-----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, SDqOf3bohl4DufVOluy1sA6RlY9HDRKmGlcWZ6swbfh+pDbGroa3XT9VM4wTTVKY cI48pQ+UUinp5rPxkXBZXA== 0001282695-06-000277.txt : 20060505 0001282695-06-000277.hdr.sgml : 20060505 20060504183344 ACCESSION NUMBER: 0001282695-06-000277 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20060428 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant ITEM INFORMATION: Unregistered Sales of Equity Securities ITEM INFORMATION: Other Events ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20060505 DATE AS OF CHANGE: 20060504 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: 06809910 BUSINESS ADDRESS: STREET 1: 25 HEALTH SCIENCES DRIVE STREET 2: SUITE 113 CITY: STONY BROOK STATE: NY ZIP: 11790 BUSINESS PHONE: 631 444 6862 MAIL ADDRESS: STREET 1: 25 HEALTH SCIENCES DRIVE STREET 2: SUITE 113 CITY: STONY BROOK STATE: NY ZIP: 11790 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 e65715_8k.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): May 1, 2006 Applied DNA Sciences, Inc (Exact Name of Registrant as Specified in Charter) Nevada 002-90539 59-2262718 (State or Other (Commission File Number) (IRS Employer Jurisdiction Identification No.) of Incorporation) 25 Health Sciences Drive, Suite 113 Stony Brook, New York 11790 (Address of Principal Executive Offices) (Zip Code) 631-444-6861 (Registrant's telephone number, including area code) Not Applicable (Former Name or Former Address, if Changed Since Last Report) 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 2.03 Creation of a Direct Financial Obligation. Item 3.02 Unregistered Sales of Equity Securities. On May 2, 2006, Applied DNA Sciences, Inc., a Nevada corporation (the "Company"), completed the first tranche of a private placement (the "Placement") of up to 140 units at $50,000 per unit for sale to "accredited investors" who are not a "U.S. person," as each is defined in regulations promulgated under the Securities Act. In this first tranche, the Company sold 20 units for aggregate gross proceeds of $1,000,000. Each such unit consists of (i) a $50,000 Principal Amount 10% Secured Convertible Promissory Note and (ii) a warrant to purchase 100,000 shares of the Company's common stock exercisable for a period of four years commencing on May 2, 2007, at a price of $0.50 per share. Each such warrant may be redeemed at the option of the Company at a redemption price of $0.001 upon the earlier of (i) May 2, 2009, and (ii) the date a registration statement for the resale of the underlying common stock has been declared effective by the Securities and Exchange Commission (the "Commission"), and the Company's stock has traded on The Over the Counter Bulletin Board at or above $1.00 per share for 20 consecutive trading days. The promissory notes and accrued but unpaid interest thereon are convertible into shares of common stock of the Company at a price of $0.50 per share by the holder of the promissory notes at any time from May 2, 2006, through May 2, 2007, and shall automatically convert on such date at a 20% discount to the average of the closing bid prices of the Company's common stock on trading days during the 12 months prior to such conversion. The promissory notes bear interest at the rate of 10% per annum and are due and payable in full on August 2, 2007. Any principal payment of or interest payment on the outstanding promissory notes not paid when due, whether upon maturity, acceleration or otherwise, shall bear interest at the lesser of 12% or the maximum rate permissible by law. At any time prior to conversion, the Company will have the right to prepay the promissory notes and accrued but unpaid interest thereon upon 3 days notice, allowing the holders to convert the promissory notes during such notice period. Until the principal and interest under the promissory notes are paid in full, or converted into common stock of the Company, the promissory notes will be secured by a security interest in all of the assets of the Company. This security interest will be pari passu with the security interest granted to the holders of $1,500,000 of $50,000 principal amount 10% secured convertible promissory notes issued as part of a private placement of the Company completed on March 8, 2006. The Company may issue up to $4,500,000 of debt in addition to the remaining $6,000,000 that may be sold in the Placement that may be secured by a security interest in all of the Company's assets, which interest would be pari passu to the security interest granted to the holders of the promissory notes and the promissory notes issued in March. In connection with the Placement, each purchaser of a unit has entered into a subscription agreement and a registration rights agreement with the Company. Pursuant to this registration right agreement, the Company will prepare and file a registration statement with the Commission for the resale of the common stock underlying the promissory notes and the warrants within 30 days of the Company's registration statement on Form SB-2, as amended (SEC File No. 333-122848), being declared effective by the Commission, and to use the Company's reasonable best efforts to have the registration statement for the resale of the common stock underlying the promissory notes and the warrants declared effective by the Commission by no later than 180 days after filing. The obligations of the Company to file and have such registration statement declared effective shall terminate as to any holder of the units upon the earlier of the date: (a) when all of such holder's common stock underlying the promissory notes and the warrants may be sold during a single three (3) month period under Rule 144 of the Securities Act; and (b) when all of such holder's common stock underlying the promissory notes and the warrants may be transferred under Rule 144(k) of the Securities Act, unless such holder later becomes an affiliate of the Company (as defined in Rule 144 of the Securities Act) in which case the Company's obligation shall be revived until such holder's rights otherwise terminate under clause (a) above. Arjent Limited served as the Company's placement agent in the Placement. The Company has agreed to pay from the proceeds of the Placement: (1) to Arjent Limited: (a) a commission equal to 10% of the gross proceeds of the Placement; (b) a non-accountable expense allowance equal to 3% and non-accountable due diligence expenses equal to 2%, of the gross proceeds of the Placement; (c) 2,400,000 shares of common stock of the Company; and (d) $75,000 for Arjent Limited's legal fees and expenses; and (2) $150,000 to VC Arjent Ltd., formerly known as Vertical Capital Partners, Inc., for consulting and management fees. The Company claims an exemption from the registration requirements of the Securities Act for the private placement of the units pursuant to Regulation S promulgated under the Securities Act because each of the units were sold in an "offshore transaction" to persons who are not a "U.S. person," in each case as defined in Regulation S. Item 8.01 Other Events. On May 1, 2006, the Company issued a press release to announce the launch of its SigNature Botanical DNA Authentication Program. A copy of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K. Item 9.01 Financial Statements and Exhibits (d) Exhibits. Exhibit 10.1 Form of Subscription Agreement by and between Applied DNA Sciences, Inc. and each purchaser of a unit. Exhibit 10.2 Form of 10% Secured Convertible Promissory Note of Applied DNA Sciences, Inc. Exhibit 10.3 Form of Warrant Agreement of Applied DNA Sciences, Inc. Exhibit 10.4 Form of Registration Rights Agreement by and between the Applied DNA Sciences, Inc. and each purchaser of a unit. Exhibit 99.1 Press release of Applied DNA Sciences, Inc., dated May 1, 2006. SIGNATURE 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. (Registrant) By: /s/ James Hayward -------------------------------------- James Hayward Chief Executive Officer Date: May 5, 2006 Exhibit No. Description of Exhibit - ----------- ---------------------- 10.1 Form of Subscription Agreement by and between Applied DNA Sciences, Inc. and each purchaser of a unit. 10.2 Form of 10% Secured Convertible Promissory Note of Applied DNA Sciences, Inc. 10.3 Form of Warrant Agreement of Applied DNA Sciences, Inc. 10.4 Form of Registration Rights Agreement by and between the Applied DNA Sciences, Inc. and each purchaser of a unit. 99.1 Press Release of Applied DNA Sciences, Inc., dated May 1, 2006. EX-10.1 2 e65715_ex10-1.txt SUBSCRIPTION AGREEMENT EXHIBIT 10.1 SUBSCRIPTION AGREEMENT Applied DNA Sciences, Inc. 25 Health Sciences Drive, Suite 113 Stony Brook, New York 11790 Gentlemen and Ladies: The undersigned (the "Subscriber") hereby subscribes for ________ units, at a price of $50,000 per unit, each consisting of (i) a $50,000 principal amount 10% Secured Convertible Promissory Note (each a "Note," or collectively, the "Notes") of Applied DNA Sciences, Inc., a Nevada corporation (the "Company"), and (ii) a warrant to purchase 100,000 shares of common stock of the Company, exercisable for a period of four years commencing on the first anniversary of the date of the initial closing of the Offering at a price of $0.50 per share (each a "Warrant," or collectively, the "Warrants"). Each Warrant may be redeemed at the option of the Company at a redemption price of $0.001 upon the earlier of (i) the date three years from issuance and (ii) the date a registration statement for the resale of the underlying common stock has been declared or remains effective by the U.S. Securities and Exchange Commission, and the Company's stock has traded on The Over the Counter Bulletin Board at or above $1.00 per share for 20 consecutive trading days. The Notes and accrued but unpaid interest thereon are convertible into shares of common stock of the Company at a price of $0.50 per share by the holder of the Notes at any time from their date of issuance through the first anniversary of such date and shall automatically convert on such anniversary at a 20% discount to the average of the closing bid prices of the Company's common stock on trading days during the 12 months prior to such conversion. In addition, at any time prior to conversion, the Company will have the right to prepay the Notes and accrued but unpaid interest thereon upon 3 days notice, such notice to allow the holders of the Notes to convert the Notes to shares of common stock of the Company or be repaid their respective principal and interest. Until the principal and interest owed under the Notes are paid in full, or converted into common stock of the Company, the Notes will be secured by a security interest in all of the assets of the Company. This security interest will be pari passu with the security interest granted to the holders of $1,500,000 of $50,000 principal amount secured convertible promissory notes bearing interest at 10% per annum issued as part of an offering completed on March 8, 2006 (the "March Notes"). The Company may issue up to $4,500,000 of debt in addition to the amounts sold in the Offering that may be secured by a security interest in all of the Company's assets, which would be pari passu to the security interest granted to the holders of the Notes and the March Notes. The Notes bear interest at the rate of 10% per annum payable on the Maturity Date (as defined below). Any principal payment of or interest payment on the unpaid principal amount of the Notes, whether at the Maturity Date, acceleration or otherwise, shall bear interest at the lesser of 12% or the maximum rate permissible by law. All principal and all accrued and unpaid interest under the Notes shall be payable in full on the date 15-months subsequent to the date of the initial closing of the Offering, referred to hereinafter as the "Maturity Date." 1. Subscription. Subject to the terms and conditions hereof, the Subscriber agrees to pay $__________________ by check or wire transfer of immediately available funds as consideration for the Subscriber's Note(s) and the Warrant(s). The Subscriber tenders herewith a check made payable at the direction of the Company or wire transfer, in the amount of $__________________. The Subscriber acknowledges and agrees that this subscription is irrevocable by the Subscriber but is subject to acceptance by the Company. 2. Security. Until the principal and interest owed under the Notes are paid in full, or converted into common stock of the Company, the Notes will be secured by a security interest in all of the assets of the Company. This security interest will be pari passu with the security interest granted to the holders of $1,500,000 of $50,000 principal amount secured convertible promissory 1 notes bearing interest at 10% per annum issued as part of an offering completed on March 8, 2006 (the "March Notes"). The Company may issue up to $4,500,000 of debt in addition to the amounts sold in the Offering that may be secured by a security interest in all of the Company's assets, which would be pari passu to the security interest granted to the holders of the Notes and the March Notes. 3. Closing. The Subscriber understands and agrees that the Company intends to make an initial closing of this offering of units in the Company on or before April 26, 2006, but that the same may be extended for three additional periods, each such period not to exceed thirty (30) days, at the sole decision of the Company, without notice to any Subscriber. If the Company does not accept the Subscriber prior to the initial closing, this Subscription Agreement and Confidential Offering Questionnaire, together with the Subscriber's funds and any other documents delivered to the Company, shall be promptly returned to the Subscriber. 4. Subscription Compliance. The Subscriber agrees that this subscription is subject to the following terms and conditions: The Company shall have the right, in its sole discretion, to: (i) accept or reject this subscription; (ii) determine whether this Subscription Agreement has been properly completed by the Subscriber and (iii) determine whether the Subscriber has met all of the Company's requirements for investment in a Note. If the Company deems this subscription to be defective, deficient or otherwise non-compliant with the terms of this offering, the Subscriber's funds will be returned promptly to the Subscriber without interest or deduction. 5. Receipt of Information. a. The Subscriber and Subscriber's purchaser representative, if any, have received a copy of the Confidential Private Placement Offering Memorandum. The Subscriber, either alone or together with Subscriber's purchaser representative, if any, have such knowledge and experience in financial and business matters as to be able to evaluate the merits and risks of an investment in the Company. b. The Subscriber and Subscriber's representative, if any, have had the opportunity to ask questions of and receive answers from the Company concerning the terms and conditions of the offering of the Units by the Company and to obtain any additional information Subscriber has requested which is necessary to verify the accuracy of the information furnished to the Subscriber concerning the Company and such offering. 6. Representations of Subscriber. In connection with the purchase of the Note, the Subscriber hereby represents and warrants to the Company as follows: a. If the Subscriber is an individual purchaser of the unit(s), the Subscriber represents and warrants that he/she is at least 25 years of age and a resident of the Country of _______________ and is not nor has ever been a "U.S. person," as defined in Rule 902 of Regulation S promulgated under the Securities Act of 1933, as amended (the "Act"). b. If the Subscriber is a Company, trust or other corporate entity purchaser of the unit(s), the Subscriber represents and warrants that it is duly organized and validly existing under the laws of the Country of _______________, and has all requisite powers to purchase the unit(s). If the subscriber is a trust, none of the trustees are a "U.S. person," as defined in Rule 902 of Regulation S promulgated under the Act. c. The Subscriber is an "accredited investor" as defined in Rule 501 of Regulation D promulgated under the Act. 2 d. The unit(s) is being purchased for the Subscriber's own account without the participation of any other person, with the intent of holding the unit(s) for investment and without the intent of participating, directly or indirectly, in a distribution of the unit(s) and not with a view to, or for a resale in connection with, any distribution of the unit(s) or any portion thereof, nor is the undersigned aware of the existence of any distribution of the Company's securities. Furthermore, the undersigned has no present intention of dividing such unit(s) with others or reselling or otherwise disposing of any portion of such unit(s), either currently or after the passage of a fixed or determinable period of time, or upon the occurrence or nonoccurrence of any predetermined event or circumstance. e. The Subscriber has no need for liquidity with respect to his purchase of a unit(s) and is able to bear the economic risk of an investment in the unit(s) for an indefinite period of time and is further able to afford a complete loss of such investment. f. The Subscriber represents that his financial commitment to all investments (including his investment in the Company) is reasonable relative to his net worth and liquid net worth. g. The Subscriber recognizes that the unit(s) will be: (i) sold to the Subscriber without registration under any United States federal or other law relating to the registration of securities for sale; (ii) issued and sold in reliance on the exemption from registration under the Nevada Securities Act, as amended (the "Nevada Act"); (iii) issued and sold in reliance on the exemption from registration under the Act provided by Section 4(2) of the Act; and (iv) issued and sold to non-United States persons, as defined in Section 902(k) under Regulation S promulgated under the Act. h. The Subscriber is aware that any resale of the unit(s) cannot be made except in accordance with Regulation S promulgated under the Act, the registration requirements of the Act or another exemption therefrom. i. The Subscriber represents and warrants that all offers and sales of the unit(s) shall be made in accordance with Regulation S, pursuant to an exemption from registration under the Act or pursuant to registration under the Act, and the Subscriber will not engage in any hedging or short selling transactions with regard to the unit(s) or the underlying common stock. j. The Subscriber is not acquiring the unit(s) based upon any representation, oral or written, by any person with respect to the future value of, or income from, the unit(s) but rather upon an independent examination and judgment as to the prospects of the Company. k. The Subscriber understands that the Company is an early stage Company and lacks an operating history. The Subscriber appreciates and understands the risks involved with investing in a Company with a limited operating history and has read and understands the risk factors set forth in the Confidential Private Placement Memorandum and the exhibits thereto. l. The Company, by and through itself and/or legal counsel, has made no representations or warranties as to the suitability of the Subscriber's investment in the Company, the length of time the undersigned will be required to own the unit(s), or the profit to be realized, if any, as a result of investment in the Company. Neither the Company nor its counsel has made an independent investigation on behalf of the Subscriber, nor has the Company, by and through itself and counsel, acted in any advisory capacity to the Subscriber. m. The Company, by and through itself and/or legal counsel, has made no representations or warranties that the past performance or experience on the part of the 3 Company, or any partner or affiliate, their partners, salesmen, associates, agents, or employees or of any other person, will in any way indicate the predicted results of the ownership of the unit(s). n. The Company has made available for inspection by the undersigned, and his purchaser representative, if any, the books and records of the Company. Upon reasonable notice, such books and records will continue to be made available for inspection by investors upon reasonable notice during normal business hours at the principal place of business of the Company. o. The unit(s) was not offered to the Subscriber by means of publicly disseminated advertisement or sales literature, nor is the Subscriber aware of any offers made to other persons by such means. p. All information which the Subscriber has provided to the Company concerning the Subscriber is correct and complete as of the date set forth at the end of this Subscription Agreement, and if there should be any material adverse change in such information prior to receiving notification that this subscription has been accepted, the undersigned will immediately provide the Company with such information. 7. Agreements of Subscriber. The Subscriber agrees as follows: a. The sale of the unit(s) by the Company has not been recommended by any United States federal or other securities commission or regulatory authority. Furthermore, the foregoing authorities have not confirmed the accuracy or determined the adequacy of this Subscription Agreement or the Confidential Private Placement Offering Memorandum. b. The unit(s) and the underlying common stock will not be offered for sale, sold, or transferred other than pursuant to: (i) an effective registration under the Nevada Act or in a transaction which is otherwise in compliance with the Nevada Act; (ii) an effective registration under the Act or in a transaction otherwise in compliance with the Act; and (iii) evidence satisfactory to the Company of compliance with the applicable securities laws of other jurisdictions. The Company shall be entitled to rely upon an opinion of counsel satisfactory to it with respect to compliance with the above laws. c. The Company is under no obligation to register the unit(s) or to comply with any exemption available for sale of the unit(s) without registration, and the information necessary to permit routine sales of securities of the Company under Rule 144 of the Act may not be available when you desire to resell them pursuant to Rule 144 of the Act. The Company is under no obligation to act in any manner so as to make Rule 144 available with respect to the unit(s). d. There is no established market for the units and it is not anticipated that any public market for the units will develop in the future. e. The Company may, if it so desires, refuse to permit the transfer of the unit(s) unless the request for transfer is accompanied by an opinion of counsel acceptable to the Company to the effect that neither the sale nor the proposed transfer will result in any violation of the Act or the applicable securities laws of any other jurisdiction. f. A legend indicating that the unit(s) and the underlying common stock have not been registered under such securities laws and referring to the restrictions and transferability of unit(s) and the underlying common stock may be placed on the certificates or instruments delivered to the Subscriber or any substitutes thereof and any transfer agent of 4 the Company may be instructed to require compliance therewith. The unit(s) is further subject to restriction of transfer as set forth in the By-laws. 8. Indemnification of the Company. The undersigned understands the meaning and legal consequences of the representations and warranties contained herein, and hereby agrees to indemnify and hold harmless, the Company, its respective agents, officers, managers and affiliates from and against any and all damages, losses, costs and expenses (including reasonable attorneys' fees) which they or any of them may incur by reason of the failure of the Subscriber to fulfill any of the terms of this Subscription Agreement, or by reason of any breach of the representations and warranties made by the Subscriber herein, or in any document provided by the Subscriber to the Company. 9. Representative Capacity. If an investment in the Company is being made by a corporation, trust or estate, the undersigned individual signing on behalf of the Subscriber, represents that he has all right and authority, in his capacity as an officer, managing member, trustee, executor or other representative of such corporation, trust or estate, as the case may be, to make such decision to invest in the Company and to execute and deliver this Subscription Agreement on behalf of such corporation, trust or estate as the case may be, enforceable in accordance with its terms. The undersigned individual also represent that any such corporation, trust or estate was not formed for the purpose of buying the unit(s) hereby subscribed. 10. Special Power of Attorney. a. The Subscriber, by executing this Subscription Agreement, irrevocably makes, constitutes and appoints any executive officer of the Company, and each of them individually, as the undersigned's true and lawful attorney, for the undersigned and in the undersigned's name, place and stead, and for the use and benefit of the undersigned, to execute and acknowledge and, to the extent necessary, to file and record: 1. such certificates, instruments and documents as may be required to be filed by the Company or which the Company deems advisable to file under the laws of the State of Nevada or any other state or jurisdiction in which the Company transacts business; and 2. all conveyances or other instruments or documents necessary, appropriate or convenient to effect the dissolution and termination of the Company. b. Such a power of attorney: 1. is a special power of attorney coupled with an interest and is irrevocable; and; 2. shall survive the death or disability of the Subscriber. c. The Subscriber hereby agrees to be bound by any representations made by the Company or its substitutes acting pursuant to this Special Power of Attorney, and the undersigned hereby waives any and all defenses which may be available to him to contest, negate or disaffirm its actions or the actions of his substitutes under this Special Power of Attorney. The powers herein granted are granted for the sole and exclusive benefit of the undersigned and not on behalf of any other person, in whole or in part. 11. Subscription Not Revocable. The undersigned hereby acknowledges and agrees that the undersigned is not entitled to cancel, terminate or revoke this Subscription Agreement or any agreements of the undersigned hereunder and that this Subscription Agreement shall survive the dissolution, death or disability of the undersigned. 5 12. Restrictions on Transferability. The undersigned understands and agrees that the purchase and resale, pledge, hypothecation or other transfer of the unit(s) is restricted by certain provisions of the By-laws of the Company and that the unit(s) shall not be sold, pledged, hypothecated or otherwise transferred unless the unit(s) is registered under the Act and applicable state securities laws or an exemption from such registration is available. 13. Governing Law. This Subscription Agreement is being delivered and is intended to be performed in the State of New York, and shall be construed and enforced in accordance with, and the law of such state shall govern the rights of parties. 14. Numbers and Gender. In this Agreement, the masculine gender includes the feminine gender and the neuter and the singular includes the plural, where appropriate to the context. THIS SPACE INTENTIONALLY LEFT BLANK; SIGNATURE PAGE FOLLOWS APPLIED DNA SCIENCES , INC. SIGNATURE PAGE TO SUBSCRIPTION AGREEMENT Subscriber hereby elects to subscribe under the Subscription Agreement for a total of $______________ of UNITS (NOTE: to be completed by subscriber) and executes the Subscription Agreement. IN WITNESS WHEREOF, the undersigned has executed this Subscription Agreement on the date set forth below. Date of Execution: ___________, 2006 IF INDIVIDUAL INVESTOR: ------------------------------------- (Signature) ------------------------------------- (Printed Name) IF CORPORATION, TRUST, ESTATE OR REPRESENTATIVE: ------------------------------------- Name of Investor By: -------------------------------- Name: Title: (Investors do not write below this line) - -------------------------------------------------------------------------------- APPROVED THIS ____ DAY OF ___________, 2006 APPLIED DNA SCIENCES, INC. By: -------------------------- Name: Title: 7 EX-10.2 3 e65715_ex10-2.txt PROMISSORY NOTE EXHIBIT 10.2 THIS NOTE AND THE COMMON STOCK REFERENCED HEREIN HAVE NOT BEEN REGISTERED WITH OR APPROVED OR DISAPPROVED BY THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY AND ARE BEING OFFERED PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). THE SALE, ASSIGNMENT, CONVEYANCE, PLEDGE, HYPOTHECATION OR TRANSFER OF THE SECURITIES REPRESENTED BY THIS NOTE OR THE UNDERLYING COMMON STOCK TO U.S. PERSONS, AS DEFINED IN RULE 902(k) OF REGULATION S PROMULGATED UNDER THE SECURITIES ACT, IS PROHIBITED EXCEPT (1) IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S AS PROMULGATED UNDER THE SECURITIES ACT; (2) PURSUANT TO REGISTRATION UNDER THE SECURITIES ACT; OR (3) PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT. This note is one of a series of notes (the "Serial Notes") issued in the aggregate principal amount of $7,000,000. APPLIED DNA SCIENCES, INC. May ___, 2006 $________________ 10% SECURED CONVERTIBLE PROMISSORY NOTE Applied DNA Sciences, Inc., a Nevada corporation (the "Company"), for value received, hereby promises to pay to ______________________________ (the "Holder," which term shall in every instance refer to any owner or holder of this Note) at ________________________________ or at any other place that the Holder may designate in writing to the Company, on August __, 2007 (the "Maturity Date"), the principal sum of _____________________ THOUSAND AND NO/100 DOLLARS ($______) in such coin or currency of the United States of America as at the time of payment shall be legal tender for the payment of public and private debts, and to pay interest on the outstanding principal sum hereof at the rate of ten percent (10%) per annum. Any principal payment or interest payment on the unpaid principal amount of this Note not paid when due, whether at the Maturity Date, by acceleration or otherwise, shall bear interest at twelve percent (12%) or the maximum rate permissible by law, whichever is less (the "Default Interest Rate"). Payment of principal and accrued and unpaid interest, if any, shall be payable on the Maturity Date in like coin or currency to the Holder hereof at the address of the Holder on file with the Company or at such other place as the Holder shall have notified the Company in writing at least five (5) days before the Maturity Date, provided that any payment otherwise due on a Saturday, Sunday or legal bank holiday may be paid on the following business day. This Note is secured by a security interest in all the assets of the Company as set forth in Section 4(e) hereof (the "Security Agreement"). Reference herein to the Security Agreement shall in no way impair the absolute and unconditional obligation of the Company to pay both principal and interest hereon as provided herein. The rights and remedies of the Holder hereunder are subject to the terms and conditions of the Security Agreement and the provisions of the Uniform Commercial Code as enacted in 1 the State of Nevada including, without limitation, powers with respect to the enforceability and collectibility of all amounts due hereunder. Reference to the Uniform Commercial Code of the State of Nevada is made for a complete description of the rights, powers and obligations of the Holder. 1. Transfers of Note to Comply with the Securities Act THE HOLDER AGREES THAT THIS NOTE AND THE COMMON STOCK ISSUABLE UPON CONVERSION OF THE NOTE MAY NOT BE SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT (1) IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S AS PROMULGATED UNDER THE SECURITIES ACT; (2) PURSUANT TO REGISTRATION UNDER THE SECURITIES ACT; OR (3) PURSUANT TO AN AVAILABLE EXEMPTION THEREFROM. 2. Prepayment; Repayment Upon Consolidation or Merger (a) The principal amount of this Note may be prepaid by the Company, in whole or in part, on three days prior written notice without premium or penalty, at any time. Upon any prepayment of the entire principal amount of this Note, all accrued, but unpaid, interest shall be paid to the Holder on the date of prepayment. The date upon which the Company prepays the principal plus all accrued and unpaid interest due on this Note shall be hereinafter referred to as the "Prepayment Date." Notwithstanding the foregoing right of payment, upon receipt of the three day notice, the Holder shall have the conversion rights set forth under Section 3(b) hereof, regardless of when said three day prior written notice is given. (b) This Note shall be paid in full, without premium, in the event the Company consolidates or merges with another corporation, unless (i) the Company shall be the surviving corporation in such consolidation or merger or (ii) the other corporation controls, is under common control with or is controlled by the Company immediately prior to the consolidation or merger whether or not the Company shall be the surviving corporation in such consolidation or merger, in which event this Note shall remain outstanding as an obligation of the consolidated or surviving corporation. 3. Conversion of Note (a) This Note and any accrued and unpaid interest hereon shall automatically convert into shares of Common Stock of the Company, par value $0.001 per share (the "Common Stock"), on the first anniversary of the date hereof at a 20% discount to the average of the closing bid prices of the Common Stock on The Over The Counter Bulletin Board reported for all trading days during the 12 months prior to such conversion. (b) The Holder shall have the right from time to time, and at any time on or prior to the first anniversary of the date hereof, to convert all or any part of the entirety of the principal and accrued but unpaid interest then outstanding under this Note into fully paid and non-assessable shares of Common Stock, as such Common Stock exists on the issue date, or any shares of capital stock or other securities of the Company into which such Common Stock shall hereafter be changed or reclassified at a conversion price equal to $0.50 per share. 2 4. Covenants of Company The Company covenants and agrees that, so long as any principal of, or interest on, this Note shall remain unpaid, unless the Holder shall otherwise consent in writing, it will comply with the following terms: (a) Reporting Requirements. The Company will furnish to the Holder: (i) as soon as possible, and in any event within ten (10) days after obtaining knowledge of the occurrence of (A) an Event of Default, as hereinafter defined, (B) an event which, with the giving of notice or the lapse of time or both, would constitute an Event of Default, or (C) a material adverse change in the condition or operations, financial or otherwise, of the Company, taken as whole, the written statement of the Chief Executive Officer or the Chief Financial Officer of the Company, setting forth the details of such Event of Default, event or material adverse change and the action which the Company proposes to take with respect thereto; (ii) promptly after the sending or filing thereof, copies of all financial statements, reports, certificates of its Chief Executive Officer, Chief Financial Officer or accountants and other information which the Company or any subsidiary sends to any holders (other than to holders of the Serial Notes) of its securities; (iii) promptly after the commencement thereof, notice of each action, suit or proceeding before any court or other governmental authority or other regulatory body or any arbitrator as to which there is a reasonable possibility of a determination that would (A) materially impact the ability of the Company or any subsidiary to conduct its business, (B) materially and adversely affect the business, operations or financial condition of the Company taken as a whole, or (C) impair the validity or enforceability of the Serial Notes or the ability of the Company to perform its obligations under the Serial Notes; (iv) promptly upon request, such other information concerning the condition or operations, financial or otherwise, of the Company as the Holder from time to time may reasonably request. (b) Taxes. The Company has filed or will file all federal, state and local tax returns required to be filed or sent or has obtained extensions thereof. Except as otherwise disclosed, the Company has timely paid or made provision for all taxes shown as due and payable on its tax returns required to be filed prior to the date hereof and all assessments received by the Company and will timely pay all taxes that will be shown as due and payable on its tax returns required to be filed after the date hereof, except to the extent that the Company shall be contesting such taxes and assessments in good faith by appropriate proceedings. (c) Compliance with Laws. The Company will comply, in all material respects with all applicable laws, rules, regulations and orders, except to the extent that noncompliance would not have a material adverse effect upon the business, operations or financial condition of the Company taken as a whole. (d) Keeping of Records and Books of Account. The Company will keep adequate records and books of account, with complete entries made in accordance with generally accepted accounting principles, reflecting all of its financial and other business transactions. 3 (e) Security Agreement. In order to secure the obligations of the Company under this Note and the Serial Notes, the Company hereby grants a security interest in all of the assets of the Company, which security interest is pari passu with the security interest granted to the holders of the certain notes (the "March Notes") issued as part of a private placement of securities that was completed on March 8, 2006, to the holders of the Serial Notes. The Company reserves the right to issue $4,500,000 of debt in addition to amounts sold in the offering, of which the Serial Notes are a part, that may be secured by a security interest in all of the Company's assets, which would be pari passu to the security interest granted to the holders of the Series Notes and the March Notes. 5. Events of Default and Remedies (a) Any one or more of the following events (each an "Event of Default") which shall have occurred and be continuing shall constitute an event of default: (i) A default in the payment of the principal or accrued interest on this Note or upon any other indebtedness of the Company after the date hereof that is greater than $100,000, as and when the same shall become due, whether by default or otherwise, which default shall have continued for a period of five (5) business days; or (ii) Any representation or warranty made by the Company or any officer of the Company in the Notes, or in any agreement, report, certificate or other document delivered to the Holder pursuant to the Notes shall have been incorrect in any material respect when made which shall not have been remedied ten (10) days after written notice thereof shall have been given by the Holder; or (iii) The Company shall fail to perform or observe any affirmative covenant contained in Section 4 of this Note or any of the Notes and such default, if capable of being remedied, shall not have been remedied ten (10) days after written notice thereof shall have been given by the Holder; or (iv) The Company or any subsidiary (A) shall institute any proceeding or voluntary case seeking to adjudicate it bankrupt or insolvent, or seeking dissolution, liquidation, winding up, reorganization, arrangement, adjustment, protection, relief or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of any order for relief or the appointment of a receiver, trustee, custodian or other similar official for such the Company or any subsidiary or for any substantial part of its property, or shall consent to the commencement against it of such a proceeding or case, or shall file an answer in any such case or proceeding commenced against it consenting to or acquiescing in the commencement of such case or proceeding, or shall consent to or acquiesce in the appointment of such a receiver, trustee, custodian or similar official; (B) shall be unable to pay its debts as such debts become due, or shall admit in writing its inability to apply its debts generally; (C) shall make a general assignment for the benefit of creditors; or (D) shall take any action to authorize or effect any of the actions set forth above in this subsection 5(a)(iv); or (v) Any proceeding shall be instituted against the Company seeking to adjudicate it a bankrupt or insolvent, or seeking dissolution, liquidation, winding up, reorganization, arrangement, adjustment, protection, relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee, custodian or other similar official for the Company or for any substantial part of its property, and either such proceeding shall 4 not have been dismissed or shall not have been stayed for a period of sixty (60) days or any of the actions sought in such proceeding (including, without limitation, the entry of any order for relief against it or the appointment of a receiver, trustee, custodian or other similar official for it or for any substantial part of its property) shall occur; or (vi) One or more final judgments, arbitration awards or orders for the payment of money in excess of $250,000 in the aggregate shall be rendered against the Company, which judgment remains unsatisfied for thirty (30) days after the date of such entry. (vii) Delisting of the Common Stock from the principal market or exchange on which the Common Stock is listed for trading; Company's failure to comply with the conditions for listing; or notification that the Company is not in compliance with the conditions for such continued listing. (viii) The issuance of an SEC stop trade order or an order suspending trading of the Common Stock from the principal market or exchange on which the Common Stock is listed for trading for longer than five (5) trading days. (ix) The failure by the Company to issue shares of Common Stock to the Holder upon exercise by the Holder of the conversion rights of the Holder in accordance with the terms of this Note, or the failure to transfer or cause its transfer agent to transfer (electronically or in certificated form) any certificate for shares of Common Stock issued to the Holder upon conversion of or otherwise pursuant to this Note as and when required by this Note, or the failure to remove any restrictive legend (or to withdraw any stop transfer instructions in respect thereof) on any certificate for any shares of Common Stock issued to the Holder upon conversion of or otherwise pursuant to this Note as and when required by this Note, and any such failure shall continue uncured for ten (10) days after the Company shall have been notified thereof in writing by the Holder; (x) Except as permitted herein, the Company shall encumber or hypothecate the collateral subject to the Security Agreement to any party; (b) In the event of and immediately upon the occurrence of an Event of Default, the Note shall become immediately due and payable without any action by the Holder and the Note shall bear interest until paid at the Default Interest Rate. If an Event of Default occurs and is continuing, Holder may pursue any available remedy to collect the payment of all amounts due under the Note or to enforce the performance of any provision of the Note. No waiver of any default under the Note shall be construed as a waiver of any subsequent default, and the failure to exercise any right or remedy thereunder shall not waive the right to exercise such right or remedy thereafter. (c) The Company covenants that in case the principal of, and accrued interest on, the Note becomes due and payable by declaration or otherwise, then the Company will pay in cash to the Holder of this Note, the whole amount that then shall have become due and payable on this Note for principal or interest, as the case may be, and in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, including reasonable fees and disbursements of the Holder's legal counsel. In case the Company shall fail forthwith to pay such amount, the Holder may commence an action or proceeding at law or in equity for the collection of the sums so due and unpaid, and may prosecute any such 5 action or proceeding to judgment or final decree against Company or other obligor upon this Note, wherever situated, the monies adjudicated or decreed to be payable. (d) The Company agrees that it shall give notice to the Holder at its registered address by facsimile, confirmed by certified mail, of the occurrence of any Event of Default within ten (10) days after such Event of Default shall have occurred. 6. Unconditional Obligation; Fees, Waivers, Other (a) The obligations to make the payments provided for in this Note are absolute and unconditional and not subject to any defense, set-off, counterclaim, rescission, recoupment or adjustment whatsoever. (b) If, following the occurrence of an Event of Default, Holder shall seek to enforce the collection of any amount of principal of and/or interest on this Note, there shall be immediately due and payable from the Company, in addition to the then unpaid principal of, and accrued unpaid interest on, this Note, all costs and expenses incurred by Holder in connection therewith, including, without limitation, reasonable attorneys' fees and disbursements. (c) No forbearance, indulgence, delay or failure to exercise any right or remedy with respect to this Note shall operate as a waiver or as an acquiescence in any default, nor shall any single or partial exercise of any right or remedy preclude any other or further exercise thereof or the exercise of any other right or remedy. (d) This Note may not be modified or discharged (other than by payment or conversion) except by a writing duly executed by the Company and Holder. (e) Holder hereby expressly waives demand and presentment for payment, notice of nonpayment, notice of dishonor, protest, notice of protest, bringing of suit, and diligence in taking any action to collect amounts called for hereunder, and shall be directly and primarily liable for the payment of all sums owing and to be owing hereon, regardless of and without any notice, diligence, act or omission with respect to the collection of any amount called for hereunder or in connection with any right, lien, interest or property at any and all times which the Company had or is existing as security for any amount called for hereunder. 7. Miscellaneous (a) The headings of the various paragraphs of this Note are for convenience of reference only and shall in no way modify any of the terms or provisions of this Note. (b) This Note has been issued by the Company pursuant to authorization of the Board of Directors of the Company. All notices required or permitted to be given hereunder shall be in writing and shall be deemed to have been duly given when personally delivered or sent by registered or certified mail (return receipt requested, postage prepaid), facsimile transmission or overnight courier to the Holder at the address in the records of the Company, to the Company at 25 Health Sciences Dr., Stony Brook, New York 11790 or at such other address as the intended recipient shall have hereafter given to the other party hereto pursuant to the provisions of this Note. 6 (c) The Company may consider and treat the entity in whose name this Note shall be registered as the absolute owner thereof for all purposes whatsoever (whether or not this Note shall be overdue) and the Company shall not be affected by any notice to the contrary. Subject to the limitations herein stated, the registered owner of this Note shall have the right to transfer this Note by assignment, and the transferee thereof shall, upon his registration as owner of this Note, become vested with all the powers and rights of the transferor. Registration of any new owners shall take place upon presentation of this Note to the Company at its principal offices, together with a duly authenticated assignment. In case of transfer by operation of law, the transferee agrees to notify the Company of such transfer and of his address, and to submit appropriate evidence regarding the transfer so that this Note may be registered in the name of the transferee. This Note is transferable only on the books of the Company by the holder hereof, in person or by attorney, on the surrender hereof, duly endorsed. Communications sent to any registered owner shall be effective as against all holders or transferees of the Note not registered at the time of sending the communication. (d) Payments of principal and interest shall be made as specified above to the registered owner of this Note. No interest shall be due on this Note for such period of time that may elapse between the maturity of this Note and its presentation for payment. (e) The Holder shall not, by virtue, hereof, be entitled to any rights of a shareholder in the Company, whether at law or in equity, and the rights of the Holder are limited to those expressed in this Note. (f) Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Note, and (in the case of loss, theft or destruction) of reasonably satisfactory indemnification, and upon surrender and cancellation of this Note, if mutilated, the Company shall execute and deliver a new Note of like tenor and date. (g) Except as otherwise provided herein, this Note shall be construed and enforced in accordance with the laws of the State of New York, without giving effect to the conflicts of law principles thereof or the actual domiciles of the parties. The Company and the Holder hereby consent to the jurisdiction of the Courts of the State of New York and the United States District Courts situated therein in connection with any action concerning the provisions of this Note instituted by the Holder against the Company. (h) The Company and the Holder(i) agree that any legal suit, action or proceeding arising out of or relating to this Note shall be instituted exclusively in the New York State Supreme Court, County of New York or in the United States District Court for the Southern District of New York, (ii) waive any objection which the Holder or the Company may have now or hereafter based upon forum non conveniens or to the venue of any such suit, action or proceeding, and (iii) irrevocably consents to the jurisdiction of the New York State Supreme Court, County of New York and the United States District Court for the Southern District of New York in any such suit, action or proceeding. The Holder and the Company further agree to accept and acknowledge service of any and all process which may be served in any such suit, action or proceeding in the New York State Supreme Court, County of New York or in the United States District Court for the Southern District of New York and agree that service of process upon the Company, mailed by certified mail to the Company's address, will be deemed in every respect effective service of process, in any suit, action or proceeding. FURTHER, THE HOLDER AND THE COMPANY HEREBY WAIVE TRIAL BY JURY IN ANY ACTION TO ENFORCE THIS NOTE AND IN CONNECTION WITH ANY DEFENSE, COUNTERCLAIM OR CROSS CLAIM ASSERTED IN ANY SUCH ACTION. 7 (i) No recourse shall be had for the payment of the principal or interest of this Note against any incorporator or any past, present or future stockholder officer, director, agent or attorney of the Company, or of any successor corporation, either directly or through the Company or any successor corporation, otherwise, all such liability of the incorporators, stockholders, officers, directors, attorneys and agents being waived, released and surrendered by the Holder hereof by the acceptance of this Note. (j) This Note shall bind the Company and its successors and assigns. THIS SPACE INTENTIONALLY LEFT BLANK; SIGNATURE PAGE FOLLOWS 8 IN WITNESS WHEREOF, the undersigned has duly executed and delivered this 10% Secured Convertible Promissory Note as of the day and year first above written. APPLIED DNA SCIENCES, INC. By: -------------------------------------- Name: James Hayward Title: Chief Executive Officer 9 EX-10.3 4 e65715_ex10-3.txt FORM OF WARRANT AGREEMENT EXHIBIT 10.3 APPLIED DNA SCIENCES, INC. Applied DNA Sciences, Inc., a Nevada corporation (the "Company"), hereby certifies that, for value received, _________________________ (the "Warrant Holder," which term includes its successors and registered assigns) is entitled to purchase an aggregate of _________ shares of common stock, par value $0.001 per share, of the Company (the "Common Stock") at an exercise price of $0.50 per share (the "Exercise Price") per share. 1. Exercise of Warrant. This Warrant may be exercised in whole or in part at any time or from time to time during the four year period commencing on May ___, 2007 and expiring at 5:00 p.m., New York City time, on May ____, 2011 (the "Exercise Term"), or if such day is a day on which banking institutions in the State of New York are authorized by law to close, then on the next succeeding day which shall not be such a day, as follows: (a) by presentation and surrender of this Warrant evidencing the Warrant to be exercised to the Company at its principal office or at the office of its stock transfer agent, if any, with the Exercise Form annexed hereto duly executed, and payment of the Exercise Price; or (b) by presentation and surrender of this Warrant evidencing the Warrant to be exercised to the Company at its principal office or at the office of its stock transfer agent, if any, with the Exercise Form annexed hereto duly executed, in which event the Company shall issue to the Warrant Holder the number of shares of Common Stock underlying this Warrant (the "Warrant Shares") determined based on the following formula: X = Y*(A-B)/A where: X means the number of Warrant Shares to be issued to the Warrant Holder. Y means the number of Warrant Shares with respect to which this Warrant is being exercised. A means the fair market value of one share of Common Stock as determined in accordance with the provisions of this Section. B means the Exercise Price. The "fair market value" of one share of Common Stock means the average of the closing bid prices of the Common Stock on The Over The Counter Bulletin Board on trading days during the 12 months immediately preceding the effective date of exercise of the Warrant and, if there is no active public market for the Common Stock, the fair market value shall be the price determined in good faith by the Board of Directors of the Company. If any Warrant should be exercised in part only, the Company shall, upon surrender of this Warrant for cancellation and presentment of the Exercise Form, execute and deliver new a Warrant or Warrants, as the case may be, evidencing the rights of the Warrant Holder thereof to purchase the balance of the shares purchasable thereunder. 1 Upon receipt by the Company of this Warrant at its office, or by the stock transfer agent of the Company at its office, in proper form for exercise together with the payment of the Exercise Price, unless this Warrant is being exercised pursuant to the cashless exercise option, in which case no payment is required, the Warrant Holder shall be deemed to be the holder of record of the Warrant Shares, notwithstanding that the stock transfer books of the Company shall then be closed or that certificates representing such Warrant Shares shall not then be actually delivered to the Warrant Holder. Certificates for the Warrant Shares shall be delivered to the Warrant Holder within a reasonable time following the exercise of this Warrant in accordance with the foregoing. 2. Alternative Exercise Provisions. Anything contained herein to the contrary notwithstanding, subject to compliance by the Warrant Holder with the restrictions on offer and sale referred to in Section 11 hereof, the Warrant Holder, at its option, may exercise this Warrant, in whole or in part, during the Exercise Term by delivering to the Company a confirmation slip issued by a brokerage firm that is a member of the National Association of Securities Dealers, Inc. or the equivalent governing body for broker-dealers in other nations, with respect to the sale of those number of Warrant Shares for which this Warrant is being exercised, together with the payment of the Exercise Price, unless this Warrant is being exercised pursuant to the cashless exercise option, in which case no payment is required, and, in such case, the Company shall deliver certificates representing such Warrant Shares on settlement date at the office of the Company's stock transfer agent. 3. Reservation and Listing of Shares. The Company hereby agrees that at all times there shall be reserved for issuance and delivery upon exercise of this Warrant, such number of shares of its Common Stock as shall be required for issuance and delivery upon exercise of this Warrant. As long as this Warrant is outstanding, the Company shall use its best efforts to cause all shares of Common Stock issuable upon the exercise of this Warrant to be listed on The Over The Counter Bulletin Board or on NASDAQ or a national securities exchange, if such shares of Common Stock, as a class, are theretofore so listed. 4. Fractional Shares. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. Any fraction of a share called for upon any exercise hereof shall be canceled. The Warrant Holder, by his acceptance hereof, expressly waives any right to receive any fractional share of stock or fractional Warrant upon exercise of this Warrant. 5. Exchange, Transfer, Assignment or Loss of Warrant. This Warrant are exchangeable, without expense, at the option of the Warrant Holder, upon presentation and surrender of this Warrant evidencing such Warrants to the Company at its office or at the office of its stock transfer agent, if any, for other Warrants of different denominations entitling the Warrant Holder thereof to purchase in the aggregate the same number of shares of Common Stock as are purchasable thereunder at the same respective Exercise Price. Subject to Section 11 hereof, upon surrender of this Warrant to the Company at its principal office or at the office of its stock transfer agent, if any, with a duly executed assignment form and funds sufficient to pay the applicable transfer tax, if any, the Company shall, without charge, execute and deliver new Warrant(s) in the name of the assignee named in such instrument of assignment and the original Warrant shall promptly be canceled. This Warrant may be divided or combined with other Warrants which carry the same rights upon presentation of this Warrant at the office of the Company or at the office of its stock transfer 2 agent, if any, together with a written notice signed by the Warrant Holder hereof specifying the names and denominations in which new Warrants are to be issued. Upon receipt by the Company of evidence satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and, in the case of loss, theft or destruction, of reasonably satisfactory indemnification, and upon surrender and cancellation of this Warrant, if mutilated, the Company will execute and deliver new Warrants of like tenor and date. 6. Rights of the Warrant Holder. The Warrant Holder shall not, by virtue hereof, be entitled to any rights of a share holder of the Company until exercise of any Warrants. 7. Adjustments of Purchase Price and Number of Shares. (a) Subdivision and Combination. If the Company shall at any time subdivide or combine the outstanding shares of Common Stock by way of stock split, reverse stock split or the like, the Exercise Price shall forthwith be proportionately increased or decreased. (b) Adjustment in Number of Shares. Upon each adjustment of the Exercise Price pursuant to the provisions of paragraph 7(a), the number of shares of Common Stock issuable upon the exercise of this Warrant shall be adjusted to the nearest full share of Common Stock by multiplying a number equal to the Exercise Price in effect immediately prior to such adjustment by the number of shares of Common Stock issuable upon exercise of this Warrant immediately prior to such adjustment and dividing the product so obtained by the adjusted Exercise Price. (c) Reclassification, Consolidation, Merger, etc. In case of any reclassification or change of the outstanding shares of Common Stock (other than a change in par value to no par value, or from no par value to par value, or as a result of a subdivision or combination), or in the case of any consolidation of the Company with, or merger of the Company into, another corporation (other than a consolidation or merger in which the Company is the surviving corporation and which does not result in any reclassification or change of the outstanding shares of Common Stock, except a change as a result of a subdivision or combination of such shares or a change in par value, as aforesaid), or in the case of a sale or conveyance to another corporation of all or a substantial part of the property of the Company, the Warrant Holder shall thereafter have the right to purchase the kind and number of shares of stock and other securities and property receivable upon such reclassification, change, consolidation, merger, sale or conveyance as if the Warrant Holder were the owner of the shares of Common Stock underlying this Warrant immediately prior to any such events at a price equal to the product of (x) the number of shares issuable upon exercise of this Warrant and (y) the Exercise Price in effect immediately prior to the record date for such reclassification, change, consolidation, merger, sale or conveyance as if such Warrant Holder had exercised this Warrant. (d) Dividends and Other Distributions with Respect to Outstanding Securities. In the event that the Company shall at any time prior to the exercise of all Warrants declare a dividend (other than a dividend consisting solely of shares of Common Stock or a cash dividend or distribution payable out of current or retained earnings) or otherwise distribute to the holders of its Common Stock any monies, assets, property, rights, evidences of indebtedness, securities (other than shares of Common Stock), whether issued by the Company or by another person or entity, or any other thing of value, the Warrant 3 Holder of the unexercised Warrants shall thereafter be entitled, in addition to the shares of Common Stock or other securities receivable upon the exercise thereof, to receive, upon the exercise of such Warrants, the same monies, property, assets, rights, evidences of indebtedness, securities or any other thing of value that they would have been entitled to receive at the time of such dividend or distribution. At the time of any such dividend or distribution, the Company shall make appropriate reserves to ensure the timely performance of the provisions of this Subsection 7(e). (e) Warrant After Adjustment. Irrespective of any change pursuant to this Section 7 in the Exercise Price or in the number, kind or class of shares or other securities or other property obtainable upon exercise of this Warrant, this Warrant may continue to express as the Exercise Price and as the number of shares obtainable upon exercise, the same price and number of shares as are stated herein. (f) Statement of Calculation. Whenever the Exercise Price shall be adjusted pursuant to the provisions of this Section 7, the Company shall forthwith file at its principal office, a statement signed by an executive officer of the Company specifying the adjusted Exercise Price determined as above provided in such section. Such statement shall show in reasonable detail the method of calculation of such adjustment and the facts requiring the adjustment and upon which the calculation is based. The Company shall forthwith cause a notice setting forth the adjusted Exercise Price to be sent by certified mail, return receipt requested, postage prepaid, to the Warrant Holder. 8. Redemption Rights. This Warrant may be redeemed at the option of the Company at a redemption price equal to $0.001 upon the earlier of (i) the date three years from the date hereof and (ii) the date a registration statement for the resale of the Common Stock has been declared or remains effective by the U.S. Securities and Exchange Commission (the "SEC"), and the Common Stock has traded on The Over the Counter Bulletin Board at or above $1.00 per share for 20 consecutive trading days. The Company may exercise this right of redemption by written notice to the Warrant Holder together with payment of the redemption price. 9. Definition of "Common Stock". For the purpose of this Warrant, the term "Common Stock" shall mean, in addition to the class of stock designated as the Common Stock, $.001 par value, of the Company on the date hereof, any class of stock resulting from successive changes or reclassifications of the Common Stock consisting solely of changes in par value, or from par value to no par value, or from no par value to par value. If at any time, as a result of an adjustment made pursuant to one or more of the provisions of Section 7 hereof, the shares of stock or other securities or property obtainable upon exercise of this Warrant shall include securities of the Company other than shares of Common Stock or securities of another corporation, then thereafter the amount of such other securities so obtainable shall be subject to adjustment from time to time in a manner and upon terms as nearly equivalent as practicable to the provisions with respect to Common Stock contained in Section 7 hereof and all other provisions of this Warrant with respect to Common Stock shall apply on like terms to any such other shares or other securities. 10. Reserved. 11. Restrictions on Offer and Sale. THE OFFER AND SALE OF THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED WITH OR 4 APPROVED OR DISAPPROVED BY THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR ANY SECURITIES COMMISSION OR REGULATORY AUTHORITY AND ARE BEING OFFERED PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE ACT. THE SALE, ASSIGNMENT, CONVEYANCE, PLEDGE, HYPOTHECATION OR TRANSFER OF THE SECURITIES REPRESENTED BY THIS WARRANT TO U.S. PERSONS, AS DEFINED IN RULE 902(k) OF REGULATION S PROMULGATED UNDER THE ACT, IS PROHIBITED EXCEPT (1) IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S AS PROMULGATED UNDER THE SECURITIES ACT; (2) PURSUANT TO REGISTRATION UNDER THE ACT; OR (3) PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE ACT, AND ANY CERTIFICATE REPRESENTING WARRANT SHARES SHALL BEAR A LEGEND TO SUCH EFFECT. 12. Notices to Warrant Holders. Nothing contained in this Warrant shall be construed as conferring upon the Warrant Holder the right to vote or to consent or to receive notice as a share holder in respect of any meetings of share holders for the election of directors or any other matter, or as having any rights whatsoever as a share holder of the Company. If, however, at any time prior to the expiration of this Warrant and its exercise, any of the following events shall occur: (a) The Company shall take a record of the holders of its shares of Common Stock for the purpose of entitling them to receive a dividend or distribution payable otherwise than in cash, or a cash dividend or distribution payable otherwise than out of current or retained earnings, as indicated by the accounting treatment of such dividend or distribution on the books of the Company; or (b) The Company shall offer to all the holders of its Common Stock any additional shares of capital stock of the Company or securities convertible into or exchangeable for shares of capital stock of the Company, or any warrant, right or option to subscribe therefor; or (c) A dissolution, liquidation or winding up of the Company (other than in connection with a consolidation or merger) or a sale of all or substantially all of its property, assets and business shall be proposed; or (d) There shall be any capital reorganization or reclassification of the capital stock of the Company, or consolidation or merger of the Company with another entity; then, in anyone or more of said events, the Company shall give written notice of such event at least fifteen (15) days prior to the date fixed as a record date or the date of closing the transfer books for the determination of the share holders entitled to such dividend, distribution, convertible or exchangeable securities or subscription rights, warrants or options, or entitled to vote on such proposed dissolution, liquidation, winding up or sale. Such notice shall specify such record date or the date of closing the transfer books, as the case may be. Failure to give such notice or any defect therein shall not affect the validity of any action taken in connection with the declaration or payment of any such dividend or distribution, or the issuance of any convertible or exchangeable securities or subscription rights, warrants or options, or any proposed dissolution, liquidation, winding up or sale. 5 13. Notices. (a) All communications under this Warrant shall be in writing and shall be mailed by certified mail, postage prepaid, return receipt requested, or telecopied with confirmation of receipt or delivered by hand or by overnight delivery service: If to the Company at: Applied DNA Sciences, Inc. Attn: Jim Hayward, Chief Executive Officer 25 Health Sciences Drive, Suite 113 Stony Brook, New York 11790 If to the Warrant Holder, to the address of such Warrant Holder as it appears in the stock or warrant ledger of the Company. (b) Any notice so addressed, when mailed by registered or certified mail shall be deemed to be given three days after so mailed, when telecopied shall be deemed to be given when transmitted, or when delivered by hand or overnight shall be deemed to be given when hand delivered or on the day following deposit with the overnight delivery service. 14. Successors. All the covenants and provisions of this Warrant by or for the benefit of the Warrant Holder shall inure to the benefit of his successors and assigns hereunder. 15. Termination. This Warrant will terminate on the earlier of (a) the expiration date of this Warrant or (b) the date this Warrant has been exercised. 16. Governing Law. This Warrant shall be deemed to be made under the laws of the State of New York and for all purposes shall be construed in accordance with the laws of said State, excluding choice of law principles thereof. 17. Entire Agreement, Amendment, Waiver. This Warrant and all attachments hereto and all incorporation by references set forth herein, set forth the entire agreement and understanding between the parties as to the subject matter hereof and merges and supersedes all prior discussions, agreements and understandings of any and every nature among them. This Warrant may be amended, the Company may take any action herein prohibited or omit to take any action herein required to be performed by it, and any breach of any covenant, agreement, warranty or representation may be waived, only if the Company has obtained the written consent or waiver of the Warrant Holder. No course of dealing between or among any persons having any interest in this Warrant will be deemed effective to modify, amend or discharge any part of this Warrant or any rights or obligations of any person under or by reason of this Warrant. THIS SPACE INTENTIONALLY LEFT BLANK; SIGNATURE PAGE FOLLOWS 6 IN WITNESS WHEREOF, the undersigned has executed this Warrant as of this _____ day of May, 2006. APPLIED DNA SCIENCES, INC. By: -------------------------- Name: James Hayward Title: Chief Executive Officer 7 APPLIED DNA SCIENCES, INC. WARRANT EXERCISE FORM (To be executed upon exercise Warrant) The undersigned, the record holder of this Warrant, hereby irrevocably elects to exercise the right, represented by this Warrant, to purchase ___ of the Warrant Shares. The undersigned requests that a certificate for the Warrant Shares being purchased be registered in the name of ______________ and that such certificate be delivered to __________. Dated: ------------- ------------------------------ (Signature) ------------------------------ (Printed Name) 8 EX-10.4 5 e65715_ex10-4.txt REGISTRATION RIGHTS AGREEMENT EXHIBIT 10.4 REGISTRATION RIGHTS AGREEMENT This REGISTRATION RIGHTS AGREEMENT (this "Agreement"), is made as of May ___, 2006, by and among Applied DNA Sciences, Inc., a Nevada corporation (the "Company"), and each of the undersigned (individually, the "Subscriber"). WHEREAS, the Company has sold up to 140 units (the "Units") as of the date hereof to "accredited investors" who are not "U.S. persons," including the Subscriber, at a price of $50,000 per Unit for a maximum offering of $7,000,000 (the "Offering"); WHEREAS, each Unit consists of (i) a $50,000 principal amount 10% Secured Convertible Promissory Note (each a "Note," or collectively, the "Notes") and (ii) a warrant to purchase 100,000 shares of common stock of Applied DNA (each a "Warrant," or collectively, the "Warrants"); and WHEREAS, the Company desires to provide to the holders of the Notes and the Warrants certain registration rights under the Securities Act of 1933, as amended, and the rules and regulations thereunder, or any similar successor statute as each may be in effect from time to time (collectively, the "Securities Act"), and applicable state securities laws. NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Subscriber agree as follows: ARTICLE 1 - DEFINITIONS 1.1. Definitions. As used in this Agreement, the following terms shall have the following meanings: (a) "Agreement" has the meaning set forth in the preamble hereto. (b) "Business Day" means any day other than a Saturday, Sunday or holiday on which banking institutions in New York, New York are closed. (c) "Company" has the meaning set forth in the preamble hereto. (d) "Common Stock" shall mean the common stock of the Company, par value $0.001 per share. (e) "Exchange Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder, or any similar successor statute, as each may be in effect from time to time. (f) "Investors" means, collectively, the holders of the Notes and the Warrants and any of their transferees or assignees who have registration rights under this Agreement in accordance with the terms hereof. "Investor" means any such persons, individually. (g) "Note" or "Notes" has the meaning set forth in the preamble hereto. 1 (h) "Note Shares" means the shares of Common Stock issued or issuable upon conversion of the Notes. (i) "register," "registered," and "registration" refer to a registration effected by preparing and filing a Registration Statement or Statements in compliance with the Securities Act and the declaration or ordering of effectiveness of such Registration Statement or Statements by the SEC. (j) "Registrable Securities" means (i) the Warrant Shares, (ii) the Note Shares, (iii) any Common Stock issued or issuable in respect of the Warrant Shares or the Notes Shares upon any stock split, stock dividend, recapitalization, or similar event; and (iv) any capital stock or other securities otherwise issued or issuable with respect to the Warrant Shares or the Notes Shares; provided, however, that shares of Common Stock or other securities shall only be treated as Registrable Securities if and for so long as they have not been (A) sold to or through a broker or dealer or underwriter in a public distribution, or (B) sold in a transaction exempt from the registration and prospectus delivery requirements of the Securities Act under Section 4(l) thereof, in the case of either clause (A) or clause (B) in such a manner that, upon the consummation of such sale, all transfer restrictions and restrictive legends with respect to such shares are removed upon the consummation of such sale. For the avoidance of doubt, "Registrable Securities" does not include any unexercised option(s) or warrant(s) for the purchase of any capital stock or convertible notes of the Company. (k) "Registration Statement" means any registration statement of the Company, and any amendments thereto, under the Securities Act subject to or pursuant to Article 2 or another provision of this Agreement, as applicable. (l) "SEC" means the United States Securities and Exchange Commission. (m) "Selling Securityholder" means any Investor participating in any registration of Registrable Securities pursuant to this Agreement. (n) "Subscriber" has the meaning set forth in the preamble hereto. (o) "Warrant Shares" means the shares of Common Stock issued or issuable upon exercise of the Warrants. 1.2. Capitalized Terms. Capitalized terms used herein and not otherwise defined herein shall have the respective meanings set forth in the agreements with respect to sale of Registrable Securities. ARTICLE 2 - REGISTRATION 2.1. Registration. The Company shall prepare and file a registration statement with the SEC with respect to the Registrable Securities underlying the Notes and the Warrants within 30 days of the Company's Registration Statement or Form SB-2 (SEC File No. 333-122848), as amended, being declared effective by the SEC. The Company shall use its reasonable best efforts to have the Registration Statement declared effective by the SEC by no later than 180 days after filing. The obligations of the Company to file and have the Registration Statement declared effective shall terminate as to any holder of the Units upon the earlier of the date: (a) when all of 2 such holder's Registrable Securities may be sold during a single three (3) month period under Rule 144 of the Securities Act; and (b) when all of such holder's Registrable Securities may be transferred under Rule 144(k) of the Securities Act unless such holder later becomes an affiliate of the Company (as defined in Rule 144 of the Securities Act) in which case the Company's obligation shall be revived until such holder's rights otherwise terminate under clause (a) above. ARTICLE 3 - OBLIGATIONS OF THE COMPANY In connection with the registration of the Registrable Securities, the Company shall have the following obligations: 3.1. Availability of Registration Statement. The Company shall prepare promptly and file with the SEC any Registration Statement required by Article 2, use reasonable best efforts to cause such Registration Statement relating to the Registrable Securities to become effective within 180 days after such filing, and keep the Registration Statement continuously effective and available for use at all times, except as set forth herein, until such date as all of the Registrable Securities have been sold pursuant to such Registration Statement or the registration rights with respect to the Registrable Securities have been terminated pursuant to Section 2.1 hereof (the "Registration Period"). 3.2. Amendments to Registration Statement. The Company shall prepare and file with the SEC such amendments (including post-effective amendments) and supplements to a Registration Statement and the prospectus used in connection with the Registration Statement as may be necessary to keep the Registration Statement effective and such prospectus available for use at all times during the Registration Period (including, without limitation, amendments and supplements necessary in connection with a change in the "Plan of Distribution" section in any Registration Statement or prospectus) and, during such period, comply with the provisions of the Securities Act with respect to the disposition of all Registrable Securities covered by the Registration Statement until the termination of the Registration Period. The Company shall cause any such amendment and/or new Registration Statement to become effective as soon as practicable following the filing thereof. 3.3. Correction of Statements or Omissions. As soon as practicable after becoming aware of such event, the Company shall publicly announce or notify all Selling Securityholders of the happening of any event, of which the Company has actual knowledge, as a result of which the prospectus included in a Registration Statement, as then in effect, includes an untrue statement of a material fact or fails to state a material fact required to be stated therein or necessary to make the statements therein not misleading, and use commercially reasonable efforts as soon as possible to (but in any event it shall within five Business Days or three Business Days of the receipt by the Company from its accountants of financial information required to correct such untrue statement or omission, as applicable) prepare a supplement or amendment to the Registration Statement (and make all required filings with the SEC and all applicable state securities or blue sky commissions) to correct such untrue statement or omission if not otherwise satisfied through the filing of a report to the SEC or otherwise pursuant to applicable securities laws (but such a supplement or amendment or other filing shall not be required if, notwithstanding the Company's commercially reasonable efforts to so prepare and file such supplement, amendment or other filing, such a supplement, amendment or other filing is no longer required by applicable law to correct such untrue statement or omission because such untrue statement or omission no longer exists) and the Company shall simultaneously (and 3 thereafter as requested) deliver such number of copies of such supplement or amendment to each Investor (or other applicable document) as such Investor may request in writing. 3.4. Stop Orders. The Company shall use commercially reasonable efforts to prevent the issuance of any stop order or other suspension of effectiveness of a Registration Statement, and, if such an order is issued, to obtain the withdrawal of such order at the earliest practicable time, and the Company shall immediately notify all Selling Securityholders and, in the event of an underwritten offering, the managing underwriter(s), of the issuance of such order and the resolution thereof. 3.5. Listing. The Company shall use commercially reasonable efforts to cause the listing and the continuation of listing of all the Registrable Securities covered by any Registration Statement on each securities exchange or quotation system upon which any other securities of the Company is then listed or quoted. 3.6. Transfer Agent. The Company shall provide a transfer agent and registrar, which may be a single entity, for the Registrable Securities not later than the effective date of the Registration Statement. 3.7. Compliance with Laws. The Company shall comply with all applicable laws related to a Registration Statement and offering and sale of securities covered by the Registration Statement and all applicable rules and regulations of governmental authorities in connection therewith (including, without limitation, the Securities Act and the Exchange Act). ARTICLE 4 - OBLIGATIONS OF THE INVESTORS 4.1. Obligations of the Investors. Each Investor electing to participate in any registration of Registrable Securities as a Selling Securityholder generally agrees as follows: (a) Information Concerning Investors; Cooperation. Each Selling Securityholder agrees to cooperate with the Company in connection with the preparation and filing of any Registration Statement hereunder, and for so long as the Company is obligated to keep any such Registration Statement effective, such Selling Securityholder will provide to the Company, in writing, for use in the Registration Statement, all information regarding such Selling Securityholder, the Registrable Securities held by him, her or it, the intended method of distribution of such Registrable Securities and such other information as may be necessary to enable the Company to prepare the Registration and prospectus covering the Registrable Securities and to maintain the currency and effectiveness thereof. At least 30 days prior to the first anticipated filing date of a Registration Statement, the Company shall notify each Selling Securityholder of the information the Company so requires from each such Selling Securityholder and each Selling Securityholder shall deliver to the Company such requested information within 20 days of request therefor or shall be excluded from such registration. (b) SEC. Each Selling Securityholder agrees to use reasonable efforts to cooperate with the Company (at the Company's expense) in responding to comments of the staff of the SEC relating to such Investor. (c) Suspension of Offering or Distribution. On notice from the Company of the happening of any of the events specified in Sections 3.3 or 3.4, the 4 Company requires the suspension by such Selling Securityholder of the distribution of any of the Registrable Securities, then such Selling Securityholder shall cease offering or distributing the Registrable Securities until such time as the Company notifies such Selling Securityholder that offering and distribution of the Registrable Securities may recommence. ARTICLE 5 - EXPENSES OF REGISTRATION 5.1. Expenses. With respect to each registration of Registrable Securities hereunder, all expenses (other than underwriting discounts and commissions and transfer taxes), including, without limitation, the reasonable fees and disbursements of one counsel to the Selling Securityholders, all registration, listing and qualification fees, printers and accounting fees, and the fees and disbursements of counsel for the Company, shall be borne by the Company. ARTICLE 6 - INDEMNIFICATION In the event any Registrable Securities are included in a Registration Statement under this Agreement: 6.1. Indemnification by the Company. The Company will indemnify, hold harmless and defend (a) each Selling Securityholder, (b) each underwriter of Registrable Securities, and (c) the directors, officers, partners, members, employees, agents and persons who control each such Selling Securityholder and any such underwriter within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, if any (each, a "Investor Indemnified Person"), against any losses, claims, damages, liabilities or expenses (collectively, together with actions, proceedings or inquiries whether or not in any court, before any administrative body or by any regulatory or self-regulatory organization, whether commenced or threatened, in respect thereof, "Claims") to which any of them may become subject insofar as such Claims arise out of or are based upon: (i) any untrue statement or alleged untrue statement of a material fact in a Registration Statement or the omission or alleged omission to state therein a material fact required to be stated or necessary to make the statements therein not misleading, (ii) any untrue statement or alleged untrue statement of a material fact contained in any preliminary prospectus if used prior to the effective date of such Registration Statement, or contained in the final prospectus (as amended or supplemented, if the Company files any amendment thereof or supplement thereto with the SEC) or the omission or alleged omission to state therein any material fact necessary to make the statements made therein, in light of the circumstances under which the statements therein were made, not misleading, or (iii) any violation or alleged violation by the Company of the Securities Act, the Exchange Act, any other law, including, without limitation, any state securities law, or any rule or regulation thereunder relating to the offer or sale of the Registrable Securities (the matters in the foregoing clauses (i) through (iii) being, collectively, "Violations"). The Company shall reimburse each such Investor Indemnified Person, promptly as such expenses are incurred and are due and payable, for any reasonable legal fees and other reasonable expenses incurred by them in connection with investigating or defending any such Claim. Notwithstanding anything to the contrary contained herein, the Company shall not be required to indemnify or hold harmless a Investor Indemnified Person (A) with respect to a Claim arising out of or based upon (1) any violation of federal or state securities laws, rules or regulations committed by such Investor Indemnified Persons (or any person who controls any of them or any agent, broker-dealer or underwriter engaged by them) or in the case of a non-underwritten offering, any failure by such Investor Indemnified Person to give any purchaser of Registrable Securities at or prior to the written confirmation of such sale, a copy of 5 the most recent prospectus, (2) an untrue statement or omission contained in any Registration Statement or prospectus which statement or omission was made in reliance upon and in conformity with written information provided by or on behalf of such Investor Indemnified Person specifically for use or inclusion in the Registration Statement or any prospectus, (3) any prospectus used after such time as the Company advised such Investor Indemnified Person that the filing of a post effective amendment or supplement thereto was required, except the prospectus as so amended or supplemented, or (4) any prospectus used after such time as the Company's obligation to keep the Registration Statement effective and current has expired or been suspended hereunder, provided, that the Company has so advised such Investor Indemnified Person; (B) shall not apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written consent of the Company, which consent shall not be unreasonably withheld; and (C) with respect to any preliminary prospectus, shall not inure to the benefit of a Investor Indemnified Person if the untrue statement or omission of material fact contained in the preliminary prospectus was corrected on a timely basis in the prospectus, as then amended or supplemented, if such corrected prospectus was timely made available by the Company pursuant to Section 3.3 hereof, and such Investor Indemnified Person was promptly advised in writing not to use the incorrect prospectus prior to the use giving rise to a Claim and such Investor Indemnified Person, notwithstanding such advice, used it. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of the Investor Indemnified Person and shall survive the transfer of the Registrable Securities by a Investor pursuant to Article 9. 6.2. Indemnification by Investors. An Investor shall indemnify, hold harmless and defend, to the same extent and in the same manner set forth in Section 6.1, the Company, each of its directors, each of its officers who signs the Registration Statement, its employees, agents and persons, if any, who control the Company within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, and any other securityholder selling securities pursuant to the Registration Statement and any underwriter of securities covered by such Registration Statement, together with its directors, officers and members, and any person who controls such securityholder or underwriter within the meaning of the Securities Act or the Exchange Act (each, a "Company Indemnified Person"), against any Claim to which any of them may become subject, under the Securities Act, the Exchange Act or otherwise, insofar as such Claim arises out of or is based upon any Violation, in each case to the extent (and only to the extent) that such Violation occurs in reliance upon and in conformity with written information furnished to the Company by such Investor expressly for use in connection with such Registration Statement; and such Investor will reimburse any legal or other expenses (promptly as such expenses are incurred and are due and payable) reasonably incurred by them in connection with investigating or defending any such Claim; provided, however, that the indemnity agreement contained in this Section 6.2 shall not apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written consent of such Investor, which consent shall not be unreasonably withheld; and provided, further, however, that such Investor shall be liable under this Agreement (including this Section 6.2 and Article 7) for only that amount as does not exceed the net proceeds actually received by such Investor as a result of the sale of Registrable Securities pursuant to such Registration Statement. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such Company Indemnified Person and shall survive the transfer of the Registrable Securities by such Investor pursuant to Article 9. Notwithstanding anything to the contrary contained herein, the indemnification agreement contained in this Section 6.2 with respect to any preliminary prospectus shall not inure to the benefit of any Company Indemnified Person if the untrue statement or omission of material fact 6 contained in the preliminary prospectus was corrected on a timely basis in the prospectus, as then amended or supplemented, and the Company Indemnified Person failed to utilize such corrected prospectus. 6.3. Notices. Promptly after receipt by a Investor Indemnified Person or Company Indemnified Person under this Article 6 of notice of the commencement of any action (including any governmental action), such Investor Indemnified Person or Company Indemnified Person shall, if a Claim in respect thereof is to be made against any indemnifying party under this Article 6, deliver to the indemnifying party a written notice of the commencement thereof, and the indemnifying party shall have the right (at its expense) to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume and continue control of the defense thereof with counsel mutually satisfactory to the indemnifying party and the Investor Indemnified Person or the Company Indemnified Person, as the case may be; provided, however, that such indemnifying party shall diligently pursue such defense and an indemnifying party shall not be entitled to assume (or continue) such defense if the representation by such counsel of the Investor Indemnified Person or Company Indemnified Person and the indemnifying party would be inappropriate due to actual or potential conflicts of interest between such Investor Indemnified Person or Company Indemnified Person and any other party represented by such counsel in such proceeding or the actual or potential defendants in, or targets of, any such action include both the Investor Indemnified Person or the Company Indemnified Person and the indemnifying party, and any such Investor Indemnified Person or Company Indemnified Person reasonably determines that there may be legal defenses available to such Investor Indemnified Person or Company Indemnified Person which are different from or in addition to those available to such indemnifying party. Notwithstanding any assumption of such defense and without limiting any indemnification obligation provided for in Section 6.1 or 6.2, the Company Indemnified Person or Investor Indemnified Person, as the case may be, shall be entitled to be represented by counsel (at its own expense if the indemnifying party is permitted to assume and continue control of the defense and otherwise at the expense of the indemnifying party) and such counsel shall be entitled to participate in such defense. The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action shall not relieve such indemnifying party of any liability to the Investor Indemnified Person or Company Indemnified Person under this Article VI, except to the extent that the indemnifying party is actually materially prejudiced in its ability to defend such action. The indemnification required by this Article 6 shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as such expense, loss, damage or liability is incurred and is due and payable. ARTICLE 7 - CONTRIBUTION 7.1. To provide for just and equitable contribution, if (i) an indemnified party makes a claim for indemnification pursuant to Section 6.1 or 6.2 (subject to the limitations thereof) but it is found in a final judicial determination, not subject to further appeal, that such indemnification may not be enforced in such case, even though this Agreement expressly provides for indemnification in such case, or (ii) any indemnified or indemnifying party seeks contribution under the Securities Act, the Exchange Act or otherwise, then the Company (including for this purpose any contribution made by or on behalf of any director of the Company, any officer of the Company who signed any such registration statement, and any controlling person of the Company within the meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange Act), as one entity, and the Selling Securityholders whose Registrable Securities are included in such 7 registration in the aggregate (including for this purpose any contribution by or on behalf of an indemnified party), as a second entity, shall contribute to the losses, liabilities, claims, damages, and expenses whatsoever to which any of them may be subject, on the basis of relevant equitable considerations such as the relative fault of the Company and such Selling Securityholders in connection with the facts which resulted in such losses, liabilities, claims, damages, and expenses. The relative fault, in the case of an untrue statement, alleged untrue statement, omission, or alleged omission, shall be determined by, among other things, whether such statement, alleged statement, omission, or alleged omission relates to information supplied by the Company or by such Selling Securityholders, and the parties' relative intent, knowledge, access to information, and opportunity to correct or prevent such statement, alleged statement, omission, or alleged omission. Subject to the following sentence, the Company and Investors agree that it would be unjust and inequitable if the respective obligations of the Company and the Selling Securityholders for contribution were determined by pro rata or per capita allocation of the aggregate losses, liabilities, claims, damages, and expenses (even if the Selling Securityholders and the other indemnified parties were treated as one entity for such purpose) or by any other method of allocation that does not reflect the equitable considerations referred to in this Section 7.1. In no case shall any Selling Securityholder be responsible for a portion of the contribution obligation imposed on all Selling Securityholders in excess of the net proceeds actually received by such Selling Securityholder as a result of the sale of Registrable Securities pursuant to such Registration Statement. No person guilty of a fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who is not guilty of such fraudulent misrepresentation. For purposes of this Section 7.1, each person, if any, who controls any Selling Securityholder within the meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange Act and each officer, director, partner, employee, agent, and counsel of each such Selling Securityholder or control person shall have the same rights to contribution as such Selling Securityholder or control person and each person, if any, who controls the Company within the meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange Act, each officer of the Company who signs the Registration Statement, each director of the Company, and its or their respective counsel shall have the same rights to contribution as the Company, subject in each case to the provisions of this Section 7.1. Anything in this Section 7.1 to the contrary notwithstanding, no party shall be liable for contribution with respect to the settlement of any claim or action effected without its written consent. This Section 7.1 is intended to supersede any right to contribution under the Securities Act, the Exchange Act or otherwise. ARTICLE 8 - MARKET STAND-OFF 8.1. "Market Stand-Off". Each Investor hereby agrees that, during the period specified by the Company and any underwriter of Common Stock or other securities of the Company following the effective date of a Registration Statement of the Company filed under the Securities Act, it shall not, to the extent requested by the Company and such underwriter, directly or indirectly sell, offer to sell, contract to sell (including, without limitation, any short sale), grant any option to purchase or otherwise transfer or dispose of (other than to donees who agree to be similarly bound) any securities of the Company held by it at any time during such period except Common Stock included in such registration; provided, that (i) such market stand-off time period shall not exceed 180 days following the effective date of such registration if such registration relates to the Company's initial public offering of securities, and shall not exceed 90 days following the effective date of such registration in all other cases; (ii) the directors, officers and holders of more than 2% of the Company's then outstanding capital stock (each such director, 8 officer and stockholder, a "Lockup Party") shall have agreed to be at least as restricted with respect to the offer, sale or other transfer of such persons' securities in the Company (a "lockup"); and (iii) the Company shall promptly provide notice to each Investor of any discretionary waiver or early termination by the Company or its underwriter of the lockup of any Lockup Party, and cause each Investor to receive, on a proportionate basis, the benefit of any such waiver or termination. ARTICLE 9 - REPORTS UNDER THE EXCHANGE ACT 9.1. Rule 144 Reporting. With a view to making available the benefits of certain rules and regulations of the SEC which may at any time permit the sale of the Registrable Securities to the public without registration after such time as a public market exists for the Common Stock of the Company, the Company agrees to: (a) Make and keep public information available, as those terms are understood and defined in Rule 144 under the Securities Act, at all times after the date that the Company becomes subject to the reporting requirements of the Securities Act or the Exchange Act; (b) File with the Commission in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act (at any time after it has become subject to such reporting requirements); and (c) So long as any Investor owns any Registrable Securities, to furnish to such Investor forthwith upon written request a written statement by the Company as to its compliance with the reporting requirements of said Rule 144 (at any time after 90 days after the effective date of the first registration statement filed by the Company for an offering of its securities to the general public), and of the Securities Act and the Exchange Act (at any time after it has become subject to such reporting requirements), a copy of the most recent annual or quarterly report of the Company, and such other reports and documents of the Company and other information in the possession of or reasonably obtainable by the Company as any such Investor may reasonably request in availing itself of any rule or regulation of the SEC allowing such Investor to sell any such securities without registration. ARTICLE 10 - AMENDMENT AND ASSIGNMENT OF REGISTRATION RIGHTS 10.1. Assignment of Registration Rights. The rights of any Investor hereunder as to Registrable Securities transferred by such Investor, including the right to have the Company register Registrable Securities pursuant to this Agreement, shall be automatically assigned by the Investor to any transferee of all or any portion of the Registrable Securities, whether such transfer occurs before or after the Registration Statement becomes effective, if: (a) the transferring Investor agrees in writing with the transferee or assignee to assign such rights, and a copy of such agreement is furnished to the Company within 10 days after such assignment, (b) the Company is, within 10 days after such transfer or assignment, furnished with written notice of (i) the name and address of such transferee or assignee, and (ii) the securities with respect to which such registration rights are being transferred or assigned, (c) following such transfer or assignment, the further disposition of such securities by the transferee or assignee is restricted under the Securities Act or applicable state securities laws, and (d) at or before the time the Company 9 receives the written notice contemplated by clause (b) of this sentence, the transferee or assignee agrees in writing for the benefit of the Company to be bound by all of the provisions contained herein. The rights of any Investor hereunder with respect to any Registrable Securities retained by such Investor shall not be assigned by virtue of the transfer of other Registrable Securities. 10.2. Amendment of Registration Rights. Except as expressly provided in this Agreement, neither this Agreement nor any term hereof may be amended, waived, discharged or terminated other than by a written instrument signed by the party against whom enforcement of any such amendment, waiver, discharge or termination is sought; provided, however, that holders of more than 50% of the Registrable Securities may, with the written consent of the Company, waive, modify or amend on behalf of all holders, any provisions hereof benefitting such holders, so long as the effect thereof will be that all such holders will be treated equally. ARTICLE 11 - MISCELLANEOUS 11.1. Registered Holders. A person or entity is deemed to be a holder (or a holder in interest) of Registrable Securities whenever such person or entity owns of record such Registrable Securities. If the Company receives conflicting instructions, notices or elections from two or more persons or entities with respect to the same Registrable Securities, the Company shall act upon the basis of instructions, notice or election received from the registered owner of such Registrable Securities. 11.2. Notices, etc. All notices and other communications required or permitted under this Agreement shall be sent by registered or certified mail, postage prepaid, overnight courier, confirmed facsimile or other electronic transmission or otherwise delivered by hand or by messenger, addressed (a) if to a Investor, at such Investor's address set forth on the signature page hereto or at such other address as such Investor shall have furnished to the Company in writing, (b) if to the Company at its offices to the attention of the President or at such other address as the Company shall have furnished to the Investors in writing, or (c) if any transferee or assignee of a Investor pursuant to Section 10.1, at such address as such transferee or assignee shall have furnished to the Company in writing. Each such notice or other communication shall for all purposes of this Agreement be treated as effective or having been received or given, as applicable, (i) when delivered if delivered personally, (ii) if sent by mail, at the earlier of its receipt or three Business Days after the registration or certification thereof, (iii) if sent by overnight courier, one Business Day after the same has been deposited with a nationally recognized courier service, or (iv) when sent by confirmed facsimile or other electronic transmission, on the day sent (if a Business Day) if sent during normal business hours of the recipient, and if not, then on the next Business Day (provided, that such facsimile or other electronic transmission is followed by delivery via another method permitted by this Section 11.2). 11.3. Delays or Omissions. Except as expressly provided in this Agreement, no delay or omission to exercise any right, power or remedy accruing to any Investor upon any breach or default of the Company under this Agreement shall impair any such right, power or remedy of such Investor nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, or of or in any similar breach or default thereafter occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring. Any waiver, permit, consent or approval of any kind or character on the part of any Investor of any breach or default under this Agreement, or any waiver on the part of any Investor of any provisions or conditions of this Agreement, must be in writing 10 and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement or by law or otherwise afforded to any Investor shall be cumulative and not alternative. 11.4. Governing Law; Jurisdiction. This Agreement shall be governed in all respects by the laws of the State of New York without giving effect to the conflicts of laws principles thereof. All suits, actions or proceedings arising out of, or in connection with, this Agreement or the transactions contemplated by this Agreement shall be brought in any federal or state court of competent subject matter jurisdiction sitting in New York, New York Each of the parties hereto by execution and delivery of this Agreement, expressly and irrevocably (i) consents and submits to the personal jurisdiction of any such courts in any such action or proceeding; (ii) consents to the service of any complaint, summons, notice or other process relating to any such action or proceeding by delivery thereof to such party as set forth in Section 11.2 hereof; and (iii) waives any claim or defense in any such action or proceeding based on any alleged lack of personal jurisdiction, improper venue, forum non conveniens or any similar basis. 11.5. Entire Agreement; Amendment. This Agreement and the other documents delivered pursuant to this Agreement at the Closing constitute the full and entire understanding and agreement between the parties with regard to the subject matter hereof and thereof and supersede all prior agreements and merge all prior discussions, negotiations, proposals and offers (written or oral) between them, and no party shall be liable or bound to any other party in any manner by any representations, warranties, covenants or agreements except as specifically set forth herein or therein. Except as expressly provided in this Agreement, neither this Agreement nor any term hereof may be amended, waived, discharged or terminated other than by a written instrument signed by the party against whom enforcement of any such amendment, waiver, discharge or termination is sought. 11.6. Successors and Assigns. Subject to Article 10 hereof, the provisions of this Agreement shall inure to the benefit of, and be binding upon, the permitted successors, assigns, heirs, executors and administrators of the parties to this Agreement, except that the Company may not assign this Agreement without the written consent of the Holders of at least 50% of the then outstanding Registrable Securities. 11.7. Titles and Subtitles. The headings in this Agreement are used for convenience of reference only and shall not be considered in construing or interpreting this Agreement. 11.8. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be enforceable against the parties actually executing such counterparts, and all of which together shall constitute one instrument. This Agreement may be delivered by facsimile, and facsimile signatures shall be treated as original signatures for all applicable purposes. 11.9. Further Assurances. Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as the other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby. 11 11.10. Consents. Unless otherwise provided herein, all consents and other determinations to be made pursuant to this Agreement shall be made on the basis of a majority in interest (determined by number of securities) with respect to the Registrable Securities. 11.11. Severability. In the event that any provision of this Agreement becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, this Agreement shall continue in full force and effect without said provision. 11.12. No Third Party Beneficiaries. This Agreement shall not confer any rights or remedies upon any person other than the parties hereto, each investor, their permitted successors and assigns and parties eligible for indemnification under Article 6, and only in accordance with the express terms of this Agreement. 11.13. Confidentiality of Agreement, Press Releases and Public Announcements. Except as set forth below, the parties shall, and shall cause their officers, employees and representatives to, treat and hold as confidential the existence and terms of this Agreement at all times. No party shall issue any press release or make any public announcement relating to the subject matter of this Agreement without the prior written approval of the Company and the holders of at least 50% of the number of Registrable Securities; provided, however, that any party may make any public disclosure it believes in good faith is required by applicable law (including applicable securities laws) or any listing or trading agreement concerning its publicly-traded securities to make such disclosure (in which case the disclosing party will use its reasonable efforts to advise the other parties in writing prior to making the disclosure). 11.14. Construction. The parties have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement. Any reference to any federal, state, local or foreign statute or law shall be deemed also to refer to all rules and regulations promulgated thereunder and any applicable common law, unless the context requires otherwise. The word "including" shall mean including without limitation and is used in an illustrative sense rather than a limiting sense. Terms used with initial capital letters will have the meanings specified, applicable to singular and plural forms, for all purposes of this Agreement. Reference to any gender will be deemed to include all genders and the neutral form. 11.15. Incorporation of Exhibits, Annexes and Schedules. The Exhibits, Annexes and Schedules identified in this Agreement, if any, are incorporated herein by reference and made a part hereof. THIS SPACE INTENTIONALLY LEFT BLANK. SIGNATURE PAGE FOLLOWS 12 IN WITNESS WHEREOF, the parties have caused this Registration Rights Agreement to be duly executed as of the date first above written. APPLIED DNA SCIENCES, INC. By: -------------------------------- Name: Title: IF INDIVIDUAL INVESTOR: ------------------------------------ (Signature) ------------------------------------ (Printed Name) IF CORPORATION, TRUST, ESTATE OR REPRESENTATIVE: ------------------------------------ Name of Investor By: -------------------------------- Name: Title: 13 EX-99.1 6 e65715_ex99-1.txt PRESS RELEASE EXHIBIT 99.1 Applied DNA Sciences Launches SigNature(TM) Botanical DNA Authentication Program STONY BROOK, N.Y., May 1 /PRNewswire First Call / -- Applied DNA Sciences, Inc. (OTC BB: APDN), a DNA security solutions company, today announced the launch of its SigNature(TM) Botanical DNA Authentication Program ("SigNature(TM) Program"). APDN created the SigNature(TM) Program to provide a secure, cost-effective and forensic method intended to help preserve and add value to its customers' brand and product lines. The SigNature(TM) Program is the first initiative by APDN to introduce to the market a range of ready-to-use security solutions aimed at brand protection and authentication and also to address the global need to combat counterfeiting and piracy. Counterfeit items continue to pose a significant and growing problem with consumer packaged goods, especially for prestige and established brands worldwide. In the 2005 DOPIP Global Counterfeit and Piracy Report, brands were tracked to counterfeit and piracy seizures and accounted for losses of more than $1.54 billion dollars (USD). Dr. James A. Hayward, Chief Executive Officer of Applied DNA Sciences, stated, "We believe that there are many consumer packaged goods especially in the luxury, retail, and apparel industries that could benefit from the overt and covert technologies that the SigNature(TM) Program offers. Our ready-to-use, proprietary forensic methodologies are designed to protect and complement the branding and packaging needs of our clients." Sectors of commerce that could benefit from the SigNature(TM) Program include: pharmaceutical, healthcare, cosmetic, fragrance, luxury apparel, and other consumer product driven industries. The SigNature(TM) Program is based on APDN's proprietary platform technology which uses plant-derived DNA sequences. Botanical DNA can be encrypted into inks, paper, thread, holograms and many other mediums. As part of the SigNature(TM) Program offering, APDN has created a unique botanical DNA SigNature logo which highlights the word "Nature" and incorporates the scientific element including DNA and its natural derivation from botanical sources. The logo has been designed to contain embedded botanical DNA, for overt detection and forensic authentication purposes. For real-time detection, a proprietary SigNature DNA detection pen is applied over the DNA-embedded SigNature logo, prompting a reversible color change. If a reversible color change does not occur, counterfeiting is suspected, triggering the need for forensic authentication which is obtainable by sequencing the encrypted, underlying botanical DNA. About Applied DNA Sciences, Inc. Applied DNA Sciences, Inc. (APDN) develops proprietary DNA-embedded security solutions that use plant DNA to verify authenticity and protect corporate and government agencies from counterfeiting, fraud, piracy, product diversion, identity theft and unauthorized intrusion into physical plant and databases. Our common stock is listed on The Over-The-Counter Bulletin Board under the symbol "APDN". Contact: MeiLin Wan, Applied DNA Sciences, Inc., 25 Health Sciences Drive, Stony Brook, New York 11790; Tel: 631-444-6861; Fax: 631-444.8848; E-mail: info@adnas.com www.ADNAS.com. -1- The statements made by Applied DNA Sciences, Inc. in this press release may be forward-looking in nature and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements describe the Company's future plans, projections, strategies and expectations, and may be identified by words such as "expects", "anticipates", "intends", "plans", "believes", "seeks", "estimates" or words of similar meaning. These forward-looking statements are based on assumptions and involve a number of risks, uncertainties, situations and other factors that may cause our or our industry's actual results, level of activity, performance or achievements to be materially different from any future results, level of activity, performance or achievements expressed or implied by these statements. These factors include changes in interest rates, market competition, changes in the local and national economies, and various other factors detailed from time to time in Applied DNA Sciences' SEC reports and filings, including our Annual Report on Form 10-KSB, filed on January 12, 2006, and subsequent Quarterly Reports on Form 10-QSB and Current Reports on Form 8-K. The Company undertakes no obligation to update publicly any forward-looking statements to reflect new information, events or circumstances after the date hereof to reflect the occurrence of unanticipated events. -2- -----END PRIVACY-ENHANCED MESSAGE-----