NEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE
EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR
THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS THEREUNDER AND IN
COMPLIANCE WITH APPLICABLE STATE SECURITIES OR BLUE SKY LAWS.
SAFESCIENCE, INC.
WARRANT
-------
Warrant No. [ ] Dated: March 29, 2000
SafeScience, Inc., a Nevada corporation (the "Company"), hereby
certifies that, for value received, [ ] or its registered assigns ("Holder"), is
entitled, subject to the terms set forth below, to purchase from the Company the
total number of shares of common stock, $.01 par value per share (the "Common
Stock"), of the Company (each such share, a "Warrant Share" and all such shares,
the "Warrant Shares") calculated pursuant to Section 3 of this Warrant (subject
to adjustment for certain events as set forth herein) at an exercise price equal
to $.01 per share (as adjusted from time to time as provided in Section 8, the
"Exercise Price"), at the times set forth herein through and including the 40th
Business Day (as defined in Exhibit A) following the Third Vesting Date (as
defined herein) (the "Expiration Date"), and subject to the following terms and
conditions (certain terms used herein are defined in Exhibit A attached hereto):
1. Registration of Warrant. The Company shall register this Warrant,
upon records to be maintained by the Company for that purpose (the "Warrant
Register"), in the name of the record Holder hereof from time to time. The
Company may deem and treat the registered Holder of this Warrant as the absolute
owner hereof for the purpose of any exercise hereof or any distribution to the
Holder, and for all other purposes, and the Company shall not be affected by
notice to the contrary.
2. Registration of Transfers. The Company shall register the transfer
of any portion of this Warrant in the Warrant Register, upon surrender of this
Warrant, with the Form of Assignment attached hereto duly completed and signed,
to the Transfer Agent or to the Company at the address specified in Section 13.
Upon any such registration or transfer, a new warrant to purchase Common Stock,
in substantially the form of this Warrant (any such new warrant, a "New
Warrant"), evidencing the portion of this Warrant so transferred shall be issued
to the transferee and a New Warrant evidencing the remaining portion of this
Warrant not so transferred, if any, shall be issued to the transferring Holder.
The acceptance of the New Warrant by the transferee thereof shall be deemed the
acceptance of such transferee of all of the rights and obligations of a holder
of a Warrant.
3. Duration, Vesting and Exercise.
(a) The vesting of the Warrant Shares which the Holder is
permitted to acquire pursuant to this Warrant shall occur on the dates set forth
below. On each such date, this Warrant shall vest on a cumulative basis with
respect to a number of Warrant Shares calculated pursuant to Section 3(b) below.
Only the Warrant Shares that have vested may be acquired upon exercise of this
Warrant.
(i) The first vesting date (the "First Vesting
Date") shall be the Effective Date (as defined in Exhibit A), provided, that, at
the Holders option, the First Vesting Date may be delayed up to twelve months
after the Effective Date; provided, however, that if the Holder shall not have
provided the Company with notice of its intention for the First Vesting Date to
occur prior to the 14th month anniversary of the Effective Date, the First
Vesting Date shall occur on such 14th month anniversary of the Effective Date.
(ii) The second vesting date (the "Second Vesting
Date") shall be the 40th Trading Day following the First Vesting Date; and
(iii) The third vesting date (the "Third Vesting
Date") shall be the 40th Trading Day following the Second Vesting Date.
Each of the First Vesting Date, Second Vesting Date, and Third
Vesting Date shall be referred to herein as a Vesting Date.
(b) On each Vesting Date, this Warrant shall vest and become
exercisable with respect to the number of Warrant Shares calculated in
accordance with the following formula:
(Applicable Share Number) x [(Purchase Price - Adjustment Price)]
-----------------------------------------------------------------
Adjustment Price
If the number calculated in accordance with the foregoing
formula is zero or a negative number, no Warrant Shares shall vest hereunder for
such Vesting Date and the Holder shall not be obligated to transfer any shares
of Common Stock to the Company. In addition, the Holder shall not be obligated
to transfer any shares of Common Stock to the Company and the number Warrant
Shares exercisable hereunder which shall have previously vested will not
decrease.
(c) Notwithstanding anything herein to the contrary, if, after
the Effective Date, the average of the Per Share Market Values (as defined in
Exhibit A) for 20 consecutive Trading Days is greater than 135% of the Purchase
Price (as defined in Exhibit A) (which number shall be subject to equitable
adjustment for stock splits, recombinations and similar events), this Warrant
shall not vest with respect to any additional Warrant Shares but will remain in
effect as to any Warrant Shares which have vested prior thereto.
(d) Notwithstanding anything herein to the contrary, if on any
Vesting Date the Adjustment Price shall be less than 70% of the Purchase Price
(the "Floor Price"), then on such Vesting Date: (i) this Warrant shall vest with
respect to the Warrant Shares pursuant to Section 3(a) and (b) hereof, provided,
that the Adjustment Price pursuant to the formula set forth in Section 3(b)
shall, exclusively for purposes of this Section 3(d)(i), equal the Floor Price
(such number of Warrant Shares, the "Initial Shares") and (ii) with respect to
the Warrant Shares whose vesting would result in a vesting of Warrant Shares in
excess of the Initial Shares, the Company will have the option to elect by
written notice (the "Notice") delivered to the Holder no later than twenty (20)
Trading Days prior to the applicable Vesting Date to either (x) pay to the
Holder, in cash (the "Cash Payment"), within three (3) Trading Days after the
Vesting Date at issue (the "Delivery Date"), an amount equal to the product
obtained by multiplying (A) the Adjustment Price and (B) the difference between
the number of Warrant Shares which would have otherwise vested on such Vesting
Date pursuant to Section 3(a) and (b) hereof and the Initial Shares (such number
of Warrant Shares, the "Subsequent Shares") or (y) allow this Warrant to vest
with respect to the Subsequent Shares. A failure by the Company to deliver the
Notice to the Holder pursuant to the terms of this Section shall constitute an
election by the Company to allow this Warrant to vest as to the Subsequent
Shares pursuant to the terms hereof. If the Company shall fail to pay the Cash
Payment in full to the Holder by the third (3rd) Trading Day after the Vesting
Date at issue then, at the election of the Holder, the Company shall either (x)
pay to the Holder $5,000 per day (in addition to the Cash Payment) until the
Cash Payment and all additional payments due hereunder are paid in full or (y)
allow this Warrant to vest with respect to the number of Warrant Shares
calculated in accordance with the formula set forth in Section 3(b), provided,
that for purposes of such calculation, (A) the Adjustment Price shall be deemed
to mean 90% of 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
Delivery Date and (B) the Applicable Share Number shall be deemed to mean the
Subsequent Shares.
(e) Notwithstanding the foregoing provisions of this Section
3, at any time during the period between the Closing Date (as defined in Exhibit
A) and the Expiration Date, within ten (10) Trading Days following the
occurrence of any of the following events (each, an "Event"), the Holder shall
have the option to elect, by providing the Company with a notice (an "Event
Vesting Notice"), to have this Warrant vest with respect to those Warrant Shares
that have not yet already vested:
(i) upon the occurrence of any of (i) an acquisition
after the date hereof by an individual or legal entity or "group" (as described
in Rule 13d-5(b)(1) promulgated under the Securities Exchange Act of 1934, as
amended (the "Exchange Act") of in excess of 1/3 of the voting securities of the
Company, (ii) a replacement of more than one-half of the members of the
Company's board of directors which is not approved by those individuals who are
members of the board of directors on the date hereof in one or a series of
related transactions, (iii) the merger of the Company with or into another
entity, consolidation or sale of all or substantially all of the assets of the
Company in one or a series of related transactions, unless following such
transaction or series of transactions, the holders of the Company's securities
prior to the first such transaction continue to hold at least 2/3 of the
securities of the surviving entity or acquirer of such assets or (iv) the
execution by the Company of an agreement to which the Company is a party or by
which it is bound, providing for any of the events set forth above in (i), (ii)
or (iii);
(ii) immediately prior to an assignment by the
Company for the benefit of creditors or commencement of a voluntary case under
Title 11 of the United States Code, or an entering into of an order for relief
in an involuntary case under Title 11 of the United States Code, or adoption by
the Company of a plan of liquidation or dissolution;
(iii) five (5) Business Days prior to the proposed
consummation with respect to the Company of a Rule 13e-3 transaction as defined
in Rule 13e-3 under the Exchange Act (or, if necessary, such earlier date as the
Company shall determine in good faith to be required in order for the Holder to
be able to participate in such transaction), it being agreed that the Holder
will receive actual notice of the 13e-3 Statement filed with the Commission;
(iv) For any period of three (3) Trading Days (which
need not be consecutive Trading Days) commencing on or after the date of
issuance of this Warrant, there shall be no closing bid price on the Common
Stock on the Nasdaq (as defined in Exhibit A) or a Subsequent Market (as defined
in Exhibit A);
(v) The Common Stock fails to be listed or quoted
for trading on the Nasdaq or a Subsequent Market or for a period of three (3)
Trading Days (which need not be consecutive Trading Days);
(vi) After the Effective Date, a holder of
Registrable Securities (as defined in the Registration Rights Agreement) is not
permitted to sell Registrable Securities under the Underlying Shares
Registration Statement (as defined in Exhibit A) for any reason for five (5) or
more days (whether or not consecutive) provided the reason the holder of
Registrable Securities is not permitted to sell Registrable Securities is not
due to the transfer of such Registrable Securities to a person not named in any
effective Registration Statement (as defined in the Registration Rights
Agreement);
(vii) The Underlying Shares Registration Statement
shall not be declared effective by the Commission on or prior to the 30th day
following the Effectiveness Date (as defined in the Registration Rights
Agreement);
(viii) The Company shall fail for any reason to
deliver certificates to a Holder prior to the fifth day after a Date of Exercise
pursuant to and in accordance with Section 4(a);
(ix) The Company shall fail, pursuant to Section 2(a)
of the Registration Rights Agreement, to register the Registrable Securities on
a Form S-3 when such form becomes available (which shall not be later than May
23, 2000); or
(x) The Company shall fail or default in the
timely performance of any material obligation under the Transaction Documents
and such failure or default shall continue uncured for a period of five (5)
Business Days after the date on which notice of such failure or default is first
given to the Company (it being understood that no prior notice need be provided
in the case of defaults which cannot reasonably be cured within a 5-day period).
In the event the Holder delivers an Event Vesting Notice, this
Warrant shall vest with respect to the number of Warrant Shares calculated in
accordance with the formula set forth in Section 3(b), provided, that for
purposes of such calculation, (A) the Adjustment Price 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
date of the Event and (B) the Applicable Share Number shall be deemed to mean
(i) prior to the First Vesting Date 100% of the number of shares of Common Stock
purchased by the Holder pursuant to the Purchase Agreement, (ii) after the First
Vesting Date and prior to the Second Vesting Date 66 2/3% of the number of
shares of Common Stock purchased by the Holder pursuant to the Purchase
Agreement; and (iii) after the Second Vesting Date and prior to the Third
Vesting Date 33 1/3% of the number of shares of Common Stock purchased by the
Holder pursuant to the Purchase Agreement. After the Third Vesting Date the
Applicable Share Number shall equal zero.
(f) Subject to Sections 3(a) and (b), this Warrant shall be
exercisable by the registered Holder on any Business Day before 6:30 P.M., New
York City time, at any time and from time to time on or after the date hereof to
and including the Expiration Date. At 6:30 P.M., New York City time on the
Expiration Date, the portion of this Warrant not exercised prior thereto shall
be and become void and of no value.
(g) Subject to Sections 3(a) and (b), this Warrant shall be
exercisable, either in its entirety or, from time to time, for a portion of the
number of Warrant Shares. If less than all of the Warrant Shares which may be
purchased under this Warrant are exercised at any time, the Company shall issue
or cause to be issued, at its expense, a New Warrant evidencing the right to
purchase the remaining number of Warrant Shares for which no exercise has been
evidenced by this Warrant.
4. Delivery of Warrant Shares.
(a) Upon surrender of this Warrant, with the Form of Election
to Purchase attached hereto duly completed and signed, to the Company at its
address for notice set forth in Section 12 and upon payment of the Exercise
Price multiplied by the number of Warrant Shares that the Holder intends to
purchase hereunder, in the manner provided hereunder, all as specified by the
Holder in the Form of Election to Purchase, the Company shall promptly (but in
no event later than 3 business days after the Date of Exercise) issue or cause
to be issued and cause to be delivered to or upon the written order of the
Holder and in such name or names as the Holder may designate, a certificate for
the Warrant Shares issuable upon such exercise, free of restrictive legends
except (i) either in the event that a registration statement covering the resale
of the Warrant Shares and naming the Holder as a selling stockholder thereunder
is not then effective or the Warrant Shares are not freely transferable without
volume restrictions pursuant to Rule 144(k) promulgated under the Securities Act
of 1933, as amended (the "Securities Act"), or (ii) if this Warrant shall have
been issued pursuant to a written agreement between the original Holder and the
Company, as required by such agreement. Any person so designated by the Holder
to receive Warrant Shares shall be deemed to have become holder of record of
such Warrant Shares as of the Date of Exercise of this Warrant. The Company
shall, upon request of the Holder, if available, use its best efforts to deliver
Warrant Shares hereunder electronically through the Depository Trust Company or
another established clearing corporation performing similar functions.
A "Date of Exercise" means the date on which the
Holders shall have delivered to the Company (i) this Warrant (or any New
Warrant, as applicable), with the Form of Election to Purchase attached
hereto (or attached to such New Warrant) appropriately completed and duly
signed, and (ii) payment of the Exercise Price for the number of Warrant Shares
so indicated by the holder hereof to be purchased.
(b) If the Company fails to deliver to the Holder certificate
or certificates representing the Warrant Shares pursuant to Section 4(a) by the
fourth (4th) Trading Day after the Date of Exercise, the Company shall pay to
such Holder, in cash, as liquidated damages and not as a penalty, $5,000 for
each day after such fourth (4th) Trading Day until such certificates are
delivered. Nothing herein shall limit the Holder's right to pursue actual
damages for the Company's failure to deliver certificates representing shares of
Common Stock upon exercise within the period specified herein and the Holder
shall have the right to pursue all remedies available to it at law or in equity
including, without limitation, a decree of specific performance and/or
injunctive relief. The exercise of any such rights shall not prohibit the Holder
from seeking to enforce damages pursuant to any other Section hereof or under
applicable law.
(c) In addition to any other rights available to the Holder,
if the Company fails to deliver to the Holder certificate or certificates
representing the Warrant Shares pursuant to Section 4(a) by the fourth (4th)
Trading Day after the Date of Exercise, and if after such fourth (4th) Trading
Day the Holder purchases (in an open market transaction or otherwise) shares of
Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant
Shares which the Holder anticipated receiving upon such exercise (a "Buy-In"),
then the Company shall pay (1) in cash to the Holder the amount by which (x) the
Holder's total purchase price (including brokerage commissions, if any) for the
shares of Common Stock so purchased exceeds (y) the amount obtained by
multiplying (A) the number of Warrant Shares that the Company was required to
deliver pursuant to Section 4(b) to deliver to the Holder in connection with the
exercise at issue by (B) the Per Share Market Value at the time of the
obligation giving rise to such purchase obligation and (2) deliver to the Holder
the number of shares of Common Stock that would have been issued had the Company
timely complied with its exercise and delivery obligations under Section 4(b).
For example, if the Holder purchases Common Stock having a total purchase price
of $11,000 to cover a Buy-In with respect to an attempted exercise of shares of
Common Stock with a market price on the date of exercise totaled $10,000, under
clause (A) of the immediately preceding sentence the Company shall be required
to pay the Holder $1,000. The Holder shall provide the Company written notice
indicating the amounts payable to the Holder in respect of the Buy-In.
(d) The Company's obligations to issue and deliver Warrant
Shares in accordance with the terms hereof are absolute and unconditional,
irrespective of any action or inaction by the Holder to enforce the same, any
waiver or consent with respect to any provision hereof, the recovery of any
judgment against any Person or any action to enforce the same, or any setoff,
counterclaim, recoupment, limitation or termination, or any breach or alleged
breach by the Holder or any other Person of any obligation to the Company or any
violation or alleged violation of law by the Holder or any other Person, and
irrespective of any other circumstance which might otherwise limit such
obligation of the Company to the Holder in connection with the issuance of
Warrant Shares. If the Company breaches its obligations under this Warrant,
then, in addition to any other liabilities the Company may have hereunder and
under applicable law, the Company shall pay or reimburse the Holder on demand
for all costs of collection and enforcement (including reasonable attorneys fees
and expenses).
5. Payment of Taxes. The Company will pay all documentary stamp taxes
attributable to the issuance of Warrant Shares upon the exercise of this
Warrant; provided, however, that the Company shall not be required to pay any
tax which may be payable in respect of any transfer involved in the registration
of any certificates for Warrant Shares or Warrants in a name other than that of
the Holder. The Holder shall be responsible for all other tax liability that may
arise as a result of holding or transferring this Warrant or receiving Warrant
Shares upon exercise hereof.
6. Replacement of Warrant. If this Warrant is mutilated, lost, stolen
or destroyed, the Company shall issue or cause to be issued in exchange and
substitution for and upon cancellation hereof, or in lieu of and substitution
for this Warrant, a New Warrant, but only upon receipt of evidence reasonably
satisfactory to the Company of such loss, theft or destruction and customary and
reasonable indemnity, if requested. Applicants for a New Warrant under such
circumstances shall also comply with such other reasonable regulations and
procedures and pay such other reasonable charges as the Company may prescribe.
7. Reservation of Warrant Shares. The Company covenants that it will,
on the date hereof, reserve and keep available out of the aggregate of its
authorized but unissued Common Stock, solely for the purpose of enabling it to
issue Warrant Shares upon exercise of this Warrant, a number of shares of Common
Stock that is not less than the number of shares of Common Stock issuable upon
exercise of this Warrant on the First Vesting Date, assuming for such purposes
that on the First Vesting Date: (A) the Applicable Share Number equals the
entire number of shares of Common Stock purchased by the original Holder under
the Purchase Agreement and (B) the Adjustment Price equals 50% of the Per Share
Market Value on the Trading Day immediately preceding the Closing Date. If on
any date the Warrant Shares issuable upon exercise of this Warrant exceed 85% of
the shares of Common Stock so reserved pursuant to the terms hereof, the Company
will immediately increase the number of shares of Common Stock reserved for
issuance upon exercise hereunder to a number equal to the number of shares of
Common Stock then issuable upon exercise of this Warrant. All such reserved
shares of Common Stock shall be free from preemptive rights or any other actual
contingent purchase rights of persons other than the Holder (taking into account
the adjustments and restrictions of Section 8). . The Company covenants that all
Warrant Shares that shall be so issuable and deliverable shall, upon issuance
and the payment of the applicable Exercise Price in accordance with the terms
hereof, be duly and validly authorized, issued and fully paid and nonassessable.
8. Certain Adjustments. The Purchase Price, the Exercise Price and
number of Warrant Shares issuable upon exercise of this Warrant are subject to
adjustment from time to time as set forth in this Section. Upon each such
adjustment of the Exercise Price pursuant to this Section, the Holder shall
thereafter prior to the Expiration Date be entitled to purchase, at the Exercise
Price resulting from such adjustment, the number of Warrant Shares obtained by
multiplying the Exercise Price in effect immediately prior to such adjustment by
the number of Warrant Shares issuable upon exercise of this Warrant immediately
prior to such adjustment and dividing the product thereof by the Exercise Price
resulting from such adjustment.
(i) If the Company, at any time while this Warrant is outstanding, (i)
shall pay a stock dividend (except scheduled dividends paid on outstanding
preferred stock as of the date hereof which contain a stated dividend rate) or
otherwise make a distribution or distributions on shares of its Common Stock or
on any other class of capital stock payable in shares of Common Stock, (ii)
subdivide outstanding shares of Common Stock into a larger number of shares, or
(iii) combine outstanding shares of Common Stock into a smaller number of
shares, the Exercise Price shall be multiplied by a fraction of which the
numerator shall be the number of shares of Common Stock (excluding treasury
shares, if any) outstanding before such event and of which the denominator shall
be the number of shares of Common Stock (excluding treasury shares, if any)
outstanding after such event. Any adjustment made pursuant to this Section shall
become effective immediately after the record date for the determination of
stockholders entitled to receive such dividend or distribution and shall become
effective immediately after the effective date in the case of a subdivision or
combination, and shall apply to successive subdivisions and combinations.
(ii) In case of any reclassification of the Common Stock or any
compulsory share exchange pursuant to which the Common Stock is converted into
other securities, cash or property, then the Holder shall have the right
thereafter to exercise this Warrant only into the shares of stock and other
securities and property receivable upon or deemed to be held by holders of
Common Stock following such reclassification, transfer or share exchange, and
the Holder shall be entitled upon such event to receive such amount of
securities or property equal to the amount of Warrant Shares such Holder would
have been entitled to had such Holder exercised this Warrant immediately prior
to such reclassification or share exchange. The terms of any such
reclassification or share exchange shall include such terms so as to continue to
give to the Holder the right to receive the securities or property set forth in
this Section 8(b) upon any exercise following any such reclassification or share
exchange.
(iii) If the Company, at any time while this Warrant is outstanding,
shall distribute to all holders of Common Stock (and not to holders of this
Warrant) evidences of its indebtedness or assets or rights or warrants to
subscribe for or purchase any security (excluding those referred to in Sections
8(i), (ii) and (iv)), then in each such case the Exercise Price shall be
determined by multiplying the Exercise Price in effect immediately prior to the
record date fixed for determination of stockholders entitled to receive such
distribution by a fraction of which the denominator shall be the Exercise Price
determined as of the record date mentioned above, and of which the
numerator shall be such Exercise Price on such record date less the then fair
market value at such record date of the portion of such assets or evidence of
indebtedness so distributed applicable to one outstanding share of Common Stock
as determined by the Company's independent certified public accountants that
regularly examines the financial statements of the Company (an "Appraiser").
(iv) Except for (i) the issuance of shares of Common Stock and warrants
to purchase Common Stock for an aggregate purchase price of up to $5,000,000
pursuant to a private placement memorandum dated March 10, 2000 and (ii) the
issuance of shares of Common Stock pursuant to the terms of this and other
identical warrants issued on the Closing Date, if the Company or any subsidiary
thereof, as applicable with respect to Common Stock Equivalents (as defined
below), at any time while this Warrant is outstanding, shall issue shares of
Common Stock or rights, warrants, options or other securities or debt that is
convertible into or exchangeable for shares of Common Stock ("Common Stock
Equivalents"), entitling any person to acquire shares of Common Stock at a price
per share less than the Purchase Price (if the holder of the Common Stock or
Common Stock Equivalent so issued shall at any time, whether by operation of
purchase price adjustments, reset provisions, floating conversion, exercise or
exchange prices or otherwise, or due to warrants, options or rights issued in
connection with such issuance, be entitled to receive shares of Common Stock at
a price less than the Purchase Price, such issuance shall be deemed to have
occurred for less than the Purchase Price), then the Purchase Price shall be
multiplied by a fraction, the numerator of which shall be the number of shares
of Common Stock outstanding immediately prior to the issuance of such Common
Stock or such Common Stock Equivalents plus the number of shares of Common Stock
which the offering price for such shares of Common Stock or Common Stock
Equivalents would purchase at the Purchase Price, and the denominator of which
shall be the sum of the number of shares of Common Stock outstanding immediately
prior to such issuance plus the number of shares of Common Stock so issued or
issuable, provided, that for purposes hereof, all shares of Common Stock that
are issuable upon conversion, exercise or exchange of Common Stock Equivalents
shall be deemed outstanding immediately after the issuance of such Common Stock
Equivalents. Such adjustment shall be made whenever such Common Stock or Common
Stock Equivalents are issued. However, upon the expiration of any Common Stock
Equivalents the issuance of which resulted in an adjustment in the Purchase
Price pursuant to this Section, if any such Common Stock Equivalents shall
expire and shall not have been exercised, the Purchase Price shall immediately
upon such expiration be recomputed and effective immediately upon such
expiration be increased to the price which it would have been (but reflecting
any other adjustments in the Purchase Price made pursuant to the provisions of
this Section after the issuance of such Common Stock Equivalents) had the
adjustment of the Purchase Price made upon the issuance of such Common Stock
Equivalents been made on the basis of offering for subscription or purchase only
that number of shares of the Common Stock actually purchased upon the exercise
of such Common Stock Equivalents actually exercised.
(v) In case of any (1) merger or consolidation of the Company with or
into another Person, or (2) sale by the Company of more than one-half of the
assets of the Company (on a book value basis) in one or a series of related
transactions, the Holder shall have the right thereafter to exercise this
Warrant for the shares of stock and other securities, cash and property
receivable upon or deemed to be held by holders of Common Stock following such
merger, consolidation or sale, and the Holder shall be entitled upon such event
or series of related events to receive such amount of securities, cash and
property as the Common Stock for which this Warrant could have been exercised
immediately prior to such merger, consolidation or sales would have been
entitled. The terms of any such merger, sale or consolidation shall include such
terms so as continue to give the Holder the right to receive the securities,
cash and property set forth in this Section upon any conversion or redemption
following such event. This provision shall similarly apply to successive such
events.
(vi) For the purposes of this Section 8, the following clauses shall
also be applicable:
(i) Record Date. In case the Company shall take a record of
the holders of its Common Stock for the purpose of entitling them (A) to receive
a dividend or other distribution payable in Common Stock or in securities
convertible or exchangeable into shares of Common Stock, or (B) to subscribe for
or purchase Common Stock or securities convertible or exchangeable into shares
of Common Stock, then such record date shall be deemed to be the date of the
issue or sale of the shares of Common Stock deemed to have been issued or sold
upon the declaration of such dividend or the making of such other distribution
or the date of the granting of such right of subscription or purchase, as the
case may be.
(ii) Treasury Shares. The number of shares of Common Stock
outstanding at any given time shall not include shares owned or held by or for
the account of the Company, and the disposition of any such shares shall be
considered an issue or sale of Common Stock.
(vii) All calculations under this Section 8 shall be made to the
nearest cent or the nearest 1/100th of a share, as the case may be.
(viii) Whenever the Exercise Price is adjusted pursuant to Section
8(iii) above, the Holder, after receipt of the determination by the Appraiser,
shall have the right to select an additional appraiser (which shall be a
nationally recognized accounting firm), in which case the adjustment shall be
equal to the average of the adjustments recommended by each of the Appraiser and
such appraiser. The Holder shall promptly mail or cause to be mailed to the
Company, a notice setting forth the Exercise Price after such adjustment and
setting forth a brief statement of the facts requiring such adjustment. Such
adjustment shall become effective immediately after the record date mentioned
above.
(ix) If (i) the Company shall declare a dividend (or any other
distribution) on its Common Stock; (ii) the Company shall declare a special
nonrecurring cash dividend on or a redemption of its Common Stock; (iii) the
Company shall authorize the granting to all holders of the Common Stock rights
or warrants to subscribe for or purchase any shares of capital stock of any
class or of any rights; (iv) the approval of any stockholders of the Company
shall be required in connection with any reclassification of the Common Stock,
any consolidation or merger to which the Company is a party, any sale or
transfer of all or substantially all of the assets of the Company, or any
compulsory share exchange whereby the Common Stock is converted into other
securities, cash or property; or (v) the Company shall authorize the voluntary
dissolution, liquidation or winding up of the affairs of the Company, then the
Company shall cause to be mailed to each Holder at their last addresses as they
shall appear upon the Warrant Register, at least 20 calendar days prior to the
applicable record or effective date hereinafter specified, a notice stating (x)
the date on which a record is to be taken for the purpose of such dividend,
distribution, redemption, rights or warrants, or if a record is not to be taken,
the date as of which the holders of Common Stock of record to be entitled to
such dividend, distributions, redemption, rights or warrants are to be
determined or (y) the date on which such reclassification, consolidation,
merger, sale, transfer or share exchange is expected to become effective or
close, and the date as of which it is expected that holders of Common Stock of
record shall be entitled to exchange their shares of Common Stock for
securities, cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer, share exchange, dissolution, liquidation
or winding up; provided, that the failure to mail such notice or any defect
therein or in the mailing thereof shall not affect the validity of the corporate
action required to be specified in such notice.
9. Payment of Exercise Price. The Holder shall pay the Exercise Price
in one of the following manners:
(a) Cash Exercise. The Holder may deliver immediately
available funds; or
(b) Cashless Exercise. The Holder may surrender this Warrant
to the Company together with a notice of cashless exercise, in which event the
Company shall issue to the Holder the number of Warrant Shares determined as
follows:
X = Y [(A-B)/A]where:
X = the number of Warrant Shares to be
issued to the Holder.
Y = the number of Warrant Shares with
respect to which this Warrant is being
exercised.
A = the average of the closing sale prices
of the Common Stock for the five (5) trading
days immediately prior to (but not
including) the Date of Exercise as reported
by Bloomberg Information Systems, Inc. (or
any successor to its function of reporting
stock prices).
B = the Exercise Price.
For purposes of Rule 144 promulgated under the Securities Act, it is intended,
understood and acknowledged that the Warrant Shares issued in a cashless
exercise transaction shall be deemed to have been acquired by the Holder, and
the holding period for the Warrant Shares shall be deemed to have been
commenced, on the issue date.
10. Certain Exercise Restrictions
(a) A Holder may not exercise this Warrant to the extent such
exercise would result in the Holder, together with any affiliate thereof,
beneficially owning (as determined in accordance with Section 13(d) of the
Exchange Act and the rules promulgated thereunder) in excess of 4.999% of the
then issued and outstanding shares of Common Stock, including shares issuable
upon such exercise and held by such Holder after application of this Section.
Since the Holder will not be obligated to report to the Company the number of
shares of Common Stock it may hold at the time of an exercise hereunder, unless
the exercise at issue would result in the issuance of shares of Common Stock in
excess of 4.999% of the then outstanding shares of Common Stock without regard
to any other shares which may be beneficially owned by the Holder or an
affiliate thereof, the Holder shall have the authority and obligation to
determine whether the restriction contained in this Section will limit any
particular exercise hereunder and to the extent that the Holder determines that
the limitation contained in this Section applies, the determination of which
portion of this Warrant is exercisable shall be the responsibility and
obligation of the Holder. If the Holder has delivered a Form of Election to
Purchase for a number of Warrant Shares that, without regard to any other shares
that the Holder or its affiliates may beneficially own, would result in the
issuance in excess of the permitted amount hereunder, the Company shall notify
the Holder of this fact and shall honor the exercise for the maximum portion of
this Warrant permitted to be exercised on such Date of Exercise in accordance
with the periods described herein and, at the option of the Holder, either keep
the portion of the Warrant tendered for exercise in excess of the permitted
amount hereunder for future exercises or return such excess portion of the
Warrant to the Holder. The provisions of this Section may be waived by a Holder
(but only as to itself and not to any other Holder) upon not less than 61 days
prior notice to the Company. Other Holders shall be unaffected by any such
waiver.
(b) A Holder may not exercise this Warrant to the extent such
exercise would result in the Holder, together with any affiliate thereof,
beneficially owning (as determined in accordance with Section 13(d) of the
Exchange Act and the rules promulgated thereunder) in excess of 9.999% of the
then issued and outstanding shares of Common Stock, including shares issuable
upon such exercise and held by such Holder after application of this Section.
Since the Holder will not be obligated to report to the Company the number of
shares of Common Stock it may hold at the time of an exercise hereunder, unless
the exercise at issue would result in the issuance of shares of Common Stock in
excess of 9.999% of the then outstanding shares of Common Stock without regard
to any other shares which may be beneficially owned by the Holder or an
affiliate thereof, the Holder shall have the authority and obligation to
determine whether the restriction contained in this Section will limit any
particular exercise hereunder and to the extent that the Holder determines that
the limitation contained in this Section applies, the determination of which
portion of this Warrant is exercisable shall be the responsibility and
obligation of the Holder. If the Holder has delivered a Form of Election to
Purchase for a number of Warrant Shares that, without regard to any other shares
that the Holder or its affiliates may beneficially own, would result in the
issuance in excess of the permitted amount hereunder, the Company shall notify
the Holder of this fact and shall honor the exercise for the maximum portion of
this Warrant permitted to be exercised on such Date of Exercise in accordance
with the periods described herein and, at the option of the Holder, either keep
the portion of the Warrant tendered for exercise in excess of the permitted
amount hereunder for future exercises or return such excess portion of the
Warrant to the Holder. The provisions of this Section may be waived by a Holder
(but only as to itself and not to any other Holder) upon not less than 61 days
prior notice to the Company. Other Holders shall be unaffected by any such
waiver.
(c) If the Company Stock is then listed for trading on the
Nasdaq or the Nasdaq National Market and the Company has not obtained the
Shareholder Approval (as defined below), then the Company may not issue in
excess of the product of (i) 3,382,580 (which number equals 19.999% of the
shares of Common Stock outstanding on the Closing Date and shall be subject to
adjustment pursuant to the anti-dilution provisions hereof) Warrant Shares upon
exercise of this Warrant and (ii) the quotient obtained by dividing (x) the
number of shares of Common Stock issued and sold to the original Holder on the
Closing Date by (y) the number of shares of Common Stock issued and sold by the
Company on the Closing Date (such number of shares, the "Issuable Maximum"). If
any Holder shall no longer hold Warrants then such Holder's remaining portion of
the Issuable Maximum shall be allocated pro-rata among the remaining Holders. If
on any Date of Exercise (A) the Company Stock is listed for trading on the
Nasdaq or the Nasdaq National Market, (B) the Exercise Price then in effect is
such that the aggregate number of shares of Common Stock that would then be
issuable upon exercise in full of this Warrant, together with any shares of
Common Stock previously issued upon exercise of this Warrant, would equal or
exceed the Issuable Maximum, and (C) the Company shall not have previously
obtained the vote of shareholders, if any, as may be required by the applicable
rules and regulations of the Nasdaq Stock Market to approve the issuance of
shares of Common Stock in excess of the Issuable Maximum pursuant to the terms
hereof (the "Shareholder Approval"), then the Company shall issue to the Holder
a number of shares of Common Stock equal to the Issuable Maximum and, with
respect to the shares whose issuance would result in an issuance of shares of
Common Stock in excess of the Issuable Maximum, (the "Excess Warrant Shares"),
the Holder shall have the option to require the Company to either (1) use its
best efforts to obtain the Shareholder Approval applicable to such issuance as
soon as possible, but in any event no later than 60 days after such request
(such 60th day, the "Target Date") or (2) pay to the Holder, within five (5)
Trading Days after the request therefor, an amount in cash equal to the product
of (x) the Excess Warrant Shares multiplied by (y) the closing sales price of
the Common Stock on (a) the Target Date or (b) the Date of Exercise giving rise
to the obligation to seek Shareholder Approval, whichever is greater (the "Cash
Payment"). In the event the Holder has elected to require the Company to seek
the Shareholder Approval pursuant to clause (1) of the immediately preceding
sentence and the Company does not obtain the Shareholder Approval on or prior to
the Target Date, then, on the Target Date, the Company shall pay the Cash
Payment to the Holder. If the Company fails to pay the Cash Payment in full
pursuant to this Section within seven (7) days after the date payable, the
Company will pay interest on such amount at a rate of 18% per annum, or such
lesser maximum amount that is permitted to be paid by applicable law, to the
Holder, accruing daily from the date payable until such amount, plus all such
interest thereon, is paid in full. The Company and the Holder understand and
agree that shares of Common Stock issued upon exercise of this Warrant and then
held by the Holder or an affiliate thereof may not cast votes or be deemed
outstanding for purposes of any vote to obtain the Shareholder Approval.
12. Fractional Shares. The Company shall not be required to issue or
cause to be issued fractional Warrant Shares on the exercise of this Warrant.
The number of full Warrant Shares which shall be issuable upon the exercise of
this Warrant shall be computed on the basis of the aggregate number of Warrant
Shares purchasable on exercise of this Warrant so presented. If any fraction of
a Warrant Share would, except for the provisions of this Section 14, be issuable
on the exercise of this Warrant, the Company shall pay an amount in cash equal
to the Exercise Price multiplied by such fraction.
13. Notices. Any and all notices or other communications or deliveries
hereunder shall be in writing and shall be deemed given and effective on the
earliest of (i) the date of transmission, if such notice or communication is
delivered via facsimile at the facsimile telephone number specified in this
Section prior to 6:30 P.M. (New York City time) on a Business Day, (ii) the
Business Day after the date of transmission, if such notice or communication is
delivered via facsimile at the facsimile telephone number specified in this
Section later than 6:30 P.M. (New York City time) on any date and earlier than
11:59 P.M. (New York City time) on such date, (iii) the Business Day following
the date of mailing, if sent by nationally recognized overnight courier service,
or (iv) upon actual receipt by the party to whom such notice is required to be
given. The addresses for such communications shall be: (i) if to the Company, to
Park Square Building, 00 Xx. Xxxxx Xxxxxx, 0xx Xxxxx, Xxxxxx, XX 00000,
facsimile: 000-000-0000, attention Chief Financial Officer, or (ii) if to the
Holder, to the Holder at the address or facsimile number appearing on the
Warrant Register or such other address or facsimile number as the Holder may
provide to the Company in accordance with this Section.
14. Warrant Agent.
(a) The Company shall serve as warrant agent under this
Warrant. Upon thirty (30) days' notice to the Holder, the Company may appoint a
new warrant agent.
(b) Any corporation into which the Company or any new warrant
agent may be merged or any corporation resulting from any consolidation to which
the Company or any new warrant agent shall be a party or any corporation to
which the Company or any new warrant agent transfers substantially all of its
corporate trust or shareholders services business shall be a successor warrant
agent under this Warrant without any further act. Any such successor warrant
agent shall promptly cause notice of its succession as warrant agent to be
mailed (by first class mail, postage prepaid) to the Holder at the Holder's last
address as shown on the Warrant Register.
15. Miscellaneous.
(a) This Warrant shall be binding on and inure to the benefit
of the parties hereto and their respective successors and assigns. This Warrant
may be amended only in writing signed by the Company and the Holder and their
successors and assigns.
(b) Subject to Section 15(a), above, nothing in this Warrant
shall be construed to give to any person or corporation other than the Company
and the Holder any legal or equitable right, remedy or cause under this Warrant.
This Warrant shall inure to the sole and exclusive benefit of the Company and
the Holder.
(c) The corporate laws of the State of Nevada shall govern all
issues concerning the relative rights of the Company and its stockholders. All
other questions concerning the construction, validity, enforcement and
interpretation of this Warrant 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. The Company and the Holder hereby
irrevocably submit to the exclusive jurisdiction of the state and federal courts
sitting in the City of New York, borough of Manhattan, for the adjudication of
any dispute hereunder or in connection herewith or with any transaction
contemplated hereby or discussed herein, and hereby irrevocably waives, and
agrees not to assert in any suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of any such court, or that such suit,
action or proceeding is improper. Each of the Company and the Holder hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by receiving a copy thereof sent
to the Company at the address in effect for notices to it under this instrument
and agrees that such service shall constitute good and sufficient service of
process and notice thereof. Nothing contained herein shall be deemed to limit in
any way any right to serve process in any manner permitted by law.
(d) The headings herein are for convenience only, do not
constitute a part of this Warrant and shall not be deemed to limit or affect any
of the provisions hereof.
(e) In case any one or more of the provisions of this Warrant
shall be invalid or unenforceable in any respect, the validity and
enforceability of the remaining terms and provisions of this Warrant shall not
in any way be affected or impaired thereby and the parties will attempt in good
faith to agree upon a valid and enforceable provision which shall be a
commercially reasonable substitute therefor, and upon so agreeing, shall
incorporate such substitute provision in this Warrant.
[REMAINDER OF XXXX INTENTIONALLY LEFT BLANK,
SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the Company has caused this Warrant to be
duly executed by its authorized officer as of the date first indicated above.
SAFESCIENCE, INC.
By:_________________________________
Name:
Title:
FORM OF ELECTION TO PURCHASE
(To be executed by the Holder to exercise the right to purchase shares of Common
Stock under the foregoing Warrant)
To SafeScience, Inc.
In accordance with the Warrant enclosed with this Form of Election to
Purchase, the undersigned holder hereby exercises the right to purchase
_________________ of the shares of Common Stock ("Warrant Shares") of
SafeScience, Inc., a Nevada corporation (the "Company"), evidenced by the
attached Warrant (the "Warrant"). Capitalized terms used herein and not
otherwise defined shall have the respective meanings set forth in the Warrant.
1. Form of Exercise Price. The Holder intends that payment of the
Exercise Price shall be made as:
____________ a "Cash Exercise" with respect to _________
Warrant Shares; and/or
____________ a "Cashless Exercise" with respect to _____
Warrant Shares (to the extent permitted by
the terms of the Warrant).
2. Payment of Exercise Price. In the event that the holder has elected
a Cash Exercise with respect to some or all of the Warrant Shares to be issued
pursuant hereto, the holder shall pay the sum of $___________________ to the
Company in accordance with the terms of the Warrant.
3. Delivery of Warrant Shares. The Company shall deliver to the holder
__________ Warrant Shares in accordance with the terms of the Warrant.
Date: _______________ __, ______
Name of Registered Holder
By: __________________________________
Name:
Title:
If the number of shares of Common Stock issuable upon this exercise
shall not be all of the shares of Common Stock which the undersigned is entitled
to purchase in accordance with the enclosed Warrant, the undersigned requests
that a New Warrant (as defined in the Warrant) evidencing the right to purchase
the shares of Common Stock not issuable pursuant to the exercise
evidenced hereby be issued in the name of and delivered to:
--------------------------------------------------------------------------------
(Please print name and address)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Dated: , Name of Holder:
(Print)
(By:)
(Name:)
(Title:)
(Signature must conform in all respects
to name of holder as specified on the
face of the Warrant)
FORM OF ASSIGNMENT
[To be completed and signed only upon transfer of Warrant]
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ________________________________ the right represented by the within
Warrant to purchase ____________ shares of Common Stock of SafeScience, Inc. to
which the within Warrant relates and appoints ________________ attorney to
transfer said right on the books of SafeScience, Inc. with full power of
substitution in the premises.
Dated:
---------------, ----
---------------------------------------
(Signature must conform in all
respects to name of holder as
specified on the face of the Warrant)
---------------------------------------
Address of Transferee
---------------------------------------
---------------------------------------
In the presence of:
--------------------------
Exhibit A
---------
(i) "Adjustment Price" means 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 a Vesting Date.
(ii) "Applicable Share Number" means 1/3 of the number of shares of
Common Stock purchased by the Holder pursuant to the Purchase Agreement.
(iii) "Business Day" shall have the meaning set forth in the Purchase
Agreement.
(iv) "Closing Date" shall have the meaning set forth in the Purchase
Agreement.
(v) "Commission" means the Securities and Exchange Commission.
(vi) "Effective Date" the date on which the Underlying Shares
Registration Statement is first declared effective by the Commission.
(vii) "Nasdaq" means the Nasdaq SmallCap Market.
(viii) "Per Share Market Value" means on any particular date (a) the
closing bid price per share of the Common Stock on such date on the Nasdaq or on
any Subsequent Market on which the Common Stock is then listed or quoted, as
reported by Bloomberg Information Services, Inc. (or any successor entity
succeeding to its function of reporting prices), or if Nasdaq or such Subsequent
Market begins to operate on an extended hours basis, and does not designate the
closing bid price, then the last bid price at 4:00 p.m., Eastern Time, as
reported by Bloomberg Information Services, Inc., or if there is no such price
on such date, then the closing bid price on the Nasdaq or on such Subsequent
Market on the date nearest preceding such date, as reported by Bloomberg
Information Services, Inc. (or any successor entity succeeding to its function
of reporting prices), or (b) if the Common Stock is not then listed or quoted on
the Nasdaq or a Subsequent Market, the closing bid price for a share of Common
Stock in the over-the-counter market, as reported by the National Quotation
Bureau Incorporated or similar organization or agency succeeding to its
functions of reporting prices) at the close of business on such date, or (c) if
the Common Stock is not then reported by the National Quotation Bureau
Incorporated (or similar organization or agency succeeding to its functions of
reporting prices), then the average of the "Pink Sheet" quotes for the relevant
conversion period, as determined in good faith by the Holder, or (d) if the
Common Stock is not then publicly traded the fair market value of a share of
Common Stock as determined by an appraiser selected in good faith by the Holders
of a majority of the applicable Warrant Shares.
(ix) "Purchase Agreement" means the Securities Purchase Agreement,
dated the Closing Date to which the Company and the original Holder are parties
and pursuant to which this Warrant was issued.
(x) "Purchase Price" means $[ ]1 (which number shall be subject to
equitable adjustment for stock splits, recombinations and similar events).
(xi) "Registration Rights Agreement" means the Registration Rights
Agreement, dated the Closing Date hereof to which the Company and the original
Holder are parties.
(xii) "Subsequent Market" shall mean any of the New York Stock
Exchange, American Stock Exchange, Inc or Nasdaq National Market.
(xiii) "Trading Day" means (a) a day on which the Common Stock is
traded on the Nasdaq or on the Subsequent Market on which the Common Stock is
then listed or quoted, as the case may be, or (b) if the Common Stock s not
listed on the Nasdaq or on a Subsequent Market, a day on which the Common Stock
is traded in the over-the-counter market, as reported by the OTC Bulletin Board,
or (c) if the Common Stock is not quoted on the OTC Bulletin Board, a day on
which the Common Stock is quoted in the over-the-counter market as reported by
the National Quotation Bureau Incorporated (or any similar organization or
agency succeeding its functions of reporting prices); provided, that in the
event that the Common Stock is not listed or quoted as set forth in (a), (b) and
(c) hereof, then Trading Day shall mean a Business Day.
(xiv) "Transaction Documents" shall have the meaning set forth in the
Purchase Agreement.
(xv) "Underlying Shares Registration Statement" shall have the meaning
ascribed to it in the Purchase Agreement.
--------
1 The lesser of (i)110% of the average of the closing bid prices of the Common
Stock for four Trading Days preceding the Closing Date and (ii) $16.00.
