proceeding is brought to enforce or interpret any provision of this Agreement, the prevailing party shall be entitled to recover as an element of its costs, and not its damages, reasonable attorneys' fees to be fixed by the court. Governing Law California, without giving effect to the principles of conflicts of law thereof. -------------------------------------------------- [Signatures on following page.] 4 Agreed and Accepted: Applied DNA Sciences, Inc. Trilogy Capital Partners, Inc. By /s/ PETER BROCKLESBY By /s/ PAUL KARON -------------------- -------------- Peter Brocklesby Paul Karon President President By /s/ KARIN KLEMM --------------- Karin Klemm COO / CFO EX-99 7 july2120058kex991.txt Exhibit 99.1 From the Desk of: R. B. (Rob) Hutchison 3489 Canterbury Place Surrey BC Canada V3S 0G8 To the Board of Directors of Applied DNA Sciences Inc. July 15, 2005 Dear Sirs; Pursuant to my notification in January of this year (2005) this letter shall serve as my resignation from my positions as both Chairman and CEO of Applied DNA Sciences Inc. In January of this year I notified you of my intentions to resig and at the request of the board I consented to stay on until the Biowell transaction could be completed. As this has now taken place I herein surrender my roles to Dr. Sheu with great honor. In June 2004 when I passed the day to day operations of the company to Mr. Brocklesby, I did so with ease and can say that he has done a fine job with overseeing the company since June 22, 2004. It is now time for me to move on and let Dr. Sheu take the reins and I do so with out remorse or objection to the corporation in any way. I leave with no ill will to any member of the board or any ill will toward the company or its management staff. I wish the corporation well and I am more than prepared to help the company in anyway, be it in a formal advisory or informal advisory capacity. To all the staff, management and Board I will you well. Sincerely, /s/ ROB HUTCHISON - ----------------- ROB HUTCHISON -----END PRIVACY-ENHANCED MESSAGE-----