STOCK OPTION AGREEMENT
This STOCK OPTION AGREEMENT ("Agreement") is dated as of May 10, 2005 (the
"Effective Date"), by and between RHL MANAGEMENT CORP. ("Seller"), ▇▇▇▇ ▇.▇.
▇▇▇▇▇▇▇ FB ("Purchaser"), and ▇▇▇▇▇▇ LAW GROUP, A PROFESSIONAL LAW CORPORATION
("Escrow Agent").
RECITALS
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WHEREAS, Seller proposes to issue to Purchaser an option to acquire ONE
MILLION EIGHT HUNDRED FORTY-THREE THOUSAND SEVENTY-ONE (1,843,071) shares (the
"Shares") of the authorized and issued common stock of Applied DNA Sciences,
Inc. ("APDN"), presently held by Seller, in accordance with the terms of this
Agreement; and
WHEREAS, in consideration of the promises and the mutual agreements herein
set forth, the parties hereto agree as follows:
AGREEMENT
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SECTION 1 Issuance of Option. Upon execution of this Agreement, Seller
hereby issues Purchaser an option to acquire 1,843,071 Shares of APDN Common
Stock, fully paid and non-assessable at an exercise price of $1.00 USD per share
(the "Per Share Exercise Price"), or an aggregate of $1,843,071 USD (the
"Purchase Price") subject to the terms of this Agreement (the "Option").
SECTION 2 Expiration of Option. Purchaser's option rights to acquire the
Shares shall expire at 5:00 pm, Eastern Standard Time, on June 25, 2005.
SECTION 3 Delivery of Shares. Seller has delivered the shares to the
Escrow Agent together with appropriate medallion guaranteed stock powers
sufficient to transfer the shares into the name or names as designated by
Purchaser.
SECTION 4 Exercise. The Option shall be exercised by delivery to Seller
of (a) a written notice of exercise stating the information set forth on the
form of Notice of Exercise attached hereto as Appendix A, (b) providing proof
that payment has been sent by wire transfer on or before the expiration of the
option as set forth in Section 2 hereof (a copy of the wire transfer
confirmation number faxed to the Escrow Agent shall be considered proof), and
(c) actual delivery by wire transfer of the Purchase Price to the Escrow Agent
for further delivery to Seller at Closing received within seven days of any such
Notice of Exercise.
SECTION 5. Closing of Sale on Exercise. The closing of the purchase and
sale of the Shares ("Closing") pursuant to this Option Agreement shall take
place upon notice of exercise as set forth in Section 4 hereof and receipt of
the Purchase Price into Escrow. At the Closing, the Escrow Agent shall release
the Shares to Purchaser and shall release the Purchase Price to Seller. In the
event that this Option shall not be exercised by the Expiration Date, the Shares
shall be immediately returned by the Escrow Agent to the Seller.
SECTION 6. No Rights as Stockholder. Purchaser shall have no rights as a
stockholder with respect to the Shares covered by this Option until the Closing
Date and delivery of the Shares to Purchaser, and no adjustment will be made for
dividends or other rights for which the record date is prior to the Closing
Date.
SECTION 7. Sales of Remaining Shares by Seller during Option Period. So
long as this option remains unexercised and the expiration date has not passed,
Seller agrees not to sell on any public securities markets any shares of common
stock of APDN at any price between $0.70 per share and $1.15 per share. This
prohibition shall not apply to any sales by Seller at a public market price per
share of $0.70 per share or less or any sales by Seller at a public market price
per share of $1.15 or greater.
SECTION 8. Representations of Seller. Seller represents and warrants to
Purchaser as follows:
(a) Seller is the record and beneficial owner of, and has good and
marketable title to, the Shares, free and clear of all liens, security
interests, charges, claims, restrictions and other encumbrances, subject to
securities laws restrictions. Seller has not granted to any person or entity
any options or other rights to buy, or proxies or other rights to vote, the
Shares. No other person or entity has any interest in the Shares of any nature.
(b) Seller has full legal power to execute and deliver this Agreement and
to perform its obligations hereunder. All acts required to be taken by Seller
to enter into this Agreement and to carry out the transactions contemplated
hereby have been properly taken; and this Agreement constitutes a legal, valid
and binding obligation of Seller, enforceable in accordance with its terms. The
execution, delivery and performance of this Agreement by Seller in accordance
with its terms will not, with or without the giving of notice or the passage of
time, or both, conflict with, result in a default, right to accelerate or loss
of rights under, or result in the creation of any encumbrance pursuant to, or
require the consent of any third party or governmental authority pursuant to any
franchise, mortgage, indenture or deed of trust or any material lease, license
or other agreement or any law, regulation, order, judgment or decree to which
Seller is a party or by which Seller (or any of its assets, properties,
operations or businesses) may be bound, subject to or affected.
SECTION 9. Representations of Purchaser. Purchaser hereby represents and
warrants to Seller as follows:
(a) Purchaser has full legal power to execute and deliver this Agreement
and to perform its obligations hereunder. All acts required to be taken by
Purchaser to enter into this Agreement and to carry out the transactions
contemplated hereby have been properly taken; and this Agreement constitutes a
legal, valid and binding obligation of Purchaser enforceable in accordance with
its terms. The execution, delivery and performance of this Agreement by
Purchaser in accordance with its terms will not, with or without the giving of
notice or the passage of time, or both, conflict with, result in a default,
right to accelerate or loss of rights under, or result in the creation of any
encumbrance pursuant to, or require the consent of any third party or
governmental authority.
SECTION 10. Notices. All notices, requests and other communications given
or made pursuant to this Agreement shall be in writing and shall be deemed to
have been duly given or made as of the date delivered personally or one day
after delivery to a nationally recognized overnight courier for next day early
morning delivery, in each case to the addresses set forth on the signature page,
or to such other address as shall be specified by like notice.
SECTION 11. Governing Law. This Agreement shall be governed by and
construed in accordance with the law of the State of California without giving
effect to principles of conflicts of law.
SECTION !2. Headings. The headings contained in this Agreement are for
reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
SECTION 13. Amendment. This Agreement may not be amended or modified except
by an instrument in writing signed by all the parties.
SECTION 14. Counterparts. This Agreement may be signed in counterparts
which, taken together, shall constitute one Agreement.
SECTION 15. Further Assurances. The parties hereto agree to promptly take
such steps as may be necessary to effectuate the purposes and intent of this
Agreement.
SECTION 16 Confidentiality. Purchaser and Seller agree to keep this
Agreement confidential and not to disclose the terms or any matters relating to
this Agreement to anyone other unless required by law.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date
first above written.
SELLER:
/a/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Print Name: RHL Management Corp
Address: ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
FAX: (▇▇▇) ▇▇▇-▇▇▇▇
PURCHASER:
By: /s/ ▇▇▇▇ ▇.▇. ▇▇▇▇▇▇▇
Name: ▇▇▇▇ ▇.▇. ▇▇▇▇▇▇▇ FB
Address: ▇▇▇▇▇▇▇▇▇▇ ▇▇
▇▇▇▇ ▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇
FAX ▇▇.▇▇.▇▇▇.▇▇▇▇▇▇
ESCROW AGENT:
▇▇▇▇▇▇ Law Group
By: /s/ M. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Name: M. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: President
Address: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
