Contract
EXHIBIT
10.3
THIS
SECURITY HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES ACT OF 1933
(THE “ACT”) OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE OFFERED OR SOLD
UNLESS REGISTERED AND QUALIFIED PURSUANT TO THE APPLICABLE PROVISIONS OF FEDERAL
AND STATE SECURITIES LAWS OR UNLESS AN EXEMPTION FROM SUCH REGISTRATION OR
QUALIFICATION APPLIES. THEREFORE, NO SALE OR TRANSFER OF THIS SECURITY SHALL
BE
MADE, NO ATTEMPTED SALE OR TRANSFER SHALL BE VALID, AND THE ISSUER SHALL NOT
BE
REQUIRED TO GIVE ANY EFFECT TO ANY SUCH TRANSACTION UNLESS (A) SUCH TRANSACTION
HAS BEEN DULY REGISTERED UNDER THE ACT AND QUALIFIED OR APPROVED UNDER
APPROPRIATE STATE SECURITIES LAWS, OR (B) THE ISSUER HAS FIRST RECEIVED AN
OPINION OF COUNSEL REASONABLY SATISFACTORY TO IT THAT SUCH REGISTRATION,
QUALIFICATION OR APPROVAL IS NOT REQUIRED.
WARRANT
AND PUT AGREEMENT
For
the
Purchase of Shares of Common Stock of
Void
After 5 P.M. May 9, 2010
Date: May
9,
2007
Warrant
to Purchase 3,230,769 Shares of Common Stock
THIS
IS TO CERTIFY,
that,
for value received, Water Science, LLC, a Florida limited liability company
or
registered assigns (the “Holder”), is entitled, subject to the terms and
conditions hereinafter set forth, on or after the date hereof, and at any time
prior to 5 P.M., Eastern Standard Time (“EST”), on May 9, 2010 but not
thereafter, to purchase such number of shares of Common Stock, par value $0.000l
(“Common Stock” or the “Shares”), of EAU Technologies, Inc. (the “Company”),
from the Company as set forth above and upon payment to the Company of an amount
per Share of $1.30 (the “Purchase Price”), if and to the extent this Warrant is
exercised, in whole or in part, during the period this Warrant remains in force,
subject in all cases to adjustment as provided in Section 2 hereof, and to
receive a certificate or certificates representing the Shares so purchased,
upon
presentation and surrender to the Company of this Warrant, with the form of
Subscription Agreement attached hereto, including changes thereto reasonably
requested by the Company, duly executed and accompanied by payment of the
Purchase Price of each Share.
SECTION
1
Terms
of this Warrant
1.1 Time
of
Exercise. This Warrant may be exercised at any time and from time to time after
9:00 A.M. Eastern Time, as the case may be, on the date hereof (the “Exercise
Commencement Date”), but no later than 5:00 P.M., Eastern Time, May 9, 2010 (the
“Expiration Time”) at which time this Warrant shall become void and all rights
hereunder shall cease.
1.2 Manner
of
Exercise.
1.2.1 The
Holder may exercise this Warrant, in whole or in part, upon surrender of this
Warrant, with the form of Subscription Agreement attached hereto duly executed,
to the Company at its corporate office in Kennesaw, Georgia, and upon payment
to
the Company of the full Purchase Price for each Share to be purchased in lawful
money of the United States, or by certified or cashier’s check, or wired funds,
and upon compliance with and subject to the conditions set forth
herein.
1.2.2 Upon
receipt of this Warrant with the form of Subscription Agreement duly executed
and accompanied by payment of the aggregate Purchase Price for the Shares for
which this Warrant is then being exercised, the Company shall cause to be issued
certificates for the total number of whole Shares for which this Warrant is
being exercised in such denominations as are required for delivery to the
Holder, and the Company shall thereupon deliver such certificates to the Holder
or its nominee.
1.2.3 In
case
the Holder shall exercise this Warrant with respect to less than all of the
Shares that may be purchased under this Warrant, the Company shall execute
a new
Warrant for the balance of the Shares that may be purchased upon exercise of
this Warrant and deliver such new Warrant to the Holder.
1.2.4 The
Company covenants and agrees that it will pay when due and payable any and
all
taxes which may be payable in respect of the issue of this Warrant, or the
issue
of any Shares upon the exercise of this Warrant. The Company shall not, however,
be required to pay any tax which may be payable in respect of any transfer
involved in the issuance or delivery of this Warrant or of the Shares in a
name
other than that of the Holder at the time of surrender, and until the payment
of
such tax the Company shall not be required to issue such Shares.
1.3 Put
Right.
1.3.1 The
Company shall have the right, but not the obligation (the “Put
Right”),
to
require Holder to exercise all, or a portion of, this Warrant by delivering
a
written notice to Holder (the “Put
Notice”)
on or
prior to the Expiration Time. The Put Notice shall specify the number of Shares
which Holder is required to purchase from the Company pursuant to this Warrant,
such determination as to the number of Shares to be purchased to be made in
the
Company’s sole and absolute discretion. The Company shall not exercise the Put
Right more than one time in any calendar month.
1.3.2 Within
fourteen (14) calendar days following its receipt, or deemed receipt, of the
Put
Notice, Holder shall exercise the Warrant for the number of Shares specified
in
the Put Notice. Holder shall pay the Purchase Price for each Share. The Purchase
Price shall be paid by wire transfer of immediately available Federal funds
to
the account specified by the Company in the Put Notice. The failure of Holder
to
exercise the Warrant in a timely manner and consistent with the terms of the
Put
Notice shall be an event of default of this Warrant, and the Company shall
have
the right to seek legal and equitable remedies from Holder. In addition, upon
such default, this Warrant, and any other then-outstanding warrant, option
or
other right to convert or exchange an instrument for Shares shall automatically
and irrevocably terminate, including, without limitation, that certain warrant
for 5,169,231 Shares issued by the Company to Holder on even date
herewith.
1.3.3 The
proceeds from the Holder’s exercise of the Warrant (including, without
limitation, the exercise of the Warrant as a result of the Put Right) can be
used in any manner determined by the Company in its sole and absolute
discretion, including, without limitation, for working capital, acquisitions,
capital expenses, and employee bonuses.
1.4 [INTENTIONALLY
OMITTED]
1.5 Exchange
of Warrant. This Warrant may be divided into, combined with or exchanged for
another Warrant or Warrants of like tenor to purchase a like aggregate number
of
Shares. If the Holder desires to divide, combine or exchange this Warrant,
he
shall make such request in writing delivered to the Company at its corporate
office and shall surrender this Warrant and any other Warrants to be so divided,
combined or exchanged. The Company shall execute and deliver to the person
entitled thereto a Warrant or Warrants, as the case may be, as so requested.
The
Company shall not be required to effect any division, combination or exchange
which will result in the issuance of a Warrant entitling the Holder to purchase
upon exercise a fraction of a Share. The Company may require the Holder to
pay a
sum sufficient to cover any tax or governmental charge that may be imposed
in
connection with any division, combination or exchange of Warrants.
1.6 Holder
as
Owner. Prior to surrender of this Warrant in accordance with Section for
registration of assignment, the Company may deem and treat the Holder as the
absolute owner of this Warrant (notwithstanding any notation of ownership or
other writing hereon) for the purpose of any exercise hereof and for all other
purposes, and the Company shall not be affected by any notice to the
contrary.
1.7 Method
of
Assignment. Any assignment or transfer of any portion or all of this Warrant
shall be made by surrender of this Warrant to the Company at its principal
office with the form of assignment attached hereto duly executed and accompanied
by: (i) funds sufficient to pay any transfer tax, and (ii) an opinion of counsel
reasonably satisfactory to the Company to the effect that the assignment or
transfer has been made in compliance with applicable federal and state
securities laws. In such event, the Company shall, without charge, execute
and
deliver a new Warrant in the name of the assignee named in such instrument
of
assignment and this Warrant shall promptly be canceled.
1.8 Rights
of
Holder. Nothing contained in this Warrant shall be construed as conferring
upon
the Holder the right to vote, consent or receive notice as a shareholder in
respect of any meetings of shareholders for the election of directors or any
other matter, or as having any rights whatsoever as a shareholder of the
Company.
1.9 Lost
Certificates. If this Warrant is lost, stolen, mutilated or destroyed, the
Company shall, on such reasonable terms as to indemnity or otherwise as it
may
impose (which shall, in the case of a mutilated Warrant, include the surrender
thereof), issue a new Warrant of like denomination and tenor as, and in
substitution for, this Warrant, which shall thereupon become void. Any such
new
Warrant shall constitute an additional contractual obligation of the Company,
whether or not the Warrant so lost, stolen, destroyed or mutilated shall be
at
any time enforceable by anyone.
1.9.1 At
all
times the Company shall reserve and keep available for the exercise of this
Warrant such number of authorized shares of Common Stock as are sufficient
to
permit the exercise in full of this Warrant.
1.9.2 The
Company covenants that all Shares when issued upon the exercise of this Warrant
will be validly issued, fully paid, nonassessable and free of preemptive
rights.
SECTION
2
Adjustment
of Purchase Price and Number of Shares Purchasable upon
Exercise
2.1 Stock
Splits. If the Company at any time or from time to time after the issuance
date
of this Warrant effects a subdivision of the outstanding Common Stock, the
Purchase Price then in effect immediately before that subdivision shall be
proportionately decreased, and conversely, if the Company at any time or from
time to time after the issuance date of this Warrant combines the outstanding
shares of Common Stock, the Purchase Price then in effect immediately before
the
combination shall be proportionately increased. Any adjustment under this
subsection 2.1 shall become effective at the close of business on the date
the
subdivision or combination becomes effective.
2.2 Dividends
and Distributions. In the event the Company at any time, or from time to time
after the issuance date of this Warrant makes, or fixes a record date for the
determination of holders of Common Stock entitled to receive, a dividend or
other distribution payable in additional shares of Common Stock, then and in
each such event the Purchase Price then in effect shall be decreased as of
the
time of such issuance or, in the event such a record date is fixed, as of the
close of business on such record date, by multiplying the Purchase Price then
in
effect by a fraction (i) the numerator of which is the total number of shares
of
Common Stock issued and outstanding immediately prior to the time of such
issuance or the close of business on such record date, and (ii) the denominator
of which shall be the total number of shares of Common Stock issued and
outstanding immediately prior to the time of such issuance or the close of
business on such record date plus the number of shares of Common Stock issuable
in payment of such dividend or distribution; provided, however, that if such
record date is fixed and such dividend is not fully paid or if such distribution
is not fully made on the date fixed therefor, the Purchase Price shall be
recomputed accordingly as of the close of business on such record date and
thereafter the Purchase Price shall be adjusted pursuant to this subsection
2.2
as of the time of actual payment of such dividends or
distributions.
2.3 Recapitalization
or Reclassification. If the Shares issuable upon the exercise of the Warrant
are
changed into the same or a different number of shares of any class or classes
of
stock, whether by recapitalization, reclassification or otherwise (other than
a
subdivision or combination of shares or stock dividend or a reorganization,
merger, consolidation or sale of assets, provided for elsewhere in this Section
2), then, and in any such event, the Holder shall thereafter be entitled to
receive upon exercise of this Warrant such number and kind of stock or other
securities or property of the Company to which a holder of Shares deliverable
upon exercise of this Warrant would have been entitled on such reclassification
or other change, subject to further adjustment as provided herein.
2.4 [INTENTIONALLY
OMITTED]
2.5 [INTENTIONALLY
OMITTED]
2.6 No
adjustment in the Purchase Price shall be required unless such adjustment would
require an increase or decrease of at least 1% in such price; provided, however,
that any adjustments which by reason of this Section 2.6 are not required to
be
made shall be carried forward and taken into account in any subsequent
adjustment; and provided, further, that any adjustment required in order to
preserve the tax-free nature of a distribution to the holders of shares of
Common Stock shall be made when so required. All
calculations under this Section 2 shall be made to the nearest cent (with $.005
being rounded upward). Anything in this Section 2 to the contrary
notwithstanding, the Company shall be entitled, to the extent permitted by
law,
to make such reductions in the Purchase Price, in addition to those required
by
this Section 2, as it in its discretion shall determine to be advisable in
order
that any stock dividends, subdivision or combination of shares, distribution
of
capital stock or rights or warrants to purchase stock or securities,
distribution of evidences of indebtedness or assets or any other transaction
which could be treated as any of the foregoing transactions pursuant to Section
305 of the Internal Revenue Code of 1986, as amended (and any successor
provision), hereafter made by the Company to its shareholders shall not be
taxable to such shareholders.
SECTION
3
Status
Under the Securities Act of 1933
This
Warrant and the Shares issuable upon exercise of this Warrant have not been
registered under the Securities Act of 1933, as amended (“the Act”). Upon
exercise, in whole or in part, of this Warrant, the certificates representing
the Shares shall bear the legend first above written.
SECTION
4
Other
Matters
4.1 Binding
Effect. All the covenants and provisions of this Warrant by or for the benefit
of the Company shall bind and inure to the benefit of its successors and assigns
hereunder.
4.2 Notices.
Notices or demands pursuant to this Warrant to be given or made by the Holder
to
or on the Company shall be sufficiently given or made if sent by certified
or
registered mail, return receipt requested, postage prepaid, or facsimile and
addressed, until another address is designated in writing by the Company, as
follows:
0000
Xxxx
Xxxxxxxxxxxxx Xxxx., Xxxxx A
Kennesaw,
GA 30152
Telephone
No.: (000) 000-0000
Attention: Xxxx
X.
Xxxxxxx, President
Notices
to the Holder provided for in this Warrant shall be deemed given or made by
the
Company if sent by certified or registered mail, return receipt requested,
postage prepaid, and addressed to the Holder at his last known address as it
shall appear on the books of the Company.
4.3 Governing
Law. The validity, interpretation and performance of this Warrant shall be
governed by the laws of the State of Delaware.
4.4 Parties
Bound and Benefited. Nothing in this Warrant expressed and nothing that may
be
implied from any of the provisions hereof is intended, or shall be construed,
to
confer upon, or give to, any person or corporation other than the Company and
the Holder any right, remedy or claim under any promise or agreement hereof,
and
all covenants, conditions, stipulations, promises and agreements contained
in
this Warrant shall be for the sole and exclusive benefit of the Company and
its
successors and of the Holder, its successors and permitted assigns.
4.5 Headings.
The Section headings herein are for convenience only and are not part of this
Warrant and shall not affect the interpretation thereof.
(Remainder
Of Page Intentionally Left Blank)
IN
WITNESS WHEREOF,
this
Warrant has been duly executed by the Company as of May __, 2007.
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By:
/s/
Xxxx X. Xxxxxxx
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Xxxx
X. Xxxxxxx
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Chief
Executive Officer
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WATER
SCIENCE, LLC
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By:
/s/
Xxxxx Xxxxxxx
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Xxxxx
Xxxxxxx
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Manager
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ASSIGNMENT
OF WARRANT
FOR
VALUE RECEIVED,
___________________________ hereby sells, assigns and transfers unto
________________________ the within Warrant and the rights represented thereby,
and does hereby irrevocably constitute and appoint _______________________
Attorney, to transfer said Warrant on the books of the Company, with full power
of substitution.
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Dated:
_____________________________
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Signed:
____________________________
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Signature
guaranteed:
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__________________________________
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SUBSCRIPTION
AGREEMENT
FOR
THE EXERCISE OF WARRANTS
The
undersigned hereby irrevocably subscribes for the purchase of _____________
Shares pursuant to and in accordance with the terms and conditions of this
Warrant, which Shares should be delivered to the undersigned at the address
stated below. If said number of Shares are not all of the Shares purchasable
hereunder, a new Warrant of like tenor for the balance of the remaining Shares
purchasable hereunder should be delivered to the undersigned at the address
stated below.
The
undersigned elects to pay the aggregate Purchase Price for such Shares in the
following manner:
[
]
by
the
enclosed cash or check made payable to the Company in the amount of
$_____________;
[
]
by
wire
transfer of United States funds to the account of the Company in the amount
of
$__________, which transfer has been made before or simultaneously with the
delivery of this Notice pursuant to the instructions of the Company;
or
The
undersigned agrees that: (1) the undersigned will not offer, sell, transfer
or
otherwise dispose of any Shares unless either (a) a registration statement,
or
post-effective amendment thereto, covering the Shares has been filed with the
Securities and Exchange Commission pursuant to the Securities Act of 1933,
as
amended (the “Act”), such sale, transfer or other disposition is accompanied by
a prospectus meeting the requirements of Section 10 of the Act forming a part
of
such registration statement, or post-effective amendment thereto, which is
in
effect under the Act covering the Shares to be so sold, transferred or otherwise
disposed of, and all applicable state securities laws have been complied with,
or (b) counsel reasonably satisfactory to EAU Technologies, Inc. has rendered
an
opinion in writing and addressed to EAU Technologies, Inc. that such proposed
offer, sale, transfer or other disposition of the Shares is exempt from the
provisions of Section 5 of the Act in view of the circumstances of such proposed
offer, sale, transfer or other disposition; (2) EAU Technologies, Inc. may
notify the transfer agent for the Shares that the certificates for the Shares
acquired by the undersigned are not to be transferred unless the transfer agent
receives advice from EAU Technologies, Inc. that one or both of the conditions
referred to in (1)(a) and (1)(b) above have been satisfied; and (3) EAU
Technologies, Inc. may affix the legend set forth in Section 3.1 of this Warrant
to the certificates for the Shares hereby subscribed for, if such legend is
applicable.
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Dated:
____________________________________________
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Signed:
_________________________________
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Signature
guaranteed: ________________________________
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Address:
________________________________
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