Document:

Exhibit 10.40

 

EXECUTION VERSION

 

SECURITY
AGREEMENT

 

dated October 19, 2018

by

the Grantor referred to herein

as Grantor

to

Delaware Trust Company

as Collateral Agent

 

    	 		 

     

    

 

table of
contents

 

	 	 	PAGE
	Section 1.	Grant of Security	2
	 	 	 
	Section 2.	Security for Obligations	5
	 	 	 
	Section 3.	Grantor Remains Liable	6
	 	 	 
	Section 4.	Delivery and Control of Security Collateral.	6
	 	 	 
	Section 5.	Maintaining the Account Collateral	7
	 	 	 
	Section 6.	Representations and Warranties	7
	 	 	 
	Section 7.	Further Assurances.	10
	 	 	 
	Section 8.	As to Equipment and Inventory.	11
	 	 	 
	Section 9.	As to Books and Records.	11
	 	 	 
	Section 10.	Insurance.	12
	 	 	 
	Section 11.	Post-Closing Changes; Collections on Assigned Agreements, Receivables and Related Contracts.	12
	 	 	 
	Section 12.	As to Intellectual Property Collateral.	13
	 	 	 
	Section 13.	Voting Rights; Dividends; Etc.	13
	 	 	 
	Section 14.	As to Letter-of-Credit Rights.	14
	 	 	 
	Section 15.	Commercial Tort Claims	15
	 	 	 
	Section 16.	Transfers and Other Liens; Additional Shares.	15
	 	 	 
	Section 17.	Collateral Agent Appointed Attorney in Fact	15
	 	 	 
	Section 18.	Collateral Agent May Perform	16
	 	 	 
	Section 19.	The Collateral Agent’s Duties.	16
	 	 	 
	Section 20.	Remedies	17
	 	 	 
	Section 21.	Indemnity and Expenses.	19
	 	 	 
	Section 22.	Amendments; Waivers; Additional Grantors; Etc.	19
	 	 	 
	Section 23.	Notices, Etc.	19

 

    	 		 

     

    

 

	Section 24.	Continuing Security Interest	20
	 	 	 
	Section 25.	Release; Termination.	20
	 	 	 
	Section 26.	Execution in Counterparts	20
	 	 	 
	Section 27.	Governing Law; Jurisdiction; Waiver of Jury Trial, Etc.	21

 

Schedules:

 

	Schedule I	-	Investment Property
	Schedule II	-	Deposit Accounts
	Schedule III	-	Assigned Agreements
	Schedule IV	-	Intellectual Property
	Schedule V	-	Commercial Tort Claims
	Schedule VI	-	Location, Chief Executive Office, Type of Organization, Jurisdiction of Organization and Organizational Identification Number
	Schedule VII	-	Changes in Name, Location, Etc.
	Schedule VIII	-	Locations of Equipment, Inventory and Books and Records
	Schedule IX	-	Letters of Credit
	Schedule X	-	Permitted Liens
	Schedule XI	 	Excluded Assets

 

Exhibits:

 

	Exhibit A	-	Form of Intellectual Property Security Agreement
	Exhibit B	-	Form of IP Security Agreement Supplement

 

    	 		 

     

    

 

SECURITY AGREEMENT

 

SECURITY AGREEMENT (as
amended, supplemented, amended and restated or otherwise modified from time to time, this “Agreement”) dated
October 19, 2018 made by APPLIED DNA SCIENCES, INC., a Delaware corporation with headquarters located at 50 Health Sciences Drive,
Stony Brook, New York 11790 (the “Grantor”), in favor of DELAWARE TRUST COMPANY, a Delaware corporation, as
collateral agent (together with any successor collateral agent, in such capacity, the “Collateral Agent”) for
the benefit of the investors listed on the Schedule of Buyers (each a “Buyer” and collectively, the “Buyers”;
the Buyers and the Collateral Agent are collectively, with their successors and assigns, the “Secured Parties”))
set forth in the Securities Purchase Agreement, dated as of August 31, 2018 (as amended, amended and restated, supplemented or
otherwise modified from time to time) and the other Secured Parties (the “Securities Purchase Agreement”).

 

PRELIMINARY STATEMENTS.

 

WHEREAS, the Grantor
and each Buyer are parties to the Securities Purchase Agreement, pursuant to which the Grantor shall be required to sell, and the
Buyers shall purchase or have rights to purchase, on a several and not joint basis the principal amount of the Notes issued pursuant
thereto (as such Notes may be amended, amended and restated, supplemented or otherwise modified from time to time, the “Notes”);
and

 

WHEREAS, it is
a condition precedent to the Buyers purchasing the Notes pursuant to the Securities Purchase Agreement that the Grantor shall have
executed and delivered to the Collateral Agent this Agreement providing for the grant to the Collateral Agent for the benefit of
the Secured Parties of a security interest in all of the personal property of the Grantor to secure all of the Grantor’s
Obligations (as defined below) under the Securities Purchase Agreement, the Notes and the other Transaction Documents; and

 

WHEREAS, the Grantor,
the Buyers and the Collateral Agent are parties to that certain Collateral Agency Agreement dated as of the date hereof (as amended,
supplemented, amended and restated or otherwise modified from time to time, the “Collateral Agency Agreement”);
and

 

WHEREAS, capitalized
terms used herein and not otherwise defined in this Agreement are used in this Agreement as defined in the Securities Purchase
Agreement. Further, unless otherwise defined in this Agreement or in the Securities Purchase Agreement, terms defined in Article
8 or 9 of the UCC (as defined below) are used in this Agreement as such terms are defined in such Article 8 or 9. “UCC”
means the Uniform Commercial Code as in effect from time to time in the State of New York; provided that, if perfection
or the effect of perfection or non-perfection or the priority of the security interest in any Collateral is governed by the Uniform
Commercial Code as in effect in a jurisdiction other than the State of New York, “UCC” means the Uniform Commercial
Code as in effect from time to time in such other jurisdiction for purposes of the provisions hereof relating to such perfection,
effect of perfection or non-perfection or priority.

 

    	 		 

     

    

 

NOW, THEREFORE, in consideration
of the premises and in order to induce the Buyers to purchase the Notes under the Securities Purchase Agreement, the Grantor hereby
agrees with the Collateral Agent for the ratable benefit of the Secured Parties as follows:

 

Section
1.           Grant of Security. Grantor hereby grants to the
Collateral Agent, for the ratable benefit of the Secured Parties, a security interest in all of Grantor’s tangible and
intangible assets, whether real or personal property, now or hereafter acquired, including without limitation all of
Grantor’s right, title and interest in and to the following (collectively, the “Collateral”):

 

(a)         all
equipment in all of its forms, including, without limitation, all machinery, tools, motor vehicles, vessels, aircraft, furniture
and fixtures, and all parts thereof and all accessions thereto, including, without limitation, computer programs and supporting
information that constitute equipment within the meaning of the UCC (any and all such property being the “Equipment”);

 

(b)         all
inventory in all of its forms, including, without limitation, (i) all raw materials, work in process, finished goods and materials
used or consumed in the manufacture, production, preparation or shipping thereof, (ii) goods in which Grantor has an interest in
mass or a joint or other interest or right of any kind (including, without limitation, goods in which Grantor has an interest or
right as consignee) and (iii) goods that are returned to or repossessed or stopped in transit by Grantor), and all accessions thereto
and products thereof and documents therefor, including, without limitation, computer programs and supporting information that constitute
inventory within the meaning of the UCC (any and all such property being the “Inventory”);

 

(c)         all
accounts (including, without limitation, health-care-insurance receivables), chattel paper (including, without limitation, tangible
chattel paper and electronic chattel paper), instruments (including, without limitation, promissory notes), deposit accounts (other
than Excluded Accounts (defined below)), letter-of-credit rights, general intangibles (including, without limitation, payment intangibles)
and other Obligations of any kind, whether or not arising out of or in connection with the sale or lease of goods or the rendering
of services and whether or not earned by performance, and all rights now or hereafter existing in and to all supporting Obligations
and in and to all security agreements, mortgages, Liens, leases, letters of credit and other contracts securing or otherwise relating
to the foregoing property (any and all of such accounts, chattel paper, instruments, deposit accounts, letter-of-credit rights,
general intangibles and other Obligations, to the extent not referred to in clause (d), (e) or (f) below,
being the “Receivables,” and any and all such supporting Obligations, security agreements, mortgages, Liens,
leases, letters of credit and other contracts being the “Related Contracts”);

 

(d)          the
following (the “Security Collateral”):

 

(i)       the
all of the shares of capital stock of (or other ownership or profit interests in, including partnership, membership or trust interests)
in any entity (“Equity Interests”) listed on Part I of Schedule I (Investment Property)
hereto, and the certificates, if any, representing such additional shares or other Equity Interests, and all dividends, distributions,
return of capital, cash, instruments and other property from time to time received, receivable or otherwise distributed in respect
of or in exchange for any or all of such shares or other Equity Interests and all warrants, rights or options issued thereon or
with respect thereto;

 

    	 	-2-	 

     

    

 

(ii)       the
indebtedness listed on Part II of Schedule I (Investment Property) hereto and all additional indebtedness
now or from time to time owed to Grantor (such indebtedness being the “Pledged Debt”) and the instruments, if
any, evidencing such indebtedness, and all interest, cash, instruments and other property from time to time received, receivable
or otherwise distributed in respect of or in exchange for any or all of such indebtedness; and

 

(iii)       all
other investment property (including, without limitation, all (A) securities, whether certificated or uncertificated, (B) security
entitlements, (C) securities accounts, (D) commodity contracts and (E) commodity accounts) in which Grantor has
now, or acquires from time to time hereafter, any right, title or interest in any manner, and the certificates or instruments,
if any, representing or evidencing such investment property, and all dividends, distributions, return of capital, interest, cash,
instruments and other property from time to time received, receivable or otherwise distributed in respect of or in exchange for
any or all of such investment property and all warrants, rights or options issued thereon or with respect thereto;

 

(e)          each
of the agreements listed on Schedule III (Assigned Agreements) attached hereto, in each case as such agreements may
be amended, restated, amended and restated, supplemented or otherwise modified from time to time (collectively, the “Assigned
Agreements”), including, without limitation, (w) all rights of Grantor to receive moneys due and to become due under
or pursuant to the Assigned Agreements, (x) all rights of Grantor to receive proceeds of any insurance, indemnity, warranty
or guaranty with respect to the Assigned Agreements, (y) claims of Grantor for damages arising out of or for breach of or
default under the Assigned Agreements and (z) the right of Grantor to terminate the Assigned Agreements, to perform thereunder
and to compel performance and otherwise exercise all remedies thereunder (all such Collateral being the “Agreement Collateral”);

 

(f)          the
following (collectively, the “Account Collateral”):

 

(i)       the
deposit accounts listed on Schedule II (Deposit Accounts) hereto and all funds and financial assets from time to
time credited thereto (including, without limitation, all cash equivalents), and all certificates and instruments, if any, from
time to time representing or evidencing the Deposit Accounts;

 

(ii)       all
promissory notes, certificates of deposit, checks and other instruments from time to time delivered to or otherwise possessed by
the Collateral Agent for or on behalf of Grantor in substitution for or in addition to any or all of the then existing Account
Collateral; and

 

(iii)       all
interest, dividends, distributions, cash, instruments and other property from time to time received, receivable or otherwise distributed
in respect of or in exchange for any or all of the then existing Account Collateral;

 

    	 	-3-	 

     

    

 

(g)          the
following (collectively, the “Intellectual Property Collateral”):

 

(i)       all
patents, patent applications, utility models and statutory invention registrations, all inventions claimed or disclosed therein
and all improvements thereto (“Patents”);

 

(ii)       all
trademarks, service marks, domain names, trade dress, logos, designs, slogans, trade names, business names, corporate names and
other source identifiers, whether registered or unregistered (provided that no security interest shall be granted in United
States intent-to-use trademark applications to the extent that, and solely during the period in which, the grant of a security
interest therein would impair the validity or enforceability of such intent-to-use trademark applications under applicable federal
law), together, in each case, with the goodwill symbolized thereby (“Trademarks”);

 

(iii)       all
copyrights, including, without limitation, copyrights in Computer Software (as hereinafter defined), internet web sites and the
content thereof, whether registered or unregistered (“Copyrights”);

 

(iv)       all
computer software, programs and databases (including, without limitation, source code, object code and all related applications
and data files), firmware and documentation and materials relating thereto, together with any and all maintenance rights, service
rights, programming rights, hosting rights, test rights, improvement rights, renewal rights and indemnification rights and any
substitutions, replacements, improvements, error corrections, updates and new versions of any of the foregoing (“Computer
Software”);

 

(v)       all
confidential and proprietary information, including, without limitation, know-how, trade secrets, manufacturing and production
processes and techniques, inventions, research and development information, databases and data, including, without limitation,
technical data, financial, marketing and business data, pricing and cost information, business and marketing plans and customer
and supplier lists and information (collectively, “Trade Secrets”), and all other intellectual, industrial and
intangible property of any type, including, without limitation, industrial designs and mask works;

 

(vi)       all
registrations and applications for registration for any of the foregoing, including, without limitation, those registrations and
applications for registration set forth in Schedule IV (Intellectual Property) attached hereto, together with all
reissues, divisions, continuations, continuations-in-part, extensions, renewals and reexaminations thereof;

 

(vii)       all
tangible embodiments of the foregoing, all rights in the foregoing provided by international treaties or conventions, all rights
corresponding thereto throughout the world and all other rights of any kind whatsoever of Grantor accruing thereunder or pertaining
thereto;

 

(viii)       all
agreements, permits, consents, orders and franchises relating to the license, development, use or disclosure of any of the foregoing
to which Grantor, now or hereafter, is a party or a beneficiary, including, without limitation, the agreements set forth in Schedule
IV (Intellectual Property) attached hereto, (“IP Agreements”); and

 

    	 	-4-	 

     

    

 

(ix)       any
and all claims for damages and injunctive relief for past, present and future infringement, dilution, misappropriation, violation,
misuse or breach with respect to any of the foregoing, with the right, but not the obligation, to sue for and collect, or otherwise
recover, such damages;

 

(h)          the
commercial tort claims described in Schedule V (Commercial Tort Claims) attached hereto (together with any commercial
tort claims as to which the Grantors have complied with the requirements of Section 15, the “Commercial Tort Claims
Collateral”);

 

(i)           all
books and records (including, without limitation, customer lists, credit files, printouts and other computer output materials and
records) of Grantor pertaining to any of the Collateral; and

 

(j)           all
proceeds of, collateral for, income, royalties and other payments now or hereafter due and payable with respect to, and supporting
Obligations relating to, any and all of the Collateral (including, without limitation, proceeds, collateral and supporting Obligations
that constitute property of the types described in clauses (a) through (i) of this Section 1) and, to the
extent not otherwise included, all (A) payments under insurance (whether or not the Collateral Agent is the loss payee thereof),
or any indemnity, warranty or guaranty, payable by reason of loss or damage to or otherwise with respect to any of the foregoing
Collateral, and (B) cash;

 

provided that the term
“Collateral” shall at all times exclude all Excluded Assets. “Excluded Assets” means all assets
listed on Schedule XI (Excluded Assets) attached hereto.

 

Section 2.            Security
for Obligations. This Agreement and the Collateral granted hereunder secures, in the case of Grantor, the payment of all Obligations
now or hereafter existing, whether direct or indirect, absolute or contingent, and whether for principal, reimbursement Obligations,
interest, fees, premiums, penalties, indemnifications, contract causes of action, costs, expenses or otherwise (all such Obligations,
the “Secured Obligations”). Without limiting the generality of the foregoing, this Agreement secures the payment
of all amounts that constitute part of the Secured Obligations and would be owed by Grantor to any Secured Party under the Transaction
Documents but for the fact that they are unenforceable or not allowable due to the existence of a bankruptcy, reorganization or
similar proceeding involving the Grantor. The term “Obligations” shall mean for so long as the Notes are outstanding
the payment by the Company, as and when due and payable (by scheduled maturity, required prepayment, acceleration, demand or otherwise),
of all amounts from time to time owing by it in respect of the Securities Purchase Agreement, the Notes, the Collateral Agency
Agreement and the other Transaction Documents, including, without limitation, (A) all principal of and interest on the Notes (including,
without limitation, all interest that accrues after the commencement of any insolvency proceeding of the Grantor, whether or not
the payment of such interest is unenforceable or is not allowable due to the existence of such insolvency proceeding), and (B)
all fees, commissions, expense reimbursements, indemnifications and all other amounts due or to become due under any of the Transaction
Documents.

 

    	 	-5-	 

     

    

 

Section 3.            Grantor
Remains Liable. Anything herein to the contrary notwithstanding, (a) Grantor shall remain liable under the contracts and agreements
included in the Collateral to the extent set forth therein to perform all of its duties and Obligations thereunder to the same
extent as if this Agreement had not been executed, (b) the exercise by the Collateral Agent of any of the rights hereunder shall
not release Grantor from any of its duties or Obligations under the contracts and agreements included in the Collateral and (c)
no Secured Party shall have any obligation or liability under the contracts and agreements included in the Collateral by reason
of this Agreement or any other Transaction Document, nor shall any Secured Party be obligated to perform any of the Secured Obligations
or duties of any Grantor thereunder or to take any action to collect or enforce any claim for payment assigned hereunder.

 

Section 4.            Delivery
and Control of Security Collateral.

 

(a)          All
certificates or instruments representing or evidencing Security Collateral shall be delivered to and held by or on behalf of the
Collateral Agent pursuant hereto and shall be in suitable form for transfer by delivery, or shall be accompanied by duly executed
instruments of transfer or assignment in blank, all in form and substance reasonably satisfactory to the Secured Parties. The Collateral
Agent shall have the right at any time to exchange certificates or instruments representing or evidencing Security Collateral for
certificates or instruments of smaller or larger denominations.

 

(b)          With
respect to any Security Collateral that constitutes an uncertificated security, the Grantor will cause the issuer either (i) to
register the Collateral Agent as the registered owner of such security or (ii) to agree with Grantor and the Collateral Agent that
such issuer will comply with instructions with respect to such security originated by the Collateral Agent without further consent
of Grantor, such agreement to be in form and substance reasonably satisfactory to the Secured Parties (such agreement being an
“Uncertificated Security Control Agreement”).

 

(c)          With
respect to any Security Collateral that constitutes a security entitlement as to which the financial institution acting as Collateral
Agent hereunder is not the securities intermediary, Grantor will cause the securities intermediary with respect to such security
entitlement either (i) to identify in its records the Collateral Agent as the entitlement holder thereof or (ii) to agree
with Grantor and the Collateral Agent that such securities intermediary will comply with entitlement orders originated by the Collateral
Agent without further consent of Grantor, such agreement to be in form and substance reasonably satisfactory to the Secured Parties
(a “Securities Account Control Agreement”).

 

(d)          The
Collateral Agent shall have the right, at any time and without notice to any Grantor, to endorse, assign or otherwise transfer
to or to register in the name of the Collateral Agent or any of its nominees or endorse for negotiation any or all of the Security
Collateral, without any indication that such Security Collateral is subject to the security interest hereunder, subject only to
the revocable rights specified in Section 13(a).

 

(e)          Upon
the request of the Collateral Agent, Grantor will notify each issuer of Security Collateral granted by it hereunder that such Security
Collateral is subject to the security interest granted hereunder.

 

    	 	-6-	 

     

    

 

Section 5.           Maintaining
the Account Collateral. So long as the Secured Obligations remain outstanding and unpaid:

 

(a)         Grantor
will maintain deposit accounts only with a bank or other depository institution (a “Pledged Account Bank”) that
has agreed (or will agree) with Grantor and the Collateral Agent to comply with instructions originated by the Collateral Agent
directing the disposition of funds in such deposit account without the further consent of Grantor, such agreement to be in form
and substance reasonably satisfactory to the Secured Parties (a “Deposit Account Control Agreement”). As a condition
to the establishment and maintenance of deposit accounts with any such bank or other depository institution, Grantor shall have
entered into a Deposit Account Control Agreement with such Pledged Account Bank, except with respect to Excluded Accounts (defined
below).

 

(b)          The
Collateral Agent may, without notice to, or consent from, Grantor, give such instructions, transfer, or direct the transfer of,
funds from the Deposit Accounts, to satisfy the Secured Obligations under the Transaction Documents only if an Event of Default
shall have occurred and be continuing.

 

(c)          For
the purposes hereof, “Excluded Accounts” means (a) any deposit account that is used solely for escrow, tax,
tax withholding, payment of payroll, bonuses, other compensation and related expenses and (b) any accounts held outside of the
United States of America.

 

Section 6.            Representations
and Warranties. Grantor represents and warrants as follows:

 

(a)          As
of the Effective Date, Grantor’s exact legal name, location of chief executive office, type of organization, jurisdiction
of organization and organizational identification number (if any) are set forth in Schedule VI (Location, Chief
Executive Office, Type of Organization, Jurisdiction of Organization and Organizational Identification Number); attached hereto.
Grantor has no trade names other than as listed on Schedule VI (Location, Chief Executive Office, Type of Organization,
Jurisdiction of Organization and Organizational Identification Number) attached hereto. Within the five years preceding the
Effective Date, Grantor has not changed its name, location of its chief executive office, type of organization, jurisdiction of
organization or organizational identification number from those set forth in Schedule VI (Location, Chief Executive
Office, Type of Organization, Jurisdiction of Organization and Organizational Identification Number) attached hereto except
as set forth in Schedule VII (Changes in Name, Location, Etc.) attached hereto.

 

(b)          Grantor
is the legal and beneficial owner of the Collateral granted or purported to be granted by it free and clear of any Lien, claim,
option or right of others, except for the security interest created under this Agreement or permitted hereunder and listed on Schedule
X (Permitted Liens). No effective financing statement or other instrument similar in effect covering all or any part
of such Collateral or listing Grantor or any trade name of Grantor as debtor is on file in any recording office, except such as
may have been filed in favor of the Collateral Agent relating to the Transaction Documents or as otherwise permitted under the
Securities Purchase Agreement.

 

    	 	-7-	 

     

    

 

(c)          All
of the Equipment and Inventory of Grantor is located at the places specified therefor in Schedule VIII (Locations of
Equipment, Inventory and Books and Records) attached hereto or at another location as to which Grantor has complied with the
requirements of Section 8(a). Grantor has exclusive possession and control of its Equipment and Inventory.

 

(d)          All
books and records related to the Collateral are located at the places specified therefor in Schedule VIII (Locations
of Equipment, Inventory and Books and Records) attached hereto. Grantor agrees to obtain a lien waiver and access agreement
in favor of the Collateral Agent, in form and substance reasonably satisfactory to the Secured Parties, with respect to each location
in which any books and records are stored. Grantor further agrees to deliver a fully-executed copy of such lien waiver and access
agreement to the Collateral Agent prior to the delivery of such books and records to any other location.

 

(e)          None
of the Receivables or Agreement Collateral is evidenced by a promissory note or other instrument that has not been delivered to
the Collateral Agent.

 

(f)           If
Grantor is an issuer of Security Collateral, Grantor confirms that it has received notice of the security interest granted hereunder.

 

(g)          The
Pledged Equity pledged by Grantor hereunder (if any) has been duly authorized and validly issued and is fully paid and non-assessable.
The Pledged Debt issued by Grantor and pledged by another Grantor hereunder has been duly authorized, authenticated or issued and
delivered, is the valid and legally binding obligation of the issuers thereof and is evidenced by one or more promissory notes
(which promissory notes have been delivered to the Collateral Agent).

 

(h)          The
Pledged Equity pledged by Grantor constitutes the percentage of the issued and outstanding Equity Interests of the issuers thereof
indicated on Part I of Schedule I (Investment Property) attached hereto. The Pledged Debt constitutes all
of the outstanding indebtedness owed to Grantor by the issuers thereof and is outstanding in the principal amount indicated, Part
II of Schedule I (Investment Property) attached hereto, as of the date hereof and is not in default.

 

(i)           Grantor
has no investment property, other than the investment property listed on Schedule I (Pledged Equity; Pledged Debt; Investment
Property).

 

(j)           Grantor
shall use best efforts to deliver to the Collateral Agent a consent in form and substance reasonably satisfactory to the Secured
Parties from each party to the Assigned Agreements to which the Borrower is a party to the grant of a security interest in such
Assigned Agreement pursuant to this Agreement (which by its terms does not require any such consent or for which a consent was
previously obtained).

 

(k)          Grantor
has no deposit accounts other than the Deposit Accounts listed on Schedule II (Deposit Accounts) attached hereto,
Excluded Accounts and additional deposit accounts as to which Grantor has complied (or as the case may be, will comply) with the
applicable requirements of Section 5.

 

    	 	-8-	 

     

    

 

(l)           Grantor
is not a beneficiary or assignee under any letter of credit, other than the letters of credit described in Schedule IX (Letters
of Credit) attached hereto and additional letters of credit as to which Grantor has complied with the requirements of Section
14.

 

(m)         This
Agreement creates in favor of the Collateral Agent for the benefit of the Secured Parties a valid first priority security interest
in the Collateral granted by Grantor, securing the payment of the Secured Obligations; such security interest is subject in priority
only to the Permitted Liens and the recording of all filings and other actions (including, without limitation, (A) actions necessary
to obtain control of Collateral as provided in Sections 9-104, 9-105, 9-106 and 9-107 of the UCC and (B) actions necessary to perfect
the Collateral Agent’s security interest with respect to Collateral evidenced by a certificate of title) necessary to perfect
the security interest in the Collateral granted by Grantor have been duly made or taken and are in full force and effect on and
after the date hereof.

 

(n)          No
authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body or
any other third party is required for (i) the grant by Grantor of the security interest granted hereunder or for the execution,
delivery or performance of this Agreement by Grantor, (ii) the perfection or maintenance of the security interest created
hereunder (including the first priority nature of such security interest), except for the filing of financing and continuation
statements under the UCC, which financing statements shall have been duly filed within 45 days of the Closing, as defined in the
Securities Purchase Agreement and, upon filing, shall be in full force and effect, the recordation of the Intellectual Property
Security Agreements referred to in Section 12(c) with the U.S. Patent and Trademark Office and the U.S. Copyright Office,
and the actions described in Section 4 with respect to the Security Collateral, which actions have been taken and are in
full force and effect, or (iii) the exercise by the Collateral Agent of its voting or other rights provided for in this Agreement
or the remedies in respect of the Collateral pursuant to this Agreement, except as may be required in connection with the disposition
of any portion of the Security Collateral by laws affecting the offering and sale of securities generally.

 

(o)          The
Inventory that has been produced or distributed by Grantor has been produced in material compliance with all requirements of applicable
law.

 

(p)          As
to itself and its Intellectual Property Collateral:

 

(i)       The
operation of Grantor’s business as currently conducted or as contemplated to be conducted and the use of the Intellectual
Property Collateral in connection therewith, to the best of Grantor’s knowledge, do not conflict with, infringe, misappropriate,
dilute, misuse or otherwise violate the intellectual property rights of any third party.

 

(ii)       Grantor
is the exclusive owner of all right, title and interest in and to the Intellectual Property Collateral, and is entitled to use
all Intellectual Property Collateral subject only to the terms of the IP Agreements.

 

(iii)       The
Intellectual Property Collateral set forth on Schedule IV (Intellectual Property) attached hereto includes all of
the patents, patent applications, domain names, trademark registrations and applications, copyright registrations and applications
and IP Agreements owned by Grantor as of the date hereof.

 

    	 	-9-	 

     

    

 

(iv)       The
Intellectual Property Collateral is subsisting and has not been adjudged invalid or unenforceable in whole or in part, and to the
best of Grantor’s knowledge, is valid and enforceable. Grantor is not aware of any uses of any item of Intellectual Property
Collateral that could be expected to lead to such item becoming invalid or unenforceable.

 

(v)       The
consummation of the transactions contemplated by the Transaction Documents will not result in the termination or impairment of
any of the Intellectual Property Collateral.

 

(q)          Grantor
has no commercial tort claims other than those listed in Schedule V (Commercial Tort Claims) attached hereto and
additional commercial tort claims as to which Grantor has complied with the requirements of Section 15.

 

Section 7.            Further
Assurances.

 

(a)          Grantor
agrees that from time to time, at the expense of Grantor, Grantor will promptly execute and deliver, or otherwise authenticate,
all further instruments and documents, and take all further action that may be necessary or desirable, or that the Collateral Agent
may request, in order to perfect and protect any pledge or security interest granted or purported to be granted by Grantor hereunder
or to enable the Collateral Agent to exercise and enforce its rights and remedies hereunder with respect to any Collateral of Grantor.
Without limiting the generality of the foregoing, Grantor will promptly with respect to Collateral of Grantor: (i) mark conspicuously
each document included in Inventory, each chattel paper included in Receivables, each Related Contract and, at the request of the
Collateral Agent, each of its records pertaining to such Collateral with a legend, in form and substance reasonably satisfactory
to the Secured Parties, indicating that such document, chattel paper, Related Contract, Assigned Agreement or Collateral is subject
to the security interest granted hereby; (ii) if any such Collateral shall be evidenced by a certificate, promissory note or other
instrument or chattel paper, deliver and pledge to the Collateral Agent hereunder such certificate, note or instrument or chattel
paper duly indorsed and accompanied by duly executed instruments of transfer or assignment, all in form and substance reasonably
satisfactory to the Secured Parties; (iii) file such financing or continuation statements, or amendments thereto, and such other
instruments or notices, as may be necessary or desirable, or as the Collateral Agent may request, in order to perfect and preserve
the security interest granted or purported to be granted by Grantor hereunder; (iv) take all action to ensure that the Collateral
Agent’s security interest is noted on any certificate of title related to any Collateral evidenced by a certificate of title;
(v) to cause the relevant depository institutions, banks, financial intermediaries, securities intermediaries and issuers to execute
and deliver such Deposit Account Control Agreements, Uncertificated Security Control Agreements, Securities Account Control Agreements
and other control agreements, as may be necessary or as the Collateral Agent may from time to time require; and (vi) deliver
to the Collateral Agent evidence that all other actions that the Collateral Agent may deem reasonably necessary or desirable in
order to perfect and protect the security interest granted or purported to be granted by Grantor under this Agreement has been
taken.

 

    	 	-10-	 

     

    

 

(b)          Grantor
hereby authorizes the Secured Parties to file one or more financing or continuation statements, and amendments thereto, including,
without limitation, one or more financing statements indicating that such financing statements cover all assets or all personal
property (or words of similar effect) of Grantor, regardless of whether any particular asset described in such financing statements
falls within the scope of the UCC or the granting clause of this Agreement. A photocopy or other reproduction of this Agreement
shall be sufficient as a financing statement where permitted by law. Grantor ratifies its authorization for the Secured Parties
to have filed such financing statements, continuation statements or amendments filed prior to the date hereof.

 

(c)          Grantor
will furnish to the Collateral Agent from time to time statements and schedules further identifying and describing the Collateral
of Grantor and such other reports in connection with such Collateral as the Secured Parties may reasonably request, all in reasonable
detail.

 

Section 8.            As to
Equipment and Inventory.

 

(a)          Grantor
will keep its Equipment and Inventory (other than Inventory sold in the ordinary course of business and Equipment and Inventory
in transit in the ordinary course of business) at the places therefor specified in Section 6(c) or, upon ten (10) Business
Days’ prior written notice to the Collateral Agent, at such other places designated by Grantor in such notice which shall
be an approved warehouse as to which a lien waiver and access agreement has been obtained in favor of and delivered to the Collateral
Agent, in form and substance reasonably satisfactory to the Secured Parties.

 

(b)          Grantor
will cause its Equipment to be maintained and preserved in the same condition, repair and working order as when new, ordinary wear
and tear excepted, and will forthwith, or in the case of any loss or damage to any of such Equipment as soon as practicable after
the occurrence thereof, make or cause to be made all repairs, replacements and other improvements in connection therewith that
are desirable to such end.

 

(c)          Grantor
will pay promptly when due all property and other taxes, assessments and governmental charges or levies imposed upon, and all claims
(including, without limitation, claims for labor, materials and supplies) against, its Equipment and Inventory. In producing its
Inventory, Grantor will comply, in all material respects, with all requirements of applicable law.

 

Section 9.           As to
Books and Records.

 

Grantor will keep its
books and records at the places therefor specified in Section 6(d) or, upon ten (10) Business Days’ prior written notice
to the Collateral Agent, at such other places designated by Grantor in such notice which shall be an Approved Warehouse as to which
a lien waiver and access agreement has been obtained in favor of and delivered to the Collateral Agent, in form and substance reasonably
satisfactory to the Secured Parties.

 

    	 	-11-	 

     

    

 

Section 10.          Insurance.

 

Grantor shall maintain
insurance (including property insurance, lender loss payable endorsements, etc.) in such amounts and covering such risks as are
reasonably acceptable to the to the Secured Parties and are usually carried by companies engaged in similar businesses and owning
similar properties in the same general areas in which Grantor operates, including without limitation, insurance on the Collateral.

 

Section 11.          Post-Closing
Changes; Collections on Assigned Agreements, Receivables and Related Contracts.

 

(a)          Grantor
shall not change its name, type of organization, jurisdiction of organization, organizational identification number or location
from those set forth in Section 6(a) of this Agreement without prior written notice to the Collateral Agent. Grantor will
hold and preserve its records relating to the Collateral, including, without limitation, the Assigned Agreements and Related Contracts,
and will permit representatives of the Collateral Agent at any time during normal business hours and upon reasonable notice to
inspect and make abstracts from such records and other documents. If any Grantor does not have an organizational identification
number and later obtains one, it will forthwith notify the Collateral Agent of such organizational identification number.

 

(b)          Except
as otherwise provided in this Section 11, Grantor will continue to collect, at its own expense, all amounts due or to become
due to Grantor under the Assigned Agreements, Receivables and Related Contracts. In connection with such collections, Grantor may
take such action as Grantor may deem necessary or advisable to enforce collection of the Assigned Agreements, Receivables and Related
Contracts; provided, however, that the Collateral Agent shall have the right at any time, upon the occurrence and
during the continuance of an Event of Default, to take any steps it or the other Secured Parties may deem necessary or advisable,
including but not limited to, notifying the obligors under any Assigned Agreements, Receivables and Related Contracts of the assignment
of such Assigned Agreements, Receivables and Related Contracts to the Collateral Agent and directing such obligors to make payment
of all amounts due or to become due to Grantor thereunder directly to the Collateral Agent and, upon such notification and at the
expense of Grantor, to enforce collection of any such Assigned Agreements, Receivables and Related Contracts, to adjust, settle
or compromise the amount or payment thereof, in the same manner and to the same extent as Grantor might have done, and to otherwise
exercise all rights with respect to such Assigned Agreements, Receivables and Related Contracts, including, without limitation,
those set forth set forth in Section 9-607 of the UCC. After receipt by any Grantor of the notice from the Collateral Agent referred
to in the proviso to the preceding sentence, Grantor will not adjust, settle or compromise the amount or payment of any Receivable
or amount due on any Assigned Agreement or Related Contract, release wholly or partly any obligor thereof or allow any credit or
discount thereon. No Grantor will permit or consent to the subordination of its right to payment under any of the Assigned Agreements,
Receivables and Related Contracts to any other indebtedness or Obligations of the obligor thereof.

 

    	 	-12-	 

     

    

 

Section 12.          As
to Intellectual Property Collateral.

 

(a)          No
Grantor shall, without the written consent of the Collateral Agent, discontinue use of or otherwise abandon any Intellectual Property
Collateral, or abandon any right to file an application for patent, trademark, or copyright, unless Grantor shall have previously
determined that such use or the pursuit or maintenance of such Intellectual Property Collateral is no longer desirable in the conduct
of Grantor’s business and that the loss thereof could not reasonably be expected to have a Material Adverse Change.

 

(b)          Grantor
shall use proper statutory notice in connection with its use of each item of its Intellectual Property Collateral. Except as permitted
in Section 12(a) above, Grantor shall not do or permit any act or knowingly omit to do any act whereby any of its Intellectual
Property Collateral may lapse or become invalid or unenforceable or placed in the public domain.

 

(c)          With
respect to its Intellectual Property Collateral, Grantor agrees to execute or otherwise authenticate an agreement, in substantially
the form set forth in Exhibit A hereto or otherwise in form and substance reasonably satisfactory to the Secured Parties
(an “Intellectual Property Security Agreement”), for recording the security interest granted hereunder to the
Collateral Agent in such Intellectual Property Collateral with the U.S. Patent and Trademark Office, the U.S. Copyright Office
and any other governmental authorities necessary to perfect the security interest hereunder in such Intellectual Property Collateral.

 

(d)          Grantor
agrees that should it obtain an ownership interest in any item of the type set forth in Section 1(g) that is not on the
date hereof a part of the Intellectual Property Collateral (“After-Acquired Intellectual Property”) (i) the
provisions of this Agreement shall automatically apply thereto, and (ii) any such After-Acquired Intellectual Property and, in
the case of trademarks, the goodwill symbolized thereby, shall automatically become part of the Intellectual Property Collateral
subject to the terms and conditions of this Agreement with respect thereto. Grantor shall give prompt written notice to the Collateral
Agent identifying the After-Acquired Intellectual Property, and Grantor shall execute and deliver to the Collateral Agent with
such written notice, or otherwise authenticate, an agreement substantially in the form of Exhibit B hereto or otherwise
in form and substance reasonably satisfactory to the Secured Parties (an “IP Security Agreement Supplement”)
covering such After-Acquired Intellectual Property, which IP Security Agreement Supplement shall be recorded with the U.S. Patent
and Trademark Office, the U.S. Copyright Office and any other governmental authorities necessary to perfect the security interest
hereunder in such After-Acquired Intellectual Property.

 

Section 13.          Voting
Rights; Dividends; Etc.. (a) So long as no Event of Default shall have occurred and be continuing:

 

(i)       Grantor
shall be entitled to exercise any and all voting and other consensual rights pertaining to the Security Collateral of Grantor or
any part thereof for any purpose; provided, however, that Grantor will not exercise or refrain from exercising any
such right if such action would reasonably be expected to have a material adverse effect on the value of the Security Collateral
or any part thereof.

 

    	 	-13-	 

     

    

 

(ii)       Grantor
shall be entitled to receive and retain any and all dividends, interest and other distributions paid in respect of the Security
Collateral of Grantor if and to the extent that the payment thereof is not otherwise prohibited by the terms of the Transaction
Documents; provided, however, except as otherwise provided in the Securities Purchase Agreement, any and all dividends,
interest and other distributions paid or payable other than in cash in respect of, and instruments and other property received,
receivable or otherwise distributed in respect of, or in exchange for, any Security Collateral shall be, and shall be forthwith
delivered to the Collateral Agent to hold as, Security Collateral and shall, if received by Grantor, be received in trust for the
benefit of the Collateral Agent, be segregated from the other property or funds of Grantor and be forthwith delivered to the Collateral
Agent as Security Collateral in the same form as so received (with any necessary endorsement).

 

(iii)       The
Collateral Agent will execute and deliver (or cause to be executed and delivered) to Grantor all such proxies and other instruments
as Grantor may reasonably request for the purpose of enabling Grantor to exercise the voting and other rights that it is entitled
to exercise pursuant to paragraph (i) above and to receive the dividends or interest payments that it is authorized to receive
and retain pursuant to paragraph (ii) above.

 

(b)          Upon
the occurrence and during the continuance of an Event of Default:

 

(i)       All
rights of Grantor (x) to exercise or refrain from exercising the voting and other consensual rights that it would otherwise be
entitled to exercise pursuant to Section 13(a)(i) shall, upon notice to Grantor by the Collateral Agent, cease and (y) to
receive the dividends, interest and other distributions that it would otherwise be authorized to receive and retain pursuant to
Section 13(a)(ii) shall automatically cease, and all such rights shall thereupon become vested in the Collateral Agent,
which shall thereupon have the sole right to exercise or refrain from exercising such voting and other consensual rights and to
receive and hold as Security Collateral such dividends, interest and other distributions.

 

(ii)       All
dividends, interest and other distributions that are received by any Grantor contrary to the provisions of paragraph (i) of this
Section 13(b) shall be received in trust for the benefit of the Collateral Agent, shall be segregated from other funds of
Grantor and shall be forthwith paid over to the Collateral Agent as Security Collateral in the same form as so received (with any
necessary endorsement).

 

Section 14.          As
to Letter-of-Credit Rights.

 

(a)          Grantor,
by granting a security interest in its Receivables consisting of letter-of-credit rights to the Collateral Agent, intends to (and
hereby does) assign to the Collateral Agent its rights (including its contingent rights) to the proceeds of all Related Contracts
consisting of letters of credit of which it is or hereafter becomes a beneficiary or assignee. Grantor will promptly use commercially
reasonable efforts to cause the issuer of each letter of credit in favor of Grantor and each nominated person (if any) with respect
thereto to consent to such assignment of the proceeds thereof pursuant to a consent in form and substance reasonably satisfactory
to the Secured Parties and deliver written evidence of such consent to the Collateral Agent.

 

    	 	-14-	 

     

    

 

(b)          Upon
the occurrence of an Event of Default, Grantor will, promptly upon request by the Collateral Agent, (i) notify (and Grantor hereby
authorizes the Collateral Agent to notify) the issuer and each nominated person with respect to each of the Related Contracts consisting
of letters of credit that the proceeds thereof have been assigned to the Collateral Agent hereunder and any payments due or to
become due in respect thereof are to be made directly to the Collateral Agent or its designee and (ii) arrange for the Collateral
Agent to become the transferee beneficiary of letter of credit.

 

Section 15.         Commercial
Tort Claims. Grantor will promptly give notice to the Collateral Agent of any commercial tort claim that may arise after the
date hereof and will immediately execute or otherwise authenticate a supplement to this Agreement, and otherwise take all necessary
action, to subject such commercial tort claim to the first priority security interest created under this Agreement.

 

Section 16.          Transfers
and Other Liens; Additional Shares.

 

(a)          Grantor
agrees that it will not (i) sell, assign or otherwise dispose of, or grant any option with respect to, any of the Collateral, other
than sales, assignments and other dispositions of Collateral, and options relating to Collateral, permitted under the terms of
the Securities Purchase Agreement, or (ii) create or suffer to exist any Lien upon or with respect to any of the Collateral of
Grantor except for the pledge, assignment and security interest created under this Agreement and Liens permitted under the Securities
Purchase Agreement.

 

(b)          Grantor
agrees that it will (i) cause each issuer of the Pledged Equity pledged by Grantor not to issue any Equity Interests or other securities
in addition to or in substitution for the Pledged Equity issued by such issuer, except to Grantor, and (ii) pledge hereunder,
immediately upon its acquisition (directly or indirectly) thereof, any and all additional Equity Interests or other securities.

 

Section 17.         Collateral
Agent Appointed Attorney in Fact. Grantor hereby irrevocably appoints the Collateral Agent as attorney in fact, with full authority
in the place and stead of Grantor and in the name of Grantor or otherwise, from time to time, to take any action and to execute
any instrument that the Collateral Agent or the other Secured Parties may deem necessary or advisable to accomplish the purposes
of this Agreement, including, without limitation, upon the occurrence and during the continuance of an Event of Default, to:

 

(a)          obtain
and adjust insurance required to be paid to the Collateral Agent pursuant to, or in accordance with, Section 9,

 

(b)          ask
for, demand, collect, sue for, recover, compromise, receive and give acquittance and receipts for moneys due and to become due
under or in respect of any of the Collateral,

 

(c)          receive,
indorse and collect any drafts or other instruments, documents and chattel paper, in connection with clause (a) or (b)
above, and

 

(d)          file
any claims or take any action or institute any proceedings that the Collateral Agent or the other Secured Parties may deem necessary
or desirable for the collection of any of the Collateral or otherwise to enforce compliance with the terms and conditions of any
Assigned Agreement or the rights of the Collateral Agent with respect to any of the Collateral.

 

    	 	-15-	 

     

    

 

Section 18.          Collateral
Agent May Perform. If any Grantor fails to perform any agreement contained herein, the Collateral Agent may, but without any
obligation to do so and without notice, itself perform, or cause performance of, such agreement, and the expenses of the Collateral
Agent incurred in connection therewith shall be payable by Grantor under Section 21.

 

Section 19.           The
Collateral Agent’s Duties.

 

(a)           The
powers conferred on the Collateral Agent hereunder are solely to protect the Secured Parties’ interest in the Collateral
and shall not impose any duty upon it to exercise any such powers. Except for the safe custody of any Collateral in its possession
and the accounting for moneys actually received by it hereunder, the Collateral Agent shall have no duty as to any Collateral,
as to ascertaining or taking action with respect to calls, conversions, exchanges, maturities, tenders or other matters relative
to any Collateral, whether or not any Secured Party has or is deemed to have knowledge of such matters, or as to the taking of
any necessary steps to preserve rights against any parties or any other rights pertaining to any Collateral. The Collateral Agent
shall be deemed to have exercised reasonable care in the custody and preservation of any Collateral in its possession if such Collateral
is accorded treatment substantially equal to that which it accords its own property.

 

(b)          Anything
contained herein to the contrary notwithstanding, the Collateral Agent may from time to time, when the Collateral Agent in its
discretion deems it to be necessary or advisable, appoint one or more subagents (each a “Subagent”) for the
Collateral Agent hereunder with respect to all or any part of the Collateral. In the event that the Collateral Agent so appoints
any Subagent with respect to any Collateral, (i) the assignment and pledge of such Collateral and the security interest granted
in such Collateral by Grantor hereunder shall be deemed for purposes of this Security Agreement to have been made to such Subagent,
in addition to the Collateral Agent, for the ratable benefit of the Secured Parties, as security for the Secured Obligations of
Grantor, (ii) such Subagent shall automatically be vested, in addition to the Collateral Agent, with all rights, powers, privileges,
interests and remedies of the Collateral Agent hereunder with respect to such Collateral, and (iii) the term “Collateral
Agent,” when used herein in relation to any rights, powers, privileges, interests and remedies of the Collateral Agent with
respect to such Collateral, shall include such Subagent; provided, however, that no such Subagent shall be authorized
to take any action with respect to any such Collateral unless and except to the extent expressly authorized in writing by the Collateral
Agent.

 

    	 	-16-	 

     

    

 

Section 20.           Remedies.
If any Event of Default shall have occurred and be continuing:

 

(a)           The
Collateral Agent may exercise in respect of the Collateral, in addition to other rights and remedies provided for herein or otherwise
available to it, all the rights and remedies of a secured party upon default under the UCC (whether or not the UCC applies to the
affected Collateral) and also may: (i) require Grantor to, and Grantor hereby agrees that it will at its expense and upon request
of the Collateral Agent forthwith, to the extent commercially feasible, assemble all or part of the Collateral as directed by the
Collateral Agent and make it available to the Collateral Agent at a place and time to be designated by the Collateral Agent that
is reasonably convenient to both parties; (ii) without notice except as specified below or as otherwise required pursuant to Section
9-611 of the UCC, sell the Collateral or any part thereof in one or more parcels at public or private sale, at any of the Collateral
Agent’s offices or elsewhere, for cash, on credit or for future delivery, and upon such other terms as are in accordance
with applicable law; (iii) occupy any premises owned or leased by any of the Grantors where the Collateral or any part thereof
is assembled or located for a reasonable period in order to effectuate its rights and remedies hereunder or under law; and (iv) exercise
any and all rights and remedies of any of the Grantors under or in connection with the Collateral, or otherwise in respect of the
Collateral, including, without limitation, (A) any and all rights of Grantor to demand or otherwise require payment of any amount
under, or performance of any provision of, the Assigned Agreements, the Receivables, the Related Contracts and the other Collateral,
(B) withdraw, or cause or direct the withdrawal, of all funds with respect to the Account Collateral and (C) exercise all other
rights and remedies with respect to the Assigned Agreements, the Receivables, the Related Contracts and the other Collateral, including,
without limitation, those set forth in Section 9-607 of the UCC. Grantor agrees that, to the extent notice of sale shall be required
by law, at least ten (10) days’ notice to Grantor of the time and place of any public sale or the time after which any private
sale is to be made shall constitute reasonable notification. The Collateral Agent shall not be obligated to make any sale of Collateral
regardless of notice of sale having been given. The Collateral Agent may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale may, without further notice (except as otherwise required by Section
9-611 of the UCC), be made at the time and place to which it was so adjourned.

 

(b)          Any
cash held by or on behalf of the Collateral Agent and all cash proceeds received by or on behalf of the Collateral Agent in respect
of any sale of, collection from, or other realization upon all or any part of the Collateral may, in the discretion of the Collateral
Agent, be held by the Collateral Agent as collateral for the benefit of the Secured Parties against, all or any part of the Secured
Obligations. Any surplus of such cash or cash proceeds held by or on the behalf of the Collateral Agent and remaining after payment
in full of all the Secured Obligations shall be paid over to Grantor or to whomsoever may be lawfully entitled to receive such
surplus.

 

(c)          All
payments received by any Grantor under or in connection with any Assigned Agreement or otherwise in respect of the Collateral shall
be received in trust for the benefit of the Collateral Agent, shall be segregated from other funds of Grantor and shall be forthwith
paid over to the Collateral Agent in the same form as so received (with any necessary endorsement).

 

(d)          [RESERVED].

 

(e)          In
the event of any sale or other disposition of any of the Intellectual Property Collateral of Grantor, the goodwill symbolized by
any Trademarks subject to such sale or other disposition shall be included therein, and Grantor shall supply to the Collateral
Agent or its designee Grantor’s know-how and expertise, and documents and things relating to any Intellectual Property Collateral
subject to such sale or other disposition, and Grantor’s customer lists and other records and documents relating to such
Intellectual Property Collateral and to the manufacture, distribution, advertising and sale of products and services of Grantor.

 

    	 	-17-	 

     

    

 

(f)           If
the Collateral Agent shall exercise its right to sell all or any of the Security Collateral of any Grantor pursuant to this Section
20, Grantor agrees that, upon request of the Collateral Agent, Grantor will, at its own expense:

 

(i)       execute
and deliver, and cause each issuer of such Security Collateral contemplated to be sold and the directors and officers thereof to
execute and deliver, all such instruments and documents, and do or cause to be done all such other acts and things, as may be necessary
or, in the opinion of the Collateral Agent, advisable to register such Security Collateral under the provisions of the Securities
Act of 1933 (as amended from time to time, the “Securities Act”), to cause the registration statement relating
thereto to become effective and to remain effective for such period as prospectuses are required by law to be furnished and to
make all amendments and supplements thereto and to the related prospectus that, in the opinion of the Collateral Agent or the other
Secured Parties, are necessary or advisable, all in conformity with the requirements of the Securities Act and the rules and regulations
of the Securities and Exchange Commission applicable thereto;

 

(ii)       use
its best efforts to qualify the Security Collateral under the state securities or “Blue Sky” laws and to obtain all
necessary governmental approvals for the sale of such Security Collateral, as requested by the Collateral Agent;

 

(iii)       cause
each such issuer of such Security Collateral to make available to its security holders, as soon as practicable, an earnings statement
that will satisfy the provisions of Section 11(a) of the Securities Act;

 

(iv)       provide
the Collateral Agent with such other information and projections as may be necessary or, in the opinion of the Collateral Agent
or the other Secured Parties, advisable to enable the Collateral Agent to effect the sale of such Security Collateral upon such
terms as are in accordance with applicable law; and

 

(v)       do
or cause to be done all such other acts and things as may be necessary to make such sale of such Security Collateral or any part
thereof valid and binding and in compliance with applicable law.

 

(g)          The
Collateral Agent is authorized, in connection with any sale of the Security Collateral pursuant to this Section 20, to deliver
or otherwise disclose to any prospective purchaser of the Security Collateral: (i) any registration statement or prospectus, and
all supplements and amendments thereto, prepared pursuant to subsection (f)(i) above; (ii) any information and
projections provided to it pursuant to subsection (f)(iv) above; and (iii) any other information in its possession
relating to such Security Collateral.

 

(h)          Grantor
acknowledges the impossibility of ascertaining the amount of damages that would be suffered by the Secured Parties by reason of
the failure by Grantor to perform any of the covenants contained in subsection (f) above and, consequently, agrees
that, if Grantor shall fail to perform any of such covenants, it will pay, as liquidated damages and not as a penalty, an amount
equal to the value of the Security Collateral on the date the Collateral Agent shall demand compliance with subsection (f)
above.

 

    	 	-18-	 

     

    

 

Section 21.          Indemnity
and Expenses.

 

(a)          Grantor
agrees to indemnify, defend and save and hold harmless each Secured Party and each of their Affiliates and their Related Parties
(each, an “Indemnified Party”) from and against, and shall pay on demand, any and all claims, damages, losses,
liabilities and expenses (including, without limitation, reasonable fees and expenses of counsel) that may be incurred by or asserted
or awarded against any Indemnified Party, in each case arising out of or in connection with or resulting from this Agreement (including,
without limitation, enforcement of this Agreement); provided that such indemnity shall not, as to any Indemnified Party,
be available to the extent that such losses, claims, damages, liabilities or related expenses (x) are determined by a court
of competent jurisdiction by final and nonappealable judgment to have resulted from the bad faith, gross negligence or willful
misconduct of such Indemnified Party or any of its officers, directors or employees, or (y) arising from disputes solely among
the Collateral Agent, the Buyers and/or their transferees (other than in respect of disputes against an Indemnitee in its capacity
as Collateral Agent or any similar role under the Transaction Documents).

 

(b)          Without
limiting the foregoing clause (a), Grantor will upon demand pay to the Collateral Agent the amount of any and all (1) reasonable
expenses, including, without limitation, the reasonable fees and expenses of its counsel and of any experts and agents, that the
Collateral Agent may incur in connection with (i) the administration of this Agreement, and (ii) the custody, preservation,
use or operation of, or the sale of, collection from or other realization upon, any of the Collateral of Grantor, and (2) expenses,
including, without limitation, the fees and expenses of its counsel and of any experts and agents, that the Collateral Agent may
incur in connection with (i) the exercise or enforcement of any of the rights of the Collateral Agent or the other Secured Parties
hereunder or (ii) the failure by Grantor to perform or observe any of the provisions hereof.

 

Section 22.        Amendments;
Waivers; Additional Grantors; Etc. No amendment or waiver of any provision of this Agreement, and no consent to any departure
by any Grantor herefrom, shall in any event be effective unless the same shall be in writing and signed by the Collateral Agent,
and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.
No failure on the part of the Collateral Agent to exercise, and no delay in exercising any right hereunder, shall operate as a
waiver thereof; nor shall any single or partial exercise of any such right preclude any other or further exercise thereof or the
exercise of any other right.

 

Section 23.         Notices,
Etc. Except as otherwise provided herein, whenever it is provided herein that any notice, demand, request, consent, approval,
declaration or other communication shall or may be given to or served upon any of the parties by any other party, or whenever any
of the parties desires to give and serve upon any other party any communication with respect to this Agreement, each such notice,
demand, request, consent, approval, declaration or other communication shall be in writing and shall be given in the manner and
to the address, and deemed received, as provided for in accordance with the terms of the Collateral Agency Agreement. Delivery
by email or facsimile of an executed counterpart of any amendment, supplement or waiver of any provision of this Agreement or any
Schedule or Exhibit relating thereto shall be effective as delivery of an original executed counterpart thereof.

 

    	 	-19-	 

     

    

 

Section 24.          Continuing
Security Interest. This Agreement shall create a continuing security interest in the Collateral and shall (a) remain in full
force and effect until the indefeasible payment in full in cash of the Secured Obligations, (b) be binding upon Grantor, its successors
and assigns and (c) inure, together with the rights and remedies of the Collateral Agent hereunder, to the benefit of the
Secured Parties and their respective successors, transferees and assigns.

 

Section 25.           Release;
Termination.

 

(a)           Upon
any sale, lease, transfer or other disposition of any item of Collateral of Grantor (other than sales of Inventory in the ordinary
course of business) in accordance with the terms of the Transaction Documents, the Collateral Agent will, at Grantor’s expense,
execute and deliver to Grantor such documents as Grantor shall reasonably request to evidence the release of such item(s) of Collateral
from the assignment and security interest granted hereby; provided, however, that (i) at the time of such request
and such release no Event of Default shall have occurred and be continuing, (ii) Grantor shall have delivered to the Collateral
Agent, at least ten (10) Business Days prior to the date of the proposed release, a written request for release describing
the item of Collateral and the terms of the sale, lease, transfer or other disposition in reasonable detail, including, without
limitation, the price thereof and any expenses in connection therewith, together with a form of release for execution by the Collateral
Agent and a certificate of Grantor to the effect that the transaction is in compliance with the Transaction Documents and as to
such other matters as the Collateral Agent may request, (iii) the proceeds of any such sale, lease, transfer or other disposition
required to be applied, or any payment to be made in connection therewith, shall, to the extent so required, be paid or made to,
or in accordance with the instructions of, the Collateral Agent, and (iv) the Collateral Agent shall have received written direction
from the Buyers in accordance with the Collateral Agency Agreement.

 

(b)          Upon
the indefeasible payment in full in cash of the Secured Obligations, other than any unasserted contingent Obligations, the pledge
and security interest granted hereby shall terminate and all rights to the Collateral shall revert to Grantor. Upon any such termination,
the Secured Parties will, at the Grantor’s expense, execute and deliver to Grantor such documents as Grantor shall reasonably
request to evidence such termination.

 

Section 26.         Execution
in Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed
to be an original and all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart
of a signature page to this Agreement by email or facsimile shall be effective as delivery of an original executed counterpart
of this Agreement.

 

    	 	-20-	 

     

    

 

Section 27.           Governing
Law; Jurisdiction; Waiver of Jury Trial, Etc. 

 

(a)           GOVERNING
LAW. THIS AGREEMENT AND ANY CLAIMS, CONTROVERSY, DISPUTE OR CAUSE OF ACTION (WHETHER IN TORT OR OTHERWISE) BASED ON, ARISING
OUT OF OR RELATING TO THIS GUARANTY AND THE TRANSACTIONS CONTEMPLATED HEREBY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS OF LAWS (OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK
GENERAL OBLIGATIONS LAWS).

 

(b)          SUBMISSION
TO JURISDICTION. GRANTOR IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION
OF THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF SUCH STATE,
AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR FOR RECOGNITION
OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT
OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE
AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS AGREEMENT
SHALL AFFECT ANY RIGHT THAT THE COLLATERAL AGENT OR ANY OTHER SECURED PARTY MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING
RELATING TO THIS AGREEMENT AGAINST ANY GRANTOR OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.

 

(c)          WAIVER
OF VENUE. GRANTOR IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION
THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT
IN ANY COURT REFERRED TO IN PARAGRAPH (b) OF THIS SECTION. GRANTOR HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.

 

(d)          SERVICE
OF PROCESS. GUARANTOR HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 23.

 

(e)          WAIVER
OF JURY TRIAL. GUARANTOR HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT
MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT
NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO
HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

 

SIGNATURE PAGE FOLLOWS

 

    	 	-21-	 

     

    

 

IN WITNESS WHEREOF, Grantor
has caused this Agreement to be duly executed and delivered by its officer thereunto duly authorized as of the date first above
written.

 

	 	APPLIED DNA SCIENCES, INC.,
	 	a Delaware corporation
	 	 	 
	 	By:	/s/ Beth Jantzen
	 	Name:	Beth Jantzen, CPA
	 	Title:	Chief Financial Officer

 

SIGNATURES CONTINUE ON NEXT PAGE

 

Signature
Page to Security Agreement 

 

    	 		 

     

    

 

	ACCEPTED AND AGREED	 
	as of the date first written above by:	 
	 	 	 
	DELAWARE TRUST COMPANY,	 
	as Collateral Agent	 
	 	 	 
	By:	/s/ Alan R. Halpern	 
	Name:  	Alan R. Halpern	 
	Title:	Vice President	 

 

Signature
Page to Security Agreement

 

    	 		 

     

    

 

Exhibit A to the

Security Agreement

 

FORM OF
INTELLECTUAL PROPERTY SECURITY AGREEMENT

 

This INTELLECTUAL PROPERTY
SECURITY AGREEMENT (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “IP
Security Agreement”) dated October 19, 2018 is made by APPLIED DNA SCIENCES, INC. a Delaware corporation (the “Grantor”),
in favor of DELAWARE TRUST COMPANY, a Delaware corporation, as collateral agent (the “Collateral Agent”) for
the Secured Parties (as defined in the Security Agreement referred to below).

 

WHEREAS, Grantor is party
to the Securities Purchase Agreement dated as of August 31, 2018 (as amended, restated, amended and restated, supplemented or otherwise
modified from time to time, the “Securities Purchase Agreement”) with the Buyers party thereto.

 

WHEREAS, pursuant to
the Securities Purchase Agreement, the Grantor has executed and delivered that certain Security Agreement dated as of the date
hereof made by the Grantor to the Collateral Agent for the benefit of the Secured Parties (as amended, restated, amended and restated,
supplemented or otherwise modified from time to time, the “Security Agreement”; the capitalized terms defined
therein and not otherwise defined herein being used herein as therein defined).

 

WHEREAS, under the terms
of the Security Agreement, the Grantor has granted to the Collateral Agent, for the ratable benefit of the Secured Parties, a security
interest in, among other property, certain intellectual property of the Grantor, and have agreed as a condition thereof to execute
this IP Security Agreement for recording with the U.S. Patent and Trademark Office, the United States Copyright Office and other
governmental authorities.

 

NOW, THEREFORE, for good
and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Grantor agrees as follows:

 

SECTION 1.    Grant
of Security. Grantor hereby grants to the Collateral Agent for the ratable benefit of the Secured Parties a security interest
in all of Grantor’s right, title and interest in and to the following (the “Collateral”):

 

(i)       all
patents, patent applications, utility models and statutory invention registrations, all inventions claimed or disclosed therein
and all improvements thereto, including, without limitation, those set forth in Schedule A hereto (the “Patents”);

 

(ii)       all
trademarks, service marks, domain names, trade dress, logos, designs, slogans, trade names, business names, corporate names and
other source identifiers, whether registered or unregistered (provided that no security interest shall be granted in United States
intent-to-use trademark applications to the extent that, and solely during the period in which, the grant of a security interest
therein would impair the validity or enforceability of such intent-to-use trademark applications under applicable federal law),
together, in each case, with the goodwill symbolized thereby, including, without limitation, those set forth in Schedule B
hereto (the “Trademarks”);

 

    	 		 

     

    

 

 

(iii)       all
copyrights, including, without limitation, copyrights in Computer Software (as hereinafter defined), internet web sites and the
content thereof, whether registered or unregistered, including, without limitation, the copyright registrations and applications
and exclusive copyright licenses set forth in Schedule C hereto (the “Copyrights”);

 

(iv)       all
reissues, divisions, continuations, continuations-in-part, extensions, renewals and reexaminations of any of the foregoing, all
rights in the foregoing provided by international treaties or conventions, all rights corresponding thereto throughout the world
and all other rights of any kind whatsoever of Grantor accruing thereunder or pertaining thereto;

 

(v)       any
and all claims for damages and injunctive relief for past, present and future infringement, dilution, misappropriation, violation,
misuse or breach with respect to any of the foregoing, with the right, but not the obligation, to sue for and collect, or otherwise
recover, such damages; and

 

(vi)       any
and all proceeds of, collateral for, income, royalties and other payments now or hereafter due and payable with respect to, and
supporting Obligations (as defined in the Security Agreement) relating to, any and all of the Collateral of or arising from any
of the foregoing.

 

SECTION 2.    Security
for Obligations. The grant of a security interest in the Collateral by Grantor under this IP Security Agreement secures the
payment of all Secured Obligations now or hereafter existing under or in respect of the Transaction Documents, whether direct or
indirect, absolute or contingent, and whether for principal, reimbursement obligations, interest, premiums, penalties, fees, indemnifications,
contract causes of action, costs, expenses or otherwise. Without limiting the generality of the foregoing, this IP Security Agreement
secures, as to Grantor, the payment of all amounts that constitute part of the Secured Obligations and that would be owed by Grantor
to any Secured Party under the Transaction Documents but for the fact that such Secured Obligations are unenforceable or not allowable
due to the existence of a bankruptcy, reorganization or similar proceeding involving Grantor.

 

SECTION 3.    Recordation.
Grantor authorizes and requests that the Register of Copyrights, the Commissioner for Patents and the Commissioner for Trademarks
and any other applicable government officer record this IP Security Agreement.

 

SECTION 4.    Execution
in Counterparts. This IP Security Agreement may be executed in any number of counterparts, each of which when so executed shall
be deemed to be an original and all of which taken together shall constitute one and the same agreement.

 

SECTION 5.   Grants,
Rights and Remedies. This IP Security Agreement has been entered into in conjunction with the provisions of the Security Agreement.
Grantor does hereby acknowledge and confirm that the grant of the security interest hereunder to, and the rights and remedies of,
the Collateral Agent with respect to the Collateral are more fully set forth in the Security Agreement, the terms and provisions
of which are incorporated herein by reference as if fully set forth herein.

 

SECTION
6.   GOVERNING LAW. THIS IP SECURITY AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS OF LAWS.

 

[remainder of page intentionally
blank]

 

    	 	-2-	 

     

    

 

IN WITNESS WHEREOF, Grantor
has caused this IP Security Agreement to be duly executed and delivered by its officer thereunto duly authorized as of the date
first above written.

 

	 	APPLIED DNA SCIENCES, INC.
	 	 
	 	By	        
	 	Name:	 
	 	Title:	 
	 	 
	 	Address for Notices:
	 	 
	 	 
	 	 

 

    	 		 

     

    

 

Exhibit B to the

Security Agreement

 

FORM OF
INTELLECTUAL PROPERTY SECURITY AGREEMENT SUPPLEMENT

 

This INTELLECTUAL PROPERTY
SECURITY AGREEMENT SUPPLEMENT (as amended, restated, amended and restated, supplemented or otherwise modified from time to time,
the “IP Security Agreement Supplement”) dated __________, 20__, is made by APPLIED DNA SCIENCES, INC. a Delaware
corporation (the “Grantors”) in favor of DELAWARE TRUST COMPANY, a Delaware corporation, as collateral agent
(the “Collateral Agent”) for the Secured Parties (as defined in the Security Agreement referred to below).

 

WHEREAS, Grantor is party
to the Securities Purchase Agreement dated as of [August 31], 2018 (as amended, restated, amended and restated, supplemented or
otherwise modified from time to time, the “Securities Purchase Agreement”) with the Buyers party thereto.

 

WHEREAS, pursuant to
the Securities Purchase Agreement, the Grantor has executed and delivered that certain Security Agreement dated as of October 19,
2018 made by the Grantor to the Collateral Agent for the benefit of the Secured Parties (as amended, restated, amended and restated,
supplemented or otherwise modified from time to time, the “Security Agreement”) and that certain Intellectual
Property Security Agreement dated [insert date of Intellectual Property Security Agreement] made by the Grantor to the Collateral
Agent for the benefit of the Secured Parties (as amended, restated, amended and restated, supplemented or otherwise modified from
time to time, the “IP Security Agreement”; the capitalized terms defined therein and not otherwise defined herein
being used herein as therein defined).

 

WHEREAS, under the terms
of the Security Agreement, the Grantor has granted to the Collateral Agent, for the ratable benefit of the Secured Parties, a security
interest in the Additional Collateral (as defined in Section 1 below) of the Grantor and has agreed as a condition thereof
to execute this IP Security Agreement Supplement for recording with the U.S. Patent and Trademark Office, the United States Copyright
Office and other governmental authorities.

 

NOW, THEREFORE, for good
and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Grantor agrees as follows:

 

SECTION 1.Grant
of Security. Each Grantor hereby grants to the Collateral Agent, for the ratable benefit of the Secured Parties, a security
interest in all of such Grantor’s right, title and interest in and to the following (the “Additional Collateral”):

 

(i)       all
patents, patent applications, utility models and statutory invention registrations, all inventions claimed or disclosed therein
and all improvements thereto, including, without limitation, those set forth in Schedule A hereto (the “Patents”);

 

(ii)       all
trademarks, service marks, domain names, trade dress, logos, designs, slogans, trade names, business names, corporate names and
other source identifiers, whether registered or unregistered (provided that no security interest shall be granted in United States
intent-to-use trademark applications to the extent that, and solely during the period in which, the grant of a security interest
therein would impair the validity or enforceability of such intent-to-use trademark applications under applicable federal law),
together, in each case, with the goodwill symbolized thereby, including, without limitation, those set forth in Schedule B
hereto (the “Trademarks”);

 

    	 		 

     

    

 

(ii)       all
copyrights, including, without limitation, copyrights in Computer Software (as hereinafter defined), internet web sites and the
content thereof, whether registered or unregistered, including, without limitation, the copyright registrations and applications
and exclusive copyright licenses set forth in Schedule C hereto (the “Copyrights”);

 

(iii)       all
reissues, divisions, continuations, continuations-in-part, extensions, renewals and reexaminations of any of the foregoing, all
rights in the foregoing provided by international treaties or conventions, all rights corresponding thereto throughout the world
and all other rights of any kind whatsoever of such Grantor accruing thereunder or pertaining thereto;

 

(iv)       all
any and all claims for damages and injunctive relief for past, present and future infringement, dilution, misappropriation, violation,
misuse or breach with respect to any of the foregoing, with the right, but not the obligation, to sue for and collect, or otherwise
recover, such damages; and

 

(v)       any
and all proceeds of, collateral for, income, royalties and other payments now or hereafter due and payable with respect to, and
supporting Obligations (as defined in the Security Agreement) relating to, any and all of the foregoing or arising from any of
the foregoing.

 

SECTION 2.Security
for Obligations. The grant of a security interest in the Additional Collateral by the Grantor under this IP Security Agreement
Supplement secures the payment of all Secured Obligations now or hereafter existing under or in respect of the Loan Documents,
whether direct or indirect, absolute or contingent, and whether for principal, reimbursement Obligations, interest, premiums, penalties,
fees, indemnifications, contract causes of action, costs, expenses or otherwise.

 

SECTION 3.Recordation.
The Grantor authorizes and requests that the Register of Copyrights, the Commissioner for Patents and the Commissioner for Trademarks
and any other applicable government officer to record this IP Security Agreement Supplement.

 

SECTION 4.Grants,
Rights and Remedies. This IP Security Agreement Supplement has been entered into in conjunction with the provisions of the
Security Agreement. The Grantor does hereby acknowledge and confirm that the grant of the security interest hereunder to, and the
rights and remedies of, the Collateral Agent with respect to the Additional Collateral are more fully set forth in the Security
Agreement, the terms and provisions of which are incorporated herein by reference as if fully set forth herein.

 

SECTION 5.GOVERNING
LAW. THIS IP SECURITY AGREEMENT SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK WITHOUT REGARD TO CONFLICTS OF LAWS.

 

    	 	-2-	 

     

    

 

IN WITNESS WHEREOF, the
Grantor has caused this IP Security Agreement Supplement to be duly executed and delivered by its officer thereunto duly authorized
as of the date first above written.

 

	 	By	        
	 	Name:
	 	Title:
	 	 
	 	Address for Notices:
	 	 
	 	 
	 	 

 

    	 	-3-	 

     

    

 

SCHEDULE I

 

Investment Property

 

Part I: None.

 

Part II: None.

 

    	 		 

     

    

 

SCHEDULE II

 

Deposit Accounts

 

		·	Bank of America, Operating Account, Account #004831291068

 

		·	Bank of America, Money Market Account, Account #483043680826

 

    	 		 

     

    

 

SCHEDULE III

 

Assigned Agreements

 

None.

 

    	 		 

     

    

 

SCHEDULE IV

 

Intellectual Property

 

COPYRIGHTS: None.

 

TRADEMARKS:

 

	
         

        Docket No.
	 	
        Client Ref 

        No.
	 	Country	 	 Application 

Date	 	Application 

No.	 	 Registration 

Date	 	 Registration No.	 	Status	 
	2542-83	 	 	 	United States	 	12/13/2016	 	87/267,216	 	 	 	 	 	Filed 	 
	2542-82	 	 	 	United States	 	12/20/2016	 	87/275,103	 	12/12/2017	 	5,356,414	 	Registered	 
	2542-47	 	8251-61	 	United States	 	06/09/2008	 	77/494,134	 	01/05/2010	 	3,735,415	 	Registered	 
	2542-75	 	2542-75	 	United States	 	12/09/2016	 	87/263,954	 	05/23/2017	 	5,209,527	 	Registered 	 
	2542-95	 	 	 	United States 	 	5/16/2017	 	87/451,220	 	 	 	 	 	Filed 	 
	2542-89	 	 	 	United States 	 	3/6/2017	 	87/360,183	 	10/17/2017	 	5,313,762	 	Registered 	 
	2542-84	 	 	 	United States 	 	12/23/2016	 	87/279,792	 	08/22/2017	 	5,269,735	 	Registered 	 
	2542-89A	 	 	 	United States	 	8/16/2017	 	87/571,726	 	 	 	 	 	Filed 	 

 

PATENTS:

 

	
         

        Country
	 	Status	 	Application 

No.	 	Application 

Date	 	Title	 	Patent No.	 	Grant Date	 
	United States	 	Granted	 	12/384,554	 	04/06/2009	 	METHOD FOR A CONTINUOUS RAPID THERMAL CYCLE SYSTEM 	 	8,163,489	 	04/24/2012	 

 

    	 		 

     

    

 

SCHEDULE V

 

Commercial Tort Claims

 

None.

 

    	 		 

     

    

 

SCHEDULE VI

 

Location of Chief Executive Office, Type
of Organization, Jurisdiction of Organization and Organizational Identification Number

 

		·	Location of Chief Executive Office: 50 Health Sciences Drive, Stony Brook, NY 11790

 

		·	Type of Organization: Corporation

 

		·	Jurisdiction of Organization: Delaware

 

		·	Organization Identification Number: 59-2262718

 

    	 		 

     

    

 

SCHEDULE VII

 

Changes in Name, Location, Etc.

 

None.

 

    	 		 

     

    

 

SCHEDULE VIII

 

Locations of Equipment, Inventory and Books
and Records

 

		·	50 Health Sciences Drive, Stony Brook, NY 11790

 

    	 		 

     

    

 

SCHEDULE IX

 

Letters of Credit

 

None.

 

    	 		 

     

    

 

SCHEDULE X

 

Permitted Liens

 

None.

 

    	 		 

     

    

 

SCHEDULE XI

 

Excluded Assets

 

		·	the Equity Interests in Applied DNA Sciences India Private Limited, a corporation formed under the
laws of India, owned by the Grantor;

 

		·	the Equity Interests in APDN (B.V.I.) Inc., a corporation formed under the laws of the British Virgin
Islands, owned by the Grantor; and

 

		·	all Excluded Accounts.Exhibit 10.41

 

EXECUTION VERSION

 

FIRST AMENDMENT TO SECURITY AGREEMENT

 

This FIRST AMENDMENT
TO SECURITY AGREEMENT (this “Amendment”), dated as of November 26, 2018, is between APPLIED DNA SCIENCES,
INC., a Delaware corporation (the “Grantor”) and DELAWARE TRUST COMPANY, a Delaware corporation,
as collateral agent (together with its successors and assigns, in such capacity, the “Collateral Agent”) for
the benefit of the undersigned investors (each, a “Buyer” and collectively, the “Buyers”;
the Buyers and the Collateral Agent are collectively, together with their successors and assigns, referred to herein as the “Secured
Parties”) and the other Secured Parties.

 

WITNESSETH:

 

WHEREAS, the
Grantor and the Collateral Agent are parties to that certain Security Agreement, dated as of October 19, 2018 (as amended, amended
and restated, supplemented or otherwise modified from time to time, the “Security Agreement”), whereby the Grantor
granted a security interest in substantially all of its tangible and intangible assets, whether real or personal property, now
or hereafter acquired (the “Collateral”), to the Collateral Agent for the ratable benefit of the Secured Parties;

 

WHEREAS, the
Collateral Agent, the Grantor, APDN (B.V.I.) Inc. and the Buyers are parties that certain Collateral Agency Agreement, dated as
of October 19, 2018 (as amended, amended and restated, supplemented or otherwise modified from time to time, the “Collateral
Agency Agreement”), whereby, among other things, the Buyers appointed the Collateral Agent as the Secured Parties’
representative and agent with respect to the Collateral, and the Collateral Agent agreed to take such actions as directed in writing
from time to time by the Buyers, including with respect to the perfection of the Collateral Agent’s security interest in
the Collateral;

 

WHEREAS, the
Grantor has requested and the Secured Parties, by their execution and acknowledgement hereof, have each agreed, subject to the
terms of this Amendment, to amend the Security Agreement as provided herein; and

 

NOW, THEREFORE,
the parties hereto hereby agree as follows, for good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged:

 

1.       Definitions.
Capitalized terms used and not otherwise defined in this Amendment shall have the respective meanings given to such terms in the
Security Agreement.

 

2.       Amendment
to the Security Agreement. The parties hereto agree, intending to be legally bound, that Section 5(a) (Maintaining
the Account Collateral) of the Security Agreement is hereby amended and restated in its entirely as follows:

 

(a)       Grantor
will maintain deposit accounts with a bank or other depository institution (a “Pledged Account Bank”) that will
agree with Grantor and the Collateral Agent to comply with instructions originated by the Collateral Agent directing the disposition
of funds in such deposit account without the further consent of Grantor, such agreement to be in form and substance reasonably
satisfactory to the Secured Parties (a “Deposit Account Control Agreement”). The Secured Parties may require
the Grantor to enter into a Deposit Account Control Agreement with such Pledged Account Bank with respect to any such existing
deposit accounts, except with respect to Excluded Accounts, upon thirty (30) Business Days prior written notice to the Grantor.

 

    	 		 

     

    

 

3.       Ratification.
Except as specifically modified herein, the terms of the Security Agreement and the Collateral Agency Agreement shall remain in
full force and effect. This Amendment shall be construed in connection with and as a part of the Security Agreement and, except
as expressly amended by this Amendment, all terms, conditions, covenants, representations and warranties contained in the Security
Agreement and the Collateral Agency Agreement are hereby ratified and shall be and remain in full force and effect. Any and all
notices, requests, certificates and other instruments executed and delivered after the execution and delivery of this Amendment
may refer to the Security Agreement without making specific reference to this Amendment, but nevertheless all such references shall
include this Amendment.

 

4.       Parties
Bound. This Amendment shall be binding on and inure to the benefit of (i) the Grantor and (ii) the Secured Parties, as
well as each of their respective heirs, executors, administrators, legal representatives, successors and assigns, except as otherwise
expressly provided for herein.

 

5.       Counterparts
and Signatures. This Amendment may be executed in any number of counterparts, each of which when so executed and delivered
shall be deemed to be an original, and all of which taken together shall constitute but one and the same instrument. The transmission
or receipt of a facsimile or similar communication being a reproduction of a party’s signature or initial shall produce the
same legal result as the transmission or receipt of an original signature or initial.

 

6.       Severability
of Provisions. Any provision of this Amendment which is prohibited and unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibitive or enforceability without invalidating the remaining provisions
hereof or affecting the validity or enforceability of such provisions in any other jurisdiction.

 

7.       Section
Headings. The Section headings used in this Amendment are for convenience only and shall not affect the construction of
this Amendment.

 

8.       Governing
Law. This Amendment shall be governed by and construed in accordance with the laws of the State of New York.

 

9.       Instruction
to Administrative Agent. Each of the Buyers, by its acknowledgement hereof, hereby directs the Collateral Agent to execute
and deliver this Amendment, and authorizes the Collateral Agent to take action as agent on its behalf and to exercise such powers
and discretion under the Security Agreement, the Collateral Agency Agreement and the other Transaction Documents (as defined in
the Collateral Agency Agreement) as are delegated to the Collateral Agent by the terms thereof, together with such powers and discretion
as are reasonably incidental. This Section 9 is solely for the benefit of the Collateral Agent and the Buyers and neither
the Grantor nor any other Person shall have rights as a third party beneficiary of the provisions in this Section 9.

 

10.       Costs
and Expenses. Without limiting any expense or indemnity provisions set forth in the Security Agreement, the Collateral
Agency Agreement or any other Transaction Document, the Grantor agrees to pay on demand all reasonable and documented out-of-pocket
expenses, fees, and disbursements (including reasonable and documented attorneys’ fees and expenses) of the Collateral Agent
and the Buyers in connection with the negotiation, preparation, execution, delivery and administration of this Amendment.

 

[remainder of page intentionally left
blank]

 

    	 		 

     

    

 

IN WITNESS WHEREOF, the parties have executed
this Amendment as of the day and year first above written.

 

	 	GRANTOR:
	 	 	 
	 	APPLIED DNA SCIENCES, INC., a Delaware corporation 
	 	 	 
	 	By: 	/s/ Beth Jantzen
	 	Print Name:   Beth Jantzen, CPA
	 	Its:   Chief Financial Officer

 

[Signatures Continue on Following Page]

 

Signature Page to First Amendment to
Security Agreement 

 

    	 		 

     

    

 

	 	COLLATERAL AGENT
	 	 	 
	 	DELAWARE TRUST COMPANY,
	 	as Collateral Agent
	 	 	 
	 	By:	/s/ Alan R. Halpern
	 	Name:  Alan R. Halpern
	 	Title: Vice President

 

[Signatures Continue on Following Page]

 

Signature Page to First Amendment to
Security Agreement 

 

 

    	 		 

     

    

 

	ACKNOWLEDGED AND CONSENTED TO BY BUYERS:	 
	 	 	 
	By:	/s/ James A. Hayward	 
	Print Name:  James A. Hayward	 
	 	 	 
	By:  	/s/ Judith Murrah	 
	Print Name:  Judith Murrah	 
	 	 	 
	By:  	/s/ Yavoc Shamash	 
	Print Name:  Yavoc Shamash	 
	 	 	 
	By:  	/s/ Robert Catell	 
	Print Name:  Robert Catell	 
	 	 	 
	By:  	/s/ Elizabeth Schmalz Ferguson	 
	Print Name:  Elizabeth Schmalz Ferguson	 
	 	 	 
	By:  	/s/ Gregg Baldwin	 
	Print Name:  Gregg Baldwin	 
	 	 	 
	By:  	/s/ William Montgomery 11/8/18	 
	Print Name:  William Montgomery	 
	 	 	 
	By:  	/s/ Johnette van Eeden	 
	Print Name:  Johnette van Eeden	 
	 	 	 
	By:  	/s/ John Cartier	 
	Print Name:  John Cartier	 

Signature Page to First Amendment to
Security Agreement 

 

    	 		 

     

    

 

	ACKNOWLEDGED AND CONSENTED TO BY BUYERS (continued):
	 	 	 
	Delabarta II	 
	 	 	 
	By:  	/s/ John F. Bitzer III	 
	Print Name:  John F. Bitzer III	 
	Title:  President	 
	 	 	 
	The Rodgers Living Trust Dated April 7, 1995	 
	 	 	 
	By:  	/s/ Jay  Rodgers	 
	Print Name:  Jay D. Rodgers	 
	Title:  Trustee	 

 

	Signature:	/s/ Jay Rodgers	 
	 	Jay Rodgers (Nov 23, 2018) 	 
	 	 	 
	Email: 	jayrodgers2@gmail.com	 

 

Signature Page to First Amendment to
Security Agreement

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