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APDN > SEC Filings for APDN > Form 8-K on 22-Jul-2013All Recent SEC Filings

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Form 8-K for APPLIED DNA SCIENCES INC


22-Jul-2013

Entry into a Material Definitive Agreement, Unregistered Sale of Equity


Item 1.01. Entry into a Material Definitive Agreement.

Securities Purchase Transaction

On July 19, 2013, Applied DNA Sciences, Inc. (the "Company") entered into a securities purchase agreement ("Purchase Agreement") with Crede CG III, Ltd. ("Crede"). Pursuant to the Purchase Agreement, at the initial closing on July 19, 2013 ("Initial Closing"), Crede purchased 10,695,187 shares of the Company's Common Stock at a price of $0.187 which was the consolidated closing bid price of the Common Stock on the day prior to the signing of the Purchase Agreement. The Company received gross proceeds of $2,000,000. Pursuant to the Purchase Agreement, Crede agreed to purchase an additional $5,500,000 of the Company's Series B Convertible Preferred Stock ("Series B Preferred") at a purchase price of $1,000 per share on the date a registration statement (as described below) is declared effective by the Securities and Exchange Commission ("Second Closing"). A copy of the Purchase Agreement is attached to this Current Report on Form 8-K as Exhibit 10.1.

The Series B Preferred is convertible at the option of the holder thereof, in whole or in part, from time to time and at any time, at the lesser of (i) the Fixed Conversion Price and (ii) the Non-Fixed Conversion Price. The Fixed Conversion Price is equal to $0.187, which is the purchase price for the Common Stock at the Initial Closing. The Non-Fixed Conversion Price is equal to the consolidated closing bid price of the Company's Common Stock for the most recently completed trading day as of the time of conversion. The Series B Preferred will be convertible into Common Stock at the Company's option, in whole or in part, from time to time during the ten trading day period beginning one trading day following the effectiveness of the registration statement (as described below) through the eleventh trading day following effectiveness of such registration statement, at the Non-Fixed Conversion Price, provided that certain equity conditions are met and the Company is not in breach of certain conditions. The Series B Preferred will be automatically converted into Common Stock on the one year anniversary of the issuance of the Series B Preferred at the then applicable Non-Fixed Conversion Price, provided that certain equity conditions are met and the Company is not in breach of certain conditions. The Series B Preferred contains weighted average anti-dilution protection. The Series B Preferred will not accrue dividends except to the extent dividends are paid on the Common Stock. The Company's Common Stock will be junior in rank to the Series B Preferred with respect to preferences as to dividends, distributions and payments upon the liquidation, dissolution and winding up of the Company. The Series B Preferred will generally have no voting rights except as required by law.

The Company also issued Crede at the Initial Closing Warrants with a term of five years (though such term may be extended in certain instances) ("Series A Warrants") allowing it to purchase 10,695,187 shares of Common Stock at a price of $0.2431 which is equal to a 30% premium to the consolidated closing bid price of the Common Stock on the day prior to the signing of the Purchase Agreement. At the Initial Closing, the Company also issued Crede a second set of Warrants ("Series B Warrants") allowing it to purchase 29,411,764 shares of Common Stock, which is equal to one share of Common Stock for every share of Common Stock which would be issuable to it if it fully converted the Series B Preferred into Common Stock at the Fixed Conversion Price. The exercise price of the Series B Warrants is $0.2431, which is equal to a 30% premium to the consolidated closing bid price of the Common Stock on the day prior to the signing of the Purchase Agreement. The Series B Warrants are not exercisable until the earlier of (i) November 7, 2013 and (ii) the Second Closing, and have a term of five years (though such term may be extended in certain instances).

In addition, at the Initial Closing, the Company issued to Crede a third set of Warrants ("Series C Warrants") which is only exercisable for six months from the earlier of (i) November 7, 2013 and (ii) after the eleventh trading day following the Second Closing. The Series C Warrants will allow Crede to purchase, at a price of $0.2431 (equal to a 30% premium to the consolidated closing bid price of the Common Stock on the day prior to the signing of the Purchase Agreement), 26,737,967 shares of Common Stock, which is equal to one-third the sum of (i) the number of shares of Common Stock issued at the Initial Closing, (ii) the number of shares of Common Stock which would be issuable to it if it fully converted the Series B Preferred into Common Stock at the Fixed Conversion Price, (iii) the number of shares of Common Stock subject to the Series A Warrants and (iv) the number of shares of Common Stock subject to the Series B Warrants.

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The Series B and Series C Warrants provide the Company with an option to repurchase any remaining unexercised portion of such Warrants for a repurchase price equal to $50,000, if the Second Closing is terminated pursuant to the Purchase Agreement. The Series C Warrants are also subject to the Company's repurchase at an aggregate repurchase price equal to $10,000 at the close of trading on the tenth trading day immediately following the Second Closing but only if the registration statement (described below) is effective and covers and is available for use for the resale of (i) all shares of Common Stock issued at the First Closing, (ii) all shares of Common Stock issued upon conversion of the Series B Preferred, (iii) all shares of Common Stock which would then be issuable if the full then unconverted portion of the Series B Preferred were then fully converted into Common Stock at the then applicable conversion price,
(iv) all shares of Common Stock subject to the Series A Warrants and (v) all shares of Common Stock subject to the Series B Warrants. A copy of the forms of Series A, B and C Warrants are attached to this Current Report on Form 8-K as Exhibit 4.1, Exhibit 4.2 and Exhibit 4.3, respectively.

Crede may exercise Series A and Series B Warrants by paying in cash or on a cashless basis by exchanging such Warrants for Common Stock using a negotiated Black-Scholes value. In the event that the Common Stock trades at a price 25% or more above the exercise price of the Series A and Series B Warrants for a period of 20 consecutive days (with average daily dollar volume of Common Stock on the OTC Bulletin Board at least equal to $300,000), the Company may obligate Crede to exercise such Warrants for cash.

Pursuant to a registration rights agreement between the Company and Crede, the Company agreed to file a registration statement within 30 days of the Initial Closing and to use its best efforts to get such registration statement effective within 90 days. The registration statement will cover the resale of all shares of Common Stock issuable pursuant to the Purchase Agreement, including the . . .



Item 3.02. Unregistered Sales of Equity Securities.

The information contained in Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 3.02.



Item 5.03. Amendment to Articles of Incorporation or By-Laws; Change in Fiscal Year.

Attached to this Current Report on Form 8-K as Exhibit 3.1 is a form of Certificate of Designations of the Series B Convertible Preferred Stock ("Certificate of Designations") to be filed with the Secretary of State of Delaware. The Certificate of Designations will become effective upon filing with the Secretary of State of Delaware.



Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.

Exhibit No. Description

3.1         Form of Certificate of Designations of the Series B Convertible
            Preferred Stock.

4.1         Form of Series A Warrants issued to Crede CG III, Ltd. as of July 19,
            2013.

4.2         Form of Series B Warrants issued to Crede CG III, Ltd. as of July 19,
            2013.

4.3         Form of Series C Warrants issued to Crede CG III, Ltd. as of July 19,
            2013.

4.4         Registration Rights Agreement, dated as of July 19, 2013, by and between
            the Company and Crede CG III, Ltd.

10.1        Securities Purchase Agreement, dated as of July 19, 2013, by and between
            the Company and Crede CG III, Ltd.

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