THIS WARRANT AND THE SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT") OR ANY APPLICABLE STATE
SECURITIES LAW, AND MAY NOT BE TRANSFERRED EXCEPT (i) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT OR (ii) UPON FIRST FURNISHING TO THE
COMPANY AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH TRANSFER IS
NOT IN VIOLATION OF THE REGISTRATION REQUIREMENTS OF THE ACT OR ANY APPLICABLE
STATE SECURITIES LAW.
687,500 Shares
COMMON STOCK WARRANT
For the Purchase of Shares of Common Stock
of
SafeScience, Inc.
-----------------------------
THIS CERTIFIES THAT, for value received, Xxxxx State University (the
"Holder") or their registered assigns, are entitled to subscribe for and
purchase from SafeScience, Inc., a Nevada corporation (the "Company"), six
hundred eighty-seven thousand five hundred (687,500) fully paid and
non-assessable shares of the Company's Common Stock, par value $.01 per share
("Common Stock"), subject to the terms and conditions set forth herein at a
purchase price of $1.15 per share (the "Exercise Price"). This Warrant shall be
exercisable, subject the vesting requirements in Section 1, until January 26,
2011.
1. Vesting. The shares of this Warrant shall vest 85,938 shares
quarterly over a period of two years, commencing March 31, 2001;
notwithstanding, however, that 85,934 shares shall vest in the eighth period.
2. Exercise of Warrant. The rights represented by this Warrant may be
exercised by the holders hereof, in whole or in part (but not as to a fractional
share of Common Stock), by the surrender of this Warrant (with the notice of
exercise form attached hereto as Exhibit 1 (the "Notice of Exercise") duly
executed) at the office of any duly appointed transfer agent for the Common
Stock or at the principal office of the Company and upon payment to the Company,
or for the account of the Company, by cash or certified check or wire transfer,
of the purchase price for such shares in the amount equal to the product of (a)
the Exercise Price, times (b) the number of shares of Common Stock being
purchased.
3. Delivery of Stock Certificates on Exercise. As soon as practicable
after the exercise of this Warrant in accordance with Section 2 hereof and in
any event within 10 days thereafter, the Company at its expense will cause to be
issued in the name of and delivered to the holder hereof, or as such holder
(upon payment by such holder of any applicable transfer taxes) may direct, a
certificate or certificates for the number of shares of Common Stock to which
such holder shall be entitled on such exercise, and, unless this Warrant has
expired or has been
exercised in full, a new Warrant representing the number of shares with respect
to which this Warrant shall not then have been exercised shall also be issued to
the holder hereof at such time. The Holders of this Warrant acknowledges that
the certificate or certificates representing the shares of stock issuable upon
the exercise of this Warrant shall be stamped or otherwise imprinted with a
legend substantially in the following form:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended, or the
securities laws of any state. The securities have been acquired
for investment and may not be sold, offered for sale or
transferred in the absence of an effective registration under the
Securities Act of 1933, as amended, and any applicable state
securities laws or an opinion of counsel satisfactory in form and
substance to counsel for the Company that the transaction shall
not result in a violation of state or federal securities laws."
Upon the request of a holder of a certificate representing shares of
Common Stock purchased upon exercise of this Warrant, the Company shall remove
the foregoing legend from the certificate or issue to such holder a new
certificate therefor free of any transfer legend, if, with such request, the
Company shall have received an opinion of counsel reasonably satisfactory to the
Company to the effect that such legend may be removed from such certificate.
4. Shares to be Issued, Reservation of Shares; Holders of Record.
(a) Shares to be Issued. The Company covenants and agrees that all
shares which may be issued upon the exercise of the rights represented by this
Warrant will, upon issuance, be validly authorized, issued and outstanding,
fully paid and non-assessable, and free from all taxes, liens and charges with
respect to the issue thereof.
(b) Reservation of Common Stock. The Company covenants and agrees
that, during the period within which the rights represented by this Warrant may
be exercised, the Company will at all times have authorized and reserved a
sufficient number of shares of its Common Stock to provide for the exercise of
the rights represented by this Warrant.
(c) Holders of Record. Each person or entity in whose name any
certificate for shares of Common Stock is issued upon the exercise of this
Warrant in accordance with its terms shall for all purposes be deemed to have
become the holder of record of the shares of Common Stock represented thereby
on, and such certificate shall be dated, the date upon which the Notice of
Exercise was duly executed and payment of the aggregate Exercise Price was made
pursuant to Section 2 hereof. Prior to the exercise of this Warrant, the holder
hereof shall not be entitled to any rights of a stockholder of the Company with
respect to the shares of Common Stock for which this Warrant shall be
exercisable, including, without limitation, the right to vote, to receive
dividends or other distributions or to exercise any preemptive rights and shall
not be entitled to receive any notice of any proceedings of the Company, except
as provided herein.
5. Adjustment of Exercise Price. The Exercise Price in effect from time
to time shall be subject to adjustment as follows:
(a) Adjustment for Common Stock Dividends; Subdivisions and
Combinations.
-2-
Upon the issuance of additional shares of Common Stock as a dividend or other
distribution on outstanding Common Stock, the subdivision of outstanding shares
of Common Stock into a greater number of shares of Common Stock, or the
combination of outstanding shares of Common Stock into a smaller number of
shares of the Common Stock, the number of shares of Common Stock purchasable
hereunder shall be proportionately adjusted to the nearest whole share and the
Exercise Price shall be proportionately decreased in the case of a dividend,
split or subdivision and proportionately increased in the case of a combination.
An adjustment made pursuant to this Section 5(a) shall be given effect, upon
payment of such a dividend or distribution, as of the record date for the
determination of stockholders entitled to receive such dividend or distribution
(on a retroactive basis) and in the case of a subdivision or combination shall
become effective immediately as of the effective date thereof.
(b) Adjustments for Capital Reorganizations. If any capital
reorganization or reclassification of the capital stock of the Company shall be
effected, whether by merger, consolidation, sale of assets or otherwise (other
than a subdivision or combination of shares or stock dividend as provided for
above) (in each case, a "Reorganization"), then, as a condition of such
Reorganization, lawful and adequate provision shall be made whereby the holder
hereof shall thereafter have the right to purchase and receive upon the basis
and upon the terms and conditions specified in this Warrant, in lieu of shares
of Common Stock of the Company immediately theretofore purchasable and
receivable upon the exercise of the rights represented hereby, those shares of
stock, securities or assets which would have been issued or payable with respect
to or in exchange for the Common Stock issuable upon exercise of this Warrant
had this Warrant been exercised immediately prior to the record date (or the
effective date, as the case may be) for such Reorganization. Upon any
Reorganization this Warrant shall continue in full force and effect and the
terms hereof shall be applicable to the shares and other securities and property
receivable on the exercise of this Warrant after the consummation of such
Reorganization and shall be binding upon the issuer of any such stock or other
securities, including the person acquiring all or substantially all of the
properties or assets of the Company, whether or not such person shall have
expressly assumed the terms of this Warrant.
(c) Other Adjustments. In the event the Company shall make or
issue, or fix a record date for the determination of holders of Common Stock
entitled to receive, a dividend or other distribution payable in securities of
the Company other than shares of Common Stock, then and in each such event
lawful and adequate provision shall be made so that the holders of Warrants
shall receive upon exercise thereof in addition to the number of shares of
Common Stock receivable thereupon, the number of securities of the Company which
such holders would have received had such Warrants been exercised on the date of
such event and had such holders thereafter, during the period from the date of
such event to and including the date of exercise, retained such securities
receivable by such holders as aforesaid during such period, giving application
to all adjustments called for during such period under this Section 5 as applied
to such distributed securities.
(d) Notices of Adjustments. In each case of an adjustment pursuant
to this Section 5, the Company, at its expense, will furnish the holder of this
Warrant with a certificate, prepared by the chief financial officer of the
Company, showing such adjustment or readjustment, and the number of shares of
Common Stock or other securities and the amount, if any, of other property that
at the time would be received upon the exercise of this Warrant.
-3-
(e) Notices of Record Date. In the event (i) the Company
establishes a record date to determine the holders of any class of securities
who are entitled to receive any dividend or other distribution or (ii) there
occurs any capital reorganization of the Company, any reclassification or
recapitalization of the capital stock of the Company, any merger or
consolidation of the Company, any acquisition of the Company, any transfer of
all or substantially all of the assets of the Company to any other Company
entity or person, any sale of a majority of the voting securities of the Company
in one or a series of related transactions or any voluntary or involuntary
dissolution, liquidation or winding up of the Company, the Company shall give to
the holder hereof a notice specifying (a) the date of such record date for the
purpose of such dividend or distribution and a description of such dividend or
distribution, (b) the date on which any such reorganization, reclassification,
transfer, consolidation, merger, acquisition, sale, dissolution, liquidation or
winding up is expected to become effective, and (c) the time, if any, that is to
be fixed, as to when the holders of record of Common Stock (or other securities)
shall be entitled to exchange their shares of Common Stock (or other securities)
for securities or other property deliverable upon such reorganization,
reclassification, transfer, consolidation, merger, acquisition, sale,
dissolution, liquidation or winding up. Such written notice shall be given to
the holder of this Warrant at least fifteen (15) days prior to the date
specified in such notice on which any such action is to be taken.
6. Holder Representations and Warranties. The Holder of this Warrant
understands the risks of investing in emerging companies such as the Company and
can afford a loss of its entire investment. The Holder is acquiring the Warrant
for investment and not with the view to, or for resale in connection with, any
distribution thereof. The Holder understands that the Warrant and the shares of
Common Stock issuable upon exercise thereof have not been registered under the
Securities Act of 1933, as amended (the "Securities Act"), or any applicable
state securities ("blue sky") laws, by reason of specified exemptions from the
registration provisions of the Securities Act and such laws. The Holder
acknowledges that the Warrant and the shares of Common Stock issuable upon
exercise thereof must be held indefinitely unless they are subsequently
registered under the Securities Act or an exemption from such registration is
available. The Holder hereof has been advised or is aware of the provisions of
Rule 144 promulgated under the Securities Act, which permits the resale of
shares purchased in a private placement subject to the satisfaction of certain
conditions and that such Rule may not be available for resale of the shares.
7. Transfer. Subject to compliance with applicable securities laws,
this Warrant and all rights hereunder are transferable, in whole or in part, at
the offices referred to in paragraph 2 hereof by the holder in person or by a
duly authorized attorney, upon surrender of this Warrant properly endorsed. Each
taker and holder of this Warrant, by taking or holding the same, consents and
agrees that this Warrant, when endorsed in blank, shall be deemed negotiable and
that when this Warrant is so endorsed, the holder hereof may be treated by the
Company and all other persons dealing with this Warrant as the absolute owner
hereof for any purposes and as the person entitled to exercise the rights
represented by this Warrant or to the transfer hereof on the books of the
Company, any notice to the contrary notwithstanding; but until each transfer on
such books, the Company may treat the registered holder hereof as the owner
hereof for all purposes.
8. Exchange. Subject to compliance with applicable securities laws,
this Warrant is
-4-
exchangeable, upon the surrender hereof by the holder hereof at such offices for
new Warrants of like tenor representing in the aggregate the right to subscribe
for and purchase the number of shares which may be subscribed for and purchased
hereunder, each of such new Warrants to represent the right to subscribe for and
purchase such number of shares as shall be designated by such holder hereof at
the time of such surrender. Upon receipt of evidence satisfactory to the Company
of the loss, theft, destruction or mutilation of this Warrant and, in the case
of any such loss, theft or destruction, upon delivery of a bond of indemnity
satisfactory to the Company, or, in the case of any such mutilation, upon
surrender or cancellation of this Warrant, the Company will issue to the holder
hereof a new Warrant of like tenor, in lieu of this Warrant, representing the
right to subscribe for and purchase the number of shares which may be subscribed
for and purchased hereunder.
9. Registration Rights. The shares issuable upon exercise of this
Warrant shall have the registration rights described in Section 3.2(c) of the
License Agreement dated January 26, 2001 (the "License Agreement") by and among
the Company and the Holders. The Company may postpone the filing of any
registration statement required pursuant to the License Agreement for a
reasonable period of time, not to exceed sixty (60) days in the aggregate, and
not more than once in any ninety (90) day period, if the Company has been
advised by legal counsel in writing, with a copy to the undersigned upon their
request, that such filing would require a special audit or the disclosure of a
material impending transaction or other matter and the Board of Directors of the
Company determines reasonably and in good faith that such disclosure would have
a material adverse effect on the Company.
10. Notices. Notices or demands relating to this Warrant shall be
sufficiently given or made if sent by prepaid air express courier with regular
service to the addressee, or telexed, telecopied or hand-delivered, if to the
Company, at the address of its principal office or if to the holder of this
Warrant, at its address registered on the books of the Company.
11. No Impairment. The Company will not, by amendment of its Charter or
by any other voluntary action, avoid or seek to avoid the observance or
performance of any of the terms of this Warrant, but will at all times in good
faith assist in the carrying out of all such terms and in the taking of all such
action as may be necessary or appropriate in order to protect the rights of the
Holder of this Warrant against impairment.
12. No Rights or Liabilities as a Stockholder. This Warrant shall not
entitle the Holders hereof to any voting rights or other rights as a stockholder
of the Company. No provision of this Warrant, in the absence of affirmative
action by the holder hereof to purchase Common Stock, and no mere enumeration
herein of the rights or privileges of the holder hereof, shall give rise to any
liability of such holder for the Exercise Price or as a stockholder of the
Company, whether such liability is asserted by the Company or by creditors of
the Company.
13. Miscellaneous. The provisions of this Warrant may be amended or
waived by an instrument in writing signed by the party against which enforcement
of such amendment or waiver is sought. This Warrant shall be construed and
enforced in accordance with and governed by the laws of The Commonwealth of
Massachusetts. The headings in this Warrant are for purposes of reference only,
and shall not limit or otherwise affect any of the terms hereof. The invalidity
or unenforceability of any provision hereof shall in no way affect the validity
or
-5-
enforceability of any other provision.
-6-
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
a duly authorized officer as of January 26, 2001.
SAFESCIENCE, INC.
By: /s/ Xxxxxxx Xxxxxx
-------------------------------
Xxxxxxx Xxxxxx, President
ACCEPTED AND AGREED:
XXXXX STATE UNIVERSITY
By: /s/ Xxxx X. Xxxxx
-----------------------------------------
Name: Xxxx X. Xxxxx
Title Senior Vice President, Finance and Administration
Date:
---------------------------------------
-7-
EXHIBIT 1
NOTICE OF EXERCISE
(To be Executed by the Registered Holder in Order to Exercise the Warrant)
1. The undersigned hereby irrevocably elects to purchase _____________
(________) shares of the Common Stock, $.01 par value per share, SafeScience,
Inc., pursuant to the Warrant Agreement between the Company and the undersigned
dated January 26, 2001 and according to the terms thereof, and herewith makes
payment of the Exercise Price of such shares in full.
2. Such payment is hereby made in the amount of by wire transfer or by
certified or bank check.
3. Please issue a certificate or certificates representing said shares
of Common Stock in the name of the undersigned or in such other name as is
specified below:
-----------------------------
(Name)
-----------------------------
(Address)
-----------------------------
Signature
Dated:
----------
-----------------------------
(Name)
-----------------------------
(Address)
-----------------------------
Signature
Dated:
----------
-8-
