Warrant Purchase Agreement
THE WARRANTS AND THE SECURITIES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR QUALIFIED UNDER ANY STATE OR FOREIGN SECURITIES LAWS AND MAY NOT BE OFFERED FOR SALE, SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED OR ASSIGNED UNLESS (I) A REGISTRATION STATEMENT COVERING SUCH SECURITIES IS EFFECTIVE UNDER THE ACT AND IS QUALIFIED UNDER APPLICABLE STATE AND FOREIGN LAW OR (II) THE TRANSACTION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS UNDER THE ACT AND THE QUALIFICATION REQUIREMENTS UNDER APPLICABLE STATE AND FOREIGN LAW AND, IF THE COMPANY REQUESTS, AN OPINION SATISFACTORY TO THE COMPANY TO SUCH EFFECT HAS BEEN RENDERED BY COUNSEL.
PURCHASE WARRANT AGREEMENT
This Purchase Warrant Agreement (this “Agreement”), effective as of April 28, 2021 (the “Effective Date”), is entered into by and between Biosecurity Technology, Inc., a Nevada corporation (formerly known as Axelerex Corp.) (the “Company”), and Global Food Innovations, LLC, a Texas limited liability company (the “Holder”).
WHEREAS, Company and Holder are entering into that certain Consulting Agreement, dated of even date herewith (the “Consulting Agreement”), pursuant to which Holder has agreed to perform certain Services (as defined in the Consulting Agreement) for Company;
WHEREAS, in partial consideration of Holder’s performance of Services, Company desires to issue to Holder the Warrants (as defined below), subject to the terms and conditions of this Agreement.
NOW THEREFORE, in consideration of the promises and the mutual covenants and agreements set forth below, the legal sufficiency of which is acknowledged, the parties covenant and agree as follows:
1. Definitions. As used in this Agreement, the following terms have the respective meanings set forth below:
“Aggregate Exercise Price” means an amount equal to the product of (a) the number of Warrant Shares in respect of which such Warrant is then being exercised pursuant to Section 4 hereof, multiplied by (b) the Exercise Price.
“Board” means the board of directors of the Company.
“Business Day” means any day, except a Saturday, Sunday or legal holiday, on which banking institutions in the city of Omaha, Nebraska are authorized or obligated by law or executive order to close.
“Common Stock” means (i) the common stock, of the Company, $0.001 par value per share, as authorized as of the date hereof and (ii) any capital stock into which the securities described in subsection (i) shall have been converted, exchanged or reclassified following the date hereof.
“Exercise Date” means, for any given exercise of each Warrant, the date on which the conditions to such exercise as set forth in Section 4 shall have been satisfied at or prior to 5:00 p.m. (Central) on a Business Day, including, without limitation, the receipt by the Company of the Notice of Exercise.
“Fair Market Value” means, if the Company’s Common Stock is then traded or quoted on a nationally recognized securities exchange, inter-dealer quotation system or over-the- counter market (a “Trading Market”), the fair market value of a share of Common Stock shall be the closing price or last sale price of a share of the Common Stock reported for the Business Day immediately before the date on which Holder delivers its Notice of Exercise to the Company. If the Company’s Common Stock is not traded in a Trading Market, the Board of the Company shall determine the fair market value of a share of Common Stock in its reasonable good faith judgment.
“Person” means any individual, sole proprietorship, partnership, limited liability company, corporation, joint venture, trust, incorporated organization or government or department or agency thereof.
“Warrant Shares” means the shares of Common Stock of the Company then purchasable upon exercise of each Warrant in accordance with the terms of this Agreement.
2. Warrants. The Company hereby agrees to issue the following warrants to Holder:
(a) The Company shall issue, on the Effective Date, a warrant (the “Initial Warrant”) to Holder which certifies that Holder is entitled to purchase from the Company One Million (1,000,000) duly authorized, validly issued, fully paid and nonassessable shares of Common Stock at a purchase price per share of Zero and 25/100 Dollars ($0.25) (the “Exercise Price”), subject to the terms and conditions of this Agreement.
(b) Provided the Consulting Agreement is still in force and effect and subject to the terms and conditions of this Agreement, the Company shall issue, on each anniversary of the Effective Date for three (3) consecutive years, an additional warrant (each, an “Additional Warrant”, and along with the Initial Warrant, each a “Warrant” and collectively the “Warrants”) to Holder which certifies that Holder is entitled to purchase from the Company Additional Shares of Common Stock that are duly authorized, validly issued, fully paid and nonassessable at a purchase price per share of the Exercise Price. For purpose of this Agreement, “Additional Shares” means an amount of shares equal to the product of (i) Two Hundred and Fifty Thousand (250,000) multiplied by (ii) (x) the number of Principals (as defined in the Consulting Agreement) performing Services on behalf of the Consultant in a meaningful manner in the reasonable discretion of Company as of such anniversary plus (y) the number of Principals not performing Services on behalf of the Consultant due to death or being deemed Disabled as of such anniversary. Notwithstanding anything herein to the contrary, the maximum amount of Additional Shares per Additional Warrant shall be One Million (1,000,000) shares. By way of example, if, on the third (3rd) anniversary of the Effective Date, two (2) Principals are performing Services on behalf of the Consultant and one (1) Principal is not performing Services on behalf of the Consultant due to either being deemed Disabled or having died, the Additional Warrant issued by the Company to Holder shall be for Seven Hundred Fifty Thousand (750,000) shares of Common Stock.
(c) For purposes of this Agreement, “Disabled” means, in regards to a Principal, physically and/or mentally unable to perform all or substantially all of such Principal’s usual and customary duties as a Principal under the Consulting Agreement currently and for the foreseeable future and such inability has continued for at least six (6) consecutive months. The determination of whether a Principal is “Disabled” under the foregoing definition shall be made by one or more physicians selected for that purpose by the Company.
3. Term of Warrant. Subject to the terms and conditions hereof, at any time or from time to time after each respective Warrant is issued and prior to 5:00 p.m. (Central) on the seventh (7th) anniversary of the Effective Date or, if such day is not a Business Day, on the next preceding Business Day (the “Exercise Period”), the Holder may exercise each Warrant for all but not less than all of the Warrant Shares purchasable thereunder (subject to adjustment as provided herein).
4. Exercise of Warrant.
(a) Exercise Procedure. Each Warrant may be exercised by the Holder delivering the Company a duly executed Notice of Exercise form, attached hereto as Exhibit A (the “Notice of Exercise”), from time to time on any Business Day during the Exercise Period, for all but not less than all of the Warrant Shares purchasable thereunder, and payment to the Company of the Aggregate Exercise Price in accordance with Section 4(b).
(b) Payment of the Aggregate Exercise Price. Payment of the Aggregate Exercise Price shall be made by instructing the Company to issue Warrant Shares then issuable upon exercise of each Warrant on a net basis such that, without payment of any cash consideration or other immediately available funds, the Holder shall surrender each Warrant in exchange for the number of Warrant Shares as is computed using the following formula:
X = Y(A - B) ÷ A
X = the number of Warrant Shares to be issued to the Holder.
Y = the total number of Warrant Shares purchasable under such Warrant.
A = the Fair Market Value of one Warrant Share as of the applicable Exercise Date.
B = the Exercise Price.
(c) Fractional Shares. The Company shall not issue a fractional Warrant Share upon exercise of any Warrant. In the event of withholding of Warrant Shares where the number of shares whose value is equal to the Aggregate Exercise Price is not a whole number, the number of shares withheld by the Company shall be rounded up to the nearest whole share and the Company shall make a cash payment to the Holder (by delivery of a certified or official bank check or by wire transfer of immediately available funds) based on the incremental fraction of a share being so withheld by the Company in an amount equal to the product of (i) such incremental fraction of a share being so withheld multiplied by (ii) the Fair Market Value per Warrant Share as of the Exercise Date.
(d) Delivery of Stock Certificates. Within a reasonable time after each Warrant is exercised hereunder, the Company shall execute (or cause to be executed) and deliver (or cause to be delivered) to the Holder a certificate or certificates representing the Warrant Shares issued upon such exercise, together with cash in lieu of any fraction of a share, as provided in Section 4(c). The stock certificate or certificates so delivered shall be, to the extent possible, in such denomination or denominations as the exercising Holder shall reasonably request in the Notice of Exercise and shall be registered in the name of the Holder or, subject to compliance with Section 6 below, such other Person’s name as shall be designated in the Notice of Exercise. Each Warrant shall be deemed to have been exercised and such certificate or certificates of Warrant Shares shall be deemed to have been issued, and the Holder or any other Person so designated to be named therein shall be deemed to have become a holder of record of such Warrant Shares for all purposes, as of the Exercise Date.
(e) Company’s Representations and Covenants. The Company hereby represents, covenants and agrees:
(i) Each Warrant is, upon issuance, duly authorized and validly issued.
(ii) All Warrant Shares issuable upon the exercise of each Warrant pursuant to the terms hereof shall be, upon issuance, and the Company shall take all such actions as may be reasonably necessary or appropriate in order that such Warrant Shares are, validly issued, fully paid and non-assessable, free and clear of all taxes, liens and charges except for restrictions imposed by applicable federal and state securities laws.
(iii) The Company shall take commercially reasonable actions to help cause the Warrant Shares to be issued without violation by the Company of any applicable law or governmental regulation or any requirements of any domestic securities exchange upon which shares of Common Stock or other securities constituting Warrant Shares may be listed at the time of such exercise.
(iv) The Company shall pay all expenses in connection with, and all taxes and other governmental charges that may be imposed with respect to, the issuance or delivery of Warrant Shares upon exercise of each Warrant; provided, that the Company shall not be required to pay any tax or governmental charge that may be imposed with respect to any applicable withholding or the issuance or delivery of the Warrant Shares to any Person other than the Holder, and no such issuance or delivery shall be made unless and until the Person requesting such issuance has paid to the Company the amount of any such tax, or has established to the satisfaction of the Company that such tax has been paid.
(f) Conditional Exercise. Notwithstanding any other provision hereof and subject to the Exercise Period, if an exercise of any Warrant is to be made in connection with a public offering or a sale of the Company (pursuant to a merger, sale of stock, or otherwise), such exercise may at the election of the Holder be conditioned upon the consummation of such transaction, in which case such exercise shall not be deemed to be effective until immediately prior to the consummation of such transaction.
(g) Reservation of Shares. During the Exercise Period, the Company shall at all times reserve and keep available out of its authorized but unissued Common Stock or other securities constituting Warrant Shares, solely for the purpose of issuance upon the exercise of the Warrants, the maximum number of Warrant Shares issuable upon the exercise of the Warrants, and the par value per Warrant Share shall at all times be less than or equal to the applicable Exercise Price. The Company shall not increase the par value of any Warrant Shares receivable upon the exercise of any Warrant above the Exercise Price then in effect, and shall take all such actions as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable shares of Common Stock upon the exercise of this Warrant.
5. Adjustment to Number of Warrant Shares.
(a) Stock Dividends and Split-Ups. If after the Effective Date, and subject to the provisions of Section 5(c), the number of outstanding shares of Common Stock is increased by a stock dividend payable in shares of Common Stock, or by a split-up of shares of Common Stock, or other similar event, then, on the effective date of such stock dividend, split-up or similar event, the number of shares of Common Stock issuable upon exercise of each Warrant shall be increased in proportion to such increase in outstanding shares of Common Stock upon the Holder’s delivery of the Notice of Exercise.
(b) Aggregation of Shares. If after the Effective Date, and subject to the provisions of Section 5(c), the number of outstanding shares of Common Stock is decreased by a consolidation, combination, reverse stock split or reclassification of shares of Common Stock or other similar event, then, on the effective date of such consolidation, combination, reverse stock split, reclassification or similar event, the number of shares of Common Stock issuable upon exercise of each Warrant shall be decreased in proportion to such decrease in outstanding shares of Common Stock upon the Holder’s delivery of the Notice of Exercise.
(c) Adjustments in Exercise Price. Whenever the number of shares of Common Stock purchasable upon the exercise of the Warrants is adjusted, as provided in Sections 6.1(a) and (b), the Exercise Price shall be adjusted (to the nearest cent) by multiplying such Exercise Price immediately prior to such adjustment by a fraction (i) the numerator of which shall be the number of shares of Common Stock purchasable upon the exercise of the Warrant immediately prior to such adjustment, and (ii) the denominator of which shall be the number of shares of Common Stock so purchasable immediately thereafter.
(d) Reorganization, Reclassification, Consolidation or Merger. In the event of any (i) capital reorganization of the Company, (ii) reclassification of the stock of the Company (other than a change in par value or as a result of a stock dividend or split-up, aggregation or combination of shares), (iii) consolidation or merger of the Company with or into another Person, (iv) sale of all or substantially all of the Company’s assets to another Person or (v) other similar transaction (other than any such transaction covered by Sections 6.1(a) and (b)), in each case which entitles the holders of Common Stock to receive (either directly or upon subsequent liquidation) stock, securities or assets with respect to or in exchange for Common Stock, each Warrant shall, immediately after such reorganization, reclassification, consolidation, merger, sale or similar transaction, remain outstanding and shall thereafter, in lieu of or in addition to (as the case may be) the number of Warrant Shares then exercisable under each Warrant, be exercisable for the kind and number of shares of stock or other securities or assets of the Company or of the successor Person resulting from such transaction to which the Holder would have been entitled upon such reorganization, reclassification, consolidation, merger, sale or similar transaction if the Holder had exercised such Warrant immediately prior to the time of such reorganization, reclassification, consolidation, merger, sale or similar transaction and acquired the applicable number of Warrant Shares then issuable hereunder as a result of such exercise (without taking into account any limitations or restrictions on the exercisability of this Warrant); and, in such case, appropriate adjustment shall be made with respect to the Holder’s rights under this Agreement to insure that the provisions of this Section 5 shall thereafter be applicable, as nearly as possible, to each Warrant in relation to any shares of stock, securities or assets thereafter acquirable upon exercise of such Warrant. The provisions of this Section 5(d) shall similarly apply to successive reorganizations, reclassifications, consolidations, mergers, sales or similar transactions.
(e) Notice of Adjustment. As promptly as reasonably practicable following any adjustment of the number of Warrant Shares pursuant to the provisions of this Section 5, the Company shall furnish to the Holder notice setting forth in reasonable detail such adjustment and the facts upon which it is based.
(f) Notice of Corporate Events. If the Company (i) declares a dividend or any other distribution of cash, securities or other property in respect of its Common Stock, (ii) authorizes the voluntary dissolution, liquidation or winding up of the affairs of the Company, or (iii) authorizes any capital reorganization of the Company, any reclassification of the Common Stock of the Company, any consolidation or merger of the Company with or into another Person, or sale of all or substantially all of the Company’s assets to another Person, then the Company shall deliver to each Holder a notice describing the material terms and conditions of such dividend or transaction. Notwithstanding anything to the contrary in this Section 5(f), the failure to deliver any notice under this Section 5(f) or any defect therein shall not affect the validity of the corporate action required to be described in such notice.
6. Registration and Transfer.
(a) Registration. Each Warrant shall be issued in registered form only. The Company shall maintain books and records (the “Records”) for the registration of original issuance, the adjustments contemplated herein, the transfer of any Warrant and any other information relevant to the terms and conditions of this Agreement. The Company may deem and treat the Person in whose name the Warrant is registered on such register as the Holder thereof for all purposes, and the Company shall not be affected by any notice to the contrary, except any transfer of the Warrant effected in accordance with the provisions of this Agreement.
(b) Transfer of Warrant. Subject to the provisions of this Agreement and compliance with applicable securities laws, each Warrant and all rights hereunder are transferable, in whole or in part, by the Holder without charge to the Holder, upon (i) delivery of written notice to the Company stating the name, address and taxpayer identification number, the Warrant being transferred and such other information describing the transfer (including that the transferee has agreed to be bound by the terms and conditions of this Agreement), together with funds sufficient to pay any transfer taxes incurred with the making of such transfer and (ii) delivery of an opinion of counsel reasonably satisfactory to the Company that the transfer of the Warrant will be in compliance with applicable securities laws. Upon such delivery, Company shall update the Records to reflect the transferee as holder of the transferred Warrant.
7. Holder Not Deemed a Stockholder; Limitations on Liability. Except as otherwise specifically provided herein (including Section 5(f)), prior to the issuance to the Holder of the Warrant Shares to which the Holder is then entitled to receive upon the due exercise of each Warrant, the Holder shall not be entitled to vote or receive dividends or be deemed the holder of shares of capital stock of the Company for any purpose, nor shall anything contained in this Agreement be construed to confer upon the Holder, as such, any of the rights of a stockholder of the Company or any right to vote, give or withhold consent to any corporate action (whether any reorganization, issue of stock, reclassification of stock, consolidation, merger, conveyance or otherwise), receive notice of meetings, receive dividends or subscription rights, or otherwise. In addition, nothing contained in this Agreement shall be construed as imposing any liabilities on the Holder to purchase any securities (upon exercise of each Warrant or otherwise) or as a stockholder of the Company, whether such liabilities are asserted by the Company or by creditors of the Company.
8. Representations of the Holder. The Holder hereby represents and warrants to the Company as follows:
(a) The Holder is an “accredited investor” as defined in Rule 501 of Regulation D promulgated under the Securities Act of 1933, as amended (the “Securities Act”). The Holder is acquiring each Warrant and the Warrant Shares to be issued upon exercise thereof for investment for its own account and not with a view towards, or for resale in connection with, the public sale or distribution of any Warrant or the Warrant Shares, except pursuant to sales registered or exempted under the Securities Act.
(b) The Holder understands and acknowledges that each Warrant and the Warrant Shares to be issued upon exercise thereof are “restricted securities” under the federal securities laws inasmuch as they are being acquired from the Company in a transaction not involving a public offering and that, under such laws and applicable regulations, such securities may be resold without registration under the Securities Act only in certain limited circumstances. In addition, the Holder represents that it is familiar with Rule 144 under the Securities Act, as presently in effect, and understands the resale limitations imposed thereby and by the Securities Act.
(c) The Holder acknowledges that it can bear the economic and financial risk of its investment for an indefinite period, and has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of each Warrant and the Warrant Shares to be issued upon exercise thereof. The Holder has had an opportunity to ask questions and receive answers from the Company regarding the business, properties, prospects and financial condition of the Company.
9. Notices. All notices, requests, and other communications hereunder shall be deemed to be duly given if sent by U.S. mail, postage prepaid, addressed to the other party at the address as set forth herein below:
To the Company:
Biosecurity Technology, Inc.
3821 S. 148th Street
Omaha, NE 68130
Attn: Dan Lynn
With a copy to:
Dvorak Law Group, LLC
9500 W. Dodge Rd., Ste. 100
Omaha, NE 68114
Attn: David R. Mayer
To the Consultant:
Global Food Innovations, LLC
1762 FM 2060
Abernathy, TX 79311
Attn: Mark Miller
Either party may change the address to which notices for it shall be addressed by providing notice of such change to the other party in the manner set forth in this Section.
10. Entire Agreement. This Agreement constitutes the sole and entire agreement of the parties to this Agreement with respect to the subject matter contained herein, and supersedes all prior and contemporaneous understandings and agreements, both written and oral, with respect to such subject matter.
11. Successors and Assigns; No Third-Party Beneficiaries. This Agreement is for the sole benefit of and binding upon the Company and the Holder and their respective successors and, in the case of the Holder, permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other Person any legal or equitable right, benefit or remedy of any nature whatsoever, under or by reason of this Agreement.
12. Headings. The headings in this Agreement are for reference only and shall not affect the interpretation of this Agreement.
13. Amendment and Modification; Waiver. Except as otherwise provided herein, this Agreement may only be amended, modified or supplemented by an agreement in writing signed by each party hereto. No waiver by the Company or the Holder of any of the provisions hereof shall be effective unless explicitly set forth in writing and signed by the party so waiving. No waiver by any party shall operate or be construed as a waiver in respect of any failure, breach or default not expressly identified by such written waiver, whether of a similar or different character, and whether occurring before or after that waiver. No failure to exercise, or delay in exercising, any rights, remedy, power or privilege arising from this Agreement shall operate or be construed as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.
14. Severability. If any term or provision of this Agreement is invalid, illegal, or unenforceable in any jurisdiction, such invalidity, illegality, or unenforceability shall not affect any other term or provision of this Agreement or invalidate or render unenforceable such term or provision in any other jurisdiction.
15. Choice of Law, Jurisdiction and Venue. This Agreement shall be governed by, construed and enforced in accordance with the laws of the State of Nebraska without giving effect to any conflict of laws principles that would cause the laws of any other jurisdiction to apply. The parties agree that the state or federal courts located in Douglas County, Nebraska shall have exclusive venue of any dispute and will have jurisdiction over all parties.
16. Counterparts. This Agreement may be executed in multiple counterparts and by electronic signature, each of which shall be deemed an original and all of which together shall constitute one instrument.
[Rest of Page Intentionally Left Blank; Signature Page Follows.]
IN WITNESS WHEREOF, the parties have executed this Agreement as of the Effective Date.
|Biosecurity Technology, Inc.|
|By:||/s/ Dan Lynn|
|Global Food Innovations, LLC|
|By:||/s/ Mark Miller|
Purchase Warrant Agreement
Notice of Exercise
To: Biosecurity Technology, Inc.
The undersigned, subject to the provisions set forth in that certain Purchase Warrant Agreement, dated April 28, 2021 (the “Agreement”), hereby irrevocably elects to purchase the number of shares of Common Stock of Biosecurity Technology, Inc., a Nevada corporation (the “Company”), subject to the applicable Warrant, each as set forth below. The undersigned hereby agrees to pay the Aggregate Exercise Price for such shares of Common Stock in accordance with the terms and conditions of the Agreement. The undersigned reaffirms the representations and warranties set forth in Section 8 of the Agreement. Capitalized terms used herein and not otherwise defined shall have the meaning ascribed to them in the Agreement.
Date of Issuance of Warrant:
Number of Shares of Common Stock:
The undersigned requests that certificates for the shares of Common Stock be issued in the name of:
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