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Exhibit 10.1

 

Confidential materials omitted and filed separately with the Securities and
Exchange Commission. Asterisks (***) denote omissions.

 

MUTUAL LICENSE AGREEMENT

 

MUTUAL LICENSE AGREEMENT (“Agreement”), dated as of March 25, 2015 (the
“Effective Date”), by and between Divatex Home Fashion, Inc., a New York
corporation with a place of business at 261 Fifth Avenue, Suite 501, New York,
NY 10016 (“DHF”), and Applied DNA Sciences, Inc., a Delaware corporation, having
an address at 50 Health Sciences Drive, Stony Brook, NY 11790 (“ADNAS”; and
together with DHF, the “Parties”).

 

WITNESSETH:

 

WHEREAS, ADNAS has developed patented technologies (the “Technologies”) for the
tagging of raw cotton fiber at source called SigNature® T; and

 

WHEREAS, DHF designs, manufactures, sources, and distributes home textile
fabrics including bedding, bath and accessories. DHF has filed applications with
the U.S. Patent and Trademark Office (“USPTO”) to register the following
trademarks: “PimaCott”, “GizaCott” and “AmeriCott” (collectively, the
“Trademarks”) for the branding and marketing of tagged cotton fiber; and

 

WHEREAS, the Parties contemplate entering into an agreement with commodity
merchant(s) pursuant to which the merchant will be given a license to collect a
tagging fee for each pound of SigNature® T tagged cotton from the cotton gins
and sell the tagged cotton fibers to customers.

 

NOW, THEREFORE, the Parties hereto agree as follows:

 

ARTICLE I

GENERAL PROVISIONS

 

1.1       Term of the Agreement. The initial term of this Agreement shall be two
(2) years, which shall automatically renew for additional one (1) year periods,
unless the Agreement is mutually terminated pursuant to Section 7.1 below. (The
initial term and any renewal terms shall collectively be referred to as the
“Term”). If the cumulative sales for tagged cotton do not result in total sales
of 45 million pounds within two (2) years, the Agreement can be terminated at
the option of ADNAS.

 

1.2       Limitations on Liability.

 

(a)          Neither of the Parties shall have any power to bind the other Party
except as specifically provided in this Agreement.

 

 

   

 

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(b)          Except as otherwise provided herein, neither Party shall be
responsible or liable for any indebtedness, obligation or liability of the other
Party, whether incurred before or after the Effective Date of this Agreement. In
the event that either Party becomes liable for any indebtedness or obligation of
the other Party in contravention of the provisions of this provision, such Party
shall be indemnified by the other Party pursuant to Article VI hereof.

 

(c)          The terms and conditions of this Agreement are intended for the
exclusive benefit of each Party and no third party shall be entitled to any
benefit therefrom nor may any third party in any way rely upon either Party, its
assets, or any of its officers, directors, employees or agents, none of whom
shall have any apparent authority to bind the other Party except in the manner
expressly provided herein.

 

ARTICLE II

RIGHTS AND DUTIES OF THE PARTIES

 

2.1       Contributions by the Parties.

 

(a)          ADNAS will grant the DHF an exclusive worldwide license to use the
SigNature® T technology for application in raw cotton fiber for the Term. Upon
any expiration or termination of this Agreement, the grant shall expire
immediately and DHF shall have no further right to use the SigNature® T
technology for application in raw cotton fiber.

 

(b)          DHF will grant ADNAS an exclusive, worldwide license to use the
trademarks, “PimaCott”, “GizaCott” and “AmeriCott” for the Term. Upon any
expiration or termination of this Agreement, the grant shall expire immediately
and ADNAS shall have no further right to use the "PimaCott", "GizaCott" and
"AmeriCott" trademarks.

 

2.2       Management.

DHF will be solely responsible for the following marketing and operational
procedures. The Parties shall jointly determine protocols for chain of custody
assurance. ADNAS agrees to provide DHF reasonable technical assistance relating
to the use the SigNature® T technology for application in raw cotton fiber in
DHF’s marketing efforts.

 

2.3       Business Plan. The Parties will agree on a business plan. DHF will use
best efforts to achieve the goals set forth in such business plan which will
include the sale of (a) of fifty (50) million pounds of raw cotton in the first
year of the Agreement and (b) one hundred (100) million pounds of raw cotton in
the second year of the Agreement.

 

ARTICLE III

FINANCIAL MATTERS

 

3.1       Expenses, Profits and Losses.

 

(a)          DHF will be solely responsible for the marketing of the tagged
cotton using Signature® T under the Trademarks to businesses that use cotton in
the production and distribution of cotton goods. DHF will be responsible for its
own travel expenses

 

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(b)          ADNAS will be solely responsible for the application of the tagging
technology, DNA-related marketing materials and labor, and a predetermined
amount per year of QC testing and authentication through the supply chain. ADNAS
will work directly with merchant(s) for delivery and installation of SigNature®
T technology transfer equipment at the designated gins. ADNAS will be
responsible for its own travel expenses related specifically to training and
installation of such equipment.

 

(c)          The parties will reach an agreement of the cost for marketing and
application of the Technology set forth in subparagraphs (a) and (b) above. DHF
will be responsible for costs of subparagraph (a) and ADNAS will be responsible
for the costs set forth in subparagraph (b) (collectively the “Agreed Costs”).
The Agreed Costs will be as set forth in the Revenue Sharing Model attached
hereto as Schedule A. The Parties will reach an agreement on any other costs
that may occur that are not included in subparagraphs (a) or (b) above.

 

(d)          ADNAS will collect the tagging fee from the merchant. Each party
shall be entitled to be reimbursed therefrom for their respective Agreed Costs.
The balance of the tagging fee shall be divided equally between the parties,
except for the first hundred million pounds of cotton tagged, the fee will be
distributed as set forth in Schedule A.

 

(e)          DHF shall report to ADNAS with respect the Agreed Costs it has
incurred as such are incurred.

 

(f)          ADNAS will provide a quarterly statement to DHF, within ten (10)
business days of the end of each calendar quarter, with respect to tagging fees
collected for the previous quarter and shall pay to DHF with the report, its
share of the tagging fee.

 

3.2       Books and Records; Audit Rights.

 

(a)          Books and Records. Each Party shall keep adequate books and records
at its place of business, setting forth a true and accurate account of all
business transactions arising out of and in connection with this Agreement.

 

(b)           Audit Rights. During the Term and for one (1) year thereafter,
each Party shall have the right, at its own expense, upon five (5) business
days' prior written notice through its representatives including its auditors,
to examine and/or audit, and make copies and extracts from the other Party's
books and records during regular business hours.

 

(c)          Discrepancy. In the event that such inspection reveals an
underpayment by ADNAS, then DHF shall promptly provide ADNAS a copy thereof and
ADNAS shall within thirty (30) days of receipt of such report, remit payment to
DHF in the amount of the underpayment; provided, however, that ADNAS shall have
thirty (30) days from receipt of any audit report to respond with documentation
reasonably refuting any claim contained therein. ADNAS shall pay any undisputed
claims as set forth above. If no such documentation is provided or documentation
is provided but DHF disagrees that such documentation warrants a reduction in
the amount claimed by DHF to be due, then DHF shall thereafter be free to pursue
its remedies under the Agreement related to non-payment. In the event that such
discrepancy is greater than ten percent (10%) of monies owed to DHF, then ADNAS
shall bear all reasonable expenses related to such inspection, including
reasonable attorney's fees if applicable.

 

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3.3       Insurance  Each Party shall acquire and maintain at its sole cost and
expense during the Term and for a period of six (6) years following the
termination of this Agreement, comprehensive general liability Insurance,
including product liability and contractual liability, underwritten by an
insurance company with a Best’s rating of at least A-/XII.  This insurance
coverage shall provide protection of not less than $2,000,000 combined single
limit for personal injury and property damage (on a per occurrence basis) and a
deductible not to exceed ten percent (10%) of the required policy limits.  All
insurance policies shall name the other Party and its parents, subsidiaries and
related companies and the respective owners, officers, directors, agents and
employees of each of them as additional insureds.  Each Party shall furnish the
other Party with endorsements from insurance carriers reflecting compliance with
the foregoing obligations within thirty (30) days after execution of this
Agreement.  Each Party’s insurance will be primary and not excess or
contributory with respect to any insurance that the other Party may maintain.

 

4            Intellectual Property. DHF shall own all trademarks and domain
names developed in the course of this Agreement. and agrees to grant and hereby
grants ADNAS the worldwide, non-exclusive right and license to use such
trademarks and domain names relating to the goods and services provided
hereunder. In the event that DHF elects not to renew a trademark registration or
domain name licensed pursuant to this Section, DHF shall notify ADNAS at least
sixty (60) days prior to such renewal/expiration date and, upon ADNAS’ request,
agrees to transfer such trademark registration or domain name registration to
ADNAS.

 

ARTICLE IV

REPRESENTATIONS AND WARRANTIES: COVENANTS

 

5.1       Each of the Parties represents and warrants to the other that:

 

(a)          It is a corporation, duly formed, validly existing and in good
standing under the laws of the state of its formation. The execution, delivery
and performance by it of this Agreement are within its corporate power and
authority and have been duly authorized by all necessary corporate action.

 

(b)          This Agreement is its valid and binding obligation enforceable
against each Party in accordance with its terms except that such enforcement may
be subject to bankruptcy, insolvency, reorganization moratorium or similar laws
now or hereafter in effect, or legal or equitable principles relating to or
limiting creditors’ rights.

 

ARTICLE V

INDEMNIFICATION/CONTRIBUTION

 

6.1       Contribution/Indemnification.

 

(a)       Indemnification:

 

i.          DHF agrees to indemnify and hold ADNAS harmless with respect to any
third party claims arising out of (a) the marketing and use of the Trademarks
except for any ADNAS claims with respect to the efficacy of the Technology, or
(b) or any claim asserting that the use of the Trademarks as contemplated herein
infringes on or violates the rights of such third party.

 

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ii.         ADNAS agrees to indemnify and hold DHF harmless with respect to any
third party claims arising out of the any claim that the application of the
SigNature® T technology infringes on or violates the rights of such third party
or that SigNature® T technology does not meet ADNAS claims with respect to
efficacy.

 

iii.        In the event that any claim for indemnification hereunder arises,
the party seeking such indemnification shall promptly notify the other party in
writing. Such other party shall thereupon be obligated, at the option of the
party seeking indemnification, to retain and pay for counsel to defend such
claim, the choice of such counsel being subject to the approval of the party
entitled to indemnification, but which approval shall not be unreasonably be
withheld. The parties shall further use good faith efforts to keep the costs of
such indemnification, including defense cost, to a reasonable minimum as may be
commercially reasonable under the circumstances. In the event that that the
party entitled to indemnification does not seek defense, such party shall be
entitled to have its own counsel participate in the defense of such claim at its
costs and expense.

 

iv.        The indemnification provisions herein shall also extend to the
officers, employees, agents, attorneys or other persons acting on behalf of the
parties.

 

v.         No settlement of a claim shall be entered into without the consent of
the party providing the indemnification, which consent shall not be unreasonably
withheld.

 

vi.        Neither party shall be entitled to indemnification for any claim that
is based on the conduct of that party.

 

ARTICLE VI

TERMINATION

 

7.1       Event of Termination. Either party may terminate this Agreement upon
the happening of any of the following events:

 

(a)  An event of Bankruptcy or Insolvency of either of the Parties.

 

(b)  Mutual written agreement of the Parties with sixty (60) days prior written
notice.

 

(c)  At ADNAS’s option if DHF does not complete the cumulative sale of 45
million pounds of DNA-marked cotton by the 2-year anniversary of this agreement
as per Paragraph 1.1.

 

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(d)  A material breach by one Party of its obligations hereunder which has not
been cured within thirty (30) days after written notice thereof has been
received by the other Party.

 

ARTICLE VII

MISCELLANEOUS PROVISIONS

 

8.1       Confidential Information. In the course of the performance of this
Agreement, the one party (“Disclosing Party”) may furnish the other party
(“Receiving Party”) with confidential and proprietary information and trade
secrets including any business and technical information, know-how and trade
secrets (whether written, graphic or oral) related to their and their
subsidiaries’ current, future and proposed products, including, but not limited
to, research and development programs, improvements, methods, procedures,
discoveries, patents, patent applications, inventions, processes, chemical
formulae, marker compounds, DNA sequences, technology, designs, models,
drawings, product plans, products, services, customers, customer lists,
strategies, studies, business plans, forecasts, market information, marketing
plans, techniques, engineering, testing systems, hardware configuration
information, computer software and programs (including source code and related
documentation), test and/or experimental data and results, laboratory notebooks,
marketing, finances or other business information (collectively, “Confidential
Information”). Confidential Information also includes confidential information
of third parties that is observed, identified or disclosed under or as a result
of this Agreement. The Receiving Party will not disclose the Confidential
Information, must immediately return it upon expiration or termination of this
Agreement, and must keep it in strict confidence and not use it for any purpose
other than the Parties’ respective performance under this Agreement. The
Receiving Party may disclose Discloser’s Confidential Information to its
Affiliates, employees, officers, directors, partners, representatives,
third-party service providers or contractors or other persons designated by a
party to act or perform on its behalf on a “need to know” basis only, provided
that each is bound by obligations of confidentiality and restrictions against
disclosure at least as restrictive as those contain herein. The Disclosing Party
will use reasonable efforts to mark or cause to be marked all materials
containing its Confidential Information to clearly indicate ownership of the
materials and their confidential status; however, failure to mark does not by
itself disqualify information from being Confidential Information if other
factors or circumstances, or a Party’s course of performance, clearly indicate
to the Receiving Party at the time of disclosure or the Receiving Party
acknowledges that the information is confidential. The Receiving Party
recognizes that the Confidential Information of the Disclosing Party (1) was
designed and developed by the Disclosing Party at great expense and over lengthy
periods of time; (2) is secret, confidential and unique; (3) constitutes the
exclusive property and/or trade secrets of the Disclosing Party; and (4) that
any use of the Confidential Information by the Receiving Party for any purpose
other than in accordance with this Agreement and in furtherance of obligations
hereunder would be wrongful and would cause irreparable injury to the Disclosing
Party for which damages are not an adequate remedy. The restrictions and
obligations in this Section concerning confidentiality will survive the
expiration or termination of this Agreement for a period of three (3) years. The
obligations of the Parties herein will not apply to information which: (i) was
known to the Receiving Party prior to receipt thereof from the Disclosing Party,
as evidenced by the written records of the Receiving Party; (ii) was disclosed
to the Receiving Party in good faith by a third party who is in lawful
possession of and who had the right to make such disclosures; (iii) became part
of the public domain, by publication or otherwise, through no fault of the
Receiving Party; or, (iv) was independently developed by the Receiving Party as
evidenced by the Receiving Party's written records. Each Party understands and
agrees that, in the event that it violates any of the Confidentiality provisions
of this paragraph 8.1, the other Party will suffer immediate and irreparable
harm that cannot be accurately calculated in monetary damages. Consequently,
notwithstanding anything to the contrary in this Agreement, the violating Party
acknowledges and agrees that the other Party shall be entitled to immediate
injunctive relief, either by temporary or permanent injunction, to prevent such
a violation. The violating Party acknowledges and agrees that this injunctive
relief shall be in addition to any other legal or equitable relief to which the
other Party would be entitled.

 

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8.2       Validity. In the event that any provision of this Agreement shall be
held to be invalid, the same shall not affect in any respect whatsoever the
validity of the remainder of this Agreement.

 

8.3       Integrated Agreement. This Agreement constitutes the entire
understanding and agreement among the Parties with respect to the subject matter
hereof and there are no agreements, understandings, restrictions or warranties
among the parties.

 

8.4       Headings. The headings, titles and subtitles used in this Agreement
are for ease of reference only and shall not control or affect the meaning or
construction of any provision hereof.

 

8.5       Notices. Except as may be otherwise specifically provided in this
Agreement, all notices required or permitted here under shall be in writing and
shall be deemed to be delivered when deposited in the United States mail,
postage prepaid, certified or registered mail, return receipt requested,
addressed to the Parties at their respective addresses set forth in this
Agreement, and addressed to the person signing this agreement on behalf of such
Party. With respect to DHF, a copy of any notice shall be sent to its counsel,
Paul H. Aloe, Esq., Kudman Trachten Aloe LLP, 350 Fifth Avenue, Suite 4400, New
York, New York 10118 in the manner set forth above or by electronic mail to
paloe@kudmanlaw.com. Either Party may change the address to which notices are to
be sent, or the person to whose attention they are to be directed, by a written
notice in accordance with this paragraph.

 

8.6       Arbitration of Disputes. Any controversy, dispute between the Parties
or claim arising out of or relating to this contract, or the breach thereof, if
it cannot be resolved by the Parties, shall be settled by arbitration
administered by the American Arbitration Association under its Commercial
Arbitration Rules, and judgment on the award rendered by the arbitrator may be
entered in any court having jurisdiction thereof.

 

8.7       Applicable Law and Venue. This Agreement shall be construed in
accordance with the laws of the State of New York without regard to any
provisions of conflicts of laws. Exception arbitration as set forth above, the
New York State Supreme Court, County of New York, or the United States District
Court for the Southern District of New York shall have exclusive jurisdiction to
adjudicate any action arising in connection with this Agreement and each party
hereby consents to such jurisdiction.

 

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8.8       Assignment. Neither Party hereto shall assign this Agreement or any
rights or obligations hereunder without the prior written consent of the other
Party hereto, and any such attempted assignment without the prior written
consent of the other Party shall be void and of no force or effect; provided,
however, that either Party may assign this Agreement or any of its rights and
obligations hereunder to a related corporate entity (provided that it also
assigns its rights in the Trademarks or SigNature® T to such entity). This
Agreement will be binding upon the Parties’ respective assigns.

 

IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the
day and year first above written.

 

Divatex Home Fashion, Inc.   Applied DNA Sciences, Inc.           By: /s/ David
Greenstein   By: /s/ James A. Hayward     David Greenstein     James A. Hayward
    Chief Executive Officer     Chief Executive Officer  

 

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SCHEDULE A

 

ADNAS-DIVATEX REVENUE SHARING MODEL

This revenue sharing model assumes:

1.     ADNAS DNA costs per lb of cotton marked

oIncludes

§Marking materials and labor

§QC testing

§Authentication through the supply chain

oExcludes

§Design customization and installation of marking equipment

§Travel expenses

2.     Divatex marketing costs per lb of cotton marked exclude travel expenses

3.     ADNAS-Divatex shared revenue (***) on remainder assuming a selling price
of $*** per lb

 

Revenue-sharing per lb per year:

 

Lbs of cotton
DNA-marked
per year

ADNAS

DIRECT

 

(estimated)

$ per lb

(1)

DIVATEX

DIRECT

(estimated)$
per lb

(2)

ADNAS-DIVATEX

SHARED
Revenue

$ per lb

Assume $*** per lb

(3)

ADNAS

TOTAL

Revenue

$ per lb

DIVATEX

TOTAL

Revenue

$ per lb

*** to *** $*** $*** $*** $*** $*** *** to *** $*** $*** $*** $*** $*** *** to
*** $*** $*** $*** $*** $*** >*** $*** $*** $*** $*** $***