Document:

Unassociated Document

    
      

    

    EXHIBIT
      10.1

     

    SUBSCRIPTION
      AGREEMENT

    

    Applied
      DNA Sciences, Inc.

    25
      Health
      Sciences Drive, Suite 113

    Stony
      Brook, New York 11790

    

    Gentlemen
      and Ladies:

    

    The
      undersigned (the “Subscriber”) hereby subscribes for ________ unit(s)
      (the “Units”), at a price of $50,000 per Unit, each consisting of (i) a $50,000
      principal amount 10% Secured Convertible Promissory Note (each a “Note,” or
      collectively, the “Notes”) of Applied DNA Sciences, Inc., a Nevada corporation
      (the “Company”), and (ii) a warrant to purchase 100,000 shares of common stock
      of the Company (each a “Warrant,” or collectively, the “Warrants”), exercisable
      for a period of four years commencing on the first anniversary of the date
      of
      the closing of the first purchase and sale of such Units (the “Closing Date”) at
      a price of $0.50 per share. These Units are part of an offering of up to forty
      such Units by the Company to one or more subscribers (the "Offering"). Each
      Warrant may be redeemed at the option of the Company at a redemption price
      of
      $0.01 upon the earlier of (i) the date three years from issuance and (ii) the
      date the Company’s stock has traded on The Over the Counter Bulletin Board or a
      national securities exchange at or above $1.00 per share for 20 consecutive
      trading days. The Notes and accrued but unpaid interest thereon are convertible
      into shares of common stock of the Company at a price of $0.50 per share by
      the
      holder of the Notes at any time from their date of issuance through the first
      anniversary of such date and shall automatically convert on such anniversary
      at
      a 20% discount to the average volume weighted average price of the Company’s
      common stock for the ten trading days prior to the Closing Date. In addition,
      at
      any time prior to conversion, the Company will have the right to prepay the
      Notes and accrued but unpaid interest thereon upon 3 days notice, such notice
      to
      allow the holders of the Notes to convert the Notes into shares of common stock
      of the Company prior to such repayment. 

     

    Until
      the
      principal and interest owed under the Notes are paid in full, or converted
      into
      common stock of the Company, the Notes will be secured by a security interest
      in
      all of the assets of the Company. This security interest will be pari
      passu
      with the
      security interest granted to the holders of $1,500,000 of $50,000 principal
      amount secured convertible promissory notes of the Company, bearing interest
      at
      10% per annum issued as part of an offering completed on March 8, 2006 (the
      “March Notes”) and the holders of $2,950,000 of $50,000 principal amount secured
      convertible promissory notes of the Company, bearing interest at 10% per annum
      issued as part of offerings completed on May 2, 2006 and June 15, 2006 (the
“May
      and June Notes”). The Company may issue up to $20,000,000 of debt in addition to
      the amounts sold in the offering that may be secured by a security interest
      in
      all of the Company’s assets, which would be pari
      passu to
      the
      security interest granted to the holders of the Notes, the May and June Notes,
      and the March Notes.

     

    The
      Notes
      bear interest at the rate of 10% per annum. All principal and all accrued and
      unpaid interest under the Notes shall be payable in full on the date 12-months
      subsequent to the Closing Date, referred to hereinafter as the “Maturity
      Date.”

     

    1.  Subscription.
      Subject
      to the terms and conditions hereof, the Subscriber agrees to pay
      $__________________ by check or wire transfer of immediately available funds
      as
      consideration for the Subscriber’s Note(s) and the Warrant(s). The Subscriber
      tenders herewith a check made payable at the direction of the Company or wire
      transfer, in the amount of $__________________. The Subscriber acknowledges
      and
      agrees that this subscription is irrevocable by the Subscriber but is subject
      to
      acceptance by the Company.

    

    2.  Security.
      Until
      the
      principal and interest owed under the Notes are paid in full, or converted
      into
      common stock of the Company, the Notes will be secured by a security interest
      in
      all of the assets of the Company. This security interest will be pari passu
      with
      the security interest granted to the holders of $1,500,000 of $50,000 principal
      amount secured convertible promissory notes of the Company, bearing interest
      at
      10% per annum issued as part of an offering completed on March 8, 2006 (the
      “March Notes”) and the holders of $2,950,000 of $50,000 principal amount secured
      convertible promissory notes of the Company, bearing interest at 10% per annum
      issued as part of offerings completed on May 2, 2006 and June 15, 2006 (the
“May
      and June Notes”). The Company may issue up to $8,050,000 of debt in addition to
      the amounts sold in the offering that may be secured by a security interest
      in
      all of the Company’s assets, which would be pari passu to the security interest
      granted to the holders of the Notes, the May and June Notes, and the March
      Notes.

     

    
      
        
        

      

      
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    3.  Closing.
      The
      Subscriber understands and agrees that the Company intends to make an initial
      closing of this offering of Units in the Company on or before June 30, 2007,
      but
      that the same may be extended for three additional periods, each such period
      not
      to exceed thirty (30) days, at the sole decision of the Company, without notice
      to any Subscriber. If the Company does not accept the Subscriber prior to
      Closing Date, this Subscription Agreement and Confidential Offering
      Questionnaire, together with the Subscriber’s funds and any other documents
      delivered to the Company, shall be promptly returned to the
      Subscriber.

    

    4.  Subscription
      Compliance.
      The
      Subscriber agrees that this subscription is subject to the following terms
      and
      conditions:

    

    The
      Company shall have the right, in its sole discretion, to: (i) accept or reject
      this subscription; (ii) determine whether this Subscription Agreement has been
      properly completed by the Subscriber and (iii) determine whether the Subscriber
      has met all of the Company’s requirements for investment in a Unit. If the
      Company deems this subscription to be defective, deficient or otherwise
      non-compliant with the terms of this offering, the Subscriber’s funds will be
      returned promptly to the Subscriber without interest or deduction.

    

    5.  Receipt
      of Information.

    

    a.  The
      Subscriber and Subscriber’s purchaser representative, if any, have received a
      copy of the Confidential Private Placement Term Sheet. The Subscriber, either
      alone or together with Subscriber’s purchaser representative, if any, have such
      knowledge and experience in financial and business matters as to be able to
      evaluate the merits and risks of an investment in the Company.

    

    b.  The
      Subscriber and Subscriber’s representative, if any, have had the opportunity to
      ask questions of and receive answers from the Company concerning the terms
      and
      conditions of the offering of the Units by the Company and to obtain any
      additional information Subscriber has requested which is necessary to verify
      the
      accuracy of the information furnished to the Subscriber concerning the Company
      and such offering.

    

    6.   Representations
      of Subscriber.
      In
      connection with the purchase of the Units, the Subscriber hereby represents
      and
      warrants to the Company as follows:

    

    a. 
If
      the
      Subscriber is an individual purchaser of the Unit(s), the Subscriber represents
      and warrants that he/she is at least 25 years of age and a resident of the
      Country of _______________ and is not nor has ever been a “U.S. person,” as
      defined in Rule 902 promulgated under the Securities Act of 1933, as amended
      (the “Act”).

    

    b.  If
      the
      Subscriber is a Company, trust or other corporate entity purchaser of the
      Unit(s), the Subscriber represents and warrants that it is duly organized and
      validly existing under the laws of the Country of _______________, and has
      all
      requisite powers to purchase the Unit(s). If the subscriber is a trust, none
      of
      the trustees are a “U.S. person,” as defined in Rule 902 promulgated under the
      Act.

     

    
      
        
        

      

      
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    c.  The
      Subscriber is an “accredited investor” as defined in Rule 501 of Regulation D
      promulgated under the Act.

    

    d.  The
      Unit(s) is being purchased for the Subscriber’s own account without the
      participation of any other person, with the intent of holding the Unit(s) for
      investment and without the intent of participating, directly or indirectly,
      in a
      distribution of the Unit(s) and not with a view to, or for a resale in
      connection with, any distribution of the Unit(s) or any portion thereof, nor
      is
      the undersigned aware of the existence of any distribution of the Company’s
      securities. Furthermore, the undersigned has no present intention of dividing
      such Unit(s) with others or reselling or otherwise disposing of any portion
      of
      such Unit(s), either currently or after the passage of a fixed or determinable
      period of time, or upon the occurrence or nonoccurrence of any predetermined
      event or circumstance.

    

    e.  The
      Subscriber has no need for liquidity with respect to his purchase of a Unit(s)
      and is able to bear the economic risk of an investment in the Unit(s) for an
      indefinite period of time and is further able to afford a complete loss of
      such
      investment.

    

    f.  The
      Subscriber represents that his financial commitment to all investments
      (including his investment in the Company) is reasonable relative to his net
      worth and liquid net worth.

    

    g.  The
      Subscriber recognizes that the Unit(s) will be: (i) sold to the Subscriber
      without registration under any United States federal or other law relating
      to
      the registration of securities for sale; (ii) issued and sold in reliance on
      the
      exemption from registration under the Nevada Securities Act, as amended (the
      “Nevada Act”); and (iii) issued and sold to non-United States persons, as
      defined in Rule 902(k) promulgated under the Act.

    

    h.  The
      Subscriber is aware that any resale of the Unit(s) cannot be made except in
      accordance with the registration requirements of the Act or an exemption
      therefrom.

    

    i.  The
      Subscriber represents and warrants that all offers and sales of the Unit(s)
      shall be made pursuant to an exemption from registration under the Act or
      pursuant to registration under the Act, and the Subscriber will not engage
      in
      any hedging or short selling transactions with regard to the Unit(s) or the
      underlying common stock.

    

    j.  The
      Subscriber is not acquiring the Unit(s) based upon any representation, oral
      or
      written, by any person with respect to the future value of, or income from,
      the
      Unit(s) but rather upon an independent examination and judgment as to the
      prospects of the Company.

    

    k.  The
      Subscriber understands that the Company is an early stage Company and has a
      minimal operating history. The Subscriber appreciates and understands the risks
      involved with investing in a Company with a limited operating history and has
      read and understands the risk factors set forth in the Confidential Private
      Placement Term Sheet and in the Company’s Annual Report on Form 10-KSB, filed on
      January 16, 2007, and in its subsequent quarterly report on Form 10-QSB, and
      current reports on Form 8-K. Copies of such material are attached to the Term
      Sheet and can be obtained by visiting the Securities and Exchange Commission’s
      website at http://www.sec.gov.

    

    l.  The
      Company, by and through itself and/or legal counsel, has made no representations
      or warranties as to the suitability of the Subscriber’s investment in the
      Company, the length of time the undersigned will be required to own the Unit(s),
      or the profit to be realized, if any, as a result of investment in the Company.
      Neither the Company nor its counsel has made an independent investigation on
      behalf of the Subscriber, nor has the Company, by and through itself and
      counsel, acted in any advisory capacity to the Subscriber.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    

    m.  The
      Company, by and through itself and/or legal counsel, has made no representations
      or warranties that the past performance or experience on the part of the
      Company, or any partner or affiliate, their partners, salesmen, associates,
      agents, or employees or of any other person, will in any way indicate the
      predicted results of the ownership of the Unit(s).

    

    n.  The
      Company has made available for inspection by the undersigned, and his purchaser
      representative, if any, the books and records of the Company. Upon reasonable
      notice, such books and records will continue to be made available for inspection
      by investors upon reasonable notice during normal business hours at the
      principal place of business of the Company.

    

    o.  The
      Unit(s) was not offered to the Subscriber by means of publicly disseminated
      advertisement or sales literature, nor is the Subscriber aware of any offers
      made to other persons by such means.

    

    p.  All
      information which the Subscriber has provided to the Company concerning the
      Subscriber is correct and complete as of the date set forth at the end of this
      Subscription Agreement, and if there should be any material adverse change
      in
      such information prior to receiving notification that this subscription has
      been
      accepted, the undersigned will immediately provide the Company with such
      information.

    

    7.    Agreements
      of Subscriber.
      The
      Subscriber agrees as follows:

    

    a.    The
      sale
      of the Unit(s) by the Company has not been recommended by any United States
      federal or other securities commission or regulatory authority. Furthermore,
      the
      foregoing authorities have not confirmed the accuracy or determined the adequacy
      of this Subscription Agreement or the Confidential Private Placement Term
      Sheet.

    

    b.    The
      Unit(s) and the underlying common stock will not be offered for sale, sold,
      or
      transferred other than pursuant to: (i) an effective registration under the
      Nevada Act or in a transaction which is otherwise in compliance with the Nevada
      Act; (ii) an effective registration under the Act or in a transaction otherwise
      in compliance with the Act; and (iii) evidence satisfactory to the Company
      of
      compliance with the applicable securities laws of other jurisdictions. The
      Company shall be entitled to rely upon an opinion of counsel satisfactory to
      it
      with respect to compliance with the above laws.

    

    c.    The
      Company is under no obligation to register the Unit(s) or to comply with any
      exemption available for sale of the Unit(s) without registration, and the
      information necessary to permit routine sales of securities of the Company
      under
      Rule 144 of the Act may not be available when you desire to resell them pursuant
      to Rule 144 of the Act. The Company is under no obligation to act in any manner
      so as to make Rule 144 available with respect to the Unit(s).

    

    d.    There
      is
      no established market for the Units and it is not anticipated that any public
      market for the Units will develop in the future.

    

    e.    The
      Company may, if it so desires, refuse to permit the transfer of the Unit(s)
      unless the request for transfer is accompanied by an opinion of counsel
      acceptable to the Company to the effect that neither the sale nor the proposed
      transfer will result in any violation of the Act or the applicable securities
      laws of any other jurisdiction.

    

    f.    A
      legend
      indicating that the Unit(s) and the underlying common stock have not been
      registered under such securities laws and referring to the restrictions and
      transferability of Unit(s) and the underlying common stock may be placed on
      the
      certificates or instruments delivered to the Subscriber or any substitutes
      thereof and any transfer agent of the Company may be instructed to require
      compliance therewith.

     

    
      
        
        

      

      
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    8.    Indemnification
      of the Company.
      The
      undersigned understands the meaning and legal consequences of the
      representations and warranties contained herein, and hereby agrees to indemnify
      and hold harmless, the Company, its respective agents, officers,
      managers
      and affiliates from and against any and all damages, losses, costs and expenses
      (including reasonable attorneys’ fees) which they or any of them may incur by
      reason of the failure of the Subscriber to fulfill any of the terms of this
      Subscription Agreement, or by reason of any breach of the representations and
      warranties made by the Subscriber herein, or in any document provided by the
      Subscriber to the Company.

    

    9.    Representative
      Capacity.
      If an
      investment in the Company is being made by a corporation, trust or estate,
      the
      undersigned individual signing on behalf of the Subscriber, represents that
      he
      has all right and authority, in his capacity as an officer, managing member,
      trustee, executor or other representative of such corporation, trust or estate,
      as the case may be, to make such decision to invest in the Company and to
      execute and deliver this Subscription Agreement on behalf of such corporation,
      trust or estate as the case may be, enforceable in accordance with its terms.
      The undersigned individual also represent that any such corporation, trust
      or
      estate was not formed for the purpose of buying the Unit(s) hereby
      subscribed.

     

    10.    Special
      Power of Attorney.

    

     a.    The
      Subscriber, by executing this Subscription Agreement, irrevocably makes,
      constitutes and appoints any executive officer of the Company, and each of
      them
      individually, as the undersigned’s true and lawful attorney, for the undersigned
      and in the undersigned’s name, place and stead, and for the use and benefit of
      the undersigned, to execute and acknowledge and, to the extent necessary, to
      file and record:

    

    1.  such
      certificates, instruments and documents as may be required to be filed by the
      Company or which the Company deems advisable to file under the laws of the
      State
      of Nevada or any other state or jurisdiction in which the Company transacts
      business; and

     

    2.  all
      conveyances or other instruments or documents necessary, appropriate or
      convenient to effect the dissolution and termination of the
      Company.

    

    b.    Such
      a
      power of attorney:

    

    1.  is
      a
      special power of attorney coupled with an interest and is irrevocable;
      and;

     

    2.  shall
      survive the death or disability of the Subscriber.

    

    c.    The
      Subscriber hereby agrees to be bound by any representations made by the Company
      or its substitutes acting pursuant to this Special Power of Attorney, and the
      undersigned hereby waives any and all defenses which may be available to him
      to
      contest, negate or disaffirm its actions or the actions of his substitutes
      under
      this Special Power of Attorney. The powers herein granted are granted for the
      sole and exclusive benefit of the undersigned and not on behalf of any other
      person, in whole or in part.

    

    
      
        
        

      

      
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    11.    Subscription
      Not Revocable.
      The
      undersigned hereby acknowledges and agrees that the undersigned is not entitled
      to cancel, terminate or revoke this Subscription Agreement or any agreements
      of
      the undersigned hereunder and that this Subscription Agreement shall survive
      the
      dissolution, death or disability of the undersigned.

    

    12.    Restrictions
      on Transferability.
      The
      undersigned understands and agrees that the Unit(s) shall not be sold, pledged,
      hypothecated or otherwise transferred unless the Unit(s) is registered under
      the
      Act and applicable state securities laws or an exemption from such registration
      is available.

    

    13.    Governing
      Law. This
      Subscription Agreement is being delivered and is intended to be performed in
      the
      State of New York, and shall be construed and enforced in accordance with,
      and
      the law of such state shall govern the rights of parties.

    

    14.    Numbers
      and Gender.
      In this
      Agreement, the masculine gender includes the feminine gender and the neuter
      and
      the singular includes the plural, where appropriate to the context.

    

    

    

    

    

    

    THIS
      SPACE INTENTIONALLY LEFT BLANK; SIGNATURE PAGE FOLLOWS

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    APPLIED
      DNA SCIENCES , INC. 

    SIGNATURE
      PAGE TO

    SUBSCRIPTION
      AGREEMENT

    

    Subscriber
      hereby elects to subscribe under the Subscription Agreement for a total of
      $______________ Units (NOTE: to be completed by subscriber) and executes the
      Subscription Agreement.

    

    IN
      WITNESS WHEREOF,
      the
      undersigned has executed this Subscription Agreement on the date set forth
      below. 

    

    Date
      of
      Execution: June __, 2007

    

    IF
      INDIVIDUAL INVESTOR: 

    

    

     

    
      
        
(Signature)

    

    

     

    
      
        

      
(Printed
      Name)

    

    IF
      CORPORATION, TRUST, 

    ESTATE
      OR REPRESENTATIVE: 

     

     

    
      

    

    Name
      of Investor

     

     

     

    By:
      
      
        

      

    

    Name: 

    Title:
      

    

     

    (Investors
      do not write below this line) 
      
        

      

     

    APPROVED
      THIS ____ DAY OF JUNE, 2007 

    

    APPLIED
      DNA SCIENCES, INC. 

    

    

    By:
      ______________________________      

    Name:

    Title:

     

     

     

     

     

    7Exhibit 10.2

     

      
        

      

    

     

    EXHIBIT
      10.2

     

    THIS
      NOTE
      AND THE COMMON STOCK REFERENCED HEREIN HAVE NOT BEEN REGISTERED WITH OR APPROVED
      OR DISAPPROVED BY THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR ANY
      STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY AND ARE BEING OFFERED
      PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE UNITED STATES SECURITIES
      ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”). 

     

    THE
      SALE,
      ASSIGNMENT, CONVEYANCE, PLEDGE, HYPOTHECATION OR TRANSFER OF THE SECURITIES
      REPRESENTED BY THIS NOTE OR THE UNDERLYING COMMON STOCK TO U.S. PERSONS, AS
      DEFINED IN RULE 902(k) PROMULGATED UNDER THE SECURITIES ACT, IS PROHIBITED
      EXCEPT (1) PURSUANT TO REGISTRATION UNDER THE SECURITIES ACT OR (2) PURSUANT
      TO
      AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT.

     

    This
      note
      is one of a series of notes (the “Bridge Notes”) issued in the aggregate
      principal amount of $2,000,000.

     

    APPLIED
      DNA SCIENCES, INC.

     

    
      
        	
                June
                  ___, 2007

              	
                $________________

              

      

    

     

    10%
      SECURED
      CONVERTIBLE PROMISSORY NOTE

     

    Applied
      DNA Sciences, Inc., a Nevada corporation (the “Company”), for value received,
      hereby promises to pay to ______________________________ (the “Holder,”
which
      term shall in every instance refer to any owner or holder of this Note) at
      ________________________________ or at any other place that the Holder may
      designate in writing to the Company,
      on June
      __, 2008 (the “Maturity Date”), the principal sum of _____________________
THOUSAND
      AND NO/100 DOLLARS
      ($______) in such coin or currency of the United States of America as at the
      time of payment shall be legal tender for the payment of public and private
      debts, and to pay interest on the outstanding principal sum hereof at the rate
      of ten percent (10%) per annum. Payment of principal and accrued and unpaid
      interest, if any, shall be payable on the Maturity Date in like coin or currency
      to the Holder hereof at the address of the Holder on file with the Company
      or at
      such other place as the Holder shall have notified the Company in writing at
      least five (5) days before the Maturity Date, provided that any payment
      otherwise due on a Saturday, Sunday or legal bank holiday may be paid on the
      following business day.

     

    This
      Note
      is secured by a security interest in all the assets of the Company as set forth
      in Section 4 hereof (the “Security Agreement”). Reference herein to the Security
      Agreement shall in no way impair the absolute and unconditional obligation
      of
      the Company to pay both principal and interest hereon as provided
      herein.

     

    The
      rights and remedies of the Holder hereunder are subject to the terms and
      conditions of the Security Agreement and the provisions of the Uniform
      Commercial Code as enacted in the State of Nevada including, without limitation,
      powers with respect to the enforceability and collectibility of all amounts
      due
      hereunder. Reference to the Uniform Commercial Code of the State of Nevada
      is
      made for a complete description of the rights, powers and obligations of the
      Holder.

     

    
      
        
        

      

      
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      	1.	
              Transfers
                of Note to Comply with the Securities
                Act

            

    

     

    THE
      HOLDER AGREES THAT THIS NOTE AND THE COMMON STOCK ISSUABLE UPON CONVERSION
      OF
      THE NOTE MAY NOT BE SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE
      DISPOSED OF EXCEPT (1) PURSUANT TO REGISTRATION UNDER THE SECURITIES ACT OR
      (2)
      PURSUANT TO AN AVAILABLE EXEMPTION THEREFROM.

     

    
      	2.	
              Prepayment;
                Repayment Upon Consolidation or
                Merger

            

    

     

    (a)  The
      principal amount of this Note may be prepaid by the Company, in whole or in
      part, on three days prior written notice without premium or penalty, at any
      time. Upon any prepayment of the entire principal amount of this Note, all
      accrued, but unpaid, interest shall be paid to the Holder on the date of
      prepayment. The date upon which the Company prepays the principal plus all
      accrued and unpaid interest due on this Note shall be hereinafter referred
      to as
      the “Prepayment Date.” Notwithstanding the foregoing right of payment, upon
      receipt of the three days notice, the Holder shall have the conversion rights
      set forth under Section 3(b) hereof, regardless of when such three days prior
      written notice is given.

     

    (b)  This
      Note
      shall be paid in full, without premium, in the event the Company consolidates
      or
      merges with another corporation, unless (i) the Company shall be the surviving
      corporation in such consolidation or merger or (ii) the other corporation
      controls, is under common control with or is controlled by the Company
      immediately prior to the consolidation or merger whether or not the Company
      shall be the surviving corporation in such consolidation or merger, in which
      event this Note shall remain outstanding as an obligation of the consolidated
      or
      surviving corporation.

     

    
      	3.	
              Conversion
                of Note

            

    

     

    (a)  This
      Note
      and any accrued and unpaid interest hereon shall automatically convert on the
      first anniversary of the date hereof into fully paid and non-assessable shares
      of Common Stock of the Company, par value $0.001 per share (the “Common Stock”),
      at a 20% discount to the average volume, weighted average price of the Common
      Stock for the ten trading days prior to the date hereof.

     

    (b)  The
      Holder shall have the right from time to time, and at any time on or prior
      to
      the first anniversary of the date hereof, to convert all or any part of the
      entirety of the principal and accrued but unpaid interest then outstanding
      under
      this Note into that number of fully paid and non-assessable shares of Common
      Stock, equal to the principal and accrued but unpaid interest under this note
      divided by $0.50, rounded up to the nearest whole share, on the first
      anniversary of the date hereof.

     

    4.  
Security
      Agreement.  In
      order to secure the obligations of the Company under this Note and the Bridge
      Notes, the Company hereby grants a security interest in all of the assets of
      the
      Company, which security interest is pari
      passu
      with the
      security interest granted to the holders of $1,500,000 of $50,000 principal
      amount secured convertible promissory notes of the Company bearing interest
      at
      10% per annum issued as part of an offering completed on March 8, 2006 (the
      “March Notes”) and the holders of $2,950,000 of $50,000 principal amount secured
      convertible promissory notes of the Company bearing interest at 10% per annum
      issued as part of offerings completed on May 2, 2006 and June 15, 2006 (the
“May
      and June Notes”). The Company reserves the right to issue $20,000,000 of debt in
      addition to amounts sold in the offering, of which the Bridge Notes are a part,
      secured by a security interest in all of the Company’s assets, which security
      interest would be pari
      passu
      to the
      security interest granted to the holders of the Notes, the May and June Notes,
      and the March Notes..

     

    
      
        
        

      

      
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      	5.	
              Events
                of Default and Remedies

            

    

     

    (a)  Any
      one
      or more of the following events (each an “Event of Default”) which shall have
      occurred and be continuing shall constitute an event of default:

     

    (i)  A
      default
      in the payment of the principal or accrued interest on this Note or upon any
      other indebtedness of the Company after the date hereof that is greater than
      $100,000, as and when the same shall become due, whether by default or
      otherwise, which default shall have continued for a period of five (5) business
      days; or

     

    (ii)  Any
      representation or warranty made by the Company or any officer of the Company
      in
      the Notes, or in any agreement, report, certificate or other document delivered
      to the Holder pursuant to the Notes shall have been incorrect in any material
      respect when made which shall not have been remedied ten (10) days after written
      notice thereof shall have been given by the Holder; or

     

    (iii)  The
      Company or any subsidiary (A) shall institute any proceeding or voluntary case
      seeking to adjudicate it bankrupt or insolvent, or seeking dissolution,
      liquidation, winding up, reorganization, arrangement, adjustment, protection,
      relief or composition of it or its debts under any law relating to bankruptcy,
      insolvency or reorganization or relief of debtors, or seeking the entry of
      any
      order for relief or the appointment of a receiver, trustee, custodian or other
      similar official for such the Company or any subsidiary or for any substantial
      part of its property, or shall consent to the commencement against it of such
      a
      proceeding or case, or shall file an answer in any such case or proceeding
      commenced against it consenting to or acquiescing in the commencement of such
      case or proceeding, or shall consent to or acquiesce in the appointment of
      such
      a receiver, trustee, custodian or similar official; (B) shall be unable to
      pay
      its debts as such debts become due, or shall admit in writing its inability
      to
      apply its debts generally; (C) shall make a general assignment for the benefit
      of creditors; or (D) shall take any action to authorize or effect any of the
      actions set forth above in this subsection 5(a)(iii); or

     

    (iv)  Any
      proceeding shall be instituted against the Company seeking to adjudicate it
      a
      bankrupt or insolvent, or seeking dissolution, liquidation, winding up,
      reorganization, arrangement, adjustment, protection, relief of debtors, or
      seeking the entry of an order for relief or the appointment of a receiver,
      trustee, custodian or other similar official for the Company or for any
      substantial part of its property, and either such proceeding shall not have
      been
      dismissed or shall not have been stayed for a period of sixty (60) days or
      any
      of the actions sought in such proceeding (including, without limitation, the
      entry of any order for relief against it or the appointment of a receiver,
      trustee, custodian or other similar official for it or for any substantial
      part
      of its property) shall occur; or

     

    (v)  One
      or
      more final judgments, arbitration awards or orders for the payment of money
      in
      excess of $1,000,000 in the aggregate shall be rendered against the Company,
      which judgment remains unsatisfied for thirty (30) days after the date of such
      entry.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    (vi)  Delisting
      of the Common Stock from the principal market or exchange on which the Common
      Stock is listed for trading; the Company’s failure to comply with the conditions
      for listing; or notification that the Company is not in compliance with the
      conditions for such continued listing.

     

    (vii)  The
      issuance of an SEC stop trade order or an order suspending trading of the Common
      Stock from the principal market or exchange on which the Common Stock is listed
      for trading for longer than five (5) trading days.

     

    (viii)  The
      failure by the Company to issue shares of Common Stock to the Holder upon
      exercise by the Holder of the conversion rights of the Holder in accordance
      with
      the terms of this Note, or the failure to transfer or cause its transfer agent
      to transfer (electronically or in certificated form) any certificate for shares
      of Common Stock issued to the Holder upon conversion of or otherwise pursuant
      to
      this Note as and when required by this Note, or the failure to remove any
      restrictive legend (or to withdraw any stop transfer instructions in respect
      thereof) on any certificate for any shares of Common Stock issued to the Holder
      upon conversion of or otherwise pursuant to this Note as and when required
      by
      this Note, and any such failure shall continue uncured for ten (10) days after
      the Company shall have been notified thereof in writing by the
      Holder;

     

    (ix)  Except
      as
      permitted herein, the Company shall encumber or hypothecate the collateral
      subject to the Security Agreement to any party;

     

    (b)  In
      the
      event of and immediately upon the occurrence of an Event of Default, the Note
      shall become immediately due and payable without any action by the Holder and
      the Note shall bear interest until paid at the rate of ten percent (10%) per
      annum. If an Event of Default occurs and is continuing, Holder may pursue any
      available remedy to collect the payment of all amounts due under the Note or
      to
      enforce the performance of any provision of the Note. No waiver of any default
      under the Note shall be construed as a waiver of any subsequent default, and
      the
      failure to exercise any right or remedy thereunder shall not waive the right
      to
      exercise such right or remedy thereafter.

     

    (c)  The
      Company covenants that in case the principal of, and accrued interest on, the
      Note becomes due and payable by declaration or otherwise, then the Company
      will
      pay in cash to the Holder of this Note, the whole amount that then shall have
      become due and payable on this Note for principal or interest, as the case
      may
      be, and in addition thereto, such further amount as shall be sufficient to
      cover
      the costs and expenses of collection, including reasonable fees and
      disbursements of the Holder’s legal counsel. In case the Company shall fail
      forthwith to pay such amount, the Holder may commence an action or proceeding
      at
      law or in equity for the collection of the sums so due and unpaid, and may
      prosecute any such action or proceeding to judgment or final decree against
      Company or other obligor upon this Note, wherever situated, the monies
      adjudicated or decreed to be payable.

     

    (d)  The
      Company agrees that it shall give notice to the Holder at its registered address
      by facsimile, confirmed by certified mail, of the occurrence of any Event of
      Default within ten (10) days after such Event of Default shall have
      occurred.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    
      	6.	
              Unconditional
                Obligation; Fees, Waivers,
                Other

            

    

     

    (a)  The
      obligations to make the payments provided for in this Note are absolute and
      unconditional and not subject to any defense, set-off, counterclaim, rescission,
      recoupment or adjustment whatsoever.

     

    (b)  If,
      following the occurrence of an Event of Default, Holder shall seek to enforce
      the collection of any amount of principal of and/or interest on this Note,
      there
      shall be immediately due and payable from the Company, in addition to the then
      unpaid principal of, and accrued unpaid interest on, this Note, all costs and
      expenses incurred by Holder in connection therewith, including, without
      limitation, reasonable attorneys’ fees and disbursements.

     

    (c)  No
      forbearance, indulgence, delay or failure to exercise any right or remedy with
      respect to this Note shall operate as a waiver or as an acquiescence in any
      default, nor shall any single or partial exercise of any right or remedy
      preclude any other or further exercise thereof or the exercise of any other
      right or remedy.

     

    (d)  This
      Note
      may not be modified or discharged (other than by payment or conversion) except
      by a writing duly executed by the Company and Holder.

     

    (e)  Holder
      hereby expressly waives demand and presentment for payment, notice of
      nonpayment, notice of dishonor, protest, notice of protest, bringing of suit,
      and diligence in taking any action to collect amounts called for hereunder,
      and
      shall be directly and primarily liable for the payment of all sums owing and
      to
      be owing hereon, regardless of and without any notice, diligence, act or
      omission with respect to the collection of any amount called for hereunder
      or in
      connection with any right, lien, interest or property at any and all times
      which
      the Company had or is existing as security for any amount called for
      hereunder.

     

    
      	7.	
              Miscellaneous

            

    

     

    (a)  The
      headings of the various paragraphs of this Note are for convenience of reference
      only and shall in no way modify any of the terms or provisions of this
      Note.

     

    (b)  This
      Note
      has been issued by the Company pursuant to authorization of the Board of
      Directors of the Company.

     

    All
      notices required or permitted to be given hereunder shall be in writing and
      shall be deemed to have been duly given when personally delivered or sent by
      registered or certified mail (return receipt requested, postage prepaid),
      facsimile transmission or overnight courier to the Holder at the address in
      the
      records of the Company, to the Company at 25 Health Sciences Dr., Stony Brook,
      New York 11790 or at such other address as the intended recipient shall have
      hereafter given to the other party hereto pursuant to the provisions of this
      Note.

     

    (c)  The
      Company may consider and treat the entity in whose name this Note shall be
      registered as the absolute owner thereof for all purposes whatsoever (whether
      or
      not this Note shall be overdue) and the Company shall not be affected by any
      notice to the contrary. Subject to the limitations herein stated, the registered
      owner of this Note shall have the right to transfer this Note by assignment,
      and
      the transferee thereof shall, upon his registration as owner of this Note,
      become vested with all the powers and rights of the transferor. Registration
      of
      any new owners shall take place upon presentation of this Note to the Company
      at
      its principal offices, together with a duly authenticated assignment. In case
      of
      transfer by operation of law, the transferee agrees to notify the Company of
      such transfer and of his address, and to submit appropriate evidence regarding
      the transfer so that this Note may be registered in the name of the transferee.
      This Note is transferable only on the books of the Company by the holder hereof,
      in person or by attorney, on the surrender hereof, duly endorsed. Communications
      sent to any registered owner shall be effective as against all holders or
      transferees of the Note not registered at the time of sending the
      communication.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    (d)  Payments
      of principal and interest shall be made as specified above to the registered
      owner of this Note. No interest shall be due on this Note for such period of
      time that may elapse between the maturity of this Note and its presentation
      for
      payment.

     

    (e)  The
      Holder shall not, by virtue, hereof, be entitled to any rights of a shareholder
      in the Company, whether at law or in equity, and the rights of the Holder are
      limited to those expressed in this Note.

     

    (f)  Upon
      receipt by the Company of evidence reasonably satisfactory to it of the loss,
      theft, destruction or mutilation of this Note, and (in the case of loss, theft
      or destruction) of reasonably satisfactory indemnification, and upon surrender
      and cancellation of this Note, if mutilated, the Company shall execute and
      deliver a new Note of like tenor and date.

     

    (g)  Except
      as
      otherwise provided herein, this Note shall be construed and enforced in
      accordance with the laws of the State of New York, without giving effect to
      the
      conflicts of law principles thereof or the actual domiciles of the parties.
      The
      Company and the Holder hereby consent to the jurisdiction of the Courts of
      the
      State of New York and the United States District Courts situated therein in
      connection with any action concerning the provisions of this Note instituted
      by
      the Holder against the Company.

     

    (h)  The
      Company and the Holder(i) agree that any legal suit, action or proceeding
      arising out of or relating to this Note shall be instituted exclusively in
      the
      New York State Supreme Court, County of New York or in the United States
      District Court for the Southern District of New York, (ii) waive any objection
      which the Holder or the Company may have now or hereafter based upon
      forum
      non conveniens
      or to
      the venue of any such suit, action or proceeding, and (iii) irrevocably consents
      to the jurisdiction of the New York State Supreme Court, County of New York
      and
      the United States District Court for the Southern District of New York in any
      such suit, action or proceeding. The Holder and the Company further agree to
      accept and acknowledge service of any and all process which may be served in
      any
      such suit, action or proceeding in the New York State Supreme Court, County
      of
      New York or in the United States District Court for the Southern District of
      New
      York and agree that service of process upon the Company, mailed by certified
      mail to the Company’s address, will be deemed in every respect effective service
      of process, in any suit, action or proceeding. FURTHER, THE HOLDER AND THE
      COMPANY HEREBY WAIVE TRIAL BY JURY IN ANY ACTION TO ENFORCE THIS NOTE AND IN
      CONNECTION WITH ANY DEFENSE, COUNTERCLAIM OR CROSS CLAIM ASSERTED IN ANY SUCH
      ACTION.

     

    (i)  No
      recourse shall be had for the payment of the principal or interest of this
      Note
      against any incorporator or any past, present or future stockholder officer,
      director, agent or attorney of the Company, or of any successor corporation,
      either directly or through the Company or any successor corporation, otherwise,
      all such liability of the incorporators, stockholders, officers, directors,
      attorneys and agents being waived, released and surrendered by the Holder hereof
      by the acceptance of this Note.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    (j)  This
      Note
      shall bind the Company and its successors and assigns.

     

    

     

    

     

    

     

    THIS
      SPACE INTENTIONALLY LEFT BLANK; SIGNATURE PAGE FOLLOWS

     

    

     

    

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, the undersigned has duly executed and delivered this 10%
      Secured Convertible Promissory Note as of the day and year first above
      written.

     

    
      	 	 	 
	 	APPLIED
              DNA
              SCIENCES, INC.
	 
 	 
 	 
 
	 	By:  	/s/ James
              Hayward
	 	
              
Name:
              James Hayward
	 	Title:
              Chief Executive Officer

    

     

     

     

     

    8

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