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EXHIBIT 10.7
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement ("Agreement"), dated as of June 14,
2000, is made by and between Aquasearch, Inc., a Colorado corporation
("Company"), and Alpha Venture Capital, Inc., a Cook Islands corporation (the
"Subscriber").
Recitals
WHEREAS, upon the terms and subject to the conditions of the Common
Stock Purchase Agreement ("Purchase Agreement"), between the Subscriber and the
Company, the Company has agreed to issue and sell to the Subscriber up to ten
million dollars ($10,000,000) of the common stock of the Company ("Subscribed
Shares") par value $.0001 per share (the "Common Stock"), and
WHEREAS, pursuant to the terms of the Purchase Agreement the Company
will issue to the Subscriber warrants: (i) upon the execution hereof, to
purchase one hundred fifty thousand (150,000) shares of Common Stock at an
exercise price equal to eighty percent (80%) of the closing bid price of the
Common Stock on the date hereof (the "Initial Warrant"); (ii) upon the
effectiveness of the Registration Statement required to filed pursuant to
Section 2 hereof, to purchase one million, three hundred fifty thousand
(1,350,000) shares of Common Stock at an exercise price equal to eighty percent
(80%) of the average Market Price of the Common Stock on the last five trading
days immediately prior to the date that such Registration Statement is declared
effective by the Securities and Exchange Commission (the "Registration
Warrant"); and (iii) to purchase a maximum of nine hundred and fifty thousand
(950,000) shares of Common Stock ("Further Warrants") on a pro rata basis in
conjunction with the draw downs, as set forth in the Purchase Agreement,
exercisable at the closing bid price, at the date of each draw down.
WHEREAS, to induce the Subscriber to execute and deliver the Purchase
Agreement, the Company has agreed to provide certain registration rights under
the Securities Act of 1933, as amended, and the rules and regulations
thereunder, or any similar successor statute (collectively, "Securities Act"),
and applicable state securities laws with respect to the Subscribed Shares;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and the
Subscriber hereby agree as follows:
1. DEFINITIONS.
(a) As used in this Agreement, the following terms shall have the
following meaning:
(i) "Effective Date" means the date of this Agreement.
(ii) "Subscriber", has the meaning set forth in the preamble to
this Agreement.
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(iii) "Register", "registered" and "registration" refer to a
registration effected by preparing and filing a Registration Statement or
Statements in compliance with the Securities Act and pursuant to Rule 415 under
the Securities Act or any successor rule providing for offering securities on a
delayed or continuous basis ("Rule 415"), and the declaration or ordering of
effectiveness of such Registration Statement by the United States Securities and
Exchange Commission (the "SEC").
(iii) "Registrable Securities" means the Subscribed Shares and the
Warrants.
(iv) "Registration Statement" means a registration statement of the
Company under the Securities Act.
(v) "Warrant" means the Initial Warrant, Registration Warrant, and
any Further Warrants.
(b) Capitalized terms used herein and not otherwise defined herein
shall have the respective meanings set forth in the Purchase Agreement.
2. REGISTRATION.
(a) MANDATORY REGISTRATION. The Company shall prepare and file
with the SEC, no later than twenty (20) business days after the Effective Date,
a Registration Statement on Form SB-2 ("Registration Statement"), covering a
sufficient number of shares of Common Stock for the Subscribers to cover the
registration of the ten million dollars ($10,000,000) of Subscribed Shares and
the conversion of the Warrants based on the closing bid price of the Common
Stock as of the most recent practicable date, and in any event not less than
20,000,000 shares of the Common Stock. Such Registration Statement shall state
that, in accordance with the Securities Act, it also covers such indeterminate
number of additional shares of Common Stock as may become issuable to prevent
dilution resulting from stock splits, or stock dividends. If at any time (i) the
number of Subscribed Shares and (ii) the number of shares of Common Stock
issuable upon exercise of the Warrants exceeds the aggregate number of shares of
Common Stock then registered, the Company shall, within ten (10) business days
after receipt of written notice from the Subscriber, file with the SEC an
additional Registration Statement on Form SB-2 or any other applicable
registration statement, to register (i) Subscribed Shares and (ii) the shares of
Common Stock issuable upon exercise of the Warrants that exceed the aggregate
number of shares of Common Stock already registered.
(b) PAYMENT BY THE COMPANY. If the Registration Statement covering
the Registrable Securities required to be filed by the Company pursuant to
Section 2(a) hereof is not declared effective within one hundred and fifty (150)
days from the Effective Date (i) for any reason other than the requirement by
the SEC of modifications to the structure of the transactions contemplated
hereby that are unacceptable to the Company or the Subscriber, then the
commitment contained in the Common Stock Purchase Agreement and in this
Agreement (the "Commitment") shall terminate and the Subscriber shall retain the
Initial Warrant, the
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Registration Warrant (which shall be exercisable at a price equal to eighty
percent (80%) of the closing bid price of the Common Stock on the date hereof)
and the non-refundable fee of $17,500 to cover legal fees and expenses incurred
by Subscriber or (ii) because the SEC has required modification of the structure
of the transactions contemplated hereby that are unacceptable to the Company or
the Subscriber, then the Commitment shall terminate and the Subscriber shall
retain the Initial Warrant and the non-refundable fee of $17,500 to cover legal
fees and expenses incurred by Subscriber.
The Company acknowledges that its failure to have the Registration
Statement declared effective within one hundred (150) days from the Effective
Date (for any reason other than the requirement by the SEC of modifications to
the structure of the transactions contemplated hereby that are unacceptable to
the Company or the Subscriber) shall cause the Subscriber to suffer damages in
an amount that shall be difficult to ascertain. Accordingly, the parties agree
that it is appropriate to include in this Agreement a provision for liquidated
damages. The parties acknowledge and agree that the liquidated damages provision
set forth in this section represents the parties' good faith effort to quantify
such damages and, as such, agree that the form and amount of such liquidated
damages are reasonable and will not constitute a penalty. The payment of
liquidated damages shall not relieve the Company from its obligations to
register the Common Stock and deliver the Common Stock pursuant to the terms of
this Agreement, the Purchase Agreement and the Subscribed Shares.
3. OBLIGATION OF THE COMPANY. In connection with the registration
of the Registrable Securities, the Company shall do each of the following:
(a) Prepare promptly, and file with the SEC within twenty (20)
days of the Effective Date, a Registration Statement with respect to not less
than the number of Registrable Securities provided in Section 2(a) above, and,
thereafter, use all diligent efforts to cause the Registration Statement
relating to the Registrable Securities to become effective the earlier of (a)
five (5) business days after notice from the Securities and Exchange Commission
that the Registration Statement may be declared effective, or (b) one hundred
fifty (150) days after the Effective Date, and keep the Registration Statement
effective at all times until the earliest of (i) the date that is one year after
the completion of the last Closing Date under the Purchase Agreement, (ii) the
date when the Subscriber may sell all Registrable Securities under Rule 144
without volume limitations, or (iii) the date the Subscriber no longer owns any
of the Registrable Securities (collectively, the "Registration Period"), which
Registration Statement (including any amendments or supplements, thereto and
prospectuses contained therein) shall not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading;
(b) Prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to the Registration Statement and the
prospectus used in connection with the Registration Statement as may be
necessary to keep the Registration Statement effective at all times during the
Registration Period, and, during the Registration Period, and to comply with the
provisions of the Securities Act with respect to the disposition of
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all Registrable Securities of the Company covered by the Registration Statement
until the expiration of the Registration Period.
(c) Permit a single firm of counsel designated by Subscriber to
review the Registration Statement and all amendments and supplements thereto a
reasonable period of time (but not less than one (1) Business Day) prior to
their filing with the SEC, and not file any document in a form to which such
counsel reasonably objects.
(d) Notify Subscriber and Subscriber's legal counsel identified to
the Company (which, until further notice, shall be deemed to be Krieger &
Prager, LLP, ATTN: Samuel Krieger, Esq.; "SUBSCRIBER'S COUNSEL") (and, in the
case of (i)(A) below, not less than one (1) Business Day prior to such filing)
and (if requested by any such person) confirm such notice in writing no later
than one (1) Business Day following the day (i): (A) when a prospectus or any
prospectus supplement or post-effective amendment to the Registration Statement
is proposed to be filed; (B) whenever the SEC notifies the Company whether there
will be a "review" of such Registration Statement; (C) whenever the Company
receives (or a representative of the Company receives on its behalf) any oral or
written comments from the SEC respect of a Registration Statement (copies or, in
the case of oral comments, written or oral summaries of such comments shall be
promptly furnished by the Company to Subscriber's Counsel); and (D) with respect
to the Registration Statement or any post-effective amendment, when the same has
become effective; (ii) of any request by the SEC or any other Federal or state
governmental authority for amendments or supplements to the Registration
Statement or the prospectus or for additional information; (iii) of the issuance
by the SEC of any stop order suspending the effectiveness of the Registration
Statement covering any or all of the Registrable Securities or the initiation of
any proceedings for that purpose; (iv) if at any time any of the representations
or warranties of the Company contained in any agreement (including any
securities purchase agreement) contemplated hereby ceases to be true and correct
in all material respects; (v) of the receipt by the Company of any notification
with respect to the suspension of the qualification or exemption from
qualification of any of the Registrable Securities for sale in any jurisdiction,
or the initiation or threatening of any proceeding for such purpose; and (vi) of
the occurrence of any event that to the knowledge of the Company makes any
statement made in the Registration Statement or the prospectus or any document
incorporated or deemed to be incorporated therein by reference untrue in any
material respect or that requires any revisions to the Registration Statement,
the prospectus or other documents so that, in the case of the Registration
Statement or the prospectus, as the case may be, it will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading. In addition, the
Company shall furnish Subscriber's Counsel with copies of all intended written
responses to the comments contemplated in clause (C) of this Section not later
than one (1) Business Day in advance of the filing of such responses with the
SEC so that Subscriber shall have the opportunity to comment thereon.
(e) Furnish to Subscriber, (i) promptly after the same is prepared
and publicly distributed, filed with the SEC, or received by the Company, one
(1) copy of the Registration Statement, each preliminary prospectus and the
prospectus, and each amendment or supplement
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thereto, and (ii) such number of copies of a prospectus, including a preliminary
prospectus, and all amendments and supplements thereto and such other documents,
as the Subscriber may reasonably request in order to facilitate the disposition
of the Registrable Securities owned by the Subscriber;
(f) Use all diligent efforts to (i) register and/or qualify the
Registrable Securities covered by the Registration Statement under such other
securities or blue sky laws of such jurisdictions as the Subscriber may
reasonably request and in which significant volumes of shares of Common Stock
are traded, (ii) prepare and file in those jurisdictions such amendments
(including post-effective amendments) and supplements to such registrations and
qualifications as may be necessary to maintain the effectiveness thereof at all
times during the Registration Period, (iii) take such other actions as may be
necessary to maintain such registrations and qualification in effect at all
times during the Registration Period, and (iv) take all other actions reasonably
necessary or advisable to qualify the Registrable Securities for sale in such
jurisdictions: PROVIDED, HOWEVER, that the Company shall not be required in
connection therewith or as a condition thereto to (A) qualify to do business in
any jurisdiction where it would not otherwise be required to qualify but for
this Section 3(f), (B) subject itself to general taxation in any such
jurisdiction, (C) file a general consent to service of process in any such
jurisdiction, (D) provide any undertakings that cause more than nominal expense
or burden to the Company or (E) make any change in its charter or by-laws or any
then existing contracts, which in each case the Board of Directors of the
Company determines to be contrary to the best interests of the Company and its
stockholders;
(g) As promptly as practicable after becoming aware of such event,
notify the Subscriber of the happening of any event of which the Company has
knowledge, as a result of which the prospectus included in the Registration
Statement, as then in effect, includes any untrue statement of a material fact
or omits to state a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading ("Registration Default"), and uses all diligent
efforts to promptly prepare a supplement or amendment to the Registration
Statement or other appropriate filing with the SEC to correct such untrue
statement or omission, and any other necessary steps to cure the Registration
Default, and deliver a number of copies of such supplement or amendment to the
Subscriber as the Subscriber may reasonably request. Failure to cure the
Registration Default within ten (10) business days shall result in the Company
including liquidated damage penalty of $1,000 per day for so long as more than
10,000 shares of Common Stock are held by the Subscriber;
(h) As promptly as practicable after becoming aware of such event,
notify the Subscriber (or, in the event of an underwritten offering, the
managing underwriters) of the issuance by the SEC of any notice of effectiveness
or any stop order or other suspension of the effectiveness of the Registration
Statement at the earliest possible time;
(i) Use its commercially reasonable efforts, if eligible, either
to (i) cause all the Registrable Securities covered by the Registration
Statement to be listed on a national securities exchange and on each additional
national securities exchange on which securities of the same
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class or series issued by the Company are then listed, if any, if the listing of
such Registrable Securities is then permitted under the rules of such exchange,
or (ii) secure designation of all the Registrable Securities covered by the
Registration Statement as a National Association of Securities Dealers Automated
Quotations System ("Nasdaq) "Small Capitalization" within the meaning of Rule
11Aa2-1 of the SEC under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the quotation of the Registrable Securities on the Nasdaq
Small Cap Market; or if, despite the Company's commercially reasonable efforts
to satisfy the preceding clause (i) or (ii), the Company is unsuccessful in
doing so, to secure NASD authorization and quotation for such Registrable
Securities on the over-the-counter bulletin board and, without limiting the
generality of the foregoing, to arrange for at least two market makers to
register with the National Association of Securities Dealers, Inc. ("NASD") as
such with respect to such registrable securities; PROVIDED, HOWEVER, that the
Subscriber acknowledges that the Company does not currently meet the
requirements for listing on a national securities exchange or the Nasdaq Small
Cap Market pursuant to (i) or (ii) and that nothing in this section shall be
construed to require the Company to pursue such qualification until such time as
the Company satisfies such requirements for a period of not less than forty-five
(45) days:
(j) Provide a transfer agent for the Registrable Securities not
later than the effective date of the Registration Statement;
(k) Cooperate with the Subscriber to facilitate the timely
preparation and delivery of certificates for the Registrable Securities to be
offered pursuant to the Registration Statement and enable such certificates for
the Registrable Securities to be in such denominations or amounts as the case
may be, as the Subscriber may reasonably request and registration in such names
as the Subscriber may request; and, within five (5) business days after a
Registration Statement which includes Registrable Securities is ordered
effective by the SEC, the Company shall deliver, and shall cause legal counsel
selected by the Company to deliver, to the transfer agent for the Registrable
Securities (with copies to the Subscriber) an appropriate instruction and
opinion of such counsel, if so required by the Company's transfer agent; and
(l) Take all other reasonable actions necessary to expedite and
facilitate distribution to the Subscriber of the Registrable Securities pursuant
to the Registration Statement.
4. OBLIGATIONS OF THE SUBSCRIBER. In connection with the
registration of the Registrable Securities, the Subscriber shall have the
following obligations;
(a) It shall be a condition precedent to the obligations of the
Company to complete the registration pursuant to this Agreement with respect to
the Registrable Securities of the Subscriber that the Subscriber shall timely
furnish to the Company such information regarding itself, the Registrable
Securities held by it, and the intended method of disposition of the Registrable
Securities held by it, as shall be reasonably required to effect the
registration of such Registrable Securities and shall timely execute such
documents in connection with such registration as the Company may reasonably
request.
(b) The Subscriber by such Subscriber's acceptance of the
Registrable Securities
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agrees to cooperate with the Company as reasonably requested by the Company in
connection with the preparation and filing of the Registration Statement
hereunder; and
(c) The Subscriber agrees that, upon receipt of any notice from
the Company of the happening of any event of the kind described in Section 3(g)
or 3(h) above, the Subscriber will immediately discontinue disposition of
Registrable Securities pursuant to the Registration Statement covering such
Registrable Securities until the Subscriber receives the copies of the
supplemented or amended prospectus contemplated by Section 3(g) or 3(h) and, if
so directed by the Company, the Subscriber shall deliver to the Company (at the
expense of the Company) or destroy (and deliver to the Company a certificate of
destruction) all copies in the Subscriber's possession, of the prospectus
covering such Registrable Securities current at the time of receipt of such
notice.
5. EXPENSES OF REGISTRATION. All reasonable expenses, other than
underwriting discounts and commissions incurred in connection with
registrations, filing or qualifications pursuant to Section 3, but including,
without limitations, all registration, listing, and qualifications fees,
printers and accounting fees, the fees and disbursements of counsel for the
Company, shall be borne by the Company. Nothing in this paragraph 5 shall be
construed as obligating the Company to pay legal fees to Subscriber's counsel in
excess of the non-refundable fee $17,500 referenced in Section 2(b) hereof.
6. INDEMNIFICATION. After Registrable Securities are included in
a Registration Statement under this Agreement:
(a) To the extent permitted by law, the Company will indemnify and
hold harmless, the Subscriber, the directors, if any, of such Subscriber, the
officers, if any, of such Subscriber, each person, if any, who controls the
Subscriber within the meaning of the Securities Act or the Exchange Act (each,
an "Indemnified Person"), against any losses, claims, damages, liabilities or
expenses (joint or several) incurred (collectively, "Claims") to which any of
them may become subject under the Securities Act, the Exchange Act or otherwise,
insofar as such Claims (or actions or proceedings, whether commenced or
threatened, in respect thereof) arise out of or are based upon: (i) any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement or any post-effective amendment thereof or the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, (ii) any
untrue statement or alleged untrue statement of a material fact contained in any
preliminary prospectus if used prior to the effective date of such Registration
Statement, or contained in the final prospectus (as amended or supplemented, if
the Company files any amendment thereof or supplement thereto with the SEC) or
the omission or alleged omission to state therein any material fact necessary to
make the statements made therein, in the light of the circumstances under which
the statements therein were made, not misleading or (iii) any violation or
alleged violation by the Company of the Securities Act, the Exchange Act, any
state securities law or any rule or regulation under the Securities Act, the
Exchange Act or any state securities law (the matters in the foregoing clauses
(i) through (iii) being collectively referred to as "Violations"). The Company
shall reimburse the Subscriber, promptly as such expenses are incurred and are
due and payable, for any reasonable legal fees or
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other reasonable expenses incurred by them in connection with investigating or
defending any such Claim. Notwithstanding anything to the contrary contained
herein, the indemnification agreement contained in this Section 6(a) shall not
(i) apply to any Claims arising out of or based upon a Violation which occurs in
reliance upon and in conformity with information furnished in writing to the
Company by or on behalf of any Indemnified Person expressly for use in
connection with the preparation of the Registration Statement or any such
amendment thereof or supplement thereto, if such prospectus was timely made
available by the Company pursuant to Section 3(b) hereof; (ii) with respect to
any preliminary prospectus, inure to the benefit of any such person from whom
the person asserting any such Claim purchased the Registrable Securities that
are the subject thereof (or to the benefit of any person controlling such
person) if the untrue statement or omission of material fact contained in the
preliminary prospectus was corrected in the prospectus, as then amended or
supplemented, if such prospectus was timely made available by the Company
pursuant to Section 3(b) hereof; (iii) be available to the extent such Claim is
based on a failure of the Subscriber to deliver or cause to be delivered the
prospectus made available by the Company; or (iv) apply to amounts paid in
settlement of any Claim if such settlement is effected without the prior written
consent of the Company, which consent shall not be unreasonably withheld. The
Subscriber will indemnify the Company, its officers, directors and agents
(including legal counsel) against any claims arising out of or based upon a
Violation which occurs in reliance upon and in conformity with information
furnished in writing to the Company, by or on behalf of such Subscriber,
expressly for use in connection with the preparation of the Registration
Statement, subject to such limitations and conditions set forth in the previous
sentence. Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of the Indemnified Person or Indemnified
Party.
(b) Promptly after receipt by an Indemnified Person under this
Section 6 of notice of the commencement of any action (including any
governmental action), such Indemnified Person shall, if a Claim in respect
thereof is to be made against any indemnifying party under this Section 6,
deliver to the indemnifying party a written notice of the commencement thereof
and the indemnifying party shall have the right to participate in, and, to the
extent the indemnifying party so desires, jointly with any other indemnifying
party similarly noticed, to assume control of the defense thereof with counsel
mutually satisfactory to the indemnifying party and the Indemnified Person, as
the case may be; PROVIDED, HOWEVER, that an Indemnified Person shall have the
right to retain its own counsel with the reasonable fees and expenses to be paid
by the indemnifying party, if, in the reasonable opinion of counsel retained by
the indemnifying party, the representation by such counsel of the Indemnified
Person and the indemnifying party would be inappropriate due to actual or
potential differing interests between such Indemnified Person and any other
party represented by such counsel in such proceeding. In such event, the Company
shall pay for only one separate legal counsel for the Subscriber selected by the
Subscriber. The failure to deliver written notice to the indemnifying party
within a reasonable time of the commencement of any such action shall not
relieve such indemnifying party of any liability to the Indemnified Person under
this Section 6, except to the extent that the indemnifying party is prejudiced
in its ability to defend such action. The indemnification required by this
Section 6 shall be made by periodic payments of the amount thereof during the
course of the investigation or defense, as such expense, loss, damage or
liability is incurred and is due and payable.
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7. CONTRIBUTION. To the extent any indemnification by an
indemnifying party is prohibited or limited by law, the indemnifying party
agrees to make the maximum contribution with respect to any amounts for which it
would otherwise be liable under Section 6 to the fullest extent permitted by
law; PROVIDED, HOWEVER, that (a) no contribution shall be made under
circumstances where the maker would not have been liable for indemnification
under the fault standards set forth in Section 6; (b) no seller of Registrable
Securities guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any seller
of Registrable Securities who was not guilty of such fraudulent
misrepresentation; and (c) contribution by any seller of Registrable Securities
shall be limited in amount to the net amount of proceeds received by such seller
from the sale of such Registrable Securities.
8. REPORTS UNDER EXCHANGE ACT. With a view to making available to
the Subscriber the benefits of Rule 144 promulgated under the Securities Act or
any other similar rule or regulation of the SEC that may at any time permit the
Subscriber to sell securities of the Company to the public without registration
("Rule 144"), the Company agrees to use its reasonable best efforts to:
(a) make and keep public information available, as those terms are
understood and defined in Rule 144;
(b) file with the SEC in a timely manner all reports and other
documents required of the Company under the Exchange Act; and
(c) furnish to the Subscriber so long as the Subscriber owns
Registrable Securities, promptly upon request, (i) a written statement by the
Company that it has complied with the reporting requirements of Rule 144, the
Securities Act and the Exchange Act, (ii) a copy of the most recent annual or
quarterly report of the Company and such other reports and documents so filed by
the Company and (iii) such other information as may be reasonably requested to
permit the Subscribers to sell such securities pursuant to Rule 144 without
registration.
9. MISCELLANEOUS.
(a) OTHER FUNDING. The Company represents and warrants that the
Company is not at present engaged in discussions, and will not be so engaged,
with any persons, except the Subscriber for the placement of any equity
financing for the Company via any offerings and the Company will not be
permitted to issue any of its equity securities (or instruments convertible into
or exercisable for equity securities) in any offerings, except to the Subscriber
during the period from the date of this Agreement until May 25, 2001, or until
the minimum amount of ten million dollars ($10,000,000) of the Common Stock has
been sold to the Subscriber, except for (i) the scheduled Regulation D financing
in the amount up to four million dollars ($4,000,000.00) which is to be
completed by the Company on or before September 4, 2000 and (ii) the issuance of
equity securities (or instruments convertible into or exercisable for equity
securities) to strategic partners and/or in connection with mergers and
acquisitions.
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(b) REGISTERED OWNERS. A person or entity is deemed to be a holder
of Registrable Securities whenever such person or entity owns of record such
Registrable Securities. If the Company receives conflicting instructions,
notices or elections from two or more persons or entities with respect to the
same Registrable Securities, the Company shall act upon the basis of
instructions, notice or election received from the registered owner of such
Registrable Securities.
(c) RIGHTS CUMULATIVE; WAIVERS. The rights of each of the parties
under this Agreement are cumulative. The rights of each of the parties hereunder
shall not be capable of being waived or varied other than by an express waiver
or variation in writing. Any failure to exercise or any delay in exercising any
of such rights shall not operate as a waiver or variation of that or any other
such right. Any defective or partial exercise of any of such rights shall not
preclude any other or further exercise of that or any other such right. No act
or course of conduct or negotiation on the part of any party shall in any way
preclude such party from exercising any such right or constitute a suspension or
any variation of any such right.
(d) BENEFIT; SUCCESSORS BOUND. This Agreement and the terms,
covenants, conditions, provisions, obligations, undertakings, rights, and
benefits hereof, shall be binding upon, and shall inure to the benefit of, the
undersigned parties and their heirs, executors, administrators, representatives,
successors, and permitted assigns.
(e) ENTIRE AGREEMENT. This Agreement contains the entire agreement
between the parties with respect to the subject matter hereof. There are no
promises, agreements, conditions, undertakings, understandings, warranties,
covenants or representations, oral or written, express or implied, between them
with respect to this Agreement or the matters described in this Agreement,
except as set forth in this Agreement and in the other documentation relating to
the transactions contemplated by this Agreement. Any such negotiations,
promises, or understandings shall not be used to interpret or constitute this
Agreement.
(f) ASSIGNMENT. The rights to have the Company register
Registrable Securities pursuant to this Agreement may be assigned by the
Subscribers to any transferee, only if: (a) the assignment relates to not less
than one million dollars ($1,000,000) of Registrable Securities and the
Transferee is an Institutional Accredited Investor under Regulation D; (b) the
Company receives a legal opinion in form and substance satisfactory to the
Company that the proposed transfer complies with federal and state securities
laws and does not adversely effect the validity of the transactions executed (or
to be executed) under this Agreement and the Purchase Agreement under federal
and state securities laws; (c) the assignment requires that the Transferee be
bound by all of the provisions contained in this Agreement, and Subscriber, the
Company and the transferee or assignee (the "Transferee") enter into a written
agreement, which shall be enforceable by the Company against the Transferee and
by the Transferee against the Company, to assign such rights; and (d)
immediately following such transfer or assignment the further disposition of
such securities by the transferee or assignee is restricted under the Securities
Act and applicable state securities laws. In the event of any delay in filing or
effectiveness of the Registration Statement as a result of such assignment, the
Company shall not be liable for any damages arising from such delay, or the
payments set forth in Section 2(c) hereof.
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(g) AMENDMENT. Any provision of this Agreement may be amended and
the observance thereof may be waived (either generally or in a particular
instance and either retroactively or prospectively), only with the written
consent of the Company and Subscriber. Any amendment or waiver effected in
accordance with this Section 9 shall be binding upon the Company and any
subsequent Transferees.
(h) SEVERABILITY. Each part of this Agreement is intended to be
severable. In the event that any provision of this Agreement is found by any
court or other authority of competent jurisdiction to be illegal or
unenforceable, such provision shall be severed or modified to the extent
necessary to render it enforceable and as so severed or modified, this Agreement
shall continue in full force and effect.
(i) NOTICES. Notices required or permitted to be given hereunder
shall be in writing and shall be deemed to be sufficiently given when personally
delivered (by hand, by courier, by telephone line facsimile transmission,
receipt confirmed, or other means) or sent by certified mail, return receipt
requested, properly addressed and with proper postage pre-paid (i) if to the
Company, at its executive office and (ii) if to the Subscriber, at the address
set forth under its name in the Purchase Agreement, with a copy to its
designated attorney, or at such other address as each such party furnishes by
notice given in accordance with this Section 9(b), and shall be effective, when
personally delivered, upon receipt and, when so sent by certified mail, five (5)
business days after deposit with the United States Postal Service.
(j) GOVERNING LAW. This Agreement shall be governed by the
interpreted in accordance with the laws of the State of California without
reference to its conflicts of laws rules or principles. Each of the parties
consents to the exclusive jurisdiction of the federal courts of the State of
California in connection with any dispute arising under this Agreement and
hereby waives, to the maximum extent permitted by law, any objection, including
any objection based on FORUM NON COVENIENS, to the bringing of any such
proceeding in such jurisdictions.
(k) CONSENTS. The person signing this Agreement on behalf of each
party hereby represents and warrants that he has the necessary power, consent
and authority to execute and deliver this Agreement on behalf of that party.
(l) FURTHER ASSURANCES. In addition to the instruments and
documents to be made, executed and delivered pursuant to this Agreement, the
parties hereto agree to make, execute and deliver or cause to be made, executed
and delivered, to the requesting party such other instruments and to take such
other actions as the requesting party may reasonably require to carry out the
terms of this Agreement and the transactions contemplated hereby.
(m) SECTION HEADINGS. The Section headings in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
(n) CONSTRUCTION. Unless the context otherwise requires, when used
herein, the singular shall be deemed to include the plural, the plural shall be
deemed to include each of the
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singular, and pronouns of one or no gender shall be deemed to include the
equivalent pronoun of the other or no gender.
(o) EXECUTION IN COUNTERPARTS. This Agreement may be executed in
two or more counterparts, each of which shall be deemed an original but all of
which shall constitute one and the same agreement. This Agreement, once executed
by a party, may be delivered to the other party hereto by telephone line
facsimile transmission of a copy of this Agreement bearing the signature of the
party so delivering this Agreement. A facsimile transmission of this signed
Agreement shall be legal and binding on all parties hereto.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
COMPANY:
AQUASEARCH, INC.
By: /s/ David G. Watumull
------------------------------------
David G. Watumull
Executive Vice President
SUBSCRIBER:
ALPHA VENTURE CAPITAL, INC.
By: /s/ Barry W. Herman
-----------------------------------
Name: Barry W. Herman
---------------------------------
Title: President
---------------------------------
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