Document:

Exhibit 10.1

    
      
        

      

    

    EXHIBIT
      10.1

     

     

    PRODUCT
      DEVELOPMENT, MARKETING AND DISTRIBUTION
      AGREEMENT

     

    This
      Product Development, Marketing and Distribution Agreement (“Agreement”) is
      entered into this 8th day of May, 2007 (“Effective Date”), by and between
      Applied DNA Sciences, Inc. a Nevada corporation with its principal place of
      business at 25 Health Sciences Dr, Stony Brook NY 11790 (“ADNAS”) and Champion
      Thread Company, Inc., a North Carolina Corporation, with offices at 1349 East
      Garrison Blvd, Gastonia NC 28054, (“CTC”). 

     

     

    
      	
            	
              WHEREAS,
                ADNAS is in the business of Sales and
                Marketing of DNA anti-counterfeit and security
                products;

            

    

     

    
      	 
	WHEREAS,
              ADNAS owns exclusive rights to certain
              proprietary technologies involving the extraction, recombination,
              encapsulation, and preservation of botanical DNA, (the DNA
              “Technologies”); 

    

    
      	 
	WHEREAS,
              the DNA Technologies are used to
              forensically authenticate products, to detect and deter counterfeiting,
              to
              protect brands and intellectual property assets, to provide enhanced
              security for physical plant, documents, identification cards, passports,
              drivers licenses, currencies, databases and other products and
              applications, and can be embedded into various industrial and consumer
              products, including but not limited to, sewing threads, fabrics and
              yarns
              and textile chemicals; 

    

    
      	 
	WHEREAS,
              CTC is in the business of manufacturing
              and selling textile products and is an established developer,
              manufacturer, aggregator, supplier and distributor of sewing threads,
              fabrics, yarns, labels, ribbons, tapes, textile chemicals, pigments
              and
              other products which are commonly used in the textile, garment, shoe,
              luxury goods, bags, accessories and home furnishings industries and
              CTC
              has an extensive base of clients and suppliers in those industries,
              and
              

    

    
      	 
	WHEREAS,
              CTC owns exclusive rights to certain
              proprietary technologies involving the process of using binding agents
              for
              embedding, implanting or attaching botanical DNA to thread, and has
              developed the technology and is capable of embedding DNA markers in
              its
              products (“the Application Technologies”); and has experience in multiple
              aspects of the textile industry in North America and internationally;
              

    

    
      	 
	WHEREAS,
              ADNAS has appointed CTC to act as an
              independent reseller of ADNAS products under the terms and conditions
              set
              forth in that certain Valued Added Reseller Agreement entered February
              16,
              2004 (the “VAR Agreement”); and 

    

    
      	 
	WHEREAS,
              the parties wish to enter into this
              Agreement as a novation, to supersede and replace said VAR Agreement
              and
              to jointly produce, market and distribute DNA-enhanced security threads,
              fabrics, yarns, labels, ribbons, tapes, textile chemicals, pigments
              and
              other products, which products, (the “Products”), shall utilize and
              integrate the DNA Technologies and the Application Technologies
              (collectively “the Technologies”). 

    

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
 

    
      	 
	NOW
              THEREFORE, In consideration of the above
              recitals and mutual covenants and benefits provided herein, the Parties
              agree as follows: 

    

    
      	 	1.0
	 
              	 DEFINITIONS.

    

    
      	 
	For
              purposes of this Agreement, the following terms will have the
              following meanings: 

    

    
      	 	A.
	 
              	 ”DNA
              Technologies“ mean the proprietary
              technologies and know how owned exclusively by ADNAS involving the
              extraction, recombination, encapsulation, and preservation of botanical
              DNA and the embedding, implanting or attaching of botanical DNA into
              various products including, but not limited to, textile products;
              

    

    
      	 	B.
	 
              	 ”Application
              Technologies” mean the
              proprietary technologies and trade secrets owned exclusively by CTC
              involving the embedding, implanting or attaching of botanical DNA
              technologies in textile products. 

    

    
      	 	C.
	 
              	 ”ADNAS
              Materials” mean DNA markers and
              related ADNAS’ products employing the DNA Technologies including hardware
              and software, as identified on ADNAS’ then-current price list, excluding
              any ADNAS security products that require special authorization, as
              determined by ADNAS. 

    

    
      	 	D.
	 
              	 ”CTC
              Materials” mean fibers, solvents, dyes,
              finishes, sewing threads, fabrics, yarns, labels, ribbons, tapes, textile
              chemicals, pigments and other products which are commonly used in the
              textile, garment, shoe, luxury goods, bags, accessories and home
              furnishings industries, and related CTC products involving Application
              Technologies. 

    

    
      	 	E.
	 
              	 ”Product”
means
              enhanced security threads,
              fabrics, yarns, labels, ribbons, tapes, textile chemicals, pigments
              and
              other textile products, which utilize and integrate the DNA Technologies
              and the Application Technologies. 

    

    
      	 	F.
	 
              	 ”End
              Users” mean individuals or entities
              that purchase the Products for their own use and not for further
              distribution or sale. 

    

    
      	 	G.
	 
              	 ”Territory”
means
              the geographical
              location(s) and/or markets identified as follows:

    

    
      	 
	The
              Territory for CTC is sewing thread, yarn, wowen labels, printed
              labels that are commonly used in textile applications (labels made
              of
              fibrous material then printed on) worldwide.

    

    
      	 	H.
	 
              	 DNA
              Technologies and Application Technologies together shall
              be referred to as “Technologies”. 

    

    
      	 	2.0
	PRODUCT
              DEVELOPMENT.

    

    
 

    
      
         

      

      
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      	 	A.
	 
              	CTC
              and ADNAS shall each identify existing products to be enhanced
              by application of the DNA Technologies.

    

    
      	 	B.
	 
              	Each
              party, shall individually design, develop, and own their
              respective Technologies and shall jointly market the Products, which
              shall
              be compatible with the business of the parties and which shall contain
              the
              Technologies. 

    

    
      	 	C.
	 
              	The
              parties shall jointly: (i) define specifications of the
              Products, including Material Safety Data Sheet (MSDA) data, ; (ii)
              identify applications for the Products; (iii) develop standards to
              insure
              the maximum performance and reliability of the Products; (iv) develop
              effective authentication protocols; (v) develop and implement protocols
              to
              protect the respective intellectual property rights associated with
              the
              Products; and, (vi) assure secure storage, transportation and client
              custodial control and accountability for the Products

    

    
      	 	3.0
	 
              	TERMS
              OF DISTRIBUTION AND
              LICENSE.

    

    
      	 
	Scope
              of Appointment. Subject to the terms
              and conditions of this Agreement, ADNAS hereby appoints CTC and CTC
              hereby
              accepts such appointment as ADNAS’ reseller of the ADNAS Materials to End
              Users located in the Territory for a term of four (4) years with automatic
              renewals annually thereafter, (unless notice of non-renewal is provided
              in
              writing ninety (90) days in advance of the expiration of the original
              term, or unless the agreement is terminated in writing signed by both
              parties.) The initial 4-year period will begin on the Effective Date.
              The
              parties expressly agree during this term that CTC shall serve as the
              exclusive distributor for Products in the Territory.

    

    
      	 	3.1
	 
              	As
              an Authorized Reseller, CTC is required to:

    

    
      	 	a.
	 
              	Provide
              containers of chemicals for DNA marking, prepaid to the
              ADNAS US facilities. These containers will be mixed with ADNAS Materials
              and returned (Prepaid) to the CTC manufacturing facility in Kings
              Mountain, NC, or as designated in writing by CTC. Appropriate controls
              will be maintained by both parties to assure security. Alternately,
              ADNAS
              may elect to provide the DNA marker to be embedded into the chemicals
              at
              CTC facility, or at another facility of convenience, upon the mutual
              written consent of the parties 

    

    
      	 	b.
	 
              	Maintain
              as employee(s) a minimum of one (1) ADNAS-trained
              Installation/Technical Support Person.

    

    
      	 	c.
	 
              	Promote,
              market and resell ADNAS Materials as embedded in the
              Products to the best of its ability during the term of this AGREEMENT.
              

    

    
      	 	3.2
	 
              	As
              an Authorized Reseller, CTC will receive and ADNAS is required
              to provide: 

    

     

     

    
      
         

      

      
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      	 	a.
	 
              	Selling
              rights on all available ADNAS TECHNOLOGIES, PRODUCTS, or
              SERVICES to be resold to END USERS, including, but not limited to the
              following: 

    

    
      	 	i.
	 
              	   Security
              printing products for all sewing thread,
              yarn, labels, tags or ink based identification applications related
              to
              finished products as set forth at paragraph 1.0 “G”, above.
              

    

    
      	 	3.3
	 
              	In
              the exercise of CTC’s rights under this Agreement, CTC will
              always market and resell the ADNAS materials in combination with
              substantial added value in the form of CTC materials, products or services
              and/or Technologies. CTC also has the right to sell or solicit sales
              of
              other ADNAS products (in addition to the ADNAS Materials that form
              the
              subject of this Agreement) on a non-exclusive basis to other End Users,
              with the written consent of ADNAS (which shall not be unreasonably
              withheld) upon terms to be mutually agreed between the parties.
              

    

    
      	 	3.4
	Royalties:

    

    
      	 	a.
	 
              	CTC
              will pay to ADNAS a *** (***) royalty on gross sales (less any
              sales taxes, shipping, handling fees, and extrodinary expenses incurred
              during shipping (tariffs, etc.) of Product (Sentinel and other Products)
              after predetermined costs directly related to the manufacturing of
              the
              product and agreed to by both parties have been deducted where CTC
              initiates first contact with a potential End User which produces a
              sale to
              that End User. 

    

    
      	 	b.
	 
              	CTC
              will pay to ADNAS a *** (***) royalty on gross sales (less any
              sales taxes, shipping, handling fees, and extrodinary expenses incurred
              during shipping (tariffs, etc.) of Product, SigNature and other Products
              after predetermined costs directly related to the manufacturing of
              the
              product and agreed to by both parties have been deducted where ADNAS
              initiates first contact with a potential End User which produces a
              sale to
              that End User. 

    

    
      	 	c.
	 
              	CTC
              will pay royalties owed to ADNAS within ten (10) working days
              after CTC receives payment by the End User. Conversion from foreign
              currency, if any, shall be based upon the conversion rate published
              in the
              Wall Street Journal on the day the payment is received from the End
              User.
              

    

    
      	 	d.
	 
              	CTC
              will provide to ADNAS copies of all CTC invoices to End Users
              within ten (10) working days of the date of the shipment of the DNA
              marked
              product. CTC will provide quarterly royalty reports to ADNAS detailing
              the
              gross sales and costs for the previous quarter along with the royalties
              paid for the fiscal quarter. Quarterly reports will be due within thirty
              (30) days after the end of each quarter.

    

    
      	 	e.
	 
              	The
              above royalty percentages may be changed either higher or lower
              when mutually agreed in writing by both parties.

    

    
 

    
      
         

      

      
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      	 	f.
	 
              	In
              the event ADNAS introduces a Client and such Client purchases
              regular thread and other non-DNA products from CTC, then CTC shall
              pay
              ADNAS a sales commission of *** (***) of the gross sales to such Client.
              The commission shall be paid by CTC for as long as CTC continues to
              transact business with such Client. 

    

    
      	 	g.
	 
              	In
              the event CTC introduces a Client and such Client purchases
              regular thread and other non-DNA products from ADNAS, then ADNAS shall
              pay
              CTC a sales commission of *** (***) of the gross sales to such Client.
              The
              commission shall be paid by ADNAS for as long as ADNAS continues to
              transact business with such Client. 

    

    
      	 	h.
	 
              	ADNAS
              shall have the right, upon prior written notice to CTC, not
              more than once in CTC’s fiscal year, to engage an independent
              nationally-certified auditing firm selected by ADNAS and acceptable
              to
              CTC, which acceptance shall not be unreasonably withheld or delayed,
              to
              have access during normal business hours of CTC as may be reasonably
              necessary to verify the accuracy of the royalty reports required to
              be
              furnished pursuant to Section 3.4(d) of this Agreement. If such audit
              shows any underpayment of royalties, then, within thirty (30) days
              after
              Party’s receipt of such report, CTC shall remit to ADNAS:
              

    

    
      	 
	        (a)
              the amount of
              such underpayment; and 

    

    
      	 
	        (b)
              if such
              underpayment exceeds 10 percent (10%) of the total royalties owed for
              the
              fiscal year then being reviewed, the reasonably necessary fees and
              expenses of such auditing firm performing the audit. Otherwise, such
              fees
              and expenses shall be borne solely by ADNAS. Any overpayment of royalties
              shall be fully creditable against future royalties payable in any
              subsequent royalty period. 

    

    
      	 	4.0
	MATERIALS
              SUPPLIED DURING PRODUCT DEVELOPMENT.
              

    

    
      	 	A.
	 
              	For
              purposes of Product development and/or improvement, CTC may
              request ADNAS to provide samples of ADNAS Materials. ADNAS, at its
              cost,
              agrees to provide ADNAS Materials and information as reasonably requested
              by CTC and as necessary for the evaluation, development, manufacturing,
              marketing or distribution of the Product. CTC agrees that the ADNAS
              Materials and Technologies shall be used only for the purpose of
              evaluating, developing and manufacturing the Products and shall be
              used
              for no other purpose without the prior written consent of ADNAS, and
              any
              such use shall be under terms that shall equitably accommodate the
              financial interests of ADNAS. CTC agrees to comply with all reasonable
              security and chain of custody requirements imposed in writing by ADNAS
              governing the proper protection, security and control of the ADNAS
              Materials. 

    

    
      	 	B.
	 
              	For
              purposes of Quality Control and/or improvement, ADNAS may
              

    

     

     

    
      
         

      

      
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	request
              CTC to provide samples of CTC’s current products or
              materials involving the Application Technologies. CTC, at its cost,
              agrees
              to provide CTC products or materials as reasonably requested by ADNAS
              and
              as necessary to the evaluation, testing, development, manufacturing,
              marketing and distribution of the Product. ADNAS agrees that the CTC
              products and materials shall be used only for the purpose of evaluating
              and developing Products and shall be used for no other purpose without
              the
              prior written consent of CTC, and any such use shall be under terms
              that
              shall equitably accommodate the financial interests of CTC. ADNAS agrees
              to comply with all reasonable security and chain of custody requirements
              imposed in writing by CTC governing the proper protection, security
              and
              control of the CTC materials. 

    

    
      	 	C.
	 
              	To
              the extent either party does not have formal security or chain
              of custody requirements, the parties agree to develop mutually acceptable
              protocols for the secure storage and custody of any ADNAS Materials
              and/or
              CTC Materials transferred in accordance with this Agreement.
              

    

    
      	 	D.
	 
              	Unless
              otherwise agreed, ADNAS and CTC will each provide the
              Materials required to develop and/or test the Products as samples at
              no
              cost to each other. 

    

    
      	 	E.
	 
              	DNA
              reader technology, including at least one Real Time Polymerase
              Chain Reaction Reader (PCR), shall be initially provided by ADNAS to
              CTC
              at no charge to CTC; All additional Readers and/or reader technology
              shall
              be purchased or leased at CTC’s expense. ADNAS shall, at its expense,
              provide CTC with training on PCR operations solely for demonstration
              purposes to clients and prospective clients. All DNA extraction and
              authentication protocols shall be carried out by exclusively by ADNAS.
              

    

    
      	 	5.0
	MATERIALS,
              INVENTORY AND SECURITY.
              

    

    
      	 	A.
	 
              	Production
              and Marketing. In the course of Product
              development, manufacture, subsequent marketing and distribution, the
              Product will be produced by CTC at its facilities, or at the facilities
              of
              CTC sub-contractors. Both CTC and ADNAS shall market the Product to
              their
              customers and shall meet, as necessary, to ensure there is no duplication
              of effort. ADNAS will not be engaged in the manufacture, storage or
              distribution of Product. As the primary manufacturer of such Product,
              CTC
              will control the production, storage and distribution facilities and
              shall
              undertake the primary responsibility for secure custody of the Product
              and
              all materials, security information and technologies utilized in the
              production of the Product (except as to each party’s respective duty to
              develop and protect their own Technologies). CTC will maintain
              manufacturing records for Product, which records will be made available
              during regular business hours for ADNAS to audit not more than once
              per
              year or as required due to client concerns regarding ADNAS Technologies
              in
              Products. 

    

     

     

    
      
         

      

      
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      	 	B.
	 
              	Storage
              and Security. ADNAS and CTC will develop
              mutually acceptable protocols for the secure storage and custody of
              Products and ADNAS DNA Materials at the production facilities of CTC
              or at
              the facilities of any CTC subcontractor and at the facilities of clients.
              

    

    
      	 	C.
	 
              	ADNAS
              Packaging. CTC will distribute the Products
              to End Users with all warranties and disclaimers and license agreements
              intact as shipped from ADNAS. CTC will take all steps reasonably requested
              by ADNAS to inform End Users of any applicable restrictions and
              limitations regarding the use of the Products.

    

    
      	 	D.
	 
              	Support.
              CTC will provide End Users with
              first-line technical support for the Product. Such first-line support
              will
              include, without limitation, assistance and consultation on the use
              of the
              Product, timely responses to End Users’ questions concerning use of the
              Product, and the diagnosis and correction of problems encountered by
              End
              Users in regard to the Product. ADNAS will provide additional technical
              support from product research and development technology lab when needed.
              ADNAS will provide CTC with such second-line technical support as
              necessary and at ADNAS’ expense. 

    

    
      	 	E.
	 
              	CTC
              Pricing. CTC, in consultation with ADNAS,
              shall determine the actual retail prices at which the Product will
              be sold
              to End Users. 

    

    
      	 	F.
	Trademarks.

    

    
      	 	1.
	 
              	Subject
              to the terms and conditions of this Agreement, ADNAS grants
              to CTC a non-exclusive license to use ADNAS’ logos and trademarks to be
              used in association with the Products (“ADNAS Trademarks”) to promote and
              market the Products, provided that CTC’s use of the ADNAS trademarks is in
              accordance with ADNAS’ then-current trademark usage guidelines. CTC
              acknowledges and agrees that ADNAS owns the ADNAS trademarks and that
              any
              and all goodwill derived from the use of the ADNAS trademarks by CTC
              hereunder inures solely to the benefit of ADNAS. CTC hereby acknowledges
              that ADNAS owns all right, title and interest in the ADNAS trademarks
              ,
              together with the goodwill attaching thereto, that may inure to it
              in
              connection with this Agreement or from its use of the Trademarks
              hereunder. CTC will not apply to register any ADNAS trademarks, trade
              name, service mark or other designation that is confusingly similar
              to any
              trademark of ADNAS. 

    

    
      	 	2.
	 
              	Subject
              to the terms and conditions of this Agreement, CTC grants
              to ADNAS a non-exclusive license to use CTC’s logos and trademarks to be
              used in association with the Products (“CTC Trademarks”) to promote and
              market the Products, provided that ADNAS’ use of the CTC trademarks is in
              accordance with CTC’s then-current trademark usage guidelines. ADNAS
              acknowledges and agrees that CTC owns the CTC trademarks and
              

    

     

     

    
      
         

      

      
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	that
              any and all goodwill derived from the use of the CTC
              trademarks by ADNAS hereunder inures solely to the benefit of CTC.
              ADNAS
              hereby acknowledges that CTC owns all right, title and interest in
              the CTC
              trademarks, together with the goodwill attaching thereto, that may
              inure
              to it in connection with this Agreement or from its use of the Trademarks
              hereunder. ADNAS will not apply to register any CTC trademarks , trade
              name, service mark or other designation that is confusingly similar
              to any
              trademark of CTC. 

    

    
      	 	6.0
	REQUISITIONS
              AND
              ACKNOWLEDGEMENTS

    

    
      	 	A.
	 
              	DNA
              Material Supply. The parties agree to jointly
              and continuously determine DNA material stockpile requirements sufficient
              to meet the production requirements of CTC. ADNAS shall stockpile in
              the
              US at a facility(s) selected by ADNAS and approved by CTC, sufficient
              DNA
              Materials to ensure at all times the adequate and on-time supply of
              DNA
              Material in quantities sufficient to fully meet the production
              requirements of CTC in a timely manner.

    

    
      	 	B.
	 
              	DNA
              Material Security. The supporting inventory of
              any ADNAS DNA Materials will be held by ADNAS at secure storage facilities
              within the continental United States as selected by ADNAS and approved
              by
              CTC. Delivery to CTC will be made under secure transportation conditions
              by the selected security storage and transportation company.
              

    

    
      	 	C.
	 
              	Delivery.
              ADNAS will use commercially reasonable
              efforts to deliver the ADNAS Materials at the times specified in its
              written acknowledgment of a requisition for ADNAS Materials. ADNAS
              will
              not be liable to CTC or to any other party for any delay in the delivery
              of the ADNAS Materials not directly attributable to ADNAS.
              

    

    
      	 	D.
	 
              	Shipment.
              ADNAS will package and ship the ADNAS
              Materials in accordance with standard commercial practices. The ADNAS
              Materials will be shipped prepaid to the location specified on CTC’s
              requisition, by a mode of shipment selected by ADNAS. Title, except
              to the
              extent the ADNAS Materials contain or consist of software or firmware,
              will pass to CTC upon ADNAS’ delivery of the ADNAS Materials to the
              facility site of CTC or to the facility site of any authorized CTC
              subcontractor as designated by CTC. 

    

    
      	 	E.
	 
              	Ordering.
              All requisitions for ADNAS Materials
              submitted by CTC will be sent to ADNAS at the address set forth above,
              email address(es) or via facsimile. All requisitions will specify the
              type
              and quantity of the ADNAS Materials requested and the delivery date
              requested, and will be sent to the attention of Dr. James A. Hayward
              with
              copies to MeiLin Wan and Kurt Jensen . All of CTC’s requisitions will be
              governed exclusively by the terms and conditions of this Agreement.
              

    

    
 

    
      
         

      

      
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        	 	F.
	 
                	Acceptance.
                A requisition will be confirmed or
                declined by ADNAS in writing, by email, or facsimile within five
                (5)
                business days of its receipt.

      

       

      

        
          	 	7.0
	SALES
                  AND
                  MARKETING.

        

         

      

    

    
      	 	A.
	 
              	The
              parties shall establish an agenda to identify specific Products
              to be developed. 

    

    
      	 	B.
	 
              	The
              parties agree to develop and agree in writing a Sales &
              Marketing Plan to undertake joint sales and marketing efforts to promote
              the Products into the target markets and to target clients. The Sales
              & Marketing Plan shall identify and prioritize clients, define product
              categories and applications, program marketing activities, news releases,
              trade show participation, web seminars and direct electronic mailing
              campaigns. The parties shall create industry-specific and
              customer-specific marketing and presentation Materials and shall mount
              comprehensive trade publicity programs for the Products as they are
              developed. 

    

    
      	 	C.
	 
              	ADNAS
              and CTC agree to introduce each other to their respective
              clients and strategic marketing partners.

    

    
      	 	D.
	 
              	Within
              the guidelines of the Sales & Marketing Plan, each of
              the parties shall provide Technical Sales support to the other party
              and
              each shall make appropriate staff or Consultants available to participate
              in sales calls and meetings with target clients. Technical Sales support
              shall be provided by each party at its own cost, unless circumstances
              impose an undue burden upon one party, in which case the parties shall
              arrange cost-sharing as may be appropriate and such cost sharing shall
              be
              set forth in writing, and signed by both parties

    

    
      	 	8.0
	MATERIALS
              WARRANTY.

    

    
      	 	A.
	 
              	ADNAS,
              at its expense, shall defend any suit brought against CTC on
              the grounds that use of the ADNAS Materials or DNA Technologies for
              the
              intended purpose or purposes, as furnished by ADNAS, infringes any
              United
              States patent and shall pay the amount of any judgment that may be
              awarded
              against CTC in any such suit provided and upon condition that CTC shall
              (a) promptly deliver to ADNAS all infringement notices and other papers
              received by or served upon CTC, (b) permit ADNAS to take charge of
              the
              defense of such suit and compromise the same, if deemed advisable by
              ADNAS, and (c) assist in every reasonable way in the conduct of such
              defense. 

    

    
      	 	B.
	 
              	CTC,
              at its expense, shall defend any suit brought against ADNAS on
              the grounds that use of the Application Technologies for the intended
              purpose or purposes, as furnished by CTC, infringes any United States
              patent and 

    

     

     

    
      
         

      

      
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	shall
              pay the amount of any judgment that may be awarded against
              ADNAS in any such suit provided and upon condition that ADNAS shall
              (a)
              promptly deliver to CTC all infringement notices and other papers received
              by or served upon ADNAS, (b) permit CTC to take charge of the defense
              of
              such suit and compromise the same, if deemed advisable by CTC, and
              (c)
              assist in every reasonable way in the conduct of such defense.
              

    

    
      	 	C.
	 
              	In
              the event that CTC shall be enjoined by a court of competent
              jurisdiction from which no appeal can be taken, from selling or using
              the
              Products for the intended purpose or purposes on the ground that such
              sale
              or use of the Product infringes any such United States or other patent,
              or
              it is established to ADNAS satisfaction, upon due investigation, that
              sale
              or use of the Product infringes any such United States or other patent,
              ADNAS at its option may either (i) procure for CTC a license to sell
              and/or use the Products, (ii) modify the Products so as to make it
              non-infringing without seriously impairing its performance, (iii) replace
              the Products with a product that is substantially equal but
              non-infringing, or (iv) accept the return of the Product from CTC.
              

    

    
      	 	D.
	 
              	In
              the event that ADNAS shall be enjoined by a court of competent
              jurisdiction from which no appeal can be taken, from selling or using
              the
              Products for the intended purpose or purposes on the ground that such
              sale
              or use of the Product infringes any such United States or other patent,
              or
              it is established to ADNAS satisfaction, upon due investigation, that
              sale
              or use of the Product infringes any such United States or other patent,
              CTC, at its option may either (i) procure for ADNAS a license to sell
              and/or use the Products, (ii) modify the Products so as to make it
              non-infringing without seriously impairing its performance, (iii) replace
              the Products with a product that is substantially equal but non-infringing
              (cover), or (iv) accept payment for the Product by ADNAS, and dispose
              of
              the Product of at the direction of ADNAS.

    

    
      	 	E.
	 
              	ADNAS
              shall be responsible for assuring and insuring the integrity
              of any patent or trademark application process regarding the ADNAS
              Materials and for safeguarding by reasonable measures the confidentiality
              of all proprietary or trade secret information related to the ADNAS
              Materials to be used as components in the Products.

    

    
      	 	F.
	 
              	ADNAS
              shall supply to CTC technical specifications for the ADNAS
              Materials including, but not limited to, MSDS data, suitability for
              commercial use, stability in environmental and application conditions,
              safety for use in products exposed to the skin or general human
              occupational and end-use product exposure, technologies, methods and
              materials for successful analysis of the DNA component of the products,
              and specifications for use in marketing materials that describe the
              characteristics of the ADNAS Materials. 

    

     

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

     

     

    
      	 	G.
	 
              	CTC
              shall be responsible for assuring and insuring the integrity of
              any patent or trademark application process regarding the CTC materials
              and for safeguarding by reasonable measures the confidentiality of
              all
              proprietary or trade secret information related to the CTC Materials
              to be
              used as components in the Products. 

    

    
      	 	H.
	 
              	ADNAS
              shall secure Insurance for the Loss of Goods in Transit
              together with coverage against damages that may arise there from, for
              the
              ADNAS materials. 

    

    
      	 	I.
	 
              	CTC
              shall secure Insurance for the Loss of Goods in Transit to end
              users(s) or ADNAS together with coverage against damages that may arise
              therefrom, for the CTC materials and the Products.

    

    
      	 	J.
	 
              	Each
              party shall be responsible for acquiring and/or maintaining
              Product Liability Insurance and shall provide documentation of such
              insurance or other financial responsibility, upon demand of the other
              party. 

    

    
      	 	K.
	 
              	ADNAS
              and CTC shall jointly determine Warranty and shelf-life
              limitations. 

    

    
      	 	9.0
	CONFIDENTIALITY.

    

    
      	 
	The
              parties recognize that each party shall disclose to the other
              information concerning suppliers, clients, distributors, agents, brokers,
              buyers, sellers, technical data, performance data, pricing details,
              formulas, processes, commissions, discounts, information relating to
              competitors and other information which the parties have acquired through
              their investment of time, expense and effort and which may constitute
              confidential proprietary business information, intellectual property,
              and/or trade secrets. The parties acknowledge and agree that during
              the
              term of this Agreement, and in the course of the discharge of the duties
              hereunder, the parties shall have access to and become acquainted with
              information concerning the operation of the other party, including,
              financial, personnel, sales, manufacturing, buying, planning, and other
              information owned by and regularly used in the operation of the business
              of each party and each party shall also receive information of a
              proprietary nature regarding the constitution, formulation, pricing
              and
              effectiveness of the Products and both parties hereto accept that such
              information as outlined above constitutes the Confidential Information
              of
              the providing party. The parties hereto agree not to disclose any such
              Confidential Information, directly or indirectly, to any other person
              or
              party, except as may be necessary for such person or party to pursue
              sales
              as a function of this Agreement and such person or party shall have
              executed a Confidentiality Agreement undertaking, binding that person
              or
              party to conditions of confidentiality identical to those contained
              in
              this Agreement. The obligations of confidentiality contained in this
              Section shall survive expiration or earlier termination of this Agreement.
              

    

    
      	 	10.0
	NON-CIRCUMVENTION
              AND
              NON-COMPETITION.

    

     

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

    
 

    
      	 	A.
	 
              	In
              Consideration of this Agreement each party agrees not to attempt
              in any manner to commercially exploit, either directly or indirectly,
              the
              proprietary business concepts and Technologies or any of the Confidential
              Information without the other party’s prior written consent. The parties
              specifically understand and agree that this prohibition is specifically
              intended to include any direct or indirect solicitation of the other’s
              customer/client contacts by either party’s then current Providers,
              Suppliers, Agents, Employees and/or Representatives.

    

    
      	 	B.
	 
              	CTC
              hereby undertakes not to manufacture for the purpose of sales
              or distribution, products incorporating other DNA Technologies, which
              are
              competitive to the DNA technologies of ADNAS, without written permission
              of ADNAS, and under conditions to be mutually agreed. CTC reserves
              the
              right to incorporate non-DNA-based identification taggants in CTC
              products, independently of or in combination with the DNA technologies
              of
              ADNAS. 

    

    
      	 	C.
	 
              	ADNAS
              hereby undertakes not to supply for the purpose of sales,
              distribution or manufacture, ADNAS Materials to be used in goods which
              are
              competitive to the Products, without the written permission of CTC
              and
              under conditions to be mutually agreed. ADNAS reserves the right to
              incorporate other identification markers in conjunction with the ADNAS
              materials independently or in combination with the ADNAS technology
              and/or
              Materials. 

    

    
      	 	11.0
	CHOICE
              OF LAW AND
              JURISDICTION.

    

    All
      disputes over the meaning and interpretation of this Agreement shall be resolved
      by conciliation and mediation and if mediation is unsuccessful, then disputes
      shall be finally settled by a single arbitrator selected by ADNAS and CTC.
      If
      ADNAS and CTC cannot agree on an arbitrator, then disputes shall be resolved
      by
      an Arbitration Panel comprising one arbitrator appointed by ADNAS, one
      arbitrator appointed by CTC, and a Chairman of the Arbitration Panel appointed
      by the first two arbitrators. Any such arbitration proceeding shall be conducted
      in accordance with the arbitration rules and procedures of the American
      Arbitration Association; shall be held at a location agreed by the parties
      or by
      their designate arbitrator(s) in or near Charlotte, North Carolina; and judgment
      upon the arbitration award may be entered in any court having jurisdiction.
      In
      order to initiate procedures for dispute resolution by conciliation, mediation
      and arbitration either party may give written notice to the other of intention
      to resolve a dispute, and absent satisfactory resolution, then to arbitrate.
      Such notice shall contain a statement setting forth the nature of the dispute
      and the resolution sought.

     

    If,
      within
      thirty (30) days of such notice a resolution by conciliation between the parties
      themselves or by mediation has not been achieved to the satisfaction of both
      parties, and if within sixty (60) days from said written notice an arbitrator
      or
      Arbitration Panel has not been appointed with an arbitration schedule
      satisfactory to both parties, then either party may proceed with judicial
      remedies.

     

    Either
      Party reserves the right and power to proceed with direct judicial remedies
      against the other 

     

     

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

     

     

     

    Party
      without conciliation, mediation or arbitration for the purpose of seeking
      injunctive relief (particularly for injunctions respecting the intellectual
      properties and/or trade secrets referenced herein)

     

    This
      Agreement is entered into in the State of North Carolina and the parties hereby
      acknowledge, consent and submit to the jurisdiction of the courts of North
      Carolina for the purpose of seeking the entry and enforcement of any judgment
      that may arise in connection with this Agreement, and expressly waive any
      objection to venue in the Superior Court of Gaston County, North Carolina and/or
      the United States District Court for the Western District of North Carolina.
      This Agreement shall be construed and enforced in accordance with the laws
      of
      the State of North Carolina.

     

    
      	 	12.0
	 
              	NOTICES.
              

    

    
      	 
	All
              notices, demands and other communications to be given or
              delivered under or by reason of the provisions of this Agreement shall
              be
              given in writing and may be addressed as follows:

    

    
      	 
	Applied
              DNA Sciences, Inc. 
Att’n: Kurt Jensen 
25 Health
              Sciences Dr
Stony Brook NY 11790 
Tel: 631-444-6370 
Fax:
              631-444-8848 

    

    
      	 
	Copy
              to: 

    

    
      	 
	Joe
              Daniels 
Fulbright & Jaworski 
666 Fifth Avenue
              
New York, New York 10103 
Tel: 212 318-3322 
Fax: 212 318-3400
              

    

    
      	 
	&

    

     

     

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

     

    
 

    
      	 
	Champion
              Thread Company, Inc. 
Att’n: Robert L. Poovey, III or
              W. Matthew Poovey 
1349 East Garrison Blvd. 
Gastonia NC 28054
              
Tel: 704-562-6820
Fax: 704-868-3885BLE>

    

    
      	 
	Copy
              to: 

    

    
      	 
	William
              E. Moore, Jr. 
Gray, Layton, Kersh Solomon, Sigmon, Furr
              & Smith, P.A. 
Post Office Box 2636 
Gastonia, NC 28053
              
(704) 865-4400
(704) 866-8010 facsimile

    

    
      	 
	All
              written notices and responses required herein may be made by
              certified mail, overnight carrier service or e-mail, and must be supported
              by a record of delivery and receipt. 

    

    
      	 	13.0
	 
              	COMPLETE
              AGREEMENT.

    

    
      	 
	This
              Agreement constitutes the complete and exclusive statement of
              understanding among the Parties. It supersedes all prior written or
              oral
              statements, including any prior representation, statement, condition,
              or
              warranty, except as expressly provided otherwise herein. This Agreement
              may not be amended without the written consent of all of the Parties
              and
              represents a final agreement of the parties. No change or modification
              of
              this Agreement shall be valid unless the same be in writing and signed
              by
              all parties hereto and attached hereto as a supplement and made an
              integral part of this Agreement. 

    

    
      	 	14.0
	 
              	TERMINATION
              AND
              VOIDABILITY.

    

    
      	 
	In
              the event any party hereto becomes insolvent as evidenced by the
              filing of any petition in bankruptcy, the appointment of a receiver,
              or
              has its business activity suspended or curtailed as a result of any
              criminal prosecution or imposition of any civil penalty by a court
              of
              competent jurisdiction for violation of e.g., the securities or anti-trust
              laws of the United States or any state thereof, then this Agreement
              shall
              be voidable in the sole discretion of the other party.
              

    

    
      	 
	a.
              Failure by either party to correct, within 90 days following
              written notification by the other party, any defect in quality or in
              the
              timely delivery of materials or Product.

    

    
      	 
	b.
              Violation of the terms and conditions of Confidentiality and
              Non-Disclosure. 

    

    
      	 
	c.
              Failure of CTC or ADNAS to correct any non-payment of royalties,
              within 90 days following written notification by the other party.
              

    

     

     

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

    
 

    
      	 	15.0
	 
              	EQUITABLE
              RELIEF.

    

    
      	 
	The
              Parties acknowledge that a violation or threatened violation of
              this Agreement or any of its provisions may cause irreparable injury;
              that
              the Agreement concerns unique and special materials, properties and
              processes, and that money damages alone would be an inadequate remedy;
              and
              that, in addition to any other remedies available at law or in equity,
              such a violation or threatened violation of this Agreement or any of
              its
              provisions may be subject to a restraining order, injunctive relief,
              a
              decree of specific performance or other similar remedy in order to
              specifically enforce the provisions of this Agreement.
              

    

    
      	 	16.0
	 
              	MISCELLANEOUS.

    

    
      	 
	Waiver
              of Breach. The waiver by a party of
              a breach of any provision of this Agreement by the other party shall
              not
              operate or be construed as a waiver of any subsequent breach.
              

    

    
      	 
	Counterparts
This
              Agreement may be executed
              in counterparts, each of which shall be deemed an original and together
              shall constitute one and the same agreement.

    

    
      	 
	Partial
              Validity. The terms contained in
              this Agreement are considered reasonable by the parties, but in the
              event
              that any provision shall be found to be void but would be valid if
              some
              part thereof were deleted, or the period or area of application reduced,
              such restriction shall apply with such modification as may be necessary
              to
              make it valid and effective. Each provision of this Agreement shall
              be
              considered separable; and if, for any reason, any provision or provisions
              herein are determined to be invalid and contrary to any existing or
              future
              law, such invalidity shall not impair the operation of or affect those
              portions of this Agreement which are valid.

    

    
      	 
	Force
              Majeure. Any delays in, or failure
              of, performance of any Party to this Agreement shall not constitute
              a
              default hereunder, or give rise to any claim for damages, if and to
              the
              extent caused by occurrences beyond the control of the Party affected,
              including, but not limited to, acts of God, acts of terrorism, strikes
              or
              other concerted acts of workmen, civil disturbances, fires, floods,
              earthquakes, explosions, riots, war, rebellion, sabotage, acts of
              governmental authority or failure of governmental authority to issue
              licenses or approvals which may be required.

    

     

     

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

     

     

    
      	 
	Binding
              Effect. This Agreement shall be
              binding upon and shall inure to the benefit of the parties hereto and
              their respective successors, assigns, heirs, and personal representatives.
              

    

    
      	 
	Sections,
              Subtitles, and Captions. Whenever
              reference is made to a section of this Agreement by a single number
              without decimals, such reference shall include all decimal sections
              bearing the same principal number. Subtitles and paragraph captions
              are
              inserted for convenience of reference and do not constitute part of
              the
              Agreement. 

    

    
      	 
	Construction:
In
              construing this Agreement,
              plural terms shall be substituted for singular and singular for plural
              in
              any place in which the context so requires.

    

    
      	 
	Authority
              to Contract. Both parties hereto
              warrant that they are validly organized corporations, in good standing
              under the laws of their states of incorporation, and have the authority
              to
              enter into this Agreement. 

    

    
      	 
	IN
              WITNESS WHEREOF, each of the Parties below has caused this
              Agreement to be executed by its duly authorized representatives as
              of the
              date hereof. 

    

    
      	For ADNAS by:	For ADNAS by:
	 	 
	
              
Name:
              James A Hayward
Title: CEO
	
              
Name:
              Kurt Jensen
Title: Comptroller
	 	 
	For CTC by:	For CTC by:
	 	 
	 	 
	
              
Name:
              Robert L. Poovey, III
Title: CEO 	
              
Name:
              W. Matthew Poovey
Title: Vice-President
              

    

    
 

    16Summary of At-Will Employment Arrangement between the Company and Robert Vrij

 EXHIBIT 10.3 
 Summary of At-Will Employment Arrangement between the Company and Robert Vrij as of March 22, 2007 
 Robert Vrij was
appointed President and Chief Executive Officer of Openwave Systems Inc., effective March 22, 2007. As part of his duties, Mr. Vrij will serve as Openwave’s principal executive officer and principal operating officer. 
 Mr. Vrij’s initial compensation as President and Chief Executive Officer is an annual base salary of $450,000. Mr. Vrij is also eligible for a quarterly
incentive cash compensation award targeted at 100% of his annual base salary (i.e., $112,500 for each quarter, at his initial base salary). His actual incentive compensation will be determined based upon a combination of Openwave’s achievement
level against financial and other performance objectives established by the Compensation Committee and the Compensation Committee’s assessment of his individual performance, and may result in a payment that is below, at, or above target.
Additionally, the Board of Directors granted Mr. Vrij a restricted stock award of 50,000 shares of Openwave’s common stock, vesting annually over the next four anniversaries of February 15, 2007. The vesting of the restricted stock is
contingent upon Mr. Vrij’s continued employment on the applicable vesting date. 
 Mr. Vrij is also party to Openwave’s standard
executive change of control severance agreement, dated January 2, 2007. This agreement provides that if Mr. Vrij’s employment is terminated (other than as a result of death or disability) either without “cause” or as a
result of an “involuntary termination” (each as defined therein) within the period commencing two months preceding a “change of control” (as defined therein) and ending twenty-four months following a “change of
control”, he shall receive severance payments equal to his base salary plus target annual bonus, multiplied by two. In addition, 100% of his then-unvested options and shares of restricted stock immediately will vest, and Openwave will continue
to provide Mr. Vrij and his eligible dependents with medical, dental and vision benefit coverage for eighteen months. In the event that any of the payments made to Mr. Vrij under this agreement constitute “parachute payments”
within the meaning of Section 280G of the Internal Revenue Code, the agreement provides that Mr. Vrij will receive the severance pay and benefits described above in full, and shall receive an additional lump sum cash payment that is
sufficient, after taking into account all applicable taxes, to cover all excise taxes imposed by Sections 280G and 4999 of the Internal Revenue Code. The foregoing is a summary description of certain terms of Openwave’s standard executive
change of control severance agreement, and is qualified entirely by the text of the Form of Change of Control Severance Agreement previously filed as Exhibit 10.01 to Openwave’s Current Report on Form 8-K on November 7, 2006. 

Mr. Vrij is also a beneficiary under Openwave’s Executive Severance Benefit Policy. This policy provides that if Mr. Vrij is terminated (other than as
a result of death or disability) either without “cause” or as a result of an “involuntary termination” (each as defined therein) or Mr. Vrij resigns within ninety days for any reason or no reason following the failure to
assume this policy by a successor to Openwave, Mr. Vrij will be entitled to receive his base salary for a period of six months. In addition, Openwave will provide continued medical, dental and vision benefit coverage for the lesser of six
months or until Mr. Vrij becomes eligible for coverage through another source. Any benefits payable under this policy are coordinated with any similar benefits payable under any other agreement, plan, or arrangement (including the change of
control severance agreement described above) and therefore payments under this policy are reduced on a dollar for dollar basis to the extent like-kind benefits are paid or payable under a separate agreement, plan, or arrangement. The foregoing is a
summary description of certain terms of the Openwave Systems Inc. Executive Severance Benefit Policy, and is qualified entirely by the text of the Openwave Systems Inc. Executive Severance Benefit Policy previously filed as Exhibit 10.1 to
Openwave’s Current Report on Form 8-K on October 12, 2005. 
 Mr. Vrij is also party to Openwave’s standard director and executive
officer indemnification agreement, dated January 2, 2007. The agreement provides for indemnification of Mr. Vrij for expenses, judgments, fines and settlement amounts incurred by him in any action or proceeding arising out of his services
as a director or executive officer or at Openwave’s request. The foregoing is a summary description of certain terms of Openwave’s standard director and executive officer indemnification agreement, and is qualified entirely by the text of
the Form of Indemnity Agreement for Officers and Directors previously filed as Exhibit 10.16 to Openwave’s Annual Report on Form 10-K on September 28, 2001. 
 Mr. Vrij is also party to Openwave’s standard confidential information and invention assignment agreement, dated January 24, 2007. The agreement governs the use of Openwave’s confidential
information by Mr. Vrij and the ownership of intellectual property developed by Mr. Vrij while employed by Openwave.

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