AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT
EXHIBIT
10.4
AMENDED
AND RESTATED
THIS
REGISTRATION RIGHTS AGREEMENT (this “Agreement”)
is
entered into as of May 9, 2007, by and between EAU Technologies, Inc., a
Delaware corporation (the “Company”),
and
Water Science, LLC, a Florida limited liability company (the “Investor”).
RECITALS
WHEREAS,
prior
to the date hereof, the Investor owned warrants to purchase 8,400,000 shares
of
Common Stock of the Company at an exercise price of $2.76 per share, 6,400,000
of which expire on May 1, 2009 and 2,000,000 of which expire on September 16,
2008 (collectively, the “Original
Warrants”);
WHEREAS,
in
connection with that certain Agreement Terminating Warrants and Registration
Rights Agreement of even date herewith (the “Termination
Agreement”),
by
and between the Company and the Investor, the Original Warrants were cancelled
and the Investor was issued (i) a Warrant to purchase 5,169,231 shares of the
Company’s Common Stock at an exercise price of $1.30 per share, which expires on
the third anniversary hereof and (ii) a Warrant to purchase 3,230,769 shares
of
the Company’s Common Stock at an exercise price of $1.30 per share, which
expires on the third anniversary hereof ((i) and (ii), collectively, the
“Warrants”);
WHEREAS,
the
shares underlying the Original Warrants, together with 1,600,000 shares of
the
Company’s Common Stock issued to the Investor on May 1, 2006 and up to 1,000,000
shares of Common Stock issuable upon conversion of that certain Senior Secured
Convertible Promissory Note in the principal amount of $3,000,000 issued to
the
Investor on September 16, 2005 (“Convertible Note”), were subject to the
registration rights granted to the Investor pursuant to the Registration Rights
Agreement, dated as of September 16, 2005, and the Registration Rights
Agreement, dated as of May 1, 2006 (collectively, the “Initial
Registration Rights Agreements”);
and
WHEREAS,
the
Company and the Investor deem it to be in their respective best interests to
set
forth the rights of the Investor in connection with the sale of shares of Common
Stock and upon exercise of the Warrants and/or conversion of the Convertible
Note (the “Registrable
Shares”)
and
terminate the Initial Registration Rights Agreements, and are entering into
this
Agreement as a condition to and in connection with the Termination
Agreement.
NOW,
THEREFORE,
in
consideration of the premises and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, each of the parties
hereto hereby agrees as follows:
1
AGREEMENT
1. Registration
Rights.
(a)
Beginning
on the date hereof but no later than 45 days after the date hereof (the
“Registration
Period”),
the
Company shall use its best efforts to prepare and file with the Securities
and
Exchange Commission (the “SEC”),
a
registration statement and such other documents as may be necessary, and use
its
best efforts to have such registration statement declared effective as soon
as
reasonably practicable after such filing, so as to permit the registered resale
of the Registrable Shares, for a period of two (2) years following the issuance
of the last Registrable Share; provided,
however,
that
the Registration Period may be extended to the extent of any delay in (i) the
receipt of the questionnaires from the Investor as required by Section
5(b)
below,
and (ii) Investor’s compliance with the beneficial ownership reporting
requirements under Sections 13 and 16 of the Securities Exchange Act of 1934,
as
amended. The Company will include in such registration statement the information
required under the Securities Act of 1933, as amended (the “Securities
Act”)
to be
so included concerning the Investor, as provided by the Investor pursuant to
this Agreement and any other agreements between the parties, including any
changes in such information that may be provided by the Investor in writing
to
the Company from time to time.
(b) Notwithstanding
the foregoing provisions of this Section
1,
the
Company may voluntarily suspend the effectiveness of any such registration
statement for a limited time, which in no event shall be longer than 60 days
in
any three-month period and no longer than 120 days in any twelve month period,
if the Company has been advised in writing by counsel or underwriters to the
Company that the offering of any Registrable Shares pursuant to the registration
statement would materially adversely affect, or would be improper in view of
(or
improper without disclosure in a prospectus), a proposed financing,
reorganization, recapitalization, merger, consolidation, or similar transaction
involving the Company, in which case the Company shall keep such registration
statement effective for an additional period of time beyond two (2) years
following the last issuance of a Registrable Share equal to the number of days
the effectiveness thereof is suspended pursuant to this provision. The Company
shall notify the Investor to such effect, and, upon receipt of such notice,
the
Investor shall immediately discontinue any sales of Registrable Shares pursuant
to such registration statement until the Investor has received copies of a
supplemented or amended prospectus or until the Investor is advised in writing
by the Company that the then current prospectus may be used and has received
copies of any additional or supplemental filings that are incorporated or deemed
incorporated by reference in such prospectus.
(c) If
any
event occurs that would cause any such registration statement to contain a
material misstatement or omission or not to be effective and usable during
the
period that such registration statement is required to be effective and usable,
the Company shall promptly notify the Investor of such event and, if requested,
the Investor shall immediately cease making offers of Registrable Shares and
return all prospectuses to the Company. The Company shall promptly file an
amendment to the registration statement to correct such misstatement or omission
and use its commercially reasonable efforts to cause such amendment to be
declared effective as soon as practicable thereafter. The Company shall promptly
provide the Investor with revised prospectuses and, following receipt of the
revised prospectuses, the Investor shall be free to resume making offers of
the
Registrable Shares. In the event of such an occurrence, the Company shall keep
such registration statement effective for an additional period of time beyond
two (2) years following the last issuance of a Registrable Share equal to the
number of days the effectiveness thereof is suspended pursuant to this
provision.
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(d) Notwithstanding
any provision contained herein to the contrary, the Company’s obligation to
include, or continue to include, Registrable Shares in any such registration
statement under this Section
1
shall
terminate to the extent such shares are eligible for resale under Rule 144(k)
promulgated under the Securities Act. In addition, the Company’s obligation to
include, or continue to include, Registrable Shares in any such registration
will be suspended during any periods during which the Investor is delinquent
in
his beneficial ownership reporting requirements under the Securities Exchange
Act of 1934, as amended.
(e) If
and
whenever the Company is required by the provisions of this Agreement to use
its
commercially reasonable efforts to effect the registration of the Registrable
Shares under the Securities Act for the account of the Investor, the Company
will, as promptly as possible:
(i)
prepare and file with the SEC a registration statement complying with applicable
requirements under the Securities Act with respect to such securities and use
its commercially reasonable efforts to cause such registration statement to
become and remain effective;
(ii)
prepare and file with the SEC such amendments and supplements to such
registration statement and the prospectus used in connection therewith as may
be
necessary to keep such registration statement effective and to comply with
the
requirements of the Securities Act and the rules and regulations promulgated
by
the SEC thereunder relating to the sale or other disposition of the securities
covered by such registration statement; and
(iii)
furnish to the Investor such numbers of copies of a prospectus complying with
the requirements of the Securities Act, and such other documents as the Investor
may reasonably request in order to facilitate the public sale or other
disposition of the Registrable Shares owned by the Investor, but the Investor
shall not be entitled to use any selling materials other than a prospectus
and
such other materials as may be approved by the Company, which approval will
not
be unreasonably withheld.
(f) As
a
condition to the inclusion of the Investor’s Registrable Securities in any
registration statement, the Investor will furnish in writing to the Company
such
information with respect to the Investor as is required to be disclosed in
the
registration statement (and the prospectus included therein) by the applicable
rules, regulations and guidelines of the Securities Exchange Commission.
(g) The
expenses incurred by the Company in connection with action taken by the Company
to comply with this Section
1,
including, without limitation, all registration and filing fees, printing and
delivery expenses, accounting fees, fees and disbursements of counsel to the
Company, consultant and expert fees, and premiums for liability insurance,
if
the Company chooses to obtain such insurance, obtained in connection with a
registration statement filed to effect such compliance and all expenses,
including counsel fees, of complying with any state securities laws, shall
be
paid by the Company. All fees and disbursements of any counsel, experts, or
consultants employed by the Investor shall be borne by the Investor. The Company
shall not be obligated in any way in connection with any registration pursuant
to this Section
1
for any
selling commissions or discounts payable by the Investor to any underwriter
or
broker of securities to be sold by the Investor. The Investor agrees that any
such selling commissions or discounts shall be borne by the
Investor.
3
(h) The
Company will indemnify and hold harmless the Investor, its officers, directors
and each underwriter of such securities, and any person who controls the
Investor or underwriter within the meaning of Section 15 of the Securities
Act
(each an “Investor
Indemnified Party”),
against all claims, actions, losses, damages, liabilities and expenses, joint
or
several, to which any of such persons may become subject under the Securities
Act or otherwise, insofar as such losses, claims, damages, liabilities or
actions arise out of or are based upon any untrue statement of any material
fact
contained in any registration statement under which such securities were
registered under the Securities Act, any preliminary prospectus or final
prospectus contained therein, or any amendment or supplement thereof, or arise
out of or are based upon the omission to state therein a material fact required
to be stated therein or necessary to make the statements therein, in light
of
the circumstances under which they were made, not misleading, and will reimburse
such Investor Indemnified Party for any legal and any other expenses reasonably
incurred by such Investor Indemnified Party in connection with investigating
or
defending any such loss, claim, damage, liability, or action; provided,
however,
that
the Company will not be liable in any such case to the extent that any such
loss, claim, damage, liability or action arises directly out of or is based
primarily upon an untrue statement or omission made in said registration
statement, said preliminary prospectus or said prospectus, or said amendment
or
supplement in reliance upon and in conformity with written information furnished
to the Company by the Investor or such underwriter specifically for use in
the
preparation thereof.
(i) At
any
time when a prospectus relating to the Registrable Shares is required to be
delivered under the Securities Act, the Company will notify the Investor of
the
happening of any event, upon the notification or awareness of such event by
an
executive officer of the Company, as a result of which the prospectus included
in such registration statement, as then in effect, includes an untrue statement
of material fact or omits to state a material fact required to be stated therein
or necessary to make the statements therein not misleading in light of the
circumstances then existing.
(j) In
the
event of any registration of any securities under the Securities Act pursuant
to
this Section
1,
the
Investor agrees to indemnify and hold harmless the Company, its officers,
directors and any person who controls the Company within the meaning of Section
15 of the Securities Act (each a “Company
Indemnified Party”),
against any losses, claims, damages, liabilities, or actions, joint or several,
to which a Company Indemnified Party may become subject under the Securities
Act
or otherwise, insofar as such losses, claims, damages, liabilities, or actions
arise out of or are based upon any untrue statement of any material fact
contained in any registration statement under which such securities were
registered under the Securities Act, any preliminary prospectus or final
prospectus contained therein, or any amendment or supplement thereto, or arise
out of or are based upon the omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
in each case to the extent that any such loss, claim, damage, liability, or
action arises out of or is based upon an untrue statement or omission made
in
said registration statement, preliminary prospectus or prospectus or amendment
or supplement in reliance upon and in conformity with written information
furnished to the Company by the Investor or any affiliate (as defined in the
Securities Act) of the Investor specifically for use in the preparation
thereof.
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(k) Any
party
entitled to indemnification hereunder will (i) give prompt written notice to
the
indemnifying party of any claim with respect to which it seeks indemnification,
and (ii) unless in such indemnified party’s reasonable judgment, based upon
advise of counsel, a conflict of interest between such indemnified and
indemnifying parties may exist with respect to such claim, permit such
indemnifying party to assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party. If such defense is assumed, the
indemnified party will not be subject to any liability for any settlement made
by the indemnifying party without its consent (which consent may not be
unreasonably withheld). An indemnifying party who is not entitled to, or elects
not to, assume the defense of a claim will not be obligated to pay the fees
and
expenses of more than one counsel for all parties indemnified by such
indemnifying party, based upon advise of counsel, with respect to such claim,
unless in the reasonable judgment of any indemnified party a conflict of
interest may exist between such indemnified party and any other of such
indemnified parties with respect to such claim.
(l) With
a
view to making available to the Investor the benefits of Rule 144 promulgated
under the Securities Act, the Company agrees that it will use its commercially
reasonable efforts to maintain registration of its Common Stock under Section
12
or 15 of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”),
and
to file with the SEC in a timely manner all reports and other documents required
to be filed by an issuer of securities registered under the Exchange Act so
as
to maintain the availability of Rule 144. Upon the request of any record owner,
the Company will deliver to such owner a written statement as to whether it
has
complied with the reporting requirements of Rule 144.
2. Representations
and Warranties of the Investor.
The
Investor hereby represents and warrants to the Company as follows:
(a) The
Investor is acquiring the Registrable Shares for its own account, for investment
and not with a view to, or for resale in connection with, any distribution
or
public offering thereof within the meaning of the Securities Act, and applicable
state securities laws.
(b) The
Investor acknowledges that the certificate(s) representing the Registrable
Shares acquired by the Investor shall bear a restrictive legend substantially
as
follows:
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.
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(c) The
Investor acknowledges that the Registrable Shares will be “restricted
securities” within the meaning of Rule 144 under the Securities Act, are subject
to restrictions on transferability and resale and may not be transferred or
resold except as permitted under the Securities Act and applicable state
securities laws, pursuant to registration or exemption therefrom. The Investor
is aware that the Investor may be required to bear the financial risks of this
investment for an indefinite period of time.
(d) The
Investor further represents and warrants that the Investor is an “accredited
investor” within the meaning of Rule 501(a) of Regulation D under the Securities
Act.
(e) (i)
The
Investor has full power and authority to execute and deliver this Agreement,
(ii) the execution and delivery by the Investor of this Agreement and the
performance by it of its obligations hereunder have been authorized by all
necessary action of the Investor, (iii) the Termination Agreement has been
duly
and validly executed and delivered by the Investor and constitutes the legal,
valid and binding obligation of the Investor, and (iv) this Agreement is
enforceable against the Investor in accordance with its terms.
3. Representations
and Warranties of the Company.
The
Company hereby represents and warrants to the Investor as follows:
(a) The
Company is duly incorporated, validly existing and in good standing under the
laws of its state of incorporation, and is duly qualified to do business as
a
foreign corporation in all jurisdictions in which the failure to be so qualified
would materially and adversely affect the business or financial condition,
properties or operations of the Company.
(b) The
Company has duly authorized the issuance and sale of the Registrable Shares
in
accordance with the terms of this Agreement (as described herein) by all
requisite corporate action, including the authorization of the Company’s Board
of Directors of the issuance and sale of the Registrable Shares in accordance
herewith, and the execution, delivery and performance of any other agreements
and instruments executed in connection herewith. This Agreement constitutes
a
valid and legally binding obligation of the Company, enforceable in accordance
with its terms, except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, and other laws of general application affecting
enforcement of creditors’ rights generally, (ii) as limited by laws relating to
the availability of specific performance, injunctive relief, or other equitable
remedies, and (iii) to the extent the indemnification provisions contained
herein may be limited by applicable federal or state securities
laws.
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4. Survival;
Indemnification.
All
representations, warranties, covenants and the indemnification obligations
contained in this Agreement shall survive (i) the acceptance of this Agreement
by the Company, (ii) changes in the transactions, documents and instruments
described herein which are not material or which are to the benefit of the
Investor, and (iii) the liquidation or dissolution of the Investor. The Investor
understands the meaning and legal consequences of the representations,
warranties and covenants in Section
2
hereof
and that the Company has relied upon such representations, warranties and
covenants in determining the Investor’s qualification and suitability to
purchase Registrable Shares. The Investor hereby agrees to indemnify, defend
and
hold harmless the Company and its respective officers, directors, employees,
agents and controlling persons, from and against any and all losses, claims,
damages, liabilities, expenses (including attorneys’ fees and disbursements),
judgments or amounts paid in settlement of actions arising out of or resulting
from the untruth of any representation of the Investor herein or the breach
of
any warranty or covenant of the Investor made herein. Notwithstanding the
foregoing, no representation, warranty, covenant or acknowledgment made herein
by the Investor shall in any manner be deemed to constitute a waiver of any
rights granted to it under the Securities Act or state securities laws or
otherwise.
5. Additional
Rights and Obligations.
(a) The
Initial Registration Rights Agreements are hereby terminated.
(b) The
Investor shall timely file all beneficial ownership reports as required by
the
Exchange Act.
(b)
In
connection with the registration of any Registrable Securities pursuant to
any
registration statement, the Investor shall:
(i) within
ten (10) days of the date hereof, complete and deliver to the Company a selling
security holder questionnaire to include the information required under
Section
2(f)
hereof;
(ii) promptly
notify the Company when the Investor has sold such Registrable Securities;
and
(iii) promptly
notify the Company in the event that any information supplied by the Investor
in
writing for inclusion in such registration statement or related prospectus
or
any document referred to therein is untrue or omits to state a material fact
required to be stated therein or necessary to make such information not
misleading.
6. Notices.
Any
notice, request or other document required or permitted to be given or delivered
to the Investor or the Company shall be in writing and shall be delivered or
sent to the Investor at the Investor’s address as shown on the books of the
Company or to the Company at its principal place of business and shall be deemed
received by the Investor or the Company, as the case may be, upon personal
delivery, or upon delivery by overnight courier or three days following deposit
in the U.S. mail (sent registered or certified and postage
prepaid).
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7. Assignability.
This
Agreement is not assignable by the Investor, and may not be modified, waived
or
terminated except by an instrument in writing signed by the party against whom
enforcement of such modification, waiver or termination is sought.
8. Binding
Effect.
Except
as otherwise provided herein, this Agreement shall be binding upon and inure
to
the benefit of the parties and their respective heirs, executors,
administrators, successors, legal representatives and permitted assigns, and
the
agreements, representations, warranties and acknowledgments contained herein
shall be deemed to be made by and be binding upon such heirs, executors,
administrators, successors, legal representatives and permitted
assigns.
9. Obligations
Irrevocable.
The
obligations of the Investor shall be irrevocable, except with the consent of
the
Company, until the issuance of the Registrable Shares.
10. Entire
Agreement.
This
Agreement and the Termination Agreement constitute the entire agreement of
the
Investor and the Company relating to the matters contained herein, superseding
all prior contracts or agreements, whether oral or written.
11. Governing
Law.
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of Delaware, without regard to the principles of conflicts of law thereof
that would require the application of the laws of any jurisdiction other than
Delaware.
12. Severability.
If any
provision of this Agreement or the application thereof to the Investor or any
circumstance shall be held invalid or unenforceable to any extent, the remainder
of this Agreement and the application of such provision to other subscriptions
or circumstances shall not be affected thereby and shall be enforced to the
greatest extent permitted by law.
13. Headings.
The
headings in this Agreement are inserted for convenience and identification
only
and are not intended to describe, interpret, define, or limit the scope, extent
or intent of this Agreement or any provision hereof.
14. Counterparts.
This
Agreement may be executed in any number of counterparts, each of which when
so
executed and delivered shall be deemed to be an original and all of which
together shall be deemed to be one and the same agreement.
(Remainder
of Page Intentionally Left Blank)
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IN
WITNESS WHEREOF, the parties have caused the execution of this Agreement by
their duly authorized representatives as of the day and the year first above
written.
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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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Sole
Member
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