Exhibit 4.5
AQUASEARCH, INC.
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NOTE AND WARRANT PURCHASE AGREEMENT
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March 1998
TABLE OF CONTENTS
Page
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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
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EXHIBITS
A Schedule of Investors
B Form of Promissory Note
C Form of Warrant
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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
▇▇-▇▇▇▇ ▇▇▇▇▇ ▇▇'▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇-▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, 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
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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
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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.
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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
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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.
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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
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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 ▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
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:
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(Signature)
▇▇▇▇ ▇▇▇▇▇▇
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(Signature) (Print Name)
Title: Chief Financial Officer
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(Print Name and Title)
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EXHIBIT A - SCHEDULE OF INVESTORS
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NAME AND ADDRESS AMOUNT
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