STRONG RIVER INVESTMENTS, INC.
C/O XXXXXXXX-XXXX & XXXXXX (BVI) LIMITED
WICKHAMS CAY I, VANTERPOOL PLAZA
P.O. BOX 000
XXXX XXXX, XXXXXXXX. B.V.I.
MONTROSE INVESTMENTS LTD.
000 XXXXXXXX XXXXX, XXXXX 000
XXXXXX, XX 00000
March 29, 2000
SafeScience, Inc.
Park Square Building
00 Xx. Xxxxx Xxxxxx, 0xx Xxxxx
Xxxxxx, XX 00000
Attention: President
Re: SafeScience, Inc. (the "Company").
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Gentlemen:
Reference is made to the Securities Purchase Agreement (the
"Purchase Agreement"), of even date hereof, between the Company and the
undersigned (the "Purchasers"), pursuant to which the Company will issue and
sell to the Purchasers (i) up to 484,429 shares of Common Stock (the "Initial
Shares"), (ii) Common Stock purchase warrants, each in the form of Exhibit A to
the Purchase Agreement, pursuant to which the holder thereof shall have the
right, under certain circumstances described therein, to acquire shares of
Common Stock upon the terms set forth therein (the "Initial Adjustable Warrant")
and (iii) Common Stock purchase warrants, each in the form of Exhibit B to the
Purchase Agreement, pursuant to which the holder thereof shall have the right,
under certain circumstances described therein, to acquire shares of Common Stock
upon the terms set forth therein (the "Initial Closing Warrants" and together
with the Initial Adjustable Warrants, the "Initial Warrants"), for an aggregate
purchase price of up to $7,000,000. Capitalized terms used and not otherwise
defined in this letter that are defined in the Purchase Agreement shall have the
meanings set forth in the Purchase Agreement. The Initial Warrants and the
Initial Shares are sometimes collectively referred to herein as the "Initial
Securities."
The Purchasers shall, severally and not jointly, commit,
subject to and upon the terms and conditions hereof, to purchase from the
Company, and the Company shall sell to the Purchasers on the Additional Closing
Date (as defined herein): (i) up to [ ] 1
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1 The number which equals $7,000,000 divided by the lesser of (i) 110% of the
average of the Per Share Market Values for the four Trading Days preceding the
Additional Closing Date and (ii) $16.00 (subject to equitable adjustment for
stock splits, recombinations and similar events).
shares of Common Stock (the "Additional Shares"), (ii) additional Initial
Adjustable Warrants (the "Additional Adjustable Warrants") and (iii) additional
Initial Closing Warrants pursuant to which the holders thereof shall have the
right at any time and from time to time thereafter through the fifth anniversary
of the Additional Closing Date (as defined herein) to acquire an aggregate of up
to [ ] 2 shares of Common Stock (the "Additional Closing Warrants and together
with the Additional Adjustable Warrants, the "Additional Warrants"), for an
aggregate purchase price of $7,000,000 (the "Additional Purchase Price"),
provided, that if the Additional Purchase Price shall exceed 6% of the market
capitalization of the Common Stock on the Additional Closing Date, the
Additional Closing (as defined herein) shall not take place. The Additional
Shares and Additional Warrants are collectively referred to herein as the
"Additional Securities."
The commitment of the Purchasers set forth in this letter is
subject to the terms, conditions and qualifications set forth below:
Form of Additional Adjustable Warrants. The Additional Adjustable Warrants shall
be identical to the Initial Adjustable Warrants except that the Purchase Price
applicable thereto shall equal the lesser of (i)110% of the average of the Per
Share Market Values for the four Trading Days preceding the Additional Closing
Date and (ii) $16.00 (subject to equitable adjustment for stock splits,
recombinations and similar events).
2. Form of Additional Closing Warrants. The Additional Closing Warrants shall be
identical to the Initial Closing Warrants except that the Exercise Price (as
defined in the Initial Closing Warrants) shall be equal to 120% of the average
of the closing bid prices of the Common Stock for the five (5) Trading Days
immediately preceding the Additional Closing Date.
3. Additional Documentation. In order to effectuate a purchase and sale of the
Additional Securities, prior to their issuance, the Company and the Purchasers
shall enter into the following agreements: (a) a securities purchase agreement
identical to the Purchase Agreement, mutatis mutandis (the "Additional Purchase
Agreement") and (b) a registration rights agreement identical to the
Registration Rights Agreement, mutatis mutandis (the "Additional Registration
Rights Agreement", and together with the Additional Purchase Agreement, the
Additional Warrants, collectively the "Additional Transaction Documents"). The
Purchasers shall prepare the Additional Transaction Documents.
4. Additional Closing. (i) Each Purchaser and the Company shall each have the
right to deliver a written notice to the other (the "Additional Financing
Notice") requiring such other party to either sell or buy (severally and not
jointly), as the case may be, the Additional Securities for the Additional
Purchase Price. The Additional Financing Notice may be delivered no earlier than
190 days following the Closing Date and no later than 210 days following the
Closing Date, or as otherwise agreed to by the parties hereto. At the Additional
Closing each Purchaser which receives or delivers an Additional Closing
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2 The number which equals 7.5% of $7,000,000 divided by the lesser of (i) 110%
of the average of the Per Share Market Values for the four Trading Days
preceding the Additional Closing Date and (ii) $16.00 (subject to equitable
adjustment for stock splits, recombinations and similar events).
Notice pursuant to the terms hereof shall (subject to the terms and conditions
herein) purchase such portion of the Additional Securities as equals such
Purchaser's pro-rata portion of the Initial Securities issued and sold at the
Closing. The closing of the purchase and sale of Additional Securities (the
"Additional Closing") shall take place at the offices of Xxxxxxxx Xxxxxxxxx,0000
Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, on the fifth (5th) Business
Day after the Additional Financing Notice is received by a Purchaser or the
Company, as the case may be, or on such other date as otherwise agreed to by the
parties hereto, provided, that in no case shall the Additional Closing take
place unless and until all of the conditions listed in Section 5 of this letter
shall have been satisfied by the Company or waived by the Purchasers. The date
of the Additional Closing is hereinafter referred to as the "Additional Closing
Date." Notwithstanding anything to the contrary contained in this letter, each
Purchaser may, prior to the Additional Closing Date, designate an Affiliate
thereof to acquire all or any portion of the Additional Securities.
(i) At the Additional Closing, the parties shall deliver or shall cause
to be delivered the following: (a) the Company shall deliver to (x) each
Purchaser which receives or delivers an Additional Closing Notice pursuant to
the terms hereof or its designated Affiliate: (1) the number of Additional
Shares purchased equal to such Purchaser's pro rata portion of the Initial
Shares issued and sold at the Closing, registered in the name of such Purchaser
or its designated Affiliate, (2) an Additional Adjustable Warrant registered in
the name of such Purchaser or its designated Affiliate, (3) an Additional
Closing Warrant registered in the name of such Purchaser or its designated
Affiliate, entitling the holder thereof to purchase such number of shares of
Common Stock as equals such Purchaser's pro-rata portion of the shares of Common
Stock underlying the Initial Closing Warrant issued and sold at the Closing to
such Purchaser, (4) a legal opinion in form and substance acceptable to the
Purchasers, (5) an officer's certificate pursuant to Section 5(b) hereof and (6)
executed Additional Transaction Documents and the Transfer Agent Instructions
relating to the Additional Securities, and (y) Xxxxxxxx Xxxxxxxxx, $20,000 for
the legal fees and expenses incurred by the Purchasers to prepare the Additional
Transaction Documents, which amount shall be deducted by the Purchasers from the
Additional Purchase Price and shall be paid directly to Xxxxxxxx Xxxxxxxxx and
(b) each Purchaser which receives or delivers an Additional Closing Notice
pursuant to the terms hereof shall deliver to the Company (1) its pro rata
portion of the Additional Purchase Price, in United States dollars in
immediately available funds by wire transfer to an account designated in writing
by the Company for such purpose prior to the Additional Closing Date and (2) the
executed Additional Transaction Documents.
5. Conditions precedent to the Additional Closing. Notwithstanding anything to
the contrary contained in this letter, the commitment of a Purchaser to purchase
the Additional Securities is subject to the satisfaction or waiver by such
Purchaser of each of the following conditions:
(a) Closing of Initial Shares and Initial Warrants. The Closing shall have
occurred;
(b) Accuracy of the Company's Representations and Warranties. The
representations and warranties of the Company contained in the Purchase
Agreement shall be true and correct as of the date when made and as of the
Additional Closing Date as though made on and as of the Additional Closing Date
(other than representations and warranties which relate to a specific date
(which shall not include representations and warranties relating to the "date
hereof") which representations and warranties shall be true as of such specific
date), as evidenced by an officer's certificate attesting to such effect to be
delivered by the Company to the Purchasers at the Additional Closing Date;
(c) Performance by the Company. The Company shall have performed, satisfied
and complied with all covenants, agreements and conditions required by the
Transaction Documents to be performed, satisfied or complied with by the Company
between the Closing Date and the Additional Closing Date and no Event (as
defined in the Registration Rights Agreement ) shall have occurred which has not
been cured to the satisfaction of the Purchasers;
(d) Underlying Shares Registration Statement. The Underlying Shares
Registration Statement shall have been declared effective under the Securities
Act by the Commission and shall have remained effective at all times, not
subject to any actual or threatened stop order or subject to any actual or
threatened suspension at any time prior to the Additional Closing Date;
(e) No Injunction. Since the Closing Date, no statute, rule, regulation,
executive order, decree, ruling or injunction shall have been enacted, entered,
promulgated, amended, modified or endorsed by any court of governmental
authority of competent jurisdiction or governmental authority, stock market or
trading facility which prohibits the consummation of any of the transactions
contemplated by the Additional Transaction Documents or makes impracticable the
transactions contemplated thereby;
(f) Adverse Changes. Since the Closing Date, no event or series of events
which reasonably would be expected to have or result in a Material Adverse
Effect shall have occurred;
(g) No Suspensions of Trading in Common Stock. The trading in the Common
Stock shall not have been suspended by the Commission or on the NASDAQ at any
time since the Closing Date and the Company shall not have received any notice
of threatened or pending proceedings for delisting the Common Stock from NASDAQ;
(h) Listing of Common Stock. The Common Stock shall have been at all times
since the Closing Date listed for trading on the NASDAQ;
(i) Shares of Common Stock. The Company shall have duly reserved the number
of shares of Common Stock as required by the Additional Transaction Documents to
be reserved for issuance upon exercise of the Additional Warrants;
(j) Performance of Exercise Obligations. The Company shall have timely
complied with its exercise and delivery requirements under the Initial Warrants;
(k) Closing Threshold. For the ten (10) Trading Days immediately preceding
the date of the delivery of the Additional Financing Notice, the average daily
trading volume of the Common Stock on the NASDAQ shall be at least 50,000 shares
and the average of the Per Share Market Value for such ten (10) Trading Day
period shall be greater than $10.00 (subject to equitable adjustments for stock
splits, recombinations and similar events);
(l) Shareholder Approval. No approval of the shareholders of the Company
shall be required under the rules of the Nasdaq Stock Market or such other
exchange or trading facility or which the Common Stock is the traded or listed
for trading in order to issue a minimum of twice the number of the shares of
Common Stock issuable upon exercise of the Additional Adjustable Warrants
(assuming(x) such exercise occurred on the Additional Closing Date (y) the
Applicable Share Number (as defined in the Additional Adjustable Warrants)
relating to each Additional Adjustable Warrant equals 100% of the Additional
Shares and (z) and Adjustment Price (as defined in the Additional Adjustable
Warrants) shall be deemed to mean the average of the four lowest Per Share
Market Values (which need not occur on consecutive Trading Days) during the 40
consecutive Trading Days preceding the Additional Closing Date); and
(m) Deliveries pursuant to the Additional Transaction Documents. At the
Additional Closing, the Company shall deliver the Additional Securities and
executed Additional Transaction Documents and Transfer Agent Instructions
relating to the Additional Securities in the forms contemplated by this letter.
6. Independent Nature of Purchasers' Obligations and Rights. The obligations of
each Purchaser hereunder is several and not joint with the obligations of any
other Purchaser hereunder, and neither Purchaser shall be responsible in any way
for the performance of the obligations of any other Purchaser hereunder. Nothing
contained herein or in any other agreement or document delivered at any closing,
and no action taken by any Purchaser pursuant hereto or thereto, shall be deemed
to constitute the Purchasers as a partnership, an association, a joint venture
or any other kind of entity, or create a presumption that the Purchasers are in
any way acting in concert with respect to such obligations or the transactions
contemplated by this Agreement. Each Purchaser shall be entitled to protect and
enforce its rights, including, without limitation, the rights arising out of
this letter or out of the Additional Transaction Documents, if any, and it shall
not be necessary for any other Purchaser to be joined as an additional party in
any proceeding for such purpose.
7. Governing Law. This letter shall be governed by and construed and enforced in
accordance with the internal laws of the State of New York, without regard to
the principles of conflicts of law thereof.
8. Execution. This letter may be executed in two or more counterparts, all of
which when taken together shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each party and
delivered to the other party, it being understood that both parties need not
sign the same counterpart. In the event that any signature is delivered by
facsimile transmission, such signature shall create a valid and binding
obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile signature
page were an original thereof.
Please indicate your agreement with the foregoing by executing
a countersigned copy of this letter and returning the same to our attention,
whereupon effective immediately thereafter this letter shall become a legally
valid and binding agreement between the Purchasers and the Company.
We look forward to our continuing relationship.
Sincerely,
Strong River Investments, Inc.
By: _______________________
Name: Xxxxxx X. Xxxxx
Title: Attorney-in-Fact
Montrose Investments Ltd.
By: _______________________
Name:
Title:
Xxxxxx and accepted
March 29, 2000
SafeScience, Inc.
By: _______________________
Name:
Title:
