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As filed with the Securities and Exchange Commission on October 28, 1998
Registration No. 333-64997
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO.1
TO
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FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
ORIGINALLY FILED ON SEPTEMBER 30, 1998
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AQUASEARCH, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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COLORADO 2833 33-034535
(STATE OR OTHER JURISDICTION (PRIMARY STANDARD (I.R.S. EMPLOYER
OF INCORPORATION INDUSTRIAL CLASSIFICATION IDENTIFICATION NUMBER)
OR ORGANIZATION) CODE NUMBER)
73-4460 QUEEN KA'AHUMANU HIGHWAY
SUITE 110
KAILUA-KONA, HAWAII 96740
(808) 326-9301
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
--------------------------
MARK E. HUNTLEY, PH.D.
73-4460 QUEEN KA'AHUMANU HIGHWAY
SUITE 110
KAILUA-KONA, HAWAII 96740
(808) 326-9301
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA
CODE, OF AGENT FOR SERVICE)
--------------------------
COPIES TO:
STEVEN L. BERSON, ESQ.
MICHAEL S. RUSSELL, ESQ.
WILSON SONSINI GOODRICH & ROSATI
PROFESSIONAL CORPORATION
650 PAGE MILL ROAD
PALO ALTO, CA 94304
(650) 493-9300
FAX: (650) 496-4088
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time as the selling shareholders may decide.
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If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act of
1933 registration statement number of the earlier effective registration
statement for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
Pursuant to Rule 416, there are also being registered such additional
shares and warrants as may become issuable pursuant to the anti-dilution
provisions of the warrants.
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The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended, or until this Registration Statement
shall become effective on such date as the Securities and Exchange Commission,
acting pursuant to said Section 8(a), may determine.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article Eight Section (b) of the Registrant's Articles of Incorporation
provides for the indemnification of officers and directors to the extent
permitted by law and further provides that such person shall not be liable to
the corporation for any loss or damage suffered by the corporation on account of
any action taken by him as a director or officer of the corporation if he acted
in good faith and in a manner reasonably believed to be in or not opposed to the
best interests of the corporation and, with respect to a criminal matter, if he
had no reasonable cause to believe that his conduct was unlawful.
The Registrant has entered into indemnification agreements with its
directors and executive officers, and intends to enter into indemnification
agreements with any new directors and executive officers in the future.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the various expenses in connection with the
sale and distribution of the securities being registered. All of the amounts
shown are estimates except the Securities and Exchange Commission registration
fee.
<TABLE>
<S> <C>
Securities and Exchange Commission
registration fee . . . . . . . . . . . $ 1,688.00
Printing and engraving expenses . . . . 10,000.00
Legal fees and expenses . . . . . . . . 20,000.00
Accounting fees and expenses . . . . . 4,000.00
Miscellaneous expenses . . . . . . . . 4,312.00
Total . . . . . . . . . . . . . . $40,000.00
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</TABLE>
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
During the period from June 1997 to September 1998, the Company sold
$3,305,000 aggregate principal amount of Convertible Notes ("1998 Convertible
Notes") to a total of twelve "accredited investors" as defined under Rule 501
of the Securities Act (the "Selling Security Holders"). In connection with
the issuance of the 1998 Convertible Notes, the Company also issued to the
Selling Security Holders a total of 3,305,000 Warrants (the "1998 Warrants")
to purchase a total of 3,418,713 shares of Common Stock. The 1998 Warrants
have an exercise price of $0.50 per share and have a term of three years.
Between July and September 1998, the Selling Security Holders converted the
1998 Convertible Notes into 20,075,648 shares of Common Stock (the "Shares").
The number of Shares and 1998 Warrants issued to the Selling Security Holders
is as follows: Jane Eliza Weaver Brickey, 599,510 Shares, 100,000 Warrants;
Margret Daul, 599,510 Shares, 100,000 Warrants; Jean Farmer, 570,184 Shares,
100,000 Warrants; Earl S. Fusato Revocable Trust, Earl S. Fusato, Trustee,
4,821,340 Shares, 760,000 Warrants; Gregory Kowal, 3,205,128 Shares, 500,000
Warrants; Linda and Joe Maloney, 584,409 Shares, 100,000 Warrants; James
Stewart Miller Revocable Trust, James Stewart Miller, Trustee, 142,468
Shares, 25,000 Warrants; Lance and Elaine Nakamura, 1,574,673 Shares, 250,000
Warrants; Viiu Niiler and Charles Cole, 324,265 Shares, 50,000 Warrants;
Scott Family Trust, Tom Scott, Trustee, 663,102 Shares, 120,000 Warrants;
Jean Sawyer Weaver Trust, Jean S. Weaver, Trustee, 6,391,223 Shares,
1,100,000 Warrants; and Sarah Anna Randsell Weaver, 599,837 Shares, 100,000
Warrants. No underwriters were used in these transactions. This offering
was made under Section 4(2) of the Securities Act.
From February to March 1998, the Company sold to Earl S. Fusato, the
Company's Chief FinancialOfficer, Secretary and a member of its Board of
Directors, certain short-term notes in the aggregate principal amount of
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$250,000. The notes are payable in full on September 30, 1998. In connection
with the issuance of the notes, the Company issued to Mr. Fusato warrants to
purchase a total of 113,713 shares of its Common Stock. The warrants have an
exercise price of $0.50 per share and have a term of three years. No
underwriters were used. This offering was made under Section 4(2) of the
Securities Act.
In March 1998, the Company issued 108,000 shares of Common Stock at $0.25
per share to Dr. Pearn Niiler, a Director of the Company, for prior services
rendered to the Company as a member of the Scientific Advisory Board. No
underwriters were used. This offering was made under Section 4(2) of the
Securities Act.
In March 1998, Tana Acalay, formerly the Company's Chief Financial Officer,
exercised options to purchase 466,862 shares of the Company's Common Stock at
the exercise price of $0.063 per share. The total proceeds to the Company were
$29,179. No underwriter was used. This offering was made pursuant to the
exemption provided under Section 4(2) of the Securities Act.
From January to March 1998, the Company issued an aggregate of 126,000
shares of Common Stock at $0.25 per share to the following members of the
Scientific Advisory Board in exchange for services to the Company: Dr. Edward A.
Laws -- 17,000 shares; Dr. Robert R. Bidigare -- 17,000 shares; Dr. William
Fenical -- 17,000 shares; Dr. John Bardach -- 17,000 shares; Dr. Farooq Azam --
12,000 shares; Dr. Malcolm Gregory -- 37,000 shares; and Dr. Aladar Szalay --
9,000 shares. No underwriters were used. This offering was made under Section
4(2) of the Securities Act.
In October 1997, the Company issued 50,000 shares of Common Stock at $0.25
per share to Edward E. David, Sc.D., for consulting services rendered as a
member of the Company's Board of Directors. No underwriter was used. This
offering was made pursuant to the exemption provided under Section 4(2) of the
Securities Act.
In October 1997, the Company sold 50,000 shares of Common Stock at $0.25
per share to Edward E. David, Sc.D., a member of the Company's Board of
Directors. The total proceeds to the Company from this transaction were $12,500.
No underwriter was used. This offering was made pursuant to the exemption
provided under Section 4(2) of the Securities Act.
In October 1997, the Company issued 10,000 shares of Common Stock at $0.25
per share to Oskar R. Zaborsky, Ph.D., for consulting services rendered as a
member of the Company's Board of Directors. No underwriter was used. This
offering was made pursuant to the exemption provided under Section 4(2) of the
Securities Act.
In October 1997, the Company sold 10,000 shares of Common Stock at $0.25
per share to Oskar R. Zaborsky, Ph.D., a member of the Company's Board of
Directors. The total proceeds to the Company from this transaction were $2,500.
No underwriter was used. This offering was made pursuant to the exemption
provided under Section 4(2) of the Securities Act.
In September 1997, Tana Acalay, formerly the Company's Chief Financial
Officer, exercised options to purchase 463,250 shares of the Company's Common
Stock at the exercise price of $0.06 per share. The total proceeds to the
Company were $28,953 in the form or a three year note receivable bearing
interest of five percent per annum. No underwriter was used. This offering was
made pursuant to the exemption provided under Section 4(2) of the Securities
Act.
In April 1997, the Company sold 1,000,000 shares of Common Stock at $0.21
per share to Earl S. Fusato, the Company's Chief Financial Officer, Secretary
and a member of its Board of Directors. The total proceeds to the Company were
$210,000. No underwriter was used. This offering was made pursuant to the
exemption provided under Section 4(2) of the Securities Act.
During the period from October 1996 to April 1997, the Company sold an
aggregate of 5,044,570 Units, consisting of one share of Common Stock and one
Common Stock Purchase Warrant (the "Warrants"), in a private placement under
Section 4(2) of the Securities Act of 1933, as amended, to the following persons
at the following prices: Bernadette Ahuna - 23,255 Units at $0.43 per Unit;
Dorothy Ako - 33,333 Units at $0.30 per Unit; Amy M.
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Matsuda Revocable Living Trust - 38,461 Units at $0.26 per Unit; Steve Berson -
95,238 Units at $0.21 per Unit and 22,727 Units at $0.22 per Unit; Alfredo
Briones - 23,255 Units at $0.43 per Unit; David Coury - 90,909 Units at $0.22
per Unit; Earl S. Fusato Revocable Living Trust - 115,384 Units at $0.26 per
Unit; William and Bernice Frankoff - 17,857 Units at $0.28 per Unit; Edward
Fukuyama - 45,454 Units at $0.22 per Unit; Ralph Fuller - 23,255 Units at $0.43
per Unit; Solomon and Alice Goldsmith - 33,333 Units at $0.30 per Unit; Francis
Gray - 45,454 Units at $0.22 per Unit; Christopher and Lynne Harrison - - 75,000
Units at $0.23 per Unit; Hawaiian Trust Company, Ltd - 416,666 Units at $0.24
per Unit; Winston Healy - 34,482 Units at $0.29 per Unit; Dan Hirashima - 68,965
Units at $0.29 per Unit; J.W.A. Buyers Revocable Living Trust - 41,666 Units at
$0.24 per Unit; Raymond & Anna Kam - 90,909 Units at $0.22 per Unit, 86,956
Units at 0.23 per Unit and 41,666 Units at $0.24 per Unit; Gerald and Patricia
Kammier - 45,454 Units at $0.22 per Unit; Gregory Kowal - 476,190 Units at $0.21
per Unit; Eddy Louis - 37,037 Units at $0.27 per Unit; Alan & Amina Miyasaki -
24,390 Units at $0.41 per Unit; Grace Morrow - 108,695 Units at $0.23 per Unit,
153,846 Units at $0.26 per Unit and 38,461 Units at $0.26 per Unit; David
Murakami - 173,809 Units at $0.21 per Unit, 28,000 Units at $0.25 per Unit and
20,833 Units at $0.24 per Unit; Donald and Kimika Nakama - 238,095 Units at
$0.21 per Unit; Lance and Elaine Nakamura -125,000 Units at $0.32 per Unit and
136,363 Units at $0.22 per Unit; Calvin and Eunice Nakata - 100,000 Units at
$0.22 per Unit; Clarence and Margaret Okimoto - 45,454 Units at $0.22 per Unit,
11,869 Units at $0.23 per Unit and 12,000 Units at $0.25 per Unit; Charles Parl
- - 43,478 Units at $0.23 per Unit; Paul F. Glenn Revocable Trust - 37,037 Units
at $0.27 per Unit; Michie Proctor - 113,636 Units at $0.22 per Unit, 119,047
Units at $0.21 per Unit and 454,545 Units at $0.22 per Unit; Scott Family Trust
- - 113,636 Units at $0.44 per Unit and 178,571 Units at $0.28 per Unit; Gene
Seltzer - 43,478 Units at $0.23 per Unit; Yoshiko Takara - 23,255 Units at $0.43
per Unit; Izidor Tischler - 43,478 Units at $0.23 per Unit; Joseph Triggs -
232,558 Units at $0.43 per Unit; Bruce Tyson - 45,454 Units at $0.22 per Unit;
Robert Walker - 47,619 Units at $0.21 per Unit; Eileen Winter - 50,000 Units at
$0.25 per Unit; Alvin Kuo Wong - 41,666 Units at $0.36 per Unit; and Russell
Yamamoto - 217,391 Units at $0.23 per Unit. The Warrants have a term of three
years and are exercisable at $1.00 per share, subject to adjustment. The
Warrants are redeemable by the Company at $.01 per Warrant during their
three-year exercise period upon 30 days' notice anytime that the closing bid
price per share of the Common Stock exceeds $1.50 per share (subject to
adjustment) for 20 trading days out of 30 consecutive trading days ending on the
third day prior to the date of the notice of redemption. The gross proceeds from
this offering were $1,275,980. The Placement Agent for this offering, First
Honolulu Securities, Inc., received total commissions of $76,558.80 (equal to 6%
of the gross proceeds from the sale of the Units) and 302,674 Common Stock
Purchase Warrants (equal to 6% of the number of Units sold). The terms of the
Warrants issued to First Honolulu Securities, Inc. are identical to the terms of
the Warrants issued to the purchasers in the offering.
In March 1997, John Emerick, the Company's Vice President of Operations,
exercised options to purchase 25,000 shares of the Company's Common Stock at the
exercise price of $0.06 per share. The total proceeds to the Company were
$1,562 in the form of a three year note receivable bearing interest of five
percent per annum. No underwriter was used. This offering was made pursuant to
the exemption provided under Section 4(2) of the Securities Act.
In February 1997, the Company issued 4,000 shares of Common Stock at $0.46
per share to Alber Leong in exchange for services to the Company. No
underwriters were used. This offering was made under Section 4(2) of the
Securities Act.
In November 1996, the Company issued an aggregate of 18,760 shares of
Common Stock at an average price of $0.64/share to the following members of the
Scientific Advisory Board in exchange for services to the Company: Dr. Edward A.
Laws -- 4,690 shares; Dr. Robert R. Bidigare -- 4,690 shares; Dr. William
Fenical -- 4,690 shares; and Dr. John Bardach -- 4,690 shares. No underwriters
were used. This offering was made under Section 4(2) of the Securities Act.
In October 1996, the Company sold 400,000 shares of Common Stock at $0.50
per share to Cultor pursuant to the Cultor Stock Subscription Agreement. The
total proceeds to the Company from this transaction were $200,000. No
underwriters were used. This offering was made in reliance on the exemption
provided under Section 4(2) of the Securities Act.
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In July 1996, the Company issued 3,000 shares of Common Stock at $0.59 per
share to Alber Leong in exchange for services to the Company. No underwriters
were used. This offering was made under Section 4(2) of the Securities Act.
In February 1996, the Company issued 40,000 shares of Common Stock at $0.62
per share, to Seth Huntley, one of the Company's production technicians, for
services rendered during the period from August 1995 through January 1996. No
underwriter was used. This offering was made to Mr. Huntley without
registration pursuant to the exemption provided under Section 4(2) of the
Securities Act.
In January 1996, the Company sold an aggregate of 4,000,000 shares of
Common Stock at $0.15 per share to the following persons in a private placement
under Section 4(2) of the Securities Act: Bruce Arinaga - 100,000 shares; A.
Bush - 100,000 shares; Gary Davidson - 407,000 shares; Kewalo Holdings - 100,000
shares; James MacNeil - 160,000 shares; First Trust Corp. - 23,300 shares; James
McGonigle - 300,000 shares; Michie Proctor - 680,000 shares; Marty Meyerson -
100,000 shares; Wanda Shefts -100,000 shares; Joel Marcus - 100,000 shares;
Donald Nakama - 580,000 shares; Neal Roberts - 90,700 shares; David Murakami -
350,000 shares; James Miller - 200,000 shares; Marvin Gutlove - 100,000 shares;
Marianne May - 40,000 shares; and Carl Jensen - 240,000 shares. The total
proceeds to the Company from this transaction were $600,000. No underwriters
were used.
In January 1996, the Company sold an aggregate of 2,492,000 shares of
Common Stock at $0.125 per share to the following persons under Regulation S
under the Securities Act: Sodilot S.A. - 320,000 shares; Hans Peter Klein -
320,000 shares; and Caymus Capital - 1,852,000 shares. The total proceeds to the
Company from this transaction were $311,600. No underwriters were used.
In December 1995, the Company issued 40,000 shares of Common Stock at
$0.125 per share to John J. Emerick, the Company's Vice President of Operations,
for services rendered during the period from July 1995 through December 1995.
No underwriter was used. This offering was made to Mr. Emerick without
registration pursuant to the exemption provided under Section 4(2) of the
Securities Act.
In November 1995, the Company issued an aggregate of 264,000 shares of
Common Stock at $0.125 per share to the following persons as partial payment for
their services in constructing the Company's research and development facility
at Keahole Point: Robert E. and Terri L. Lee - 120,000 shares; Clyde and Iola
Matsuyama - 16,000 shares; Dale and Lora Robertson - 8,000 shares; Branden
Fessenden and Amber Kingham - 4,000 shares; Boyd and Kathy Matsuyama - - 8,000
shares; Dwight and Taina Matsuyama - 8,000 shares; Mark K. and Marina K. Stickel
- - 40,000 shares; Stephen J. and Jamie K. Herbert - 16,000 shares; and Henry F.
and Sri Mulyani Hills - 44,000 shares. No underwriters were used. This offering
was made in reliance on the exemption provided under Section 4(2) of the
Securities Act.
In October 1995, the Company issued an aggregate of 127,875 shares at
$0.0625 to the following persons for prior services rendered to the Company:
Alejandro Gonzales - 40,000 shares; Alexander Leonard - 25,000 shares; Georgia
Malan - 20,000 shares; and Mountain Vista Consulting - 42,875 shares. No
underwriters were used. This offering was made under Section 4(2) of the
Securities Act.
In October 1995, the Company issued 5,000 shares of Common Stock at $0.16
per share to John Emerick, the Company's Vice President of Operations, for
services rendered to the Company. No underwriter was used. This offering was
made pursuant to the exemption provided under Section 4(2) of the Securities
Act.
In September 1995, the Company sold an aggregate of 2,712,500 shares of
Common Stock at $0.08 per share to the following persons in a private placement
under Section 4(2) of the Securities Act: Tana Alcalay - 125,000 shares; Jeff
Barber - 62,500 shares; Edward Brill - 62,500 shares; California Progressions -
125,000 shares; Gary Davidson - 125,000 shares; Joanne Gioia - 125,000 shares;
Marvin Gutlove - 250,000 shares; Mark Huntley - 62,500 shares; Kenneth Koock -
125,000 shares; Joel Marcus - 362,500 shares; James Miller - 100,000 shares;
Charles Mullecker - 625,000 shares; Peter Niiler - 125,000 shares; Mark Shefts -
312,500 shares; Rocco Vezza - 625,000 shares; and Rod Wood - 625,000 shares. No
underwriters were used.
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In August 1995, the Company returned to Mark E. Huntley, Ph.D., the
Company's President and Chief Executive Officer, 1,320,000 shares of Common
Stock out of the 4,635,575 shares of Common Stock gifted to the Company by Dr.
Huntley in 1989. The closing bid price of the Company's Common Stock on the
date the 1,320,000 shares were returned to Dr. Huntley was $0.15 per share. No
underwriters were used. This offering was made to Dr. Huntley under Section
4(2) of the Securities Act.
In July 1995, the Company sold an aggregate of 3,200,000 shares of Common
Stock at $0.0625 per share to QueQui, Ltd. under Regulation S under the
Securities Act. The total proceeds to the Company from this transaction were
$200,000. No underwriters were used.
In June 1995, the Company issued 50,000 shares of Common Stock at $0.10 per
share to Robert Bidigare, Ph.D., for services rendered in connection with the
analysis of scientific data from feed trials with Cultor. No underwriters were
used. These shares were issued to Dr. Bidigare without registration pursuant to
the exemption provided under Section 4(2) of the Securities Act.
In March 1995, the Company sold an aggregate of 1,710,000 shares of Common
Stock at $0.10 per share to the following persons in a private placement under
Section 4(2) of the Securities Act: Tana Alcalay - 50,000 shares; Joan Antflick
- - 10,000 shares; Scott Brownson - 25,000 shares; David Cook - 50,000 shares;
Gary Davidson - 50,000 shares; Joan Davidson - 25,000 shares; Stanley Feldman -
50,000 shares; Frederick Fields - 50,000 shares; Robert Forcey - 100,000 shares;
Michael Freed - 5,000 shares; Paulette & Steve Freed - 45,000 shares; Bobbi
Goldblum - 25,000 shares; Mark Huntley - 50,000 shares; Sam Iler - 100,000
shares; Carl Jensen - 100,000 shares; Mahlon Kennicut - 50,000 shares, Kenneth
Koock - 50,000 shares; Joel Marcus - 50,000 shares; Marianne May - 50,000
shares; Robert Nichols - 50,000 shares; Eric Niiler - 100,000 shares; Pearn
Niiler - 50,000 shares; Viiu Niiler - 100,000 shares; Walter Nordhausen - 50,000
shares; Donald Redalje - 50,000 shares; Ken Richter - 50,000 shares; Eric
Saltsberg - 50,000 shares; Satlantic, Inc. - 50,000 shares; Niklas Schneider -
50,000 shares; Michael C.B. Smith - 50,000 shares; Craig Steede - 50,000 shares;
Henry White - 50,000 shares; and Leroy Young - 25,000 shares. No underwriters
were used. The total proceeds to the Company were $171,000.
In June 1994, the Company issued an aggregate of 250,000 shares of Common
Stock at $0.08 per share to the following persons for prior services rendered to
the Company: Michael C.B. Smith - 170,000 shares; Alejandro Gonzales - 40,000
shares; and Glenna Thompson - 40,000 shares. No underwriters were used. This
offering was made under Section 4(2) of the Securities Act.
In May 1994, the Company issued an aggregate of 775,000 shares of Common
Stock at $0.08 per share to the following persons for prior services rendered to
the Company: Mark Huntley - 400,000 shares; Tana Alcalay - 250,000 shares; and
Peter Niiler - 125,000 shares. No underwriters were used. This offering was
made under Section 4(2) of the Securities Act.
In January 1994, the Company sold 250,000 shares of Common Stock at $0.03
per share to J. McGonigle in a private placement under Section 4(2) of the
Securities Act. No underwriters were used. The total proceeds to the Company
were $7,500.
ITEM 27. EXHIBITS
<TABLE>
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3.1* Articles of Incorporation of Registrant
3.2* By-laws of Registrant
4.1+ Form of Bridge Loan Note
4.2+ Form of 1997 Warrant
4.3 Form of 1998 Convertible Note
4.4 Form of 1998 Warrant
4.5 Form of 1998 Note and Warrant Purchase Agreement
5.1 Opinion of Wilson Sonsini Goodrich & Rosati dated 9/29/98
</TABLE>
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<TABLE>
<S> <C>
10.2# Stock Subscription Agreement between Cultor Ltd. and Aquasearch,
Inc., dated May 14, 1996
10.3+ The Amended Keahole Point Facilities Use Agreement dated August
22, 1996 by and between The National Energy Laboratory of Hawaii
Authority and the Registrant
10.4$ Letter of Intent between C. Brewer and Company Limited and the
Registrant
23.1++ Consent of Ernst & Young LLP
23.2++ Consent of Johnson, Holscher & Company, P.C.
23.3** Consent of Wilson Sonsini Goodrich & Rosati, P.C.
</TABLE>
* Incorporated by reference to the exhibit filed with Registrant's Annual
Report on Form 10-KSB filed October 31, 1995.
# Incorporated by reference to the exhibit filed with Registrant's Current
Report on Form 8-K filed September 13, 1996.
+ Incorporated by reference to the exhibit filed with the Registrant's Annual
Report on Form 10-KSB for the fiscal year ended October 31, 1996.
$ Incorporated by reference to the Registrant's Current Report on Form 8-K
dated November 13, 1996.
++ Previously filed with initial filing on September 30, 1998.
** Included in Exhibit 5.1 filed herewith.
ITEM 28. UNDERTAKING
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer of controlling persons of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
The undersigned Registrant hereby undertakes:
(1) File during any period in which it offers or sells securities, a
post-effective amendment to this registration statement to:
(i) Include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in
the information in the registration statement. Notwithstanding
the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum
offering range may be reflected in a form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more
than a 20% change in the maximum aggregate offering price set
forth in the "Calculation of the Registration Fee" table in
the effective registration statement; and
(iii) Include any additional or changed material information on the
plan of distribution.
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(2) For purposes of determining liability under the Securities Act,
treat each post-effective amendment as a new registration statement of the
securities offered, and the offering of the securities at that time to be the
bona fide offering.
(3) File a post-effective amendment to remove from registration any of
the securities that remain unsold at the end of the offering.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form SB-2 and has duly caused this
Amendment No. 1 to Registration Statement (Reg. No. 333-64997) to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Honolulu, State of Hawaii, on this 27th day of October, 1998.
AQUASEARCH, INC.
/s/ MARK E. HUNTLEY
--------------------------------------
Mark E. Huntley
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 1 to Registration Statement has been signed by the following
persons in the capacities indicated on the date signed by the Company:
Signature Title
- ---------------------------------- ----------------------------------------
/s/ MARK E. HUNTLEY Chairman of the Board,
- ---------------------------------- Chief Executive Officer and
(Mark E. Huntley) President (Principal Executive Officer)
/s/ PEARN P. NIILER
- ----------------------------------
(Pearn P. Niiler) Director
- ----------------------------------
(Edward E. David, Ph.D.) Director
/s/ EARL S. FUSATO Director and Chief Financial
- ---------------------------------- Officer (Chief Accounting
(Earl S. Fusato) Officer)
II-8
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibits
<S> <C> <C>
3.1 Articles of Incorporation of Registrant . . . . . . . . . . . . (A)
3.2 By-laws of Registrant . . . . . . . . . . . . . . . . . . . . . (A)
4.1 Form of Bridge Loan Note . . . . . . . . . . . . . . . . . . . (B)
4.2 Form of 1997 Warrant . . . . . . . . . . . . . . . . . . . . . (B)
4.3 Form of 1998 Convertible Note . . . . . . . . . . . . . . . . . (E)
4.4 Form of 1998 Warrant . . . . . . . . . . . . . . . . . . . . . (E)
4.5 Form of 1998 Note and Warrant Purchase Agreement . . . . . . . (E)
5.1 Opinion of Wilson Sonsini Goodrich & Rosati, P.C.,
dated September 29, 1998 . . . . . . . . . . . . . . . . . . . (E)
10.2 Stock Subscription Agreement between Cultor Ltd. and Aquasearch,
Inc., dated May 14, 1996 . . . . . . . . . . . . . . . . . . . (C)
10.3 The Amended Keahole Point Facilities Use Agreement dated
August 22, 1996 by and between National Energy Laboratory of
Hawaii and the Registrant . . . . . . . . . . . . . . . . . . (B)
10.4 Letter of Intent between C. Brewer and Company Limited and the
Registrant . . . . . . . . . . . . . . . . . . . . . . . . . . (D)
23.1 Consent of Ernst & Young LLP . . . . . . . . . . . . . . . . . (G)
23.2 Consent of Johnson, Holscher & Company, P.C. . . . . . . . . . (G)
23.3 Consent of Wilson Sonsini Goodrich & Rosati, P.C. . . . . . . . (F)
</TABLE>
(A) Incorporated by reference to the exhibit filed with Registrant's Annual
Report on Form 10-KSB filed October 31, 1995.
(B) Incorporated by reference to the exhibit filed with the Registrant's Annual
Report on Form 10-KSB for the fiscal year ended October 31, 1996.
(C) Incorporated by reference to the exhibit filed with Registrant's Current
Report on Form 8-K filed September 13, 1996.
(D) Incorporated by reference to the Registrant's Current Report on Form 8-K
dated November 13, 1996.
(E) Attached as an Exhibit hereto.
(F) Included in Exhibit 5.1 filed herewith.
(G) Previously filed with initial filing on September 30, 1998.
<PAGE>
Exhibit 4.3
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS OF CERTAIN
STATES. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND
RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT
AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION
THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE
FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE ISSUER
OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE
SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS
IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
AQUASEARCH, INC.
PROMISSORY NOTE
$ Kailua-Kona, Hawaii
----------------
Date
---------------
FOR VALUE RECEIVED, AQUASEARCH, INC., a Colorado corporation (the
"Company") hereby absolutely and unconditionally promises to pay to (the
"Lender"), or order, the principal amount of __________________________________
($_____________ ), together with simple interest at the rate of ten percent
(10%) per annum (calculated on the basis of twelve 30-day months). Accrued
interest shall be due and payable in cash only at the time the principal amount
of this Note becomes due and owing.
This Note is one of a series of Notes issued pursuant to one or more
Note and Warrant Purchase Agreements dated March 1998 (as amended and in effect
from time to time, the "Purchase Agreements") by and among the Company, the
Lender, and certain other lenders named in Exhibit A to such Purchase Agreements
(the Lender and the certain other lenders are referred to herein as the
"Lenders"). All rights under this Note rank equally with all rights under all
other Notes, and no holder of this Note shall have rights senior to the rights
of the holders of all or any other Notes.
I. Repayments; Prepayments and Warrants.
B. This Note shall be due and payable 12 months (365 days) from the date of the
signing of this note; provided, however, that, at the option of the Lender, this
Note may be converted into equity as defined by the attached Note and Warrant
Purchase Agreement. In addition, the Company will issue the Lender a Common
Stock Purchase Warrant (the "Warrant") in substantially the form attached
<PAGE>
hereto as Exhibit C to the Note and Warrant Purchase Agreement. The Warrant will
have an exercise price of $0.50 per share and will have a term of three years
from the date of the Preferred Stock Closing. The number of shares of Common
Stock underlying the Warrant will be determined by either of two formulas. In
the event that Investor converts all principal and accrued interest on this Note
into equity within the Conversion Period, as defined in the Note and Warrant
Purchase Agreement, then the Warrant would be exercisable for a number of shares
equal to the dollar amount of the Note, plus a number of shares equal to the
dollar amount of any interest accrued. In the event that the Lender elected not
to converts all principal and accrued interest on this Note into into equity
within the Conversion Period, as defined in the Note and Warrant Purchase
Agreement, then the Warrant would be exercisable for a number of shares equal to
the dollar amount of this Note multiplied by 40%. Warrants will not be issued
for fractional shares. The number of shares of Common Stock underlying the
Warrants will be adjusted for any stock splits, combinations or similar events.
Any payment of this Note prior to the date it is due and payable shall be made
only at the same time as the Company pays all other Notes issued pursuant to the
Purchase Agreement, with such payments to be made pro-rata in proportion to the
then outstanding principal amounts of such Notes. Interest shall continue to
accrue on this Note until such time as all principal and interest due is paid in
full.
B. The Company may prepay this Note at any time, either in whole or in part,
without premium or penalty and without the prior consent of the Lender. Any
prepayment of this Note shall be made only at the same time as the Company
prepays all other Notes issued pursuant to the Purchase Agreements, with such
prepayments to be made pro-rata in proportion to the then outstanding principal
amounts of such Notes.
II. Events of Default; Acceleration.
A. The principal amount of this Note is subject to prepayment in whole or in
part upon the occurrence and during the continuance of any of the following
events (each, an "Event of Default"): (i) failure to pay any amount owing by the
Company hereunder when due and payable, or (ii) the initiation of any
bankruptcy, insolvency, moratorium, receivership or reorganization by or against
the Company, or a general assignment of assets by the Company for the benefit of
creditors. Upon the occurrence of any Event of Default, the entire unpaid
principal balance of this Note shall be immediately due and payable.
B. No remedy herein conferred upon the Lender is intended to be exclusive of any
other remedy and each and every remedy shall be cumulative and in addition to
every other remedy hereunder, and under the Purchase Agreement, now or hereafter
existing at law or in equity or otherwise.
III. Notices.
A. All notices, reports and other communications required or permitted hereunder
shall be in writing and may be delivered in person, by telecopy with written
confirmation, via overnight delivery
2
<PAGE>
service or U.S. mail, in which event it may be mailed by first-class, certified
or registered, postage fully prepaid, addressed (i) if to a Lender, at such
Lender's address set forth in the Schedule of Investors attached as Exhibit A to
the applicable Purchase Agreement (or such other address as such Lender shall
have furnished the Company in writing) and (ii) if to the Company, at the
address set forth at the beginning of the Purchase Agreements (or such other
address as the Company shall have furnished the Lenders in writing), attention
of Mark E. Huntley, Ph.D., President and Chief Executive Officer.
B. Each such notice, report or other communication shall for all purposes under
this Note be treated as effective or having been given when delivered if
delivered personally or, if sent by mail, at the earlier of its receipt or 72
hours after the same has been deposited in a regularly maintained receptacle for
the deposit of the United States mail, addressed and mailed as aforesaid, or, if
sent by telecopier with written confirmation, at the earlier of (i) 24 hours
after confirmation of transmission by the sending telecopier machine or (ii)
delivery of written confirmation.
IV. Miscellaneous.
A. With the written consent of the record holders of a majority of the principal
amount of the Notes then outstanding, the obligations of the Company and the
rights of the holders under the Notes may be waived (either generally or in a
particular instance, either retroactively or prospectively and either for a
specified period of time or indefinitely), and with the same consent the
Company, when authorized by resolution of its Board of Directors, may enter into
a supplementary agreement for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Note;
provided, however, that no such waiver or supplemental agreement shall reduce
the above percentage of principal amount, the holders of which are required to
consent to any waiver or supplemental agreement, without the consent of the
record or beneficial holders of all of the Notes, nor increase the obligations
of any holder of a Note without such holder's written consent. Upon the
effectuation of each such waiver, consent, agreement, amendment or modification,
the Company shall promptly give written notice thereof to the record holders of
the Notes who have not previously consented thereto in writing. Neither this
Note nor any provisions hereof may be changed, waived, discharged or terminated
orally, but only by a signed statement in writing.
B. No failure or delay by the Lender to exercise any right hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, power or privilege preclude any other right, power or privilege. The
provisions of this Note are severable and if any one provision hereof shall be
held invalid or unenforceable in whole or in part in any jurisdiction, such
invalidity or unenforceability shall affect only such provision in such
jurisdiction. This Note expresses the entire understanding of the parties with
respect to the transactions contemplated hereby. The Company and every endorser
and guarantor of this Note regardless of the time, order or place of signing
hereby waives presentment, demand, protest and notice of every kind, and assents
to any extension or postponement of the time for payment or any other
indulgence, to any substitution, exchange or release of collateral, and to the
addition or release of any other party or person primarily or
3
<PAGE>
secondarily liable.
C. If Lender retains an attorney for collection of this Note, or if any suit or
proceeding is brought for the recovery of all, or any part of, or for protection
of the indebtedness respected by this Note, then the Company agrees to pay on
demand all costs and expenses of the suit or proceeding, or any appeal thereof,
incurred by the Lender, including without limitation, reasonable attorneys'
fees.
D. This Note shall for all purposes be governed by, and construed in accordance
with the laws of the State of Hawaii (without reference to conflict of laws).
E. This Note shall be binding upon the Company's successors and assigns, and
shall inure to the benefit of the Lender's successors and assigns.
IN WITNESS WHEREOF, the Company has caused this Note to be executed by
its duly authorized officer to take effect as of the date first hereinabove
written.
AQUASEARCH, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
-------------------------------
4
<PAGE>
Exhibit 4.4
THE SECURITIES REPRESENTED BY THIS CERTIFICATE AND THE SHARES OF COMMON STOCK
AND OTHER SECURITIES, IF ANY, ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES
LAWS. SUCH SECURITIES MAY NOT BE SOLD OR TRANSFERRED UNLESS REGISTERED UNDER
SUCH ACT AND ALL APPLICABLE STATE SECURITIES LAWS OR UNLESS, IN THE OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY, AN EXEMPTION FROM SUCH REGISTRATIONS IS
AVAILABLE AT THE TIME OF SUCH SALE OR TRANSFER.
WARRANTS TO
PURCHASE COMMON STOCK OF
AQUASEARCH, INC.
1998 Bridge Warrant Certificate No. __
Void After _________, 2001
This certifies that, for value received, _______________ ("Buyer") or
registered assigns (the "Holder") is the owner of ______ warrants (the
"Warrants") of Aquasearch, Inc., a Colorado corporation (the "Company"). Each
Warrant shall entitle the registered holder thereof to purchase one share of the
Company's Common Stock, $0.0001 par value (the "Common Stock"), at an exercise
price (the "Exercise Price") per share of Common Stock equal to $0.50 per share
(the "Exercise Price"), at any time during the period (the "Exercise Period")
commencing on the date of this Warrant and expiring at 5:00 p.m. Honolulu,
Hawaii time, on ___________, 2001 all upon the terms and subject to the
conditions set forth herein. After expiration of the Exercise Period, the Holder
shall have no right to purchase any Common Stock hereunder. In the event that
the aforesaid expiration date of the Warrants falls on a day that is not a
business day, then the Warrants shall expire at 5:00 p.m. Honululu, Hawaii time
on the next succeeding business day. For purposes hereof, the term "business
day" shall mean any day other than a Saturday, Sunday or a day on which banking
institutions in Honolulu, Hawaii are authorized or obligated by law to be
closed.
The Warrants are being issued pursuant to a Note and Warrant Purchase
Agreement between the Company and Buyer dated as of _______________ relating to
the sale by the Company and the purchase by Buyer of a Note in the aggregate
principal amount of $_________ and Warrants to purchase ______ shares of Common
Stock (the "Warrant Common Stock"). The Note and Warrant Purchase Agreement is
one of a series of Note and Warrant Purchase Agreements between the Company and
certain investors (the "Purchase Agreements") entered into in 1998.
The Holder, by its or his acceptance hereof, agrees with the Company
that the Warrants have been issued and all rights hereunder shall be held
subject to all of the conditions, limitations and provisions set forth herein.
<PAGE>
1. Exercise of Warrants. The rights represented by the Warrants may be
exercised in whole on one occasion at any time within the Exercise Period (a
"Warrant Exercise Date") by (i) the surrender of the Warrants (with the purchase
form at the end hereof properly executed) at the principal executive office of
the Company (or such other office or agency of the Company as it may designate
by notice in writing to the Holder at the address of the Holder appearing on the
books of the Company) along with a Notice of Exercise in the form of Exhibit I
hereto; and (ii) payment to the Company of the Exercise Price for the number of
shares of Common Stock specified in the above-mentioned purchase form, together
with applicable stock transfer taxes, if any. Payment of the Exercise Price
shall be made in cash or by certified or bank check payable to the Company. The
Warrants shall be deemed to have been exercised, in whole, immediately prior to
the close of business on the date the Warrants are surrendered and payment is
made in accordance with the foregoing provisions of this Paragraph 1, and the
person or persons in whose name or names the certificates for the Warrant Common
Stock shall be issuable upon such exercise shall become the Holder or Holders of
record of such Warrant Common Stock at that time and date. The Warrant Common
Stock so purchased shall be delivered to the Holder within a reasonable time,
not exceeding ten business days, after the rights represented by the Warrants
shall have been so exercised.
2. Restrictions on Transfer. The Holder, by his or her acceptance
hereof, hereby represents and warrants to, and agrees with, the Company as
follows: (i) the Holder has been informed that neither the Warrants, nor the
shares of Warrant Common Stock or other securities purchasable pursuant to the
Warrants, have been registered for sale under any federal or state securities
laws and that the Warrants are being offered and issued to the Holder and, upon
the exercise of the Warrants by the Holder, the Warrant Common Stock purchasable
pursuant to the Warrants will be sold to the Holder, pursuant to the exemption
from registration under the Securities Act of 1933, as amended (the "Securities
Act"); (ii) the Holder is acquiring the Warrants and will acquire the Warrant
Common Stock purchasable upon exercise of the Warrants for the Holder's own
account and not with a view to distribution thereof; (iii) neither the Warrants
nor such Warrant Common Stock may be sold, transferred, assigned, hypothecated
or otherwise disposed of, in whole or in part, unless registered under the
Securities Act and applicable state securities laws or unless, in the opinion of
counsel satisfactory to the Company, an exemption from such registrations is
available; and (iv) prior to the exercise of the Warrants the Holder shall
provide to the Company in writing such information as the Company may reasonably
request to establish that the exercise of the Warrants by the Holder is exempt
from registration under such securities laws.
Subject to the preceding paragraph, any assignment of Warrants shall be
effected by the Holder by (i) completing and executing the Assignment Form
attached as Exhibit II hereto and (ii) surrendering the Warrants represented
hereby with such duly completed and executed transfer form for cancellation,
accompanied by funds sufficient to pay any transfer tax, at the office or agency
of the Company referred to in Paragraph 1; whereupon the Company shall issue, in
the name or names specified by the Holder a new Warrant or Warrants of like
tenor and representing in the aggregate rights to purchase the same number of
shares of Warrant Common Stock as are then
<PAGE>
purchasable hereunder.
3. Payment of Taxes. The Company will pay any documentary stamp taxes
attributable to the initial issuance of Common Stock issuable upon the exercise
of Warrants; 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 issuance
or delivery of any certificates of shares of Warrant Common Stock in a name
other than that of the registered Holder of Warrants in respect of which such
shares are issued, and in such case the Company shall not be required to issue
or deliver any certificate for shares of Warrant Common Stock or any Warrant
until the person requesting the same has paid to the Company the amount of such
tax or has established to the Company's satisfaction that such tax has been
paid.
4. Reservation of Common Stock. There have been reserved, and the
Company shall at all times keep reserved, out of its authorized shares of Common
Stock, a number of shares of Common Stock sufficient to provide for the exercise
of the rights of purchase represented by the Warrants, and the transfer agent
for the shares of Warrant Common Stock and every subsequent transfer agent for
any shares of Warrant Common Stock issuable upon the exercise of any of the
aforesaid rights of purchase are irrevocably authorized and directed at all
times to reserve such number of authorized shares of Common Stock as shall be
required for such purpose. The Company agrees that all shares of Warrant Common
Stock issued upon exercise of the Warrants shall be, at the time of delivery of
the certificates for such shares against payment of the Exercise Price therefor,
validly issued and outstanding, fully paid and nonassessable.
5. No Rights of Shareholder. Prior to the exercise of any Warrants
represented hereby, the Holder, as such, shall not be entitled to any rights of
a shareholder of the Company, including, without limitation, the right to vote
or to receive dividends or other distributions, and shall not be entitled to
receive any notice of any proceedings of the Company, except as otherwise
provided herein.
6. Adjustments to Exercise Price and Number of Shares. The number and
kind of securities purchasable upon the exercise of this Warrant and the
Exercise Price shall be subject to adjustment from time to time as set forth in
Exhibit III hereto upon the occurrence of certain events described therein. The
provisions of Exhibit III are incorporated by reference herein with the same
effect as if set forth in full herein.
7. Notices of Record Date. In the event of any taking by the Company of
a record of its shareholders for the purpose of determining shareholders who are
entitled to receive payment of any dividend or other distribution, any right to
subscribe for, purchase or otherwise acquire any share of any class or any other
securities or property, or to receive any other right, or for the purpose of
determining shareholders who are entitled to vote in connection with any
proposed merger or consolidation of the Company with or into any other
corporation (excluding any proposed merger or consolidation in which the
shareholders of the Company immediately before such merger or consolidation will
own more than 50% of the outstanding voting stock of the surviving entity after
<PAGE>
such merger or consolidation), or any proposed sale, lease or conveyance of all
or substantially all of the assets of the Company, or any proposed liquidation,
dissolution or winding up of the Company, then, in connection with each such
event, the Company shall mail to the Holder of this Warrant at least twenty days
prior written notice of the date on which any such record is to be taken for the
purpose of such dividend, distribution, right(s) or vote of the shareholders.
Each such written notice shall specify the amount and character of any such
dividend, distribution or right(s), and shall set forth, in reasonable detail,
the matter requiring any such vote of the shareholders.
8. Fractional Shares. The Warrants may only be exercised to purchase
full shares of Warrant Common Stock and the Company shall not be required to
issue fractions of shares of Warrant Common Stock on the exercise of Warrants.
However, if a Holder of Warrants exercises all Warrants then owned of record by
him and such exercise would result in the issuance of a fractional share, the
Company will pay to such Holder, in lieu of the issuance of any fractional share
otherwise issuable, an amount of cash based on the Market Price of the Common
Stock on the last trading day prior to the exercise date. "Market Price" means,
on any date, the average of the last reported sale price, or, in case no such
reported takes place on such day, the average of the last reported sale prices
for the last three trading days, in either case as officially reported by the
principal securities exchange on which the Common Stock is then listed or
admitted to trading or as reported in the Nasdaq Stock Market, or, if the Common
Stock is not listed or admitted to trading on any national securities exchange
or quoted on the Nasdaq Stock Market, the closing bid quotation as furnished by
the National Association of Securities Dealers, Inc. through Nasdaq or a similar
organization if Nasdaq is no longer reporting such information, or if the Common
Stock is traded on the NASD Electronic Bulletin Board, the closing bid price as
furnished by Nasdaq, or if the the Common Stock is not quoted on Nasdaq or the
NASD Electronic Bulletin Board, as determined in good faith by resolution of the
Board of Directors of the Company, based on the best information available to it
for the day immediately preceding such issuance or sale, the day of such
issuance or sale and the day immediately after such issuance or sale. If the
Common Stock is listed or admitted to trading on a national securities exchange
and also quoted on the Nasdaq Stock Market, the Market Price shall be determined
as hereinabove provided by reference to the prices reported in the Nasdaq Stock
Market; provided that if the Common Stock is listed or admitted to trading on
the New York Stock Exchange, the Market Price shall be determined as hereinabove
provided by reference to the prices reported by such exchange.
9. Registration Rights. The rights of the Holder of this Warrant and
the obligations of the Company with respect to registration under the Securities
Act and the applicable rules and regulations thereunder shall be as set forth in
the Note and Warrant Agreement between the parties, dated ___________.
10. Mergers. The Company agrees to provide the Holder of this Warrant
with at least twenty days' prior written notice of the terms and conditions of
any proposed transaction, in which the Company would (i) sell, lease, exchange,
convey or otherwise dispose of all or substantially all of its property or
business, or (ii) merge into or consolidate with any other corporation (other
than a wholly-owned subsidiary of the Company), or effect any transaction
(including a merger or other
<PAGE>
reorganization) or series of related transactions, in which more than fifty
percent (50%) of the voting power of the Company is disposed of. The Company
will cooperate with the Holder in arranging the sale of this Warrant in
connection with any such transaction.
11. Modification and Waiver. This Warrant and any provision hereof may
be changed, altered, modified, amended, supplemented, discharged or terminated
only with the written consent of the holders of a majority of the Warrants then
outstanding issued pursuant to the Purchase Agreements. In the event that any
one or more of the provisions contained herein, or the application thereof in
any circumstance, is held invalid, illegal or unenforceable, the validity,
legality and enforceability of any such provision in every other respect and of
the remaining provisions contained herein shall not be affected or impaired
thereby, and the parties agree to cooperate with each other to insure that each
receives the economic benefits intended by any such provision that is so held to
be invalid, illegal or unenforceable.
12. Notices. Any notice, request or other document required or
permitted to be given or delivered to the Holder hereof or the Company shall be
delivered or sent to each such Holder at its address as shown on the books of
the Company or to the Company at the address indicated therefor on the signature
page of this Warrant and shall be deemed received by the Holder upon the earlier
of actual receipt or, if sent by certified mail (postage pre-paid), five (5)
days after deposit in the U.S. mail.
13. Binding Effect on Successors. This Warrant shall be binding upon
any corporation succeeding the Company by merger, consolidation or acquisition
of all or substantially all of the Company's assets. All of the obligations of
the Company relating to the Warrant Common Stock shall survive the exercise and
termination of this Warrant. All of the covenants and agreements of the Company
shall inure to the benefit of the successors and assigns of the Holder hereof.
The Company will, at the time of the exercise of this Warrant, in whole or in
part, upon request of the Holder hereof but at the Company's expense,
acknowledge in writing its continuing obligation to the Holder hereof in respect
of any rights (including, without limitation, any right to registration of the
Warrant Common Stock in accordance with the Registration Rights Agreement) to
which the Holder hereof shall continue to be entitled after such exercise in
accordance with this Warrant; provided, however, that the failure of the Holder
hereof to make any such request shall not affect the continuing obligation of
the Company to the Holder hereof in respect of such rights.
14. Lost Warrants or Stock Certificates. The Company covenants to the
Holder hereof that upon receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction, or mutilation of this Warrant or any
stock certificate issued upon exercise thereof and, in the case of any such
loss, theft or destruction, upon receipt of an indemnity reasonably satisfactory
to the Company, or in the case of any such mutilation upon surrender and
cancellation of such Warrant or stock certificate, the Company shall make and
deliver a new Warrant or stock certificate, or like tenor, in lieu of the lost,
stolen, destroyed or mutilated Warrant or stock certificate.
15. No Impairment. The Company will not, by amendment of its charter
or through any
<PAGE>
reorganization, recapitalization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary action, avoid or
seek to avoid the observance or performance of any of the terms to be observed
or performed hereunder by the Company, but will at all times in good faith
assist in the carrying out of all the provisions of this Warrant and in the
taking of all such action as may be necessary or appropriate in order to protect
the rights of the Holder of this Warrant against impairment.
16. Descriptive Headings. The descriptive headings of the several
paragraphs of this Warrant are inserted for convenience only and do not
constitute a part of this Warrant.
17. Recovery of Litigation Costs. If any legal action or other
proceeding is brought for the enforcement of this Warrant, or because of an
alleged dispute, breach, default, or misrepresentation in connection with any of
the provisions of this Warrant, the successful or prevailing party or parties
shall be entitled to recover reasonable attorneys' fees and other costs incurred
in that action or proceeding, in addition to any other relief to which it or
they may be entitled.
18. Governing Law. The Warrants shall be governed by and in accordance
with the laws of the State of Hawaii without regard to the conflicts of law
principles thereof.
IN WITNESS WHEREOF, the Company has caused this Warrant to be
executed by its duly authorized officer to take effect as of ___________, 1997.
AQUASEARCH, INC.
By:
----------------------------------
Mark E. Huntley, Ph.D.
President and Chief Executive Officer
<PAGE>
EXHIBIT I
NOTICE OF EXERCISE
To: Aquasearch, Inc.
73-4460 Queen Ka'ahumanu Highway
Suite 110
Kailua-Kona, Hawaii 96740
1. The undersigned hereby elects to purchase ______________ shares of
Common Stock of the Company pursuant to the terms of the attached Warrant, and
tenders herewith payment of the purchase price of such shares in full; or
2. Please issue a certificate or certificates representing said shares
in the name of the undersigned or in such other name or names as are specified
below:
----------------------------------------
(NAME)
----------------------------------------
(ADDRESS)
----------------------------------------
(ADDRESS)
3. The undersigned represents that the aforesaid shares being acquired
for the account of the undersigned for investment and not with a view to, or for
resale in connection with, the distribution thereof and that the undersigned has
no present intention of distributing or reselling such shares.
- ------------------------------
(DATE)
- ----------------------------------------
(SIGNATURE)
<PAGE>
EXHIBIT II
ASSIGNMENT FORM
(To assign the foregoing Warrant, execute
this form and supply the required information.
Do not use this form to purchase shares.)
FOR VALUE RECEIVED, the undersigned hereby, sells, assigns and transfers
unto:__________________________________________________________________________
whose address is_______________________________________________________________
(Please Print)
and whose Social Security or other Taxpayer Identification Number
is:________________ the foregoing Warrant and all rights thereunder, hereby
constituting and appointing ______________________________________ to
transfer said Warrant on the books of the Company, with full power of
substitution in the premises.
Dated: , 19 .
----------------- -----
Holder's Signature:
--------------------------
Holder's Name:
-------------------------------
(Please Print)
Holder's Address:
----------------------------
(Please Print)
Signature Guaranteed:
----------------------------------------------------
NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatever, and must be guaranteed by a bank or trust company or by a
member of the National Association of Securities Dealers, Inc. Officers of
corporations and those acting in a fiduciary or other representative capacity
should file proper evidence of authority to assign the foregoing Warrant.
<PAGE>
EXHIBIT III
ADJUSTMENT PROVISIONS
1. Capitalized Terms. Capitalized terms used in this Exhibit III that
are not otherwise defined herein shall have the respective meanings assigned to
them in the Warrant, dated as of ____________ to which this Exhibit III is
attached, if therein defined.
2. Reclassification or Merger. In case of any reclassification, change
or conversion of securities of the class issuable upon exercise of this Warrant
(other than a change in par value, or from par value to no par value, or from no
par value to par value, or as a result of a subdivision or combination), or in
case of any merger of the Company with or into another corporation or entity
(other than a merger with another corporation in which the Company is a
continuing corporation and which does not result in any reclassification or
change of outstanding securities issuable upon exercise of this Warrant), or in
case of any sale of all or substantially all of the assets of the Company, the
Company, or such successor or purchasing corporation or entity, as the case may
be, shall execute a new Warrant (in form and substance satisfactory to the
Holder of this Warrant) providing that the Holder of this Warrant shall have the
right to exercise such new Warrant and upon such exercise to receive, in lieu of
each share of Warrant Common Stock theretofore issuable upon exercise of this
Warrant, the kind and amount of shares of stock, other securities, money and
property receivable upon such reclassification, change or merger by a holder of
one share of Common Stock. Such new Warrant shall provide for adjustments that
shall be as nearly equivalent as may be practicable to the adjustments provided
for in this Exhibit III. The provisions of this Section 2 shall similarly apply
to successive reclassifications, changes, mergers and transfers.
3. Subdivision or Combination of Shares. If the Company at any time
while this Warrant remains outstanding and unexpired shall subdivide or combine
its Common Stock, the Exercise Price and the number of Shares issuable upon
exercise hereof shall be proportionately adjusted.
4. Stock Dividends. If the Company at any time while this Warrant is
outstanding and unexpired shall pay a dividend payable in shares of Common
Stock, then the Exercise Price shall be adjusted, from and after the date of
determination of shareholders entitled to receive such dividend or distribution,
to that price determined by multiplying the Exercise Price in effect immediately
prior to such date of determination by a fraction (a) the numerator of which
shall be the total number of shares of Common Stock outstanding immediately
prior to such dividend or distribution, and (b) the denominator of which shall
be the total number of shares of Common Stock outstanding immediately after such
dividend or distribution and the number of shares of Warrant Common Stock
subject to this Warrant shall be proportionately adjusted.
5. Other Distributions. In the event the Company shall declare a
dividend or distribution payable in cash, securities of other persons, evidences
of indebtedness issued by the Company or other persons, assets or options or
rights not referred to in Sections 2, 3 or 4 of this Exhibit III, then,
<PAGE>
in each such case, provision shall be made by the Company such that the holder
of this Warrant shall receive upon exercise of this Warrant a proportionate
share of any such dividend or distribution as though it were the Holder of the
shares of Warrant Common Stock as of the record date fixed for the determination
of the shareholders of the Company entitled to receive such dividend or
distribution.
6. Notice of Adjustments. Whenever the Exercise Price shall be adjusted
pursuant to the provisions hereof, the Company shall within thirty days of such
adjustment deliver a certificate signed by its Chief Financial Officer to the
registered Holder(s) hereof setting forth, in reasonable detail, the event
requiring the adjustment, the amount of the adjustment, the method by which such
adjustment was calculated, and the Exercise Price after giving effect to such
adjustment.
<PAGE>
Exhibit 4.5
AQUASEARCH, INC.
-------------------------
NOTE AND WARRANT PURCHASE AGREEMENT
-------------------------
March 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
1. I. The Notes and the Warrants...............................................................................1
A. The Notes.......................................................................................1
B. The Warrants....................................................................................1
C. Place and Date of Closing.......................................................................2
D. Delivery........................................................................................2
E. "Piggyback" Registration Rights................................................................ 2
F. Registration Rights............................................................................ 2
II. Representations and Warranties of the Company............................................................2
A. Organization and Standing.......................................................................2
B. Corporate Power.................................................................................2
C. Subsidiaries....................................................................................3
D. Capitalization..................................................................................3
E. Authorization...................................................................................3
III. Representations, Warranties of the Investor and Restrictions on Transfer Imposed
by the Securities Act of 1933............................................................................3
A. Representations and Warranties of the Investor..................................................3
B. Legends.........................................................................................4
C. Removal of Legends and Transfer Restrictions....................................................5
IV. Miscellaneous............................................................................................5
A. Waivers and Amendments..........................................................................5
B. Governing Law...................................................................................6
C. Survival........................................................................................6
D. Successors and Assigns..........................................................................6
E. Entire Agreement................................................................................6
F. Separability of Agreements; Severability of this Agreement......................................6
G. California Corporate Securities Law.............................................................6
H. Titles and Subtitles............................................................................6
I. Counterparts....................................................................................6
J. Delays or Omissions.............................................................................6
K. Notices.........................................................................................6
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
EXHIBITS
A Schedule of Investors
B Form of Promissory Note
C Form of Warrant
</TABLE>
ii
<PAGE>
AQUASEARCH, INC.
NOTE AND WARRANT PURCHASE AGREEMENT
This Agreement is made as of _____________ among Aquasearch, Inc., a
Colorado corporation (the "Company"), with its principal office located at
73-4460 Queen Ka'ahumanu Highway, Suite 110, Kailua-Kona, Hawaii 96740, and
the undersigned (the "Investor"). The Investor understands that the Company
may enter into Note and Warrant Purchase Agreements with substantially
identical terms with one or more other investors. The undersigned and such
other investors are hereinafter referred to collectively as the "Investors."
I. The Note and the Warrants.
A. The Note. Investor hereby agrees, on the terms and conditions specified in
this Agreement, to lend to the Company the sum set forth in column 1 of
Exhibit A opposite such Investor's name at the Closing (as defined below).
Investor's loan shall be evidenced by an unsecured convertible promissory
note (the "Note") dated as of the date of the Closing in the form of
Exhibit B. The aggregate principal amount of the Note shall be as set forth
on Exhibit A, subject to adjustment as provided in Section 1.3 hereof. The
Note may be converted (the "Conversion") for the period of six months (180
days) (the "Conversion Period") into either of the following: (1) shares of
the Company's common stock at a 15% discount to the closing bid price on the
day the Company receives the funds (the"Investment Date") for the note; or
(2) any other equity offering made by the Company during the Conversion
Period.
B. The Warrants. Immediately upon Conversion or the end of the Conversion
Period, whichever comes first, the Company will issue the Investor a Common
Stock Purchase Warrant (the "Warrant") in substantially the form attached hereto
as Exhibit C. The Warrant will have an exercise price of $0.50 per share and
will have a term of three years from the Investment Date. The number of shares
of Common Stock underlying the Warrant will be determined by either of two
formulas. In the event that Investor converts all principal and accrued interest
on the Note into common shares (or any other equity offering) within the
Conversion Period, then the Warrant would be exercisable for a number of shares
equal to the dollar amount of the Note (e.g., if an Investor loaned the Company
$100,000 and converted his or her $100,000 Note and accrued interest into common
stock (or any other equity offering by the Company) within the Conversion
Period, then such Investor would receive a Warrant to purchase 100,000 shares of
Common Stock at $0.50 per share, plus a number of shares equal to the dollar
amount of any interest accrued). In the event that Investor elected not to
convert all principal and accrued interest on the Note into common stock (or any
other equity offering by the Company) within the Conversion Period, then the
Warrant would be exercisable for a number of shares equal to the dollar amount
of the Note multiplied by 40% (e.g., if an Investor loaned the Company $100,000
and did not convert his or her $100,000 Note and accrued interest into common
stock (or any other equity offering by the Company) within the Conversion
Period, then such Investor would receive a Warrant to purchase 40,000 shares of
Common Stock at $0.50 per
1
<PAGE>
share). Warrants will not be issued for fractional shares. The number of shares
of Common Stock underlying the Warrants will be adjusted for any stock splits,
combinations or similar events. The securities for which the Warrants are
exercisable are referred to as the "Warrant Common."
C. Place and Date of Closing: Multiple Closings. The closing of this transaction
(the "Initial Closing") will be held at the offices of the Company set forth
above on such time and place as the Company and the Investor shall mutually
agree (the "Closing Date"). The Company reserves the right to sell additional
Notes and Warrants to additional Investors (the "Additional Investors") in one
or more subsequent closings (a "Subsequent Closing"). The terms and conditions
of any additional Notes and Warrants to be sold at any Subsequent Closing will
not be more favorable than the Notes and Warrants sold by the Company to the
Investor in the Initial Closing. The Initial Closing and any and all Subsequent
Closings are hereinafter referred to collectively as the "Closing"). The term
"Investors" as used herein includes any and all Additional Investors.
D. Delivery. At the Closing, the Company shall deliver the Notes, dated the
Closing Date, to the Investors, and the Investors shall deliver to the Company
the principal amount thereof by check or wire transfer. Within 30 days of
Conversion , the Company shall deliver the Warrants, dated the Initial Closing
Date, to the Investors. Investors converting their Notes into common stock (or
any other equity offering by the Company) within the Conversion Period shall
deliver the Notes to the Company for cancellation.
E. "Piggyback" Registration Rights: Upon conversion of the Note to common stock
within the Conversion Period, the Investor shall have the right to require the
Company to register with the Securities and Exchange Commission (the "SEC") both
the common shares into which the Note was converted and the Warrant Common as
part of any subsequent registration of common shares the Company undertakes. If
the Investor chooses to convert his Note into any equity offering other than
common stock during the Conversion Period, the Registration Rights of such other
equity offering, if any, shall supersede any registration rights defined herein.
II. Representations and Warranties of the Company.
A. Organization and Standing. The Company is a corporation duly organized and
validly existing under, and by virtue of, the laws of Colorado and is in good
standing under such laws. The Company has all requisite corporate power and
authority to own its properties and assets and to carry on its business as
presently conducted. The Company is qualified to do business as a foreign
corporation in each jurisdiction in which the failure to be so qualified would
have materially adverse impact on the business or financial condition of the
Company taken as a whole.
B. Corporate Power. The Company has all requisite legal and corporate power
(i) to execute and deliver this Agreement, the Notes and the Warrants
(collectively the "Transaction Documents"), (ii) to sell and issue the Notes
and the Warrants pursuant to this Agreement, (iii) to issue the Warrant
Common upon exercise of the Warrants and (iv) to carry out and perform its
obligations under the
2
<PAGE>
terms of the Transaction Documents.
C. Subsidiaries. The Company does not presently control, directly or indirectly,
or have an ownership interest in any other corporation, partnership, business
trust, association or other business entity.
D. Capitalization. The authorized capital stock of the Company consists of
100,000,000 shares of Common Stock. The outstanding capital stock of the Company
consists of 45,410,513 shares of Common Stock. All of the outstanding shares are
duly authorized, validly issued, fully paid and nonassessable.
E. Authorization. All corporate action on the part of the Company, its directors
and shareholders necessary for the sale and issuance of the Notes and Warrants
and the performance of the Company's obligations under the Transaction Documents
has been taken or will be taken prior to the Closing. The Notes, the Warrants,
and the Warrant Common are hereinafter referred to collectively as the
"Securities"). Each of the Transaction Documents, when executed and delivered by
the Company, shall constitute a valid, binding and enforceable obligation of the
Company, except as the enforcement thereof may be limited by applicable
bankruptcy, insolvency, reorganization or similar laws relating to or affecting
the enforcement of creditor's rights and to the availability of the remedy of
specific performance. The execution and delivery of the Transaction Documents,
and the performance by the Company of their various terms, do not violate,
conflict with or result in a material breach of (i) the Company's Articles of
Incorporation, as amended through the Closing Date; (ii) the Company's Bylaws;
(iii) any judgment, order or decree of any court or arbitrator to which the
Company is a party; or (iv) any contract, undertaking, indenture or other
agreement or instrument by which the Company is now bound or to which it is now
a party. The Company is not subject to any judgment, order or decree of any
court or arbitrator. Except for notices required or permitted to be filed with
certain state and federal securities commissions, which notices the Company
agrees to file on a timely basis, the execution, delivery and performance by the
Company of the Transaction Documents in compliance with their respective
provisions do not require any governmental consent or approval.
III. Representations, Warranties of the Investor and Restrictions on
Transfer Imposed by the Securities Act of 1933.
A. Representations and Warranties of the Investor. Investor represents and
warrants to the Company upon acquisition of the Note and the Warrant and upon
exercise of the Warrant as follows:
1. All action on the part of the Investor for the authorization,
execution, delivery and performance by the Investor of this Agreement has been
taken, and this Agreement constitutes a valid and binding obligation of the
Investor, enforceable in accordance with its terms, except as may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws effecting the enforcement of creditor's rights and the availability of the
remedy of specific performance.
3
<PAGE>
2. The Investor is experienced in evaluating and investing in new
companies and companies with limited operating histories such as the Company.
3. The Investor is acquiring the Securities for investment for his or
her own account and not with a view to, or for resale in connection with, any
distribution. The Investor understands that the Securities to be purchased have
not been registered under the Securities Act of 1933, as amended (the "Act") by
reason of a specific exemption from the registration provisions of the Act which
depends upon, among other things, the bona fide nature of the investment intent
as expressed herein.
4. The Investor acknowledges that the Securities must be held
indefinitely unless subsequently registered under the Act or an exemption from
such registration is available. The Investor is aware of the provisions of Rule
144 promulgated under the Act which permits limited resale of securities
purchased in a private placement subject to the satisfaction of certain
conditions, including, in case the Investor has held the securities for less
than two years or is an affiliate of the Company, among other things: the
availability of certain current public information about the Company, the resale
occurring not less than one year after a party has purchased and paid for the
securities to be sold, the sale being through a "broker's transaction" or in
transactions directly with a "market maker," and the number of shares being sold
during any three-month period not exceeding specified limitations.
5. The Investor understands that a limited public market now exists for
the Common Stock of the Company and that no public market exists for the
Warrants.
6. The Investor is a sophisticated investor with such knowledge and
experience in financial and business matters so as to be capable of evaluating
the merits and risks of a prospective investment in the Securities and who is
capable of bearing the economic risks of such investment.
7. In taking any action or performing any role relative to arranging
the proposed investment, the Investor has acted solely in the Investor's own
interest. Neither the Investor nor any of its agents or employees has acted as
an agent of the Company, or as an issuer, underwriter, broker, dealer or
investment advisor relative to any of the Securities.
B. Legends. Each certificate representing the Securities shall be endorsed with
the following legend (in addition to any legend required under applicable state
securities laws):
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES
LAWS OF CERTAIN STATES. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT
AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS,
PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE
AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS
4
<PAGE>
INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE
SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE
SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR
RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE
SECURITIES LAWS.
The Company need not record a transfer of Securities, unless the conditions
specified in the foregoing legends are satisfied. The Company may also instruct
its transfer agent not to record the transfer of any of the Securities unless
the conditions specified in the foregoing legends are satisfied.
C. Removal of Legends and Transfer Restrictions. The legend relating to the Act
endorsed on a certificate pursuant to paragraph IVA 8 of this Agreement and the
stop transfer instructions with respect to the Securities represented by such
certificate shall be removed and the Company shall issue a certificate without
such legend to the holder of such Securities if such Securities are registered
under the Act and a prospectus meeting the requirements of Section 10 of the Act
is available or if such holder provides to the Company an opinion of counsel for
such holder of the Securities reasonably satisfactory to the Company, or a
no-action letter or interpretive opinion of the staff of the Securities and
Exchange Commission (the "Commission") to the effect that a public sale,
transfer or assignment of such Securities may be made without registration and
without compliance with any restriction such as Rule 144.
V. Miscellaneous.
A. Waivers and Amendments. With the written consent of the record holders of a
majority of the principal amount of the Notes then outstanding, the obligations
of the Company and the rights of the holders of the Securities under this
Agreement may be waived (either generally or in a particular instance, either
retroactively or prospectively and either for a specified period of time or
indefinitely), and with the same consent the Company, when authorized by
resolution of its Board of Directors, may enter into a supplementary agreement
for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Agreement; provided, however, that no
such waiver or supplemental agreement shall reduce the above percentage of
Securities, the holders of which are required to consent to any waiver or
supplemental agreement, without the consent of the record or beneficial holders
of all of the Securities, nor increase the obligations of any holder of
Securities without such holder's written consent. Upon the effectuation of each
such waiver, consent, agreement, amendment or modification the Company shall
promptly give written notice thereof to the record holders of the Securities who
have not previously consented thereto in writing. Neither this Agreement nor any
provisions hereof may be changed, waived, discharged or terminated orally, but
only by a signed statement in writing.
B. Governing Law. This Agreement shall be governed in all respects by the laws
of the State of Hawaii as such laws are applied to agreements between Hawaii
residents entered into and to be performed entirely within Hawaii.
5
<PAGE>
C. Survival. The representations, warranties, covenants and agreements made
herein shall survive any investigation made by the Investor and the Closing of
the transactions contemplated hereby.
D. Successors and Assigns. Except as otherwise expressly provided herein, the
provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties hereto.
E. Entire Agreement. This Agreement (including the exhibits attached hereto) and
the other documents delivered pursuant hereto constitute the full and entire
understanding and agreement between the parties with regard to the subjects
hereof and thereof.
F. Separability of Agreements; Severability of this Agreement. The Company's
agreement with each of the Investors is a separate agreement and the sale of the
Securities to each of the Investors is a separate sale. Unless otherwise
expressly provided herein, the rights of each Investor hereunder are several
rights, not rights jointly held with any of the other Investors. If any
provision of this Agreement shall be judicially determined to be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
G. California Corporate Securities Law. The following provision applies to
Investors that are residents of the State of California:
THE SALE OF THE SECURITIES WHICH ARE THE SUBJECT OF THIS
AGREEMENT HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER OF
CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF
THE SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE
CONSIDERATION THEREFOR PRIOR TO SUCH QUALIFICATION IS UNLAWFUL
UNLESS THE SALE OF SECURITIES IS EXEMPT FROM THE QUALIFICATION
BY SECTION 25100, 25102, OR 25105 OF THE CALIFORNIA
CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT
ARE EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION BEING
OBTAINED, UNLESS THE SALE IS SO EXEMPT.
H. Titles and Subtitles. The titles of the paragraphs and subparagraphs of this
Agreement are for convenience of reference only and are not to be considered in
construing this Agreement.
I. Counterparts. This Agreement may be executed in any number of counterparts,
each of which shall be an original, but all of which together shall constitute
one instrument.
J. Delays or Omissions. It is agreed that no delay or omission to exercise any
right, power or remedy accruing to the Investor, upon any breach or default of
the Company under this Agreement, shall impair any such right, power or remedy,
nor shall it be construed to be a waiver of any such breach or default, or any
acquiescence therein, or of or in any similar breach or default thereafter
occurring; nor shall any waiver of any single breach or default be deemed a
waiver of any other breach or
6
<PAGE>
default theretofore or thereafter occurring. It is further agreed that any
waiver, permit, consent or approval of any kind or character by the Investors of
any breach or default under this Agreement, or any waiver by the Investors of
any provisions or conditions of this Agreement must be in writing and shall be
effective only to the extent specifically set forth in writing and that all
remedies, either under this Agreement, or by law or otherwise afforded to the
Investors, shall be cumulative and not alternative.
K. Notices. All notices, reports and other communications required or permitted
hereunder shall be in writing and may be delivered in person, by telecopy with
written confirmation, overnight delivery service or U.S. mail, in which event it
may be mailed by first-class, certified or registered, postage prepaid,
addressed (a) if to an Investor, at such Investor's address set forth in the
Schedule of Investors (or such other address as such Investor shall have
furnished the Company in writing) and (b) if to the Company at the address set
forth at the beginning of this Agreement (or such other address as the Company
shall have furnished the Investors in writing) attention of Mark E. Huntley,
Ph.D., President and Chief Executive Officer.
Each such notice, report or other communication shall for all purposes under
this Agreement be treated as effective or having been given when delivered if
delivered personally or, if sent by mail, at the earlier of its receipt or 72
hours after the same has been deposited in a regularly maintained receptacle for
the deposit of the United States mail, addressed and mailed as aforesaid, or, if
sent by telecopier with written confirmation, at the earlier of (i) 24 hours
after confirmation of transmission by the sending telecopier machine or
(ii) delivery of written confirmation.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered by their proper and duly authorized officers or agents as
of the date and year first written above.
INVESTOR: AQUASEARCH, INC.
By:
- --------------------------- ---------------------------------
(Signature)
Earl Fusato
- --------------------------- ---------------------------------
(Signature) (Print Name)
Title: Chief Financial Officer
- --------------------------- ------------------------------
(Print Name and Title)
7
<PAGE>
EXHIBIT A - SCHEDULE OF INVESTORS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NAME AND ADDRESS AMOUNT
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<S> <C>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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</TABLE>
<PAGE>
Exhibit 5.1
WILSON SONSINI GOODRICH & ROSATI
PROFESSIONAL CORPORATION
September 29, 1998
Aquasearch, Inc.
73-4460 Queen Ka'ahumanu Hwy.
Suite 110
Kailua-Kona, HI 96740
Re: Registration Statement on Form SB-2
Ladies and Gentlemen:
We have examined the Registration Statement on Form SB-2 to be filed
with the Securities and Exchange Commission (the "Registration Statement"), in
connection with the registration under the Securities Act of 1933, as amended,
of the continuous offering of 20,075,648 shares of your Common Stock (the
"Shares") and the exercise of Warrants to Purchase Common Stock (the
"Warrants"). As your counsel, we have examined the proceedings proposed to be
taken in connection with the sale and issuance of the above-referenced
securities.
In our opinion, the Shares, and the issuance of the shares of your
Common Stock upon the exercise of the Warrants, will be legally and validly
issued, fully paid and nonassessable.
We consent to the use of this opinion as an exhibit to the
Registration Statement, and further consent to the use of our name wherever
appearing in the Registration Statement, including the Prospectus constituting a
part thereof, and any amendment thereto.
Very truly yours,
/s/Wilson Sonsini Goodrich & Rosati
-----------------------------------
WILSON SONSINI GOODRICH & ROSATI
Professional Corporation
