Exhibit
10.3
THIS NOTE AND
THE COMMON STOCK REFERENCED HEREIN HAVE NOT BEEN REGISTERED WITH OR
APPROVED OR DISAPPROVED BY THE UNITED STATES SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION OR
REGULATORY AUTHORITY AND ARE BEING OFFERED PURSUANT TO AN EXEMPTION
FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933,
AS AMENDED (THE “SECURITIES ACT”).
THE SALE,
ASSIGNMENT, CONVEYANCE, PLEDGE, HYPOTHECATION OR TRANSFER OF THE
SECURITIES REPRESENTED BY THIS NOTE OR THE UNDERLYING COMMON STOCK
IS PROHIBITED EXCEPT (1) PURSUANT TO REGISTRATION UNDER THE
SECURITIES ACT; OR (2) PURSUANT TO AN AVAILABLE EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT.
APPLIED DNA SCIENCES,
INC.
10% SECURED CONVERTIBLE
PROMISSORY NOTE
Applied DNA
Sciences, Inc., a Nevada corporation (the “Company”),
for value received, hereby promises to pay to James A. Hayward (the
“Holder,” which term shall in every instance refer to
any owner or holder of this Note) at
________________________________ or at any other place that the
Holder may designate in writing to the Company, on April 23, 2008
(the “Maturity Date”), the principal sum of ONE HUNDRED
THOUSAND AND NO/100 DOLLARS ($100,000) in such coin or currency of
the United States of America as at the time of payment shall be
legal tender for the payment of public and private debts, and to
pay interest on the outstanding principal sum hereof at the rate of
ten percent (10%) per annum. Payment of principal and accrued and
unpaid interest, if any, shall be payable on the Maturity Date in
like coin or currency to the Holder hereof at the address of the
Holder on file with the Company or at such other place as the
Holder shall have notified the Company in writing at least five (5)
days before the Maturity Date, provided that any payment otherwise
due on a Saturday, Sunday or legal bank holiday may be paid on the
following business day.
This Note is
secured by a security interest in all the assets of the Company as
set forth in Section 4 hereof (the “Security
Agreement”). Reference herein to the Security Agreement shall
in no way impair the absolute and unconditional obligation of the
Company to pay both principal and interest hereon as provided
herein.
The rights and
remedies of the Holder hereunder are subject to the terms and
conditions of the Security Agreement and the provisions of the
Uniform Commercial Code as enacted in the State of Nevada
including, without limitation, powers with respect to the
enforceability and collectibility of all amounts due hereunder.
Reference to the Uniform Commercial Code of the State of Nevada is
made for a complete description of the rights, powers and
obligations of the Holder.
1.
Transfers of Note to Comply with the Securities
Act
THE HOLDER
AGREES THAT THIS NOTE AND THE COMMON STOCK ISSUABLE UPON CONVERSION
OF THE NOTE MAY NOT BE SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR
OTHERWISE DISPOSED OF EXCEPT (1) PURSUANT TO REGISTRATION UNDER THE
SECURITIES ACT; OR (2) PURSUANT TO AN AVAILABLE EXEMPTION
THEREFROM.
2.
Prepayment; Repayment Upon Consolidation or
Merger
(a) The
principal amount of this Note may be prepaid by the Company, in
whole or in part, on three days prior written notice without
premium or penalty, at any time. Upon any prepayment of the entire
principal amount of this Note, all accrued, but unpaid, interest
shall be paid to the Holder on the date of prepayment. The date
upon which the Company prepays the principal plus all accrued and
unpaid interest due on this Note shall be hereinafter referred to
as the “Prepayment Date.” Notwithstanding the foregoing
right of payment, upon receipt of the three days notice, the Holder
shall have the conversion rights set forth under Section 3(b)
hereof, regardless of when such three days prior written notice is
given.
(b) This Note
shall be paid in full, without premium, in the event the Company
consolidates or merges with another corporation, unless (i) the
Company shall be the surviving corporation in such consolidation or
merger or (ii) the other corporation controls, is under common
control with or is controlled by the Company immediately prior to
the consolidation or merger whether or not the Company shall be the
surviving corporation in such consolidation or merger, in which
event this Note shall remain outstanding as an obligation of the
consolidated or surviving corporation.
(a) This Note
and any accrued and unpaid interest hereon shall automatically
convert into that number of fully paid and non-assessable shares of
Common Stock of the Company, par value $0.001 per share (the
“Common Stock”), as such Common Stock exists on the
date hereof, or any shares of capital stock or other securities of
the Company into which such Common Stock shall hereafter be changed
or reclassified, equal to the principal and accrued but unpaid
interest under this note divided by $0.15, rounded up to the
nearest whole share.
(b) The Holder
shall have the right from time to time, and at any time on or prior
to the first anniversary of the date hereof, to convert all or any
part of the entirety of the principal and accrued but unpaid
interest then outstanding under this Note into that number of fully
paid and non-assessable shares of Common Stock, equal to the
principal and accrued but unpaid interest under this note divided
by $0.50, rounded up to the nearest whole share, on the first
anniversary of the date hereof.
4.
Security Agreement . In order to secure the obligations of
the Company under this Note, the Company hereby grants a security
interest in all of the assets of the Company, which security
interest is pari passu with the security interest granted
to the holders of $1,500,000 of $50,000 principal amount secured
convertible promissory notes of the Company bearing interest at 10%
per annum issued as part of an offering completed on March 8, 2006
(the “March Notes”) and the holders of $3,950,000 of
$50,000 principal amount secured convertible promissory notes of
the Company bearing interest at 10% per annum issued as part of
offerings completed on May 2, 2006 and June 15, 2006 (the
“May and June Notes”). The Company reserves the right
to issue $18,400,000 of debt secured by a security interest in all
of the Company’s assets, which security interest would be
pari passu to the security interest granted to the Holder,
the May and June Notes, and the March Notes.
5. Events
of Default and Remedies
(a) Any one or
more of the following events (each an “Event of
Default”) which shall have occurred and be continuing shall
constitute an event of default:
(i)
A default in the payment of the principal or accrued interest on
this Note or upon any other indebtedness of the Company after the
date hereof that is greater than $100,000, as and when the same
shall become due, whether by default or otherwise, which default
shall have continued for a period of five (5) business days;
or
(ii)
Any representation or warranty made by the Company or any officer
of the Company in the Note, or in any agreement, report,
certificate or other document delivered to the Holder pursuant to
the Note shall have been incorrect in any material respect when
made which shall not have been remedied ten (10) days after written
notice thereof shall have been given by the Holder; or
(iii) The
Company or any subsidiary (A) shall institute any proceeding or
voluntary case seeking to adjudicate it bankrupt or insolvent, or
seeking dissolution, liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief or composition of it or
its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking the entry of any
order for relief or the appointment of a receiver, trustee,
custodian or other similar official for such the Company or any
subsidiary or for any substantial part of its property, or shall
consent to the commencement against it of such a proceeding or
case, or shall file an answer in any such case or proceeding
commenced against it consenting to
