--------------------------------------------------------------------------------

Exhibit 10.12
 
[FORM OF PURCHASE WARRANT]
 
NEITHER THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE
HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS
SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
LOAN SECURED BY SUCH SECURITIES.
 
APPLIED DNA SCIENCES, INC.
 
PURCHASE WARRANT
 
Warrant No. [___]
Issue Date: July 15, 2010

 
THIS PURCHASE WARRANT certifies that, for value received, [_____________] (the
“Holder”) is entitled, upon the terms and subject to the limitations on exercise
and the conditions hereinafter set forth, at any time on or after the Issue Date
and on or prior to the close of business on July 15, 2017 (the “Termination
Date”) but not thereafter, to subscribe for and purchase from Applied DNA
Sciences, Inc., a Delaware corporation (the “Company”), at the Exercise Price
(as defined below) then in effect, either, at the option of the Holder: (a)
Senior Secured Convertible Notes in substantially the form attached hereto as
Exhibit A (the “Notes”), (b) such number of fully paid, validly issued and
nonassessable shares of common stock, $0.001 par value per share (the “Common
Stock”), of the Company which are not Subsequent Securities (as defined in the
Notes) into which the Notes could have converted had the Holder elected to
receive Notes in the principal amount of this Warrant that the Holder shall
exercise on the applicable Exercise Date (as defined below), (c) in the event
the applicable Exercise Date occurs after a closing of a Subsequent Financing
(as defined in the Notes) and in the event the Holder elects to receive
Subsequent Financing Securities upon exercise hereof, such number of fully paid,
validly issued and nonassessable Subsequent Financing Securities into which the
Notes could have converted had the Holder elected to receive Notes in the
principal amount of this Warrant that the Holder shall exercise on the
applicable Exercise Date, or (d) in the event the applicable Exercise Date
occurs after a closing of a Qualified Financing (as defined in the Notes) and in
the event the Holder elects to receive Qualified Financing Securities (as
defined in the Notes) upon exercise hereof, such number of fully paid, validly
issued and nonassessable Qualified Financing Securities into which the Notes
could have converted had the Holder elected to receive Notes in the principal
amount of this Warrant that the Holder shall exercise on the applicable Exercise
Date.  As used herein “Underlying Securities” means, the principal amount of
Notes, shares of Common Stock, Subsequent Financing Securities or Qualified
Financing Securities, as the case may be, issuable upon exercise of this
Warrant.
 
 
 

--------------------------------------------------------------------------------

 
 
Section 1.               Exercise of Warrant.
 
(a)   Process.  Exercise of the purchase rights represented by this Warrant may
be made, in whole or in part, at any time or times on or after the Issue Date
and on or before the Termination Date by delivery to the Company (the date of
such delivery, the “Exercise Date”) of a duly executed facsimile copy of the
Notice of Exercise attached hereto as Exhibit B (or such other office or agency
of the Company as it may designate by notice in writing to the registered Holder
at the address of the Holder appearing on the books of the
Company).  Notwithstanding anything herein to the contrary, the Holder shall not
be required to physically surrender this Warrant to the Company until the Holder
has purchased the entire Underlying Securities available hereunder and the
Warrant has been exercised in full, in which case, the Holder shall surrender
this Warrant to the Company for cancellation within three (3) Trading Days (as
defined below) of the date the final Notice of Exercise is delivered to the
Company.  Partial exercises of this Warrant resulting in purchases of a portion
of the Underlying Securities available hereunder shall have the effect of
lowering the Underlying Securities purchasable hereunder by the Underlying
Securities purchased.  The Holder and the Company shall maintain records showing
the Underlying Securities purchased and the date of such purchases.  The Company
shall deliver any objection to any Notice of Exercise within one (1) Trading Day
of receipt of such notice.  In the event of any dispute or discrepancy, the
records of the Holder shall be controlling and determinative in the absence of
manifest error.  The Holder may provide this Warrant, or an affidavit of lost
security, to the Company within a reasonable period after the delivery of any
Notice of Exercise related to any partial exercise of this Warrant, and the
Company, at its expense, will promptly and, in any event within three (3)
Trading Days thereafter, issue and deliver to the Holder a new Warrant of like
tenor, registered in the name of the Holder and exercisable, in the aggregate,
for the remaining Underlying Securities available for purchase under this
Warrant.  The Holder and any assignee, by acceptance of this Warrant,
acknowledge and agree that, by reason of the provisions of this paragraph,
following the purchase of a portion of the Underlying Securities hereunder, the
Underlying Securities available for purchase hereunder at any given time may be
less than the amount stated on the face hereof.  As used herein (i) “Trading
Day” means any day on which the Common Stock is traded on the Principal Market,
or, if the Principal Market is not the principal trading market for the Common
Stock, then on the principal securities exchange or securities market on which
the Common Stock is then traded; provided that “Trading Day” shall not include
any day on which the Common Stock is scheduled to trade on such exchange or
market for less than 4.5 hours or any day that the Common Stock is suspended
from trading during the final hour of trading on such exchange or market (or if
such exchange or market does not designate in advance the closing time of
trading on such exchange or market, then during the hour ending at 4:00:00 p.m.,
New York Time), and (ii) “Principal Market” means the OTC Bulletin Board.
 
(b)   Exercise Price.  For purposes of this Warrant, “Exercise Price” means:
 
(i)             In the event the Holder elects to receive Notes upon exercise
hereof, up to [______] in principal amount of Notes;
 
 
2

--------------------------------------------------------------------------------

 
 
(ii)            In the event the Holder elects to receive shares of Common Stock
that are not Subsequent Financing Securities, $0.04405 per share;
 
(iii)           In the event the Holder elects to receive Subsequent Financing
Securities, 80% of the purchase price paid by the investors in the Subsequent
Financing for the Subsequent Financing Securities; and
 
(iv)           In the event the Holder elects to receive Qualified Financing
Securities, 80% of the purchase price paid by the investors in a Qualified
Financing for the Qualified Financing Securities.
 
(c)           Cash Exercise.  This Warrant may be exercised in whole or in part
at any time prior to the Termination Date, by delivery of the following to the
Company:
 
(i)            A duly completed and executed Notice of Exercise in the form
attached hereto as Exhibit B; and
 
(ii)           The aggregate purchase price for the Underlying Securities with
respect to which this Warrant is being exercised, in lawful money of the United
States, in one, or a combination, of the following methods: (1) cash, (2)
certified check or bank draft payable to the order of the Company, or (3) by
wire transfer of immediately available funds.
 
(d)           Cashless Exercise.
 
(i)            Cashless Exercise for Underlying Securities Classified as
Debt.  If at any time prior to the Termination Date the Holder elects to
exercise this Warrant for Underlying Securities that are classified as debt on
the Company’s balance sheet, and on the Trading Day prior to the Exercise Date
the closing price of the Common Stock is greater than the then applicable
conversion price of such Underlying Securities, the Holder of this Warrant may
elect to exercise this Warrant in whole or in part by means of a “cashless
exercise.”  In the event of a “cashless exercise,” by delivery to the Company of
a duly completed and executed Notice of Exercise in the form attached hereto,
the Holder shall be entitled to receive, without payment of any consideration,
an Underlying Security in the principal amount equal to the difference between
(A) the face amount of the Warrant being exercised minus (B) the quotient of (1)
the product of (x) the face amount of the Warrant being exercised and (y) the
then conversion price of the Underlying Security, divided by (2) the volume
weighted average closing price of the Common Stock for the five (5) consecutive
Trading Day period ending on the Trading Day immediately preceding the date of
such election.
 
(ii)           Cashless Exercise for Underlying Securities Classified as
Equity.  If at any time prior to the Termination Date the Holder elects to
exercise this Warrant for Underlying Securities that are classified as equity on
the Company’s balance sheet, the Holder of this Warrant may elect to exercise
this Warrant in whole or in part by means of a “cashless exercise” in which
event the Company shall issue to the Holder the number of Underlying Securities
determined as follows:
 
 
3

--------------------------------------------------------------------------------

 

 
X = Y [(A-B)/A]
where:
   
X = the number of Underlying Securities to be issued to the Holder.
     
Y = the number of Underlying Securities with respect to which this Warrant is
being exercised.
     
A = the volume weighted average closing price of the Common Stock for the five
(5) consecutive Trading Day period ending on the Trading Day immediately
preceding the date of such election.
     
B = the Exercise Price.
   

(e)   Delivery of Underlying Securities; etc.
 
(i)            Upon exercise of this Warrant, the Company shall promptly (but in
no event later than five (5) Trading Days after the Exercise Date) (the
“Delivery Date”) issue and deliver (or cause to be issued and delivered) to the
Holder the Underlying Securities issuable upon such exercise. The Holder, or any
person permissibly designated by the Holder to receive the Underlying
Securities, shall be deemed to have become the holder of record of such
Underlying Securities as of the Exercise Date.
 
(ii)           To the extent permitted by law, the Company’s obligations to
issue and deliver the Underlying Securities in accordance with the terms hereof
are absolute and unconditional, irrespective of any action or inaction by the
Holder to enforce the same, any waiver or consent with respect to any provision
hereof, the recovery of any judgment against any person or any action to enforce
the same, or any setoff, counterclaim, recoupment, limitation or termination, or
any breach or alleged breach by the Holder or any other person of any obligation
to the Company or any violation or alleged violation of law by the Holder or any
other person, and irrespective of any other circumstance that might otherwise
limit such obligation of the Company to the Holder in connection with the
issuance of Underlying Securities. Nothing herein shall limit the Holder’s right
to pursue any other remedies available to it hereunder, at law or in equity
including, without limitation, a decree of specific performance and/or
injunctive relief with respect to the Company’s failure to timely deliver the
Underlying Securities issuable upon exercise of this Warrant as required
pursuant to the terms hereof.
 
(iii)   If the Company fails to transmit to the Holder Underlying Securities
pursuant to this Section 1(e) by the fifth Trading Day immediately following the
Delivery Date, then the Holder will have the right to rescind such exercise.
 
(iv)   Issuance of Underlying Securities shall be made without charge to the
Holder for any issue or transfer tax or other incidental expense in respect of
the issuance of such Underlying Securities, all of which taxes and expenses
shall be paid by the Company, and such Underlying Securities shall be issued in
the name of the Holder or in such name or names as may be directed by the
Holder; provided, however, that in the event Underlying Securities are to be
issued in a name other than the name of the Holder, this Warrant when
surrendered for exercise shall be accompanied by the Assignment Form attached
hereto as Exhibit C duly executed by the Holder.
 
 
4

--------------------------------------------------------------------------------

 
 
(f)   Changes to Other Notes.
 
(i)             If, at any time while this Warrant is outstanding, the Company
effects any transaction whereby the notes (the “Other Notes”) issued pursuant to
that certain Securities Purchase Agreement, dated as of July 15, 2010, by and
among the Company and the Buyers named therein are amended, modified or
otherwise changed into or exchanged for other securities, then, upon any
subsequent exercise of this Warrant, the Holder shall have the right to receive
the amount and kind of such amended, modified, changed or exchanged securities
that the Holder would have been entitled to receive had the Holder exercised
this Warrant for the Other Notes immediately prior to such event.
 
(ii)   At any time while this Warrant is outstanding and none of the Other Notes
are outstanding, the Holder shall have the right to receive an adjustment to the
conversion price of the Notes issuable upon exercise of this Warrant that the
holders of the Other Notes would have been entitled to receive if the Other
Notes were outstanding.
 
(g)   Notice to Allow Exercise by the Holder.  If (A) the Company shall declare
a dividend (or any other distribution in whatever form) on the Common Stock; (B)
the Company shall declare a special nonrecurring cash dividend on or a
redemption of the Common Stock; (C) the Company shall authorize the granting to
all holders of the Common Stock rights or warrants to subscribe for or purchase
any shares of capital stock of any class or of any rights; (D) the approval of
any stockholders of the Company shall be required in connection with any
reclassification of the Common Stock, any consolidation or merger to which the
Company is a party, any sale or transfer of all or substantially all of the
assets of the Company, of any compulsory share exchange whereby the Common Stock
is converted into other securities, cash or property; or (E) the Company shall
authorize the voluntary or involuntary dissolution, liquidation or winding up of
the affairs of the Company; then, in each case, the Company shall cause to be
mailed to the Holder at its last address as it shall appear upon the Warrant
Register (as defined below) of the Company, at least 20 calendar days prior to
the applicable record or effective date hereinafter specified, a notice stating
(x) the date as of which the holders of the Common Stock of record to be
entitled to such dividend, distributions, redemption, rights or warrants are to
be determined or (y) the date on which such reclassification, consolidation,
merger, sale, transfer or share exchange is expected to become effective or
close, and the date as of which it is expected that holders of the Common Stock
of record shall be entitled to exchange their shares of the Common Stock for
securities, cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer or share exchange; provided that the
failure to mail such notice or any defect therein or in the mailing thereof
shall not affect the validity of the corporate action required to be specified
in such notice.  Subject to applicable law, the Holder is entitled to exercise
this Warrant during the period commencing on the date of such notice to the
effective date of the event triggering such notice.  Notwithstanding the
foregoing, the delivery of the notice described in this Section 1(g) is not
intended to and shall not bestow upon the Holder any voting rights whatsoever
with respect to the Warrant.
 
 
5

--------------------------------------------------------------------------------

 
 
Section 2.      Transfer of Warrant.
 
(a)   Transferability.  Subject to compliance with any applicable federal or
state securities laws, this Warrant and all rights hereunder are transferable,
in whole or in part, upon surrender of this Warrant at the principal office of
the Company or its designated agent, together with a written assignment of this
Warrant substantially in the form attached hereto as Exhibit C duly executed by
the Holder or its agent or attorney and funds sufficient to pay any transfer
taxes payable upon the making of such transfer.  Upon such surrender and, if
required, such payment, the Company shall execute and deliver a new Warrant in
the name of the assignee or assignees and in the denomination or denominations
specified in such instrument of assignment, and shall issue to the assignor a
new Warrant evidencing the portion of this Warrant not so assigned, and this
Warrant shall promptly be cancelled.  A Warrant, if properly assigned, may be
exercised by a new holder for the purchase of Underlying Securities without
having a new Warrant issued.
 
(b)   New Warrant.  This Warrant may be divided or combined with other Warrants
upon presentation hereof at the aforesaid office of the Company, together with a
written notice specifying the names and denominations in which new Warrants are
to be issued, signed by the Holder or its agent or attorney.  Subject to
compliance with Section 2(a), as to any transfer which may be involved in such
division or combination, the Company shall execute and deliver a new Warrant or
Warrants in exchange for the Warrant or Warrants to be divided or combined in
accordance with such notice. All Warrants issued on transfers or exchanges shall
be dated the original Issue Date and shall be identical with this Warrant except
as to the Underlying Securities issuable pursuant thereto.
 
(c)   Warrant Register.  The Company shall register this Warrant, upon records
to be maintained by the Company for that purpose (the “Warrant Register”), in
the name of the record Holder hereof from time to time.  The Company may deem
and treat the registered Holder of this Warrant as the absolute owner hereof for
the purpose of any exercise hereof or any distribution to the Holder, and for
all other purposes, absent actual notice to the contrary.
 
Section 3.      Registration Rights
 
(a)   Demand Registration.
 
(i)             If, at any time, the Company shall receive a written request
from the Holder that the Company effect the registration under the Securities
Act of 1933, as amended (the “Securities Act”), of shares of Common Stock
issuable upon exercise hereof or issuable upon conversion of the Notes,
Subsequent Financing Securities or Qualified Financing Securities (the
“Registrable Securities”), then the Company will use its reasonable efforts to
effect, as expeditiously as possible, the registration under the Securities Act
of the Registrable Securities that the Company has been so requested to register
by the Holder to the extent necessary to permit the disposition (in accordance
with the intended methods thereof) of the Registrable Securities so to be
registered; provided, that the Company shall not be obligated to effect more
than one (1) Demand Registration pursuant to this Section 3(a).
 
(ii)   The Company will be liable for and pay all expenses in connection with
any Demand Registration.
 
 
6

--------------------------------------------------------------------------------

 
 
(b)   Piggyback Registration.
 
(i)   If the Company proposes to register any Common Stock under the Securities
Act (other than a registration on Form S-8 or S-4, or any successor or similar
forms, relating to Common Stock issuable upon exercise of employee stock options
or in connection with any employee benefit or similar plan of the Company or in
connection with a direct or indirect acquisition by the Company of another
person), whether or not for sale for its own account, it will each such time
give written notice at least ten (10) Trading Days prior to the anticipated
filing date of the registration statement relating to such registration to the
Holder, which notice shall set forth the Holder’s rights under this Section 3(b)
and shall offer the Holder the opportunity to include in such registration
statement the number of Registrable Securities as the Holder may request.  Upon
the written request of the Holder made within ten (10) days after the receipt of
notice from the Company (which request shall specify the number of Registrable
Securities intended to be disposed of by the Holder), the Company will use its
reasonable efforts to effect the registration under the Securities Act of all
Registrable Securities that the Company has been so requested to register by the
Holder; provided that if, at any time after giving written notice of its
intention to register any securities pursuant to this Section 3(b) and prior to
the effective date of the registration statement filed in connection with such
registration, the Company shall determine for any reason not to register such
securities, the Company shall give written notice to the Holder and, thereupon,
shall be relieved of its obligation to register any Registrable Securities in
connection with such registration.  No registration effected under this Section
3(b) shall relieve the Company of its obligations to effect a Demand
Registration to the extent required by Section 3(a).
 
(ii)   The Company will be liable for and pay all expenses in connection with
each registration of Registrable Securities pursuant to this Section 3(b).
 
(c)   Registration Procedures.
 
(i)   Whenever the Holder requests that any Registrable Securities be registered
pursuant to Sections 3(a) or (b) hereof, the Company will as expeditiously as
possible prepare and file with the Securities and Exchange Commission (the
“SEC”) a registration statement on any form reasonably acceptable to the Holder
for which the Company then qualifies or that counsel for the Company shall deem
appropriate and which form shall be available for the sale of the Registrable
Securities to be registered thereunder in accordance with the intended method of
distribution thereof, and use its reasonable efforts to cause such filed
registration statement to become and remain effective until the earlier of (A)
the date as of which the Holder may sell all of the Registrable Securities
covered by such registration statement without restriction or limitation
pursuant to Rule 144 and without the requirement to be in compliance with Rule
144(c)(1) (or any successor thereto) promulgated under the Securities Act or (B)
the date on which the Holder shall have sold all of the Registrable Securities
covered by such registration statement (the “Registration Period”).  The Company
shall ensure that each registration statement (including any amendments or
supplements thereto and prospectuses contained therein) shall not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein, or necessary to make the statements therein (in the case of
prospectuses, in the light of the circumstances in which they were made) not
misleading. 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 such registration
statement, which prospectus is to be filed pursuant to Rule 424 promulgated
under the Securities Act, as may be necessary to keep such registration
statement effective at all times during the Registration Period, and, during
such period, comply with the provisions of the Securities Act with respect to
the disposition of all Registrable Securities of the Company covered by such
Registration Statement until such time as all of such Registrable Securities
shall have been disposed of in accordance with the intended methods of
disposition by the seller or sellers thereof as set forth in such Registration
Statement.
 
 
7

--------------------------------------------------------------------------------

 
 
(ii)   The Company shall permit the Holder to review (A) a registration
statement at least three (3) Trading Days prior to its filing with the SEC and
(B) all amendments and supplements to all registration statements (except for
Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q or any similar or
successor reports) within a reasonable number of days prior to their filing with
the SEC.  The Company shall furnish to the Holder whose Registrable Securities
are included in a registration statement, without charge, (1) copies of any
correspondence from the SEC or the staff of the SEC to the Company or its
representatives relating to any registration statement, (2) promptly after the
same is prepared and filed with the SEC, one copy of any registration statement
and any amendment(s) thereto, including financial statements and schedules, all
documents incorporated therein by reference, if requested by the Holder, and all
exhibits and (3) upon the effectiveness of any registration statement, such
number of copies of the prospectus included in such registration statement and
all amendments and supplements thereto as the Holder may reasonably request.
 
(iii)   The Company shall use its reasonable efforts to (A) register and
qualify, unless an exemption from registration and qualification applies, the
resale by the Holder under such other securities or “blue sky” laws of all
applicable jurisdictions in the United States, (B) prepare and file in those
jurisdictions, such amendments (including post-effective amendments) and
supplements to such registrations and qualifications as may be necessary to
maintain the effectiveness thereof during the Registration Period, (C) take such
other actions as may be necessary to maintain such registrations and
qualifications in effect at all times during the Registration Period, and (D)
take all other actions reasonably necessary or advisable to qualify the
Registrable Securities for sale in such jurisdictions; provided, however, that
the Company shall not be required in connection therewith or as a condition
thereto to (1) make any change to its certificate of incorporation or bylaws,
(2) qualify to do business in any jurisdiction where it would not otherwise be
required to qualify but for this Section 3(d), (3) subject itself to general
taxation in any such jurisdiction, or (4) file a general consent to service of
process in any such jurisdiction.  The Company shall promptly notify the Holder
of the receipt by the Company of any notification with respect to the suspension
of the registration or qualification of any of the Registrable Securities for
sale under the securities or “blue sky” laws of any jurisdiction in the United
States or its receipt of notice of the initiation or threatening of any
proceeding for such purpose.
 
(iv)   The Company shall notify the Holder in writing of the happening of any
event, as promptly as reasonably practicable after becoming aware of such event,
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 omission to
state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading (provided that in no event shall such notice contain any
material, nonpublic information), promptly prepare a supplement or amendment to
such registration statement to correct such untrue statement or omission, and
deliver such number of copies of such supplement or amendment to the Holder as
the Holder may reasonably request.  The Company shall also promptly notify the
Holder in writing (A) when a prospectus or any prospectus supplement or
post-effective amendment has been filed, and when a registration statement or
any post-effective amendment has become effective (notification of such
effectiveness shall be delivered to each the Holder by facsimile or e-mail on
the same day of such effectiveness and by overnight mail), (B) of any request by
the SEC for amendments or supplements to a registration statement or related
prospectus or related information, and (C) of the Company’s reasonable
determination that a post-effective amendment to a registration statement would
be appropriate.
 
 
8

--------------------------------------------------------------------------------

 
 
(v)   If the Holder is required under applicable securities laws to be described
in the registration statement as an underwriter, at the reasonable request of
the Holder, the Company shall furnish to the Holder, on the date of the
effectiveness of the registration statement and thereafter from time to time on
such dates as the Holder may reasonably request (A) a letter, dated as of such
date, from the Company’s independent certified public accountants in form and
substance as is customarily given by independent certified public accountants to
underwriters in an underwritten public offering, addressed to the Holder, and
(B) an opinion, dated as of such date, of counsel representing the Company for
purposes of such registration statement, in form, scope and substance as is
customarily given in an underwritten public offering, addressed to the Holder.
 
(vi)   Upon the written request of the Holder in connection with the Holder’s
due diligence requirements, if any, the Company shall make available for
inspection by the Holder or agents retained by the Holder (collectively, the
“Inspectors”), all pertinent financial and other records, and pertinent
corporate documents and properties of the Company (collectively, the “Records”),
as shall be reasonably deemed necessary by each Inspector, and cause the
Company’s officers, directors and employees to supply all information which any
Inspector may reasonably request; provided, however, that each Inspector shall
agree to hold in strict confidence and shall not make any disclosure (except to
the Holder) or use of any Record or other information which the Company
determines in good faith to be confidential, and of which determination the
Inspectors are so notified, unless (A) the disclosure of such Records is
necessary to avoid or correct a misstatement or omission in any registration
statement or is otherwise required under the Securities Act, (B) the release of
such Records is ordered pursuant to a final, non-appealable subpoena or order
from a court or government body of competent jurisdiction, or (C) the
information in such Records has been made generally available to the public
other than by disclosure in violation of this Agreement or any other
agreement.  The Holder agrees that it shall, upon learning that disclosure of
such Records is sought in or by a court or governmental body of competent
jurisdiction or through other means, give prompt notice to the Company and allow
the Company, at its expense, to undertake appropriate action to prevent
disclosure of, or to obtain a protective order for, the Records deemed
confidential.  Nothing herein shall be deemed to limit the Holder’s ability to
sell Registrable Securities in a manner which is otherwise consistent with
applicable laws and regulations.
 
 
9

--------------------------------------------------------------------------------

 
 
(vii)         The Company shall hold in confidence and not make any disclosure
of information concerning the Holder provided to the Company unless (A)
disclosure of such information is necessary to comply with federal or state
securities laws, (B) the disclosure of such information is necessary to avoid or
correct a misstatement or omission in any registration statement, (C) the
release of such information is ordered pursuant to a subpoena or other final,
non-appealable order from a court or governmental body of competent
jurisdiction, or (D) such information has been made generally available to the
public other than by disclosure in violation of this Warrant.  The Company
agrees that it shall, upon learning that disclosure of such information
concerning the Holder is sought in or by a court or governmental body of
competent jurisdiction or through other means, give prompt written notice to the
Holder and allow the Holder, at the Holder’s expense, to undertake appropriate
action to prevent disclosure of, or to obtain a protective order for, such
information.
 
(viii)        The Company shall use its reasonable efforts either to cause all
of the Registrable Securities covered by a registration statement to be listed
or quoted on each securities exchange, bulletin board or quotation system on
which securities of the same class or series issued by the Company are then
listed or quoted.
 
(ix)   The Company shall cooperate with the Holder and, to the extent
applicable, facilitate the timely preparation and delivery of certificates (not
bearing any restrictive legend) representing the Registrable Securities to be
offered pursuant to a registration statement and enable such certificates to be
in such denominations or amounts, as the case may be, as the Holder may
reasonably request and registered in such names as the Holder may request.
 
(x)   If requested by the Holder, the Company shall (A) as soon as reasonably
practicable incorporate in a prospectus supplement or post-effective amendment
such information as the Holder reasonably requests to be included therein
relating to the sale and distribution of Registrable Securities, including,
without limitation, information with respect to the number of Registrable
Securities being offered or sold, the purchase price being paid therefor and any
other terms of the offering of the Registrable Securities to be sold in such
offering; (B) as soon as reasonably practicable make all required filings of
such prospectus supplement or post-effective amendment after being notified of
the matters to be incorporated in such prospectus supplement or post-effective
amendment; and (C) as soon as reasonably practicable, supplement or make
amendments to any registration statement if reasonably requested by the Holder.
 
(xi)           The Company shall use its reasonable efforts to cause the
Registrable Securities to be registered with or approved by such other
governmental agencies or authorities as may be necessary to consummate the
disposition of such Registrable Securities.
 
(xii)          The Company shall otherwise use its reasonable efforts to comply
with all applicable rules and regulations of the SEC in connection with any
registration hereunder.
 
(xiii)         Within two (2) Trading Days after a registration statement which
covers Registrable Securities is ordered effective by the SEC, the Company shall
deliver, and shall cause legal counsel for the Company to deliver, to the
transfer agent for such Registrable Securities (with copies to the Holder)
confirmation that such registration statement has been declared effective by the
SEC.
 
 
10

--------------------------------------------------------------------------------

 
 
Section 4.     Miscellaneous.
 
(a)   Loss, Theft, Destruction or Mutilation of Warrant.  The Company covenants
that upon receipt by the Company of evidence reasonably satisfactory to it of
the loss, theft, destruction or mutilation of this Warrant, and upon surrender
and cancellation of such Warrant, if mutilated, the Company will make and
deliver a new Warrant of like tenor and dated as of such cancellation, in lieu
of such Warrant.
 
(b)   Saturdays, Sundays, Holidays, etc.  If the last or appointed day for the
taking of any action or the expiration of any right required or granted herein
shall not be a Trading Day, then such action may be taken or such right may be
exercised on the next succeeding Trading Day.
 
(c)   Company Covenants.
 
(i)   The Company covenants that during the period the Warrant is outstanding
and exercisable, it will reserve from its authorized and unissued Common Stock a
sufficient number of shares to provide for, either (1) the exercise in full of
any purchase rights under this Warrant, or (2) the conversion of the Notes,
Subsequent Financing Securities or Qualified Financing Securities in full upon
the exercise of any purchase rights under this Warrant.  The Company further
covenants that its issuance of this Warrant shall constitute full authority to
its officers who are charged with the duty of executing Underlying Securities to
execute and issue the necessary Underlying Securities upon the exercise of the
purchase rights under this Warrant.  The Company will take all such reasonable
action as may be necessary to assure that such Underlying Securities may be
issued as provided herein without violation of any applicable law or
regulation.  The Company covenants that all Underlying Securities which may be
issued upon the exercise of the purchase rights represented by this Warrant
will, upon exercise of the purchase rights represented by this Warrant, be duly
authorized, validly issued and nonassessable and free from all taxes, liens and
charges created by the Company in respect of the issue thereof (other than taxes
in respect of any transfer occurring contemporaneously with such issue).
 
(ii)   The Company shall not by any action, including, without limitation,
amending its certificate of incorporation or through any reorganization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms of this Warrant, but will at all times in
good faith assist in the carrying out of all such terms and in the taking of all
such actions as may be necessary or appropriate to protect the rights of the
Holder as set forth in this Warrant against impairment.
 
 
11

--------------------------------------------------------------------------------

 
 
(d)   Governing Law.  All questions concerning the construction, validity,
enforcement and interpretation of this Warrant shall be governed by and
construed and enforced in accordance with the internal laws of the State of New
York, without giving effect to any choice of law or conflict of law provision or
rule (whether of the State of New York or any other jurisdictions) that would
cause the application of the laws of any jurisdictions other than the State of
New York.  The Company hereby irrevocably submits to the exclusive jurisdiction
of the state and federal courts sitting in The City of New York, Borough of
Manhattan, for the adjudication of any dispute hereunder or in connection
herewith or with any transaction contemplated hereby or discussed herein, and
hereby irrevocably waives, and agrees not to assert in any suit, action or
proceeding, any claim that it is not personally subject to the jurisdiction of
any such court, that such suit, action or proceeding is brought in an
inconvenient forum or that the venue of such suit, action or proceeding is
improper.  Nothing contained herein shall be deemed to limit in any way any
right to serve process in any manner permitted by law.  In the event that any
provision of this Warrant is invalid or unenforceable under any applicable
statute or rule of law, then such provision shall be deemed inoperative to the
extent that it may conflict therewith and shall be deemed modified to conform to
such statute or rule of law.  Any such provision which may prove invalid or
unenforceable under any law shall not affect the validity or enforceability of
any other provision of this Warrant.  THE COMPANY HEREBY IRREVOCABLY WAIVES ANY
RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION
OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS WARRANT OR
ANY TRANSACTION CONTEMPLATED HEREBY.
 
(e)   Restrictions.  The Holder acknowledges that the Underlying Securities
acquired upon the exercise of this Warrant, if not registered, will have
restrictions upon resale imposed by state and federal securities laws and shall
bear a restrictive legend in substantially the following form:
 
NEITHER THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS CONVERTIBLE
HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS
SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
LOAN SECURED BY SUCH SECURITIES.
 
(f)   Notices.  Any notices, consents, waivers or other communications required
or permitted to be given under the terms of this Warrant must be in writing and
will be deemed to have been delivered:  (i) upon receipt, when delivered
personally; (ii) upon receipt, when sent by facsimile (provided confirmation of
transmission is mechanically or electronically generated and kept on file by the
sending party); or (iii) one (1) Trading Day after deposit with an overnight
courier service, in each case properly addressed to the party to receive the
same.  The addresses and facsimile numbers for such communications shall be:
 
 
12

--------------------------------------------------------------------------------

 
 
If to the Company:
 
Applied DNA Sciences, Inc.
25 Health Sciences Drive, Suite 113
Stony Brook, New York 11790
Telephone:     (631) 444-6370
Facsimile:        (631) 444-8848
Attention:       Chief Financial Officer
 
If to the Holder:
 
Etico Capital LP
The Chrysler Building
405 Lexington Avenue
New York, NY 10174
Telephone:      212-986-0090
Facsimile:         212-986-1148
Attention: Scott A. Weisman
 
(g)   Limitation of Liability.  No provision hereof, in the absence of any
affirmative action by the Holder to exercise this Warrant to purchase Underlying
Securities, and no enumeration herein of the rights or privileges of the Holder,
shall give rise to any liability of the Holder for the Exercise Price of any
Underlying Security of the Company, whether such liability is asserted by the
Company or by creditors of the Company.
 
(h)   Remedies.  The Holder, in addition to being entitled to exercise all
rights granted by law, including recovery of damages, will be entitled to
specific performance of its rights under this Warrant.  The Company agrees that
monetary damages would not be adequate compensation for any loss incurred by
reason of a breach by it of the provisions of this Warrant and hereby agrees to
waive and not to assert the defense in any action for specific performance that
a remedy at law would be adequate.
 
(i)   Successors and Assigns.  Subject to applicable securities laws, this
Warrant and the rights and obligations evidenced hereby shall inure to the
benefit of and be binding upon the successors of the Company and the successors
and permitted assigns of the Holder.  The provisions of this Warrant are
intended to be for the benefit of all Holders from time to time of this Warrant
and shall be enforceable by any such Holder or holder of Underlying Securities.
 
(j)   Amendment; Waiver.  No provision of this Warrant may be waived or amended
other than by written instrument signed by the Company and the Holder and their
successors and assigns.
 
(k)   Severability.  Wherever possible, each provision of this Warrant shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Warrant shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provisions
or the remaining provisions of this Warrant.
 
 
13

--------------------------------------------------------------------------------

 
 
(l)   Headings.  The headings used in this Warrant are for the convenience of
reference only and shall not, for any purpose, be deemed a part of this Warrant.
 
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK,
SIGNATURE PAGE FOLLOWS]
 
 
14

--------------------------------------------------------------------------------

 
 
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its
officer thereunto duly authorized as of the date first above indicated.
 

 
APPLIED DNA SCIENCES, INC.
                   
By:
       
Name:
     
Title:
 

 
 
 

--------------------------------------------------------------------------------

 
 
EXHIBIT A
FORM OF NOTE
 

 
 

--------------------------------------------------------------------------------

 
 
EXHIBIT B
NOTICE OF EXERCISE
 

TO:          Applied DNA Sciences, Inc.
 
1.             [  ] (Check if applicable)  The undersigned hereby elects to
purchase [$________ in principal amount of Senior Secured Convertible Notes],
[___________ shares of Common Stock, $0.001 par value per share, of the Company]
[_____________ Subsequent Financing Securities of the Company] [____________
Qualified Financing Securities of the Company] pursuant to the terms of the
attached Warrant, and tenders herewith payment of the exercise price related to
such principal amount in full in lawful money of the United States.
 
Or
 
1.             [  ] (Check if applicable)  The undersigned hereby elects to
purchase [Senior Secured Convertible Notes of the Company] [shares of Common
Stock, $0.001 par value per share, of the Company] [Subsequent Financing
Securities of the Company] [____________ Qualified Financing Securities of the
Company] as a cashless exercise of $[_________] of the total Exercise Price of
this Warrant.
 
2.             Please issue [a Note] [Common Stock] [Subsequent Financing
Securities] [Qualified Financing Securities]  in the name of the undersigned or
in such other name as is specified below:
 
 

--------------------------------------------------------------------------------

The [Note] [Common Stock] [Subsequent Financing Securities]  [Qualified
Financing Securities] Notes shall be delivered by physical delivery to:
 

--------------------------------------------------------------------------------

 

--------------------------------------------------------------------------------

 

--------------------------------------------------------------------------------

 
3.             Accredited Investor.  The undersigned is an “accredited investor”
as defined in Regulation D promulgated under the Securities Act of 1933, as
amended.
 
[SIGNATURE OF HOLDER]
 
Name of Investing
Entity: _____________________________________________________________________________________________________
 
Signature of Authorized Signatory of Investing Entity:
_______________________________________________________________________________
 
Name of Authorized Signatory:
_________________________________________________________________________________________________
 
 
 

--------------------------------------------------------------------------------

 
 
Title of Authorized Signatory:
__________________________________________________________________________________________________
 
Date: _____________________________________________________________________________________________________________________
 
 
 

--------------------------------------------------------------------------------

 
 
EXHIBIT C
ASSIGNMENT FORM
 
(To assign the foregoing warrant, execute
this form and supply required information.
Do not use this form to exercise the warrant.)
 
FOR VALUE RECEIVED, [____] all of or [_______] of the [principal amount of the
Senior Secured Convertible Notes] [Common Stock] [Subsequent Financing
Securities] [Qualified Financing Securities] issuable upon exercise of the
foregoing Warrant and all rights evidenced thereby are hereby assigned to
 
____________________________________________________________________ whose
address is
 
_________________________________________________________________________________
.
 
_________________________________________________________________________________

 
Dated: _______________ , ____          
 
Holder’s Signature: ________________________________
 
Holder’s Address:   ________________________________
 
________________________________