SUBSCRIPTIONAGREEMENT

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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 $______________ of $100,000 principal amount 10% secured convertible promissory notes (each a “Note,” or collectively, the “Notes”) of Applied DNA Sciences, Inc., a Delaware corporation (the “Company”).  This is an offering by the Company of up to a maximum aggregate amount of S1,500,000 in Notes to one or more subscribers (the “Offering”); provided that the Company may increase the size of the Offering, in its discretion, to $2.500,000.  The Notes and accrued but unpaid interest thereon automatically convert into shares of the Company’s common stock, $0.001 par value (the “Common Stock”), on the first anniversary of the date of the closing of the purchase and sale of such Notes (the “Closing Date”) at a price equal to 80% of the average volume weighted average price of the Common Stock for the ten trading days prior to the Closing Date (the “Automatic Conversion Price”).  The Notes are convertible at the option of the holder into shares of Common Stock at a price equal to the greater of (i) 50% of the average price of the Common Stock for the ten trading days prior to the date of the notice of conversion and (ii) the Automatic Conversion Price, at any time prior to the first anniversary of 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 three days notice, such notice to allow the holders of the Notes to convert the Notes into shares of Common Stock prior to such repayment.

 

Until the principal and interest owed under the Notes are paid in full, or converted into the Common Stock, 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 an aggregate principal amount of $250,000 of secured convertible promissory notes of the Company bearing interest at 10% per annum issued on March 4, 2008 (the “March Notes”), with the security interest granted to the holder of a $100,000 principal amount secured convertible promissory note of the Company bearing interest at 10% per annum issued on May 7, 2008 (the “May Note”), with the security interest granted to the holders of an aggregate principal amount of $250,000 of secured convertible promissory notes of the Company bearing interest at 10% per annum issued on July 31, 2008 (the “July Notes”), and with the security interest granted to James A. Hayward, the Chairman of the Board of Directors and the Company’s President and Chief Executive Officer, for an aggregate principal amount of $650,000 of secured convertible promissory notes of the Company bearing interest at 10% per annum issued on October 21, 2008 and January 29, 2009 (the “Hayward Notes”).  Upon the automatic conversion (or earlier payment) of the March Notes, the May Note, the July Notes and the Hayward Notes, all of the Company’s obligations will be discharged, including the termination of the noteholders’ security interest in the Company’s assets.  The Company may issue 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 March Notes, the May Note, the July Notes and the Hayward Notes.

 

The Notes bear interest at the rate of 10% per annum, and the principal and all accrued and unpaid interest shall be payable in full on the first anniversary of their issuance in shares of Common Stock, unless paid in cash at the Company’s sole discretion.

 

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).  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, 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 the March Notes, the June Notes, the Hayward Notes and the August Note.

3.               Closing.  The Subscriber understands and agrees that the Company intends to make an initial closing of this offering of Notes of the Company on or before March 15, 2009, 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 Note.  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.

 

 

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

 

 

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 Note(s) hereby subscribed.

 

 

10.             Special Power of Attorney.

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 Delaware 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.

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.

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 Note(s) shall not be sold, pledged, hypothecated or otherwise transferred unless the Note(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.

 

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SUBSCRIPTION AGREEMENT

Subscriber hereby elects to subscribe under the Subscription Agreement for a total of $______________ of $100,000 principal amount 10% secured convertible promissory notes (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: ______________, 2009

 

(Investors do not write below this line)

APPROVED THIS ____ DAY OF ______________, 2009