-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NrJlyU6go1O5Ztv4qlwCx7bsceoN2oa9+mY3MwNG9wSTl5JWoFh6xpWy+dFakqFZ V0mE5bkmkmBRP45saKS0Zw== 0001047469-98-038374.txt : 19981029 0001047469-98-038374.hdr.sgml : 19981029 ACCESSION NUMBER: 0001047469-98-038374 CONFORMED SUBMISSION TYPE: SB-2/A PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 19981028 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: AQUASEARCH INC CENTRAL INDEX KEY: 0000837490 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMMERCIAL PHYSICAL & BIOLOGICAL RESEARCH [8731] IRS NUMBER: 330034535 STATE OF INCORPORATION: CO FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: SB-2/A SEC ACT: SEC FILE NUMBER: 333-64997 FILM NUMBER: 98731795 BUSINESS ADDRESS: STREET 1: 73-4460 QUEEN KA AHUMANU HWY STREET 2: STE 110 CITY: KAILUA KONA STATE: HI ZIP: 96740 BUSINESS PHONE: 6194580011 MAIL ADDRESS: STREET 1: 73-4460 QUEEN KA AHUMANU HWY STREET 2: STE 110 CITY: KAILUA KONA STATE: HI ZIP: 96740 SB-2/A 1 SB-2/A As filed with the Securities and Exchange Commission on October 28, 1998 Registration No. 333-64997 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 AMENDMENT NO.1 TO ---------------------- FORM SB-2 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ORIGINALLY FILED ON SEPTEMBER 30, 1998 -------------------------- AQUASEARCH, INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) -------------------------- COLORADO 2833 33-034535 (STATE OR OTHER JURISDICTION (PRIMARY STANDARD (I.R.S. EMPLOYER OF INCORPORATION INDUSTRIAL CLASSIFICATION IDENTIFICATION NUMBER) OR ORGANIZATION) CODE NUMBER) 73-4460 QUEEN KA'AHUMANU HIGHWAY SUITE 110 KAILUA-KONA, HAWAII 96740 (808) 326-9301 (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES) -------------------------- MARK E. HUNTLEY, PH.D. 73-4460 QUEEN KA'AHUMANU HIGHWAY SUITE 110 KAILUA-KONA, HAWAII 96740 (808) 326-9301 (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE) -------------------------- COPIES TO: STEVEN L. BERSON, ESQ. MICHAEL S. RUSSELL, ESQ. WILSON SONSINI GOODRICH & ROSATI PROFESSIONAL CORPORATION 650 PAGE MILL ROAD PALO ALTO, CA 94304 (650) 493-9300 FAX: (650) 496-4088 -------------------------- APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to time as the selling shareholders may decide. -------------------------- If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. /X/ If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / / If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act of 1933 registration statement number of the earlier effective registration statement for the same offering. / / If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. / / Pursuant to Rule 416, there are also being registered such additional shares and warrants as may become issuable pursuant to the anti-dilution provisions of the warrants. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ---------------------------- The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until this Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS Article Eight Section (b) of the Registrant's Articles of Incorporation provides for the indemnification of officers and directors to the extent permitted by law and further provides that such person shall not be liable to the corporation for any loss or damage suffered by the corporation on account of any action taken by him as a director or officer of the corporation if he acted in good faith and in a manner reasonably believed to be in or not opposed to the best interests of the corporation and, with respect to a criminal matter, if he had no reasonable cause to believe that his conduct was unlawful. The Registrant has entered into indemnification agreements with its directors and executive officers, and intends to enter into indemnification agreements with any new directors and executive officers in the future. ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION The following table sets forth the various expenses in connection with the sale and distribution of the securities being registered. All of the amounts shown are estimates except the Securities and Exchange Commission registration fee. Securities and Exchange Commission registration fee . . . . . . . . . . . $ 1,688.00 Printing and engraving expenses . . . . 10,000.00 Legal fees and expenses . . . . . . . . 20,000.00 Accounting fees and expenses . . . . . 4,000.00 Miscellaneous expenses . . . . . . . . 4,312.00 Total . . . . . . . . . . . . . . $40,000.00 ----------- -----------
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES During the period from June 1997 to September 1998, the Company sold $3,305,000 aggregate principal amount of Convertible Notes ("1998 Convertible Notes") to a total of twelve "accredited investors" as defined under Rule 501 of the Securities Act (the "Selling Security Holders"). In connection with the issuance of the 1998 Convertible Notes, the Company also issued to the Selling Security Holders a total of 3,305,000 Warrants (the "1998 Warrants") to purchase a total of 3,418,713 shares of Common Stock. The 1998 Warrants have an exercise price of $0.50 per share and have a term of three years. Between July and September 1998, the Selling Security Holders converted the 1998 Convertible Notes into 20,075,648 shares of Common Stock (the "Shares"). The number of Shares and 1998 Warrants issued to the Selling Security Holders is as follows: Jane Eliza Weaver Brickey, 599,510 Shares, 100,000 Warrants; Margret Daul, 599,510 Shares, 100,000 Warrants; Jean Farmer, 570,184 Shares, 100,000 Warrants; Earl S. Fusato Revocable Trust, Earl S. Fusato, Trustee, 4,821,340 Shares, 760,000 Warrants; Gregory Kowal, 3,205,128 Shares, 500,000 Warrants; Linda and Joe Maloney, 584,409 Shares, 100,000 Warrants; James Stewart Miller Revocable Trust, James Stewart Miller, Trustee, 142,468 Shares, 25,000 Warrants; Lance and Elaine Nakamura, 1,574,673 Shares, 250,000 Warrants; Viiu Niiler and Charles Cole, 324,265 Shares, 50,000 Warrants; Scott Family Trust, Tom Scott, Trustee, 663,102 Shares, 120,000 Warrants; Jean Sawyer Weaver Trust, Jean S. Weaver, Trustee, 6,391,223 Shares, 1,100,000 Warrants; and Sarah Anna Randsell Weaver, 599,837 Shares, 100,000 Warrants. No underwriters were used in these transactions. This offering was made under Section 4(2) of the Securities Act. From February to March 1998, the Company sold to Earl S. Fusato, the Company's Chief FinancialOfficer, Secretary and a member of its Board of Directors, certain short-term notes in the aggregate principal amount of II-1 $250,000. The notes are payable in full on September 30, 1998. In connection with the issuance of the notes, the Company issued to Mr. Fusato warrants to purchase a total of 113,713 shares of its Common Stock. The warrants have an exercise price of $0.50 per share and have a term of three years. No underwriters were used. This offering was made under Section 4(2) of the Securities Act. In March 1998, the Company issued 108,000 shares of Common Stock at $0.25 per share to Dr. Pearn Niiler, a Director of the Company, for prior services rendered to the Company as a member of the Scientific Advisory Board. No underwriters were used. This offering was made under Section 4(2) of the Securities Act. In March 1998, Tana Acalay, formerly the Company's Chief Financial Officer, exercised options to purchase 466,862 shares of the Company's Common Stock at the exercise price of $0.063 per share. The total proceeds to the Company were $29,179. No underwriter was used. This offering was made pursuant to the exemption provided under Section 4(2) of the Securities Act. From January to March 1998, the Company issued an aggregate of 126,000 shares of Common Stock at $0.25 per share to the following members of the Scientific Advisory Board in exchange for services to the Company: Dr. Edward A. Laws -- 17,000 shares; Dr. Robert R. Bidigare -- 17,000 shares; Dr. William Fenical -- 17,000 shares; Dr. John Bardach -- 17,000 shares; Dr. Farooq Azam -- 12,000 shares; Dr. Malcolm Gregory -- 37,000 shares; and Dr. Aladar Szalay -- 9,000 shares. No underwriters were used. This offering was made under Section 4(2) of the Securities Act. In October 1997, the Company issued 50,000 shares of Common Stock at $0.25 per share to Edward E. David, Sc.D., for consulting services rendered as a member of the Company's Board of Directors. No underwriter was used. This offering was made pursuant to the exemption provided under Section 4(2) of the Securities Act. In October 1997, the Company sold 50,000 shares of Common Stock at $0.25 per share to Edward E. David, Sc.D., a member of the Company's Board of Directors. The total proceeds to the Company from this transaction were $12,500. No underwriter was used. This offering was made pursuant to the exemption provided under Section 4(2) of the Securities Act. In October 1997, the Company issued 10,000 shares of Common Stock at $0.25 per share to Oskar R. Zaborsky, Ph.D., for consulting services rendered as a member of the Company's Board of Directors. No underwriter was used. This offering was made pursuant to the exemption provided under Section 4(2) of the Securities Act. In October 1997, the Company sold 10,000 shares of Common Stock at $0.25 per share to Oskar R. Zaborsky, Ph.D., a member of the Company's Board of Directors. The total proceeds to the Company from this transaction were $2,500. No underwriter was used. This offering was made pursuant to the exemption provided under Section 4(2) of the Securities Act. In September 1997, Tana Acalay, formerly the Company's Chief Financial Officer, exercised options to purchase 463,250 shares of the Company's Common Stock at the exercise price of $0.06 per share. The total proceeds to the Company were $28,953 in the form or a three year note receivable bearing interest of five percent per annum. No underwriter was used. This offering was made pursuant to the exemption provided under Section 4(2) of the Securities Act. In April 1997, the Company sold 1,000,000 shares of Common Stock at $0.21 per share to Earl S. Fusato, the Company's Chief Financial Officer, Secretary and a member of its Board of Directors. The total proceeds to the Company were $210,000. No underwriter was used. This offering was made pursuant to the exemption provided under Section 4(2) of the Securities Act. During the period from October 1996 to April 1997, the Company sold an aggregate of 5,044,570 Units, consisting of one share of Common Stock and one Common Stock Purchase Warrant (the "Warrants"), in a private placement under Section 4(2) of the Securities Act of 1933, as amended, to the following persons at the following prices: Bernadette Ahuna - 23,255 Units at $0.43 per Unit; Dorothy Ako - 33,333 Units at $0.30 per Unit; Amy M. II-2 Matsuda Revocable Living Trust - 38,461 Units at $0.26 per Unit; Steve Berson - 95,238 Units at $0.21 per Unit and 22,727 Units at $0.22 per Unit; Alfredo Briones - 23,255 Units at $0.43 per Unit; David Coury - 90,909 Units at $0.22 per Unit; Earl S. Fusato Revocable Living Trust - 115,384 Units at $0.26 per Unit; William and Bernice Frankoff - 17,857 Units at $0.28 per Unit; Edward Fukuyama - 45,454 Units at $0.22 per Unit; Ralph Fuller - 23,255 Units at $0.43 per Unit; Solomon and Alice Goldsmith - 33,333 Units at $0.30 per Unit; Francis Gray - 45,454 Units at $0.22 per Unit; Christopher and Lynne Harrison - - 75,000 Units at $0.23 per Unit; Hawaiian Trust Company, Ltd - 416,666 Units at $0.24 per Unit; Winston Healy - 34,482 Units at $0.29 per Unit; Dan Hirashima - 68,965 Units at $0.29 per Unit; J.W.A. Buyers Revocable Living Trust - 41,666 Units at $0.24 per Unit; Raymond & Anna Kam - 90,909 Units at $0.22 per Unit, 86,956 Units at 0.23 per Unit and 41,666 Units at $0.24 per Unit; Gerald and Patricia Kammier - 45,454 Units at $0.22 per Unit; Gregory Kowal - 476,190 Units at $0.21 per Unit; Eddy Louis - 37,037 Units at $0.27 per Unit; Alan & Amina Miyasaki - 24,390 Units at $0.41 per Unit; Grace Morrow - 108,695 Units at $0.23 per Unit, 153,846 Units at $0.26 per Unit and 38,461 Units at $0.26 per Unit; David Murakami - 173,809 Units at $0.21 per Unit, 28,000 Units at $0.25 per Unit and 20,833 Units at $0.24 per Unit; Donald and Kimika Nakama - 238,095 Units at $0.21 per Unit; Lance and Elaine Nakamura -125,000 Units at $0.32 per Unit and 136,363 Units at $0.22 per Unit; Calvin and Eunice Nakata - 100,000 Units at $0.22 per Unit; Clarence and Margaret Okimoto - 45,454 Units at $0.22 per Unit, 11,869 Units at $0.23 per Unit and 12,000 Units at $0.25 per Unit; Charles Parl - - 43,478 Units at $0.23 per Unit; Paul F. Glenn Revocable Trust - 37,037 Units at $0.27 per Unit; Michie Proctor - 113,636 Units at $0.22 per Unit, 119,047 Units at $0.21 per Unit and 454,545 Units at $0.22 per Unit; Scott Family Trust - - 113,636 Units at $0.44 per Unit and 178,571 Units at $0.28 per Unit; Gene Seltzer - 43,478 Units at $0.23 per Unit; Yoshiko Takara - 23,255 Units at $0.43 per Unit; Izidor Tischler - 43,478 Units at $0.23 per Unit; Joseph Triggs - 232,558 Units at $0.43 per Unit; Bruce Tyson - 45,454 Units at $0.22 per Unit; Robert Walker - 47,619 Units at $0.21 per Unit; Eileen Winter - 50,000 Units at $0.25 per Unit; Alvin Kuo Wong - 41,666 Units at $0.36 per Unit; and Russell Yamamoto - 217,391 Units at $0.23 per Unit. The Warrants have a term of three years and are exercisable at $1.00 per share, subject to adjustment. The Warrants are redeemable by the Company at $.01 per Warrant during their three-year exercise period upon 30 days' notice anytime that the closing bid price per share of the Common Stock exceeds $1.50 per share (subject to adjustment) for 20 trading days out of 30 consecutive trading days ending on the third day prior to the date of the notice of redemption. The gross proceeds from this offering were $1,275,980. The Placement Agent for this offering, First Honolulu Securities, Inc., received total commissions of $76,558.80 (equal to 6% of the gross proceeds from the sale of the Units) and 302,674 Common Stock Purchase Warrants (equal to 6% of the number of Units sold). The terms of the Warrants issued to First Honolulu Securities, Inc. are identical to the terms of the Warrants issued to the purchasers in the offering. In March 1997, John Emerick, the Company's Vice President of Operations, exercised options to purchase 25,000 shares of the Company's Common Stock at the exercise price of $0.06 per share. The total proceeds to the Company were $1,562 in the form of a three year note receivable bearing interest of five percent per annum. No underwriter was used. This offering was made pursuant to the exemption provided under Section 4(2) of the Securities Act. In February 1997, the Company issued 4,000 shares of Common Stock at $0.46 per share to Alber Leong in exchange for services to the Company. No underwriters were used. This offering was made under Section 4(2) of the Securities Act. In November 1996, the Company issued an aggregate of 18,760 shares of Common Stock at an average price of $0.64/share to the following members of the Scientific Advisory Board in exchange for services to the Company: Dr. Edward A. Laws -- 4,690 shares; Dr. Robert R. Bidigare -- 4,690 shares; Dr. William Fenical -- 4,690 shares; and Dr. John Bardach -- 4,690 shares. No underwriters were used. This offering was made under Section 4(2) of the Securities Act. In October 1996, the Company sold 400,000 shares of Common Stock at $0.50 per share to Cultor pursuant to the Cultor Stock Subscription Agreement. The total proceeds to the Company from this transaction were $200,000. No underwriters were used. This offering was made in reliance on the exemption provided under Section 4(2) of the Securities Act. II-3 In July 1996, the Company issued 3,000 shares of Common Stock at $0.59 per share to Alber Leong in exchange for services to the Company. No underwriters were used. This offering was made under Section 4(2) of the Securities Act. In February 1996, the Company issued 40,000 shares of Common Stock at $0.62 per share, to Seth Huntley, one of the Company's production technicians, for services rendered during the period from August 1995 through January 1996. No underwriter was used. This offering was made to Mr. Huntley without registration pursuant to the exemption provided under Section 4(2) of the Securities Act. In January 1996, the Company sold an aggregate of 4,000,000 shares of Common Stock at $0.15 per share to the following persons in a private placement under Section 4(2) of the Securities Act: Bruce Arinaga - 100,000 shares; A. Bush - 100,000 shares; Gary Davidson - 407,000 shares; Kewalo Holdings - 100,000 shares; James MacNeil - 160,000 shares; First Trust Corp. - 23,300 shares; James McGonigle - 300,000 shares; Michie Proctor - 680,000 shares; Marty Meyerson - 100,000 shares; Wanda Shefts -100,000 shares; Joel Marcus - 100,000 shares; Donald Nakama - 580,000 shares; Neal Roberts - 90,700 shares; David Murakami - 350,000 shares; James Miller - 200,000 shares; Marvin Gutlove - 100,000 shares; Marianne May - 40,000 shares; and Carl Jensen - 240,000 shares. The total proceeds to the Company from this transaction were $600,000. No underwriters were used. In January 1996, the Company sold an aggregate of 2,492,000 shares of Common Stock at $0.125 per share to the following persons under Regulation S under the Securities Act: Sodilot S.A. - 320,000 shares; Hans Peter Klein - 320,000 shares; and Caymus Capital - 1,852,000 shares. The total proceeds to the Company from this transaction were $311,600. No underwriters were used. In December 1995, the Company issued 40,000 shares of Common Stock at $0.125 per share to John J. Emerick, the Company's Vice President of Operations, for services rendered during the period from July 1995 through December 1995. No underwriter was used. This offering was made to Mr. Emerick without registration pursuant to the exemption provided under Section 4(2) of the Securities Act. In November 1995, the Company issued an aggregate of 264,000 shares of Common Stock at $0.125 per share to the following persons as partial payment for their services in constructing the Company's research and development facility at Keahole Point: Robert E. and Terri L. Lee - 120,000 shares; Clyde and Iola Matsuyama - 16,000 shares; Dale and Lora Robertson - 8,000 shares; Branden Fessenden and Amber Kingham - 4,000 shares; Boyd and Kathy Matsuyama - - 8,000 shares; Dwight and Taina Matsuyama - 8,000 shares; Mark K. and Marina K. Stickel - - 40,000 shares; Stephen J. and Jamie K. Herbert - 16,000 shares; and Henry F. and Sri Mulyani Hills - 44,000 shares. No underwriters were used. This offering was made in reliance on the exemption provided under Section 4(2) of the Securities Act. In October 1995, the Company issued an aggregate of 127,875 shares at $0.0625 to the following persons for prior services rendered to the Company: Alejandro Gonzales - 40,000 shares; Alexander Leonard - 25,000 shares; Georgia Malan - 20,000 shares; and Mountain Vista Consulting - 42,875 shares. No underwriters were used. This offering was made under Section 4(2) of the Securities Act. In October 1995, the Company issued 5,000 shares of Common Stock at $0.16 per share to John Emerick, the Company's Vice President of Operations, for services rendered to the Company. No underwriter was used. This offering was made pursuant to the exemption provided under Section 4(2) of the Securities Act. In September 1995, the Company sold an aggregate of 2,712,500 shares of Common Stock at $0.08 per share to the following persons in a private placement under Section 4(2) of the Securities Act: Tana Alcalay - 125,000 shares; Jeff Barber - 62,500 shares; Edward Brill - 62,500 shares; California Progressions - 125,000 shares; Gary Davidson - 125,000 shares; Joanne Gioia - 125,000 shares; Marvin Gutlove - 250,000 shares; Mark Huntley - 62,500 shares; Kenneth Koock - 125,000 shares; Joel Marcus - 362,500 shares; James Miller - 100,000 shares; Charles Mullecker - 625,000 shares; Peter Niiler - 125,000 shares; Mark Shefts - 312,500 shares; Rocco Vezza - 625,000 shares; and Rod Wood - 625,000 shares. No underwriters were used. II-4 In August 1995, the Company returned to Mark E. Huntley, Ph.D., the Company's President and Chief Executive Officer, 1,320,000 shares of Common Stock out of the 4,635,575 shares of Common Stock gifted to the Company by Dr. Huntley in 1989. The closing bid price of the Company's Common Stock on the date the 1,320,000 shares were returned to Dr. Huntley was $0.15 per share. No underwriters were used. This offering was made to Dr. Huntley under Section 4(2) of the Securities Act. In July 1995, the Company sold an aggregate of 3,200,000 shares of Common Stock at $0.0625 per share to QueQui, Ltd. under Regulation S under the Securities Act. The total proceeds to the Company from this transaction were $200,000. No underwriters were used. In June 1995, the Company issued 50,000 shares of Common Stock at $0.10 per share to Robert Bidigare, Ph.D., for services rendered in connection with the analysis of scientific data from feed trials with Cultor. No underwriters were used. These shares were issued to Dr. Bidigare without registration pursuant to the exemption provided under Section 4(2) of the Securities Act. In March 1995, the Company sold an aggregate of 1,710,000 shares of Common Stock at $0.10 per share to the following persons in a private placement under Section 4(2) of the Securities Act: Tana Alcalay - 50,000 shares; Joan Antflick - - 10,000 shares; Scott Brownson - 25,000 shares; David Cook - 50,000 shares; Gary Davidson - 50,000 shares; Joan Davidson - 25,000 shares; Stanley Feldman - 50,000 shares; Frederick Fields - 50,000 shares; Robert Forcey - 100,000 shares; Michael Freed - 5,000 shares; Paulette & Steve Freed - 45,000 shares; Bobbi Goldblum - 25,000 shares; Mark Huntley - 50,000 shares; Sam Iler - 100,000 shares; Carl Jensen - 100,000 shares; Mahlon Kennicut - 50,000 shares, Kenneth Koock - 50,000 shares; Joel Marcus - 50,000 shares; Marianne May - 50,000 shares; Robert Nichols - 50,000 shares; Eric Niiler - 100,000 shares; Pearn Niiler - 50,000 shares; Viiu Niiler - 100,000 shares; Walter Nordhausen - 50,000 shares; Donald Redalje - 50,000 shares; Ken Richter - 50,000 shares; Eric Saltsberg - 50,000 shares; Satlantic, Inc. - 50,000 shares; Niklas Schneider - 50,000 shares; Michael C.B. Smith - 50,000 shares; Craig Steede - 50,000 shares; Henry White - 50,000 shares; and Leroy Young - 25,000 shares. No underwriters were used. The total proceeds to the Company were $171,000. In June 1994, the Company issued an aggregate of 250,000 shares of Common Stock at $0.08 per share to the following persons for prior services rendered to the Company: Michael C.B. Smith - 170,000 shares; Alejandro Gonzales - 40,000 shares; and Glenna Thompson - 40,000 shares. No underwriters were used. This offering was made under Section 4(2) of the Securities Act. In May 1994, the Company issued an aggregate of 775,000 shares of Common Stock at $0.08 per share to the following persons for prior services rendered to the Company: Mark Huntley - 400,000 shares; Tana Alcalay - 250,000 shares; and Peter Niiler - 125,000 shares. No underwriters were used. This offering was made under Section 4(2) of the Securities Act. In January 1994, the Company sold 250,000 shares of Common Stock at $0.03 per share to J. McGonigle in a private placement under Section 4(2) of the Securities Act. No underwriters were used. The total proceeds to the Company were $7,500. ITEM 27. EXHIBITS 3.1* Articles of Incorporation of Registrant 3.2* By-laws of Registrant 4.1+ Form of Bridge Loan Note 4.2+ Form of 1997 Warrant 4.3 Form of 1998 Convertible Note 4.4 Form of 1998 Warrant 4.5 Form of 1998 Note and Warrant Purchase Agreement 5.1 Opinion of Wilson Sonsini Goodrich & Rosati dated 9/29/98
II-5 10.2# Stock Subscription Agreement between Cultor Ltd. and Aquasearch, Inc., dated May 14, 1996 10.3+ The Amended Keahole Point Facilities Use Agreement dated August 22, 1996 by and between The National Energy Laboratory of Hawaii Authority and the Registrant 10.4$ Letter of Intent between C. Brewer and Company Limited and the Registrant 23.1++ Consent of Ernst & Young LLP 23.2++ Consent of Johnson, Holscher & Company, P.C. 23.3** Consent of Wilson Sonsini Goodrich & Rosati, P.C.
* Incorporated by reference to the exhibit filed with Registrant's Annual Report on Form 10-KSB filed October 31, 1995. # Incorporated by reference to the exhibit filed with Registrant's Current Report on Form 8-K filed September 13, 1996. + Incorporated by reference to the exhibit filed with the Registrant's Annual Report on Form 10-KSB for the fiscal year ended October 31, 1996. $ Incorporated by reference to the Registrant's Current Report on Form 8-K dated November 13, 1996. ++ Previously filed with initial filing on September 30, 1998. ** Included in Exhibit 5.1 filed herewith. ITEM 28. UNDERTAKING Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer of controlling persons of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. The undersigned Registrant hereby undertakes: (1) File during any period in which it offers or sells securities, a post-effective amendment to this registration statement to: (i) Include any prospectus required by Section 10(a)(3) of the Securities Act; (ii) Reflect in the prospectus any facts or events which, individually or together, represent a fundamental change in the information in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in a form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation of the Registration Fee" table in the effective registration statement; and (iii) Include any additional or changed material information on the plan of distribution. II-6 (2) For purposes of determining liability under the Securities Act, treat each post-effective amendment as a new registration statement of the securities offered, and the offering of the securities at that time to be the bona fide offering. (3) File a post-effective amendment to remove from registration any of the securities that remain unsold at the end of the offering. II-7 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form SB-2 and has duly caused this Amendment No. 1 to Registration Statement (Reg. No. 333-64997) to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Honolulu, State of Hawaii, on this 27th day of October, 1998. AQUASEARCH, INC. /s/ MARK E. HUNTLEY -------------------------------------- Mark E. Huntley President and Chief Executive Officer Pursuant to the requirements of the Securities Act of 1933, this Amendment No. 1 to Registration Statement has been signed by the following persons in the capacities indicated on the date signed by the Company: Signature Title - ---------------------------------- ---------------------------------------- /s/ MARK E. HUNTLEY Chairman of the Board, - ---------------------------------- Chief Executive Officer and (Mark E. Huntley) President (Principal Executive Officer) /s/ PEARN P. NIILER - ---------------------------------- (Pearn P. Niiler) Director - ---------------------------------- (Edward E. David, Ph.D.) Director /s/ EARL S. FUSATO Director and Chief Financial - ---------------------------------- Officer (Chief Accounting (Earl S. Fusato) Officer) II-8 INDEX TO EXHIBITS
Exhibits 3.1 Articles of Incorporation of Registrant . . . . . . . . . . . . (A) 3.2 By-laws of Registrant . . . . . . . . . . . . . . . . . . . . . (A) 4.1 Form of Bridge Loan Note . . . . . . . . . . . . . . . . . . . (B) 4.2 Form of 1997 Warrant . . . . . . . . . . . . . . . . . . . . . (B) 4.3 Form of 1998 Convertible Note . . . . . . . . . . . . . . . . . (E) 4.4 Form of 1998 Warrant . . . . . . . . . . . . . . . . . . . . . (E) 4.5 Form of 1998 Note and Warrant Purchase Agreement . . . . . . . (E) 5.1 Opinion of Wilson Sonsini Goodrich & Rosati, P.C., dated September 29, 1998 . . . . . . . . . . . . . . . . . . . (E) 10.2 Stock Subscription Agreement between Cultor Ltd. and Aquasearch, Inc., dated May 14, 1996 . . . . . . . . . . . . . . . . . . . (C) 10.3 The Amended Keahole Point Facilities Use Agreement dated August 22, 1996 by and between National Energy Laboratory of Hawaii and the Registrant . . . . . . . . . . . . . . . . . . (B) 10.4 Letter of Intent between C. Brewer and Company Limited and the Registrant . . . . . . . . . . . . . . . . . . . . . . . . . . (D) 23.1 Consent of Ernst & Young LLP . . . . . . . . . . . . . . . . . (G) 23.2 Consent of Johnson, Holscher & Company, P.C. . . . . . . . . . (G) 23.3 Consent of Wilson Sonsini Goodrich & Rosati, P.C. . . . . . . . (F)
(A) Incorporated by reference to the exhibit filed with Registrant's Annual Report on Form 10-KSB filed October 31, 1995. (B) Incorporated by reference to the exhibit filed with the Registrant's Annual Report on Form 10-KSB for the fiscal year ended October 31, 1996. (C) Incorporated by reference to the exhibit filed with Registrant's Current Report on Form 8-K filed September 13, 1996. (D) Incorporated by reference to the Registrant's Current Report on Form 8-K dated November 13, 1996. (E) Attached as an Exhibit hereto. (F) Included in Exhibit 5.1 filed herewith. (G) Previously filed with initial filing on September 30, 1998. EX-4.3 2 EXHIBIT 4.3 Exhibit 4.3 THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS OF CERTAIN STATES. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS. AQUASEARCH, INC. PROMISSORY NOTE $ Kailua-Kona, Hawaii ---------------- Date --------------- FOR VALUE RECEIVED, AQUASEARCH, INC., a Colorado corporation (the "Company") hereby absolutely and unconditionally promises to pay to (the "Lender"), or order, the principal amount of __________________________________ ($_____________ ), together with simple interest at the rate of ten percent (10%) per annum (calculated on the basis of twelve 30-day months). Accrued interest shall be due and payable in cash only at the time the principal amount of this Note becomes due and owing. This Note is one of a series of Notes issued pursuant to one or more Note and Warrant Purchase Agreements dated March 1998 (as amended and in effect from time to time, the "Purchase Agreements") by and among the Company, the Lender, and certain other lenders named in Exhibit A to such Purchase Agreements (the Lender and the certain other lenders are referred to herein as the "Lenders"). All rights under this Note rank equally with all rights under all other Notes, and no holder of this Note shall have rights senior to the rights of the holders of all or any other Notes. I. Repayments; Prepayments and Warrants. B. This Note shall be due and payable 12 months (365 days) from the date of the signing of this note; provided, however, that, at the option of the Lender, this Note may be converted into equity as defined by the attached Note and Warrant Purchase Agreement. In addition, the Company will issue the Lender a Common Stock Purchase Warrant (the "Warrant") in substantially the form attached hereto as Exhibit C to the Note and Warrant Purchase Agreement. The Warrant will have an exercise price of $0.50 per share and will have a term of three years from the date of the Preferred Stock Closing. The number of shares of Common Stock underlying the Warrant will be determined by either of two formulas. In the event that Investor converts all principal and accrued interest on this Note into equity within the Conversion Period, as defined in the Note and Warrant Purchase Agreement, then the Warrant would be exercisable for a number of shares equal to the dollar amount of the Note, plus a number of shares equal to the dollar amount of any interest accrued. In the event that the Lender elected not to converts all principal and accrued interest on this Note into into equity within the Conversion Period, as defined in the Note and Warrant Purchase Agreement, then the Warrant would be exercisable for a number of shares equal to the dollar amount of this Note multiplied by 40%. Warrants will not be issued for fractional shares. The number of shares of Common Stock underlying the Warrants will be adjusted for any stock splits, combinations or similar events. Any payment of this Note prior to the date it is due and payable shall be made only at the same time as the Company pays all other Notes issued pursuant to the Purchase Agreement, with such payments to be made pro-rata in proportion to the then outstanding principal amounts of such Notes. Interest shall continue to accrue on this Note until such time as all principal and interest due is paid in full. B. The Company may prepay this Note at any time, either in whole or in part, without premium or penalty and without the prior consent of the Lender. Any prepayment of this Note shall be made only at the same time as the Company prepays all other Notes issued pursuant to the Purchase Agreements, with such prepayments to be made pro-rata in proportion to the then outstanding principal amounts of such Notes. II. Events of Default; Acceleration. A. The principal amount of this Note is subject to prepayment in whole or in part upon the occurrence and during the continuance of any of the following events (each, an "Event of Default"): (i) failure to pay any amount owing by the Company hereunder when due and payable, or (ii) the initiation of any bankruptcy, insolvency, moratorium, receivership or reorganization by or against the Company, or a general assignment of assets by the Company for the benefit of creditors. Upon the occurrence of any Event of Default, the entire unpaid principal balance of this Note shall be immediately due and payable. B. No remedy herein conferred upon the Lender is intended to be exclusive of any other remedy and each and every remedy shall be cumulative and in addition to every other remedy hereunder, and under the Purchase Agreement, now or hereafter existing at law or in equity or otherwise. III. Notices. A. All notices, reports and other communications required or permitted hereunder shall be in writing and may be delivered in person, by telecopy with written confirmation, via overnight delivery 2 service or U.S. mail, in which event it may be mailed by first-class, certified or registered, postage fully prepaid, addressed (i) if to a Lender, at such Lender's address set forth in the Schedule of Investors attached as Exhibit A to the applicable Purchase Agreement (or such other address as such Lender shall have furnished the Company in writing) and (ii) if to the Company, at the address set forth at the beginning of the Purchase Agreements (or such other address as the Company shall have furnished the Lenders in writing), attention of Mark E. Huntley, Ph.D., President and Chief Executive Officer. B. Each such notice, report or other communication shall for all purposes under this Note be treated as effective or having been given when delivered if delivered personally or, if sent by mail, at the earlier of its receipt or 72 hours after the same has been deposited in a regularly maintained receptacle for the deposit of the United States mail, addressed and mailed as aforesaid, or, if sent by telecopier with written confirmation, at the earlier of (i) 24 hours after confirmation of transmission by the sending telecopier machine or (ii) delivery of written confirmation. IV. Miscellaneous. A. With the written consent of the record holders of a majority of the principal amount of the Notes then outstanding, the obligations of the Company and the rights of the holders under the Notes may be waived (either generally or in a particular instance, either retroactively or prospectively and either for a specified period of time or indefinitely), and with the same consent the Company, when authorized by resolution of its Board of Directors, may enter into a supplementary agreement for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Note; provided, however, that no such waiver or supplemental agreement shall reduce the above percentage of principal amount, the holders of which are required to consent to any waiver or supplemental agreement, without the consent of the record or beneficial holders of all of the Notes, nor increase the obligations of any holder of a Note without such holder's written consent. Upon the effectuation of each such waiver, consent, agreement, amendment or modification, the Company shall promptly give written notice thereof to the record holders of the Notes who have not previously consented thereto in writing. Neither this Note nor any provisions hereof may be changed, waived, discharged or terminated orally, but only by a signed statement in writing. B. No failure or delay by the Lender to exercise any right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege preclude any other right, power or privilege. The provisions of this Note are severable and if any one provision hereof shall be held invalid or unenforceable in whole or in part in any jurisdiction, such invalidity or unenforceability shall affect only such provision in such jurisdiction. This Note expresses the entire understanding of the parties with respect to the transactions contemplated hereby. The Company and every endorser and guarantor of this Note regardless of the time, order or place of signing hereby waives presentment, demand, protest and notice of every kind, and assents to any extension or postponement of the time for payment or any other indulgence, to any substitution, exchange or release of collateral, and to the addition or release of any other party or person primarily or 3 secondarily liable. C. If Lender retains an attorney for collection of this Note, or if any suit or proceeding is brought for the recovery of all, or any part of, or for protection of the indebtedness respected by this Note, then the Company agrees to pay on demand all costs and expenses of the suit or proceeding, or any appeal thereof, incurred by the Lender, including without limitation, reasonable attorneys' fees. D. This Note shall for all purposes be governed by, and construed in accordance with the laws of the State of Hawaii (without reference to conflict of laws). E. This Note shall be binding upon the Company's successors and assigns, and shall inure to the benefit of the Lender's successors and assigns. IN WITNESS WHEREOF, the Company has caused this Note to be executed by its duly authorized officer to take effect as of the date first hereinabove written. AQUASEARCH, INC. By: --------------------------------- Name: ------------------------------- Title: ------------------------------- 4 EX-4.4 3 EXHIBIT 4.4 Exhibit 4.4 THE SECURITIES REPRESENTED BY THIS CERTIFICATE AND THE SHARES OF COMMON STOCK AND OTHER SECURITIES, IF ANY, ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. SUCH SECURITIES MAY NOT BE SOLD OR TRANSFERRED UNLESS REGISTERED UNDER SUCH ACT AND ALL APPLICABLE STATE SECURITIES LAWS OR UNLESS, IN THE OPINION OF COUNSEL SATISFACTORY TO THE COMPANY, AN EXEMPTION FROM SUCH REGISTRATIONS IS AVAILABLE AT THE TIME OF SUCH SALE OR TRANSFER. WARRANTS TO PURCHASE COMMON STOCK OF AQUASEARCH, INC. 1998 Bridge Warrant Certificate No. __ Void After _________, 2001 This certifies that, for value received, _______________ ("Buyer") or registered assigns (the "Holder") is the owner of ______ warrants (the "Warrants") of Aquasearch, Inc., a Colorado corporation (the "Company"). Each Warrant shall entitle the registered holder thereof to purchase one share of the Company's Common Stock, $0.0001 par value (the "Common Stock"), at an exercise price (the "Exercise Price") per share of Common Stock equal to $0.50 per share (the "Exercise Price"), at any time during the period (the "Exercise Period") commencing on the date of this Warrant and expiring at 5:00 p.m. Honolulu, Hawaii time, on ___________, 2001 all upon the terms and subject to the conditions set forth herein. After expiration of the Exercise Period, the Holder shall have no right to purchase any Common Stock hereunder. In the event that the aforesaid expiration date of the Warrants falls on a day that is not a business day, then the Warrants shall expire at 5:00 p.m. Honululu, Hawaii time on the next succeeding business day. For purposes hereof, the term "business day" shall mean any day other than a Saturday, Sunday or a day on which banking institutions in Honolulu, Hawaii are authorized or obligated by law to be closed. The Warrants are being issued pursuant to a Note and Warrant Purchase Agreement between the Company and Buyer dated as of _______________ relating to the sale by the Company and the purchase by Buyer of a Note in the aggregate principal amount of $_________ and Warrants to purchase ______ shares of Common Stock (the "Warrant Common Stock"). The Note and Warrant Purchase Agreement is one of a series of Note and Warrant Purchase Agreements between the Company and certain investors (the "Purchase Agreements") entered into in 1998. The Holder, by its or his acceptance hereof, agrees with the Company that the Warrants have been issued and all rights hereunder shall be held subject to all of the conditions, limitations and provisions set forth herein. 1. Exercise of Warrants. The rights represented by the Warrants may be exercised in whole on one occasion at any time within the Exercise Period (a "Warrant Exercise Date") by (i) the surrender of the Warrants (with the purchase form at the end hereof properly executed) at the principal executive office of the Company (or such other office or agency of the Company as it may designate by notice in writing to the Holder at the address of the Holder appearing on the books of the Company) along with a Notice of Exercise in the form of Exhibit I hereto; and (ii) payment to the Company of the Exercise Price for the number of shares of Common Stock specified in the above-mentioned purchase form, together with applicable stock transfer taxes, if any. Payment of the Exercise Price shall be made in cash or by certified or bank check payable to the Company. The Warrants shall be deemed to have been exercised, in whole, immediately prior to the close of business on the date the Warrants are surrendered and payment is made in accordance with the foregoing provisions of this Paragraph 1, and the person or persons in whose name or names the certificates for the Warrant Common Stock shall be issuable upon such exercise shall become the Holder or Holders of record of such Warrant Common Stock at that time and date. The Warrant Common Stock so purchased shall be delivered to the Holder within a reasonable time, not exceeding ten business days, after the rights represented by the Warrants shall have been so exercised. 2. Restrictions on Transfer. The Holder, by his or her acceptance hereof, hereby represents and warrants to, and agrees with, the Company as follows: (i) the Holder has been informed that neither the Warrants, nor the shares of Warrant Common Stock or other securities purchasable pursuant to the Warrants, have been registered for sale under any federal or state securities laws and that the Warrants are being offered and issued to the Holder and, upon the exercise of the Warrants by the Holder, the Warrant Common Stock purchasable pursuant to the Warrants will be sold to the Holder, pursuant to the exemption from registration under the Securities Act of 1933, as amended (the "Securities Act"); (ii) the Holder is acquiring the Warrants and will acquire the Warrant Common Stock purchasable upon exercise of the Warrants for the Holder's own account and not with a view to distribution thereof; (iii) neither the Warrants nor such Warrant Common Stock may be sold, transferred, assigned, hypothecated or otherwise disposed of, in whole or in part, unless registered under the Securities Act and applicable state securities laws or unless, in the opinion of counsel satisfactory to the Company, an exemption from such registrations is available; and (iv) prior to the exercise of the Warrants the Holder shall provide to the Company in writing such information as the Company may reasonably request to establish that the exercise of the Warrants by the Holder is exempt from registration under such securities laws. Subject to the preceding paragraph, any assignment of Warrants shall be effected by the Holder by (i) completing and executing the Assignment Form attached as Exhibit II hereto and (ii) surrendering the Warrants represented hereby with such duly completed and executed transfer form for cancellation, accompanied by funds sufficient to pay any transfer tax, at the office or agency of the Company referred to in Paragraph 1; whereupon the Company shall issue, in the name or names specified by the Holder a new Warrant or Warrants of like tenor and representing in the aggregate rights to purchase the same number of shares of Warrant Common Stock as are then purchasable hereunder. 3. Payment of Taxes. The Company will pay any documentary stamp taxes attributable to the initial issuance of Common Stock issuable upon the exercise of Warrants; provided, however, that the Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the issuance or delivery of any certificates of shares of Warrant Common Stock in a name other than that of the registered Holder of Warrants in respect of which such shares are issued, and in such case the Company shall not be required to issue or deliver any certificate for shares of Warrant Common Stock or any Warrant until the person requesting the same has paid to the Company the amount of such tax or has established to the Company's satisfaction that such tax has been paid. 4. Reservation of Common Stock. There have been reserved, and the Company shall at all times keep reserved, out of its authorized shares of Common Stock, a number of shares of Common Stock sufficient to provide for the exercise of the rights of purchase represented by the Warrants, and the transfer agent for the shares of Warrant Common Stock and every subsequent transfer agent for any shares of Warrant Common Stock issuable upon the exercise of any of the aforesaid rights of purchase are irrevocably authorized and directed at all times to reserve such number of authorized shares of Common Stock as shall be required for such purpose. The Company agrees that all shares of Warrant Common Stock issued upon exercise of the Warrants shall be, at the time of delivery of the certificates for such shares against payment of the Exercise Price therefor, validly issued and outstanding, fully paid and nonassessable. 5. No Rights of Shareholder. Prior to the exercise of any Warrants represented hereby, the Holder, as such, shall not be entitled to any rights of a shareholder of the Company, including, without limitation, the right to vote or to receive dividends or other distributions, and shall not be entitled to receive any notice of any proceedings of the Company, except as otherwise provided herein. 6. Adjustments to Exercise Price and Number of Shares. The number and kind of securities purchasable upon the exercise of this Warrant and the Exercise Price shall be subject to adjustment from time to time as set forth in Exhibit III hereto upon the occurrence of certain events described therein. The provisions of Exhibit III are incorporated by reference herein with the same effect as if set forth in full herein. 7. Notices of Record Date. In the event of any taking by the Company of a record of its shareholders for the purpose of determining shareholders who are entitled to receive payment of any dividend or other distribution, any right to subscribe for, purchase or otherwise acquire any share of any class or any other securities or property, or to receive any other right, or for the purpose of determining shareholders who are entitled to vote in connection with any proposed merger or consolidation of the Company with or into any other corporation (excluding any proposed merger or consolidation in which the shareholders of the Company immediately before such merger or consolidation will own more than 50% of the outstanding voting stock of the surviving entity after such merger or consolidation), or any proposed sale, lease or conveyance of all or substantially all of the assets of the Company, or any proposed liquidation, dissolution or winding up of the Company, then, in connection with each such event, the Company shall mail to the Holder of this Warrant at least twenty days prior written notice of the date on which any such record is to be taken for the purpose of such dividend, distribution, right(s) or vote of the shareholders. Each such written notice shall specify the amount and character of any such dividend, distribution or right(s), and shall set forth, in reasonable detail, the matter requiring any such vote of the shareholders. 8. Fractional Shares. The Warrants may only be exercised to purchase full shares of Warrant Common Stock and the Company shall not be required to issue fractions of shares of Warrant Common Stock on the exercise of Warrants. However, if a Holder of Warrants exercises all Warrants then owned of record by him and such exercise would result in the issuance of a fractional share, the Company will pay to such Holder, in lieu of the issuance of any fractional share otherwise issuable, an amount of cash based on the Market Price of the Common Stock on the last trading day prior to the exercise date. "Market Price" means, on any date, the average of the last reported sale price, or, in case no such reported takes place on such day, the average of the last reported sale prices for the last three trading days, in either case as officially reported by the principal securities exchange on which the Common Stock is then listed or admitted to trading or as reported in the Nasdaq Stock Market, or, if the Common Stock is not listed or admitted to trading on any national securities exchange or quoted on the Nasdaq Stock Market, the closing bid quotation as furnished by the National Association of Securities Dealers, Inc. through Nasdaq or a similar organization if Nasdaq is no longer reporting such information, or if the Common Stock is traded on the NASD Electronic Bulletin Board, the closing bid price as furnished by Nasdaq, or if the the Common Stock is not quoted on Nasdaq or the NASD Electronic Bulletin Board, as determined in good faith by resolution of the Board of Directors of the Company, based on the best information available to it for the day immediately preceding such issuance or sale, the day of such issuance or sale and the day immediately after such issuance or sale. If the Common Stock is listed or admitted to trading on a national securities exchange and also quoted on the Nasdaq Stock Market, the Market Price shall be determined as hereinabove provided by reference to the prices reported in the Nasdaq Stock Market; provided that if the Common Stock is listed or admitted to trading on the New York Stock Exchange, the Market Price shall be determined as hereinabove provided by reference to the prices reported by such exchange. 9. Registration Rights. The rights of the Holder of this Warrant and the obligations of the Company with respect to registration under the Securities Act and the applicable rules and regulations thereunder shall be as set forth in the Note and Warrant Agreement between the parties, dated ___________. 10. Mergers. The Company agrees to provide the Holder of this Warrant with at least twenty days' prior written notice of the terms and conditions of any proposed transaction, in which the Company would (i) sell, lease, exchange, convey or otherwise dispose of all or substantially all of its property or business, or (ii) merge into or consolidate with any other corporation (other than a wholly-owned subsidiary of the Company), or effect any transaction (including a merger or other reorganization) or series of related transactions, in which more than fifty percent (50%) of the voting power of the Company is disposed of. The Company will cooperate with the Holder in arranging the sale of this Warrant in connection with any such transaction. 11. Modification and Waiver. This Warrant and any provision hereof may be changed, altered, modified, amended, supplemented, discharged or terminated only with the written consent of the holders of a majority of the Warrants then outstanding issued pursuant to the Purchase Agreements. In the event that any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be affected or impaired thereby, and the parties agree to cooperate with each other to insure that each receives the economic benefits intended by any such provision that is so held to be invalid, illegal or unenforceable. 12. Notices. Any notice, request or other document required or permitted to be given or delivered to the Holder hereof or the Company shall be delivered or sent to each such Holder at its address as shown on the books of the Company or to the Company at the address indicated therefor on the signature page of this Warrant and shall be deemed received by the Holder upon the earlier of actual receipt or, if sent by certified mail (postage pre-paid), five (5) days after deposit in the U.S. mail. 13. Binding Effect on Successors. This Warrant shall be binding upon any corporation succeeding the Company by merger, consolidation or acquisition of all or substantially all of the Company's assets. All of the obligations of the Company relating to the Warrant Common Stock shall survive the exercise and termination of this Warrant. All of the covenants and agreements of the Company shall inure to the benefit of the successors and assigns of the Holder hereof. The Company will, at the time of the exercise of this Warrant, in whole or in part, upon request of the Holder hereof but at the Company's expense, acknowledge in writing its continuing obligation to the Holder hereof in respect of any rights (including, without limitation, any right to registration of the Warrant Common Stock in accordance with the Registration Rights Agreement) to which the Holder hereof shall continue to be entitled after such exercise in accordance with this Warrant; provided, however, that the failure of the Holder hereof to make any such request shall not affect the continuing obligation of the Company to the Holder hereof in respect of such rights. 14. Lost Warrants or Stock Certificates. The Company covenants to the Holder hereof that upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction, or mutilation of this Warrant or any stock certificate issued upon exercise thereof and, in the case of any such loss, theft or destruction, upon receipt of an indemnity reasonably satisfactory to the Company, or in the case of any such mutilation upon surrender and cancellation of such Warrant or stock certificate, the Company shall make and deliver a new Warrant or stock certificate, or like tenor, in lieu of the lost, stolen, destroyed or mutilated Warrant or stock certificate. 15. No Impairment. The Company will not, by amendment of its charter or through any reorganization, recapitalization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Company, but will at all times in good faith assist in the carrying out of all the provisions of this Warrant and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the Holder of this Warrant against impairment. 16. Descriptive Headings. The descriptive headings of the several paragraphs of this Warrant are inserted for convenience only and do not constitute a part of this Warrant. 17. Recovery of Litigation Costs. If any legal action or other proceeding is brought for the enforcement of this Warrant, or because of an alleged dispute, breach, default, or misrepresentation in connection with any of the provisions of this Warrant, the successful or prevailing party or parties shall be entitled to recover reasonable attorneys' fees and other costs incurred in that action or proceeding, in addition to any other relief to which it or they may be entitled. 18. Governing Law. The Warrants shall be governed by and in accordance with the laws of the State of Hawaii without regard to the conflicts of law principles thereof. IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its duly authorized officer to take effect as of ___________, 1997. AQUASEARCH, INC. By: ---------------------------------- Mark E. Huntley, Ph.D. President and Chief Executive Officer EXHIBIT I NOTICE OF EXERCISE To: Aquasearch, Inc. 73-4460 Queen Ka'ahumanu Highway Suite 110 Kailua-Kona, Hawaii 96740 1. The undersigned hereby elects to purchase ______________ shares of Common Stock of the Company pursuant to the terms of the attached Warrant, and tenders herewith payment of the purchase price of such shares in full; or 2. Please issue a certificate or certificates representing said shares in the name of the undersigned or in such other name or names as are specified below: ---------------------------------------- (NAME) ---------------------------------------- (ADDRESS) ---------------------------------------- (ADDRESS) 3. The undersigned represents that the aforesaid shares being acquired for the account of the undersigned for investment and not with a view to, or for resale in connection with, the distribution thereof and that the undersigned has no present intention of distributing or reselling such shares. - ------------------------------ (DATE) - ---------------------------------------- (SIGNATURE) EXHIBIT II ASSIGNMENT FORM (To assign the foregoing Warrant, execute this form and supply the required information. Do not use this form to purchase shares.) FOR VALUE RECEIVED, the undersigned hereby, sells, assigns and transfers unto:__________________________________________________________________________ whose address is_______________________________________________________________ (Please Print) and whose Social Security or other Taxpayer Identification Number is:________________ the foregoing Warrant and all rights thereunder, hereby constituting and appointing ______________________________________ to transfer said Warrant on the books of the Company, with full power of substitution in the premises. Dated: , 19 . ----------------- ----- Holder's Signature: -------------------------- Holder's Name: ------------------------------- (Please Print) Holder's Address: ---------------------------- (Please Print) Signature Guaranteed: ---------------------------------------------------- NOTE: The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change whatever, and must be guaranteed by a bank or trust company or by a member of the National Association of Securities Dealers, Inc. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant. EXHIBIT III ADJUSTMENT PROVISIONS 1. Capitalized Terms. Capitalized terms used in this Exhibit III that are not otherwise defined herein shall have the respective meanings assigned to them in the Warrant, dated as of ____________ to which this Exhibit III is attached, if therein defined. 2. Reclassification or Merger. In case of any reclassification, change or conversion of securities of the class issuable upon exercise of this Warrant (other than a change in par value, or from par value to no par value, or from no par value to par value, or as a result of a subdivision or combination), or in case of any merger of the Company with or into another corporation or entity (other than a merger with another corporation in which the Company is a continuing corporation and which does not result in any reclassification or change of outstanding securities issuable upon exercise of this Warrant), or in case of any sale of all or substantially all of the assets of the Company, the Company, or such successor or purchasing corporation or entity, as the case may be, shall execute a new Warrant (in form and substance satisfactory to the Holder of this Warrant) providing that the Holder of this Warrant shall have the right to exercise such new Warrant and upon such exercise to receive, in lieu of each share of Warrant Common Stock theretofore issuable upon exercise of this Warrant, the kind and amount of shares of stock, other securities, money and property receivable upon such reclassification, change or merger by a holder of one share of Common Stock. Such new Warrant shall provide for adjustments that shall be as nearly equivalent as may be practicable to the adjustments provided for in this Exhibit III. The provisions of this Section 2 shall similarly apply to successive reclassifications, changes, mergers and transfers. 3. Subdivision or Combination of Shares. If the Company at any time while this Warrant remains outstanding and unexpired shall subdivide or combine its Common Stock, the Exercise Price and the number of Shares issuable upon exercise hereof shall be proportionately adjusted. 4. Stock Dividends. If the Company at any time while this Warrant is outstanding and unexpired shall pay a dividend payable in shares of Common Stock, then the Exercise Price shall be adjusted, from and after the date of determination of shareholders entitled to receive such dividend or distribution, to that price determined by multiplying the Exercise Price in effect immediately prior to such date of determination by a fraction (a) the numerator of which shall be the total number of shares of Common Stock outstanding immediately prior to such dividend or distribution, and (b) the denominator of which shall be the total number of shares of Common Stock outstanding immediately after such dividend or distribution and the number of shares of Warrant Common Stock subject to this Warrant shall be proportionately adjusted. 5. Other Distributions. In the event the Company shall declare a dividend or distribution payable in cash, securities of other persons, evidences of indebtedness issued by the Company or other persons, assets or options or rights not referred to in Sections 2, 3 or 4 of this Exhibit III, then, in each such case, provision shall be made by the Company such that the holder of this Warrant shall receive upon exercise of this Warrant a proportionate share of any such dividend or distribution as though it were the Holder of the shares of Warrant Common Stock as of the record date fixed for the determination of the shareholders of the Company entitled to receive such dividend or distribution. 6. Notice of Adjustments. Whenever the Exercise Price shall be adjusted pursuant to the provisions hereof, the Company shall within thirty days of such adjustment deliver a certificate signed by its Chief Financial Officer to the registered Holder(s) hereof setting forth, in reasonable detail, the event requiring the adjustment, the amount of the adjustment, the method by which such adjustment was calculated, and the Exercise Price after giving effect to such adjustment. EX-4.5 4 EXHIBIT 4.5 Exhibit 4.5 AQUASEARCH, INC. ------------------------- NOTE AND WARRANT PURCHASE AGREEMENT ------------------------- March 1998 TABLE OF CONTENTS
Page ---- 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
i EXHIBITS A Schedule of Investors B Form of Promissory Note C Form of Warrant
ii AQUASEARCH, INC. NOTE AND WARRANT PURCHASE AGREEMENT This Agreement is made as of _____________ among Aquasearch, Inc., a Colorado corporation (the "Company"), with its principal office located at 73-4460 Queen Ka'ahumanu Highway, Suite 110, Kailua-Kona, Hawaii 96740, and the undersigned (the "Investor"). The Investor understands that the Company may enter into Note and Warrant Purchase Agreements with substantially identical terms with one or more other investors. The undersigned and such other investors are hereinafter referred to collectively as the "Investors." I. The Note and the Warrants. A. The Note. Investor hereby agrees, on the terms and conditions specified in this Agreement, to lend to the Company the sum set forth in column 1 of Exhibit A opposite such Investor's name at the Closing (as defined below). Investor's loan shall be evidenced by an unsecured convertible promissory note (the "Note") dated as of the date of the Closing in the form of Exhibit B. The aggregate principal amount of the Note shall be as set forth on Exhibit A, subject to adjustment as provided in Section 1.3 hereof. The Note may be converted (the "Conversion") for the period of six months (180 days) (the "Conversion Period") into either of the following: (1) shares of the Company's common stock at a 15% discount to the closing bid price on the day the Company receives the funds (the"Investment Date") for the note; or (2) any other equity offering made by the Company during the Conversion Period. B. The Warrants. Immediately upon Conversion or the end of the Conversion Period, whichever comes first, the Company will issue the Investor a Common Stock Purchase Warrant (the "Warrant") in substantially the form attached hereto as Exhibit C. The Warrant will have an exercise price of $0.50 per share and will have a term of three years from the Investment Date. The number of shares of Common Stock underlying the Warrant will be determined by either of two formulas. In the event that Investor converts all principal and accrued interest on the Note into common shares (or any other equity offering) within the Conversion Period, then the Warrant would be exercisable for a number of shares equal to the dollar amount of the Note (e.g., if an Investor loaned the Company $100,000 and converted his or her $100,000 Note and accrued interest into common stock (or any other equity offering by the Company) within the Conversion Period, then such Investor would receive a Warrant to purchase 100,000 shares of Common Stock at $0.50 per share, plus a number of shares equal to the dollar amount of any interest accrued). In the event that Investor elected not to convert all principal and accrued interest on the Note into common stock (or any other equity offering by the Company) within the Conversion Period, then the Warrant would be exercisable for a number of shares equal to the dollar amount of the Note multiplied by 40% (e.g., if an Investor loaned the Company $100,000 and did not convert his or her $100,000 Note and accrued interest into common stock (or any other equity offering by the Company) within the Conversion Period, then such Investor would receive a Warrant to purchase 40,000 shares of Common Stock at $0.50 per 1 share). Warrants will not be issued for fractional shares. The number of shares of Common Stock underlying the Warrants will be adjusted for any stock splits, combinations or similar events. The securities for which the Warrants are exercisable are referred to as the "Warrant Common." C. Place and Date of Closing: Multiple Closings. The closing of this transaction (the "Initial Closing") will be held at the offices of the Company set forth above on such time and place as the Company and the Investor shall mutually agree (the "Closing Date"). The Company reserves the right to sell additional Notes and Warrants to additional Investors (the "Additional Investors") in one or more subsequent closings (a "Subsequent Closing"). The terms and conditions of any additional Notes and Warrants to be sold at any Subsequent Closing will not be more favorable than the Notes and Warrants sold by the Company to the Investor in the Initial Closing. The Initial Closing and any and all Subsequent Closings are hereinafter referred to collectively as the "Closing"). The term "Investors" as used herein includes any and all Additional Investors. D. Delivery. At the Closing, the Company shall deliver the Notes, dated the Closing Date, to the Investors, and the Investors shall deliver to the Company the principal amount thereof by check or wire transfer. Within 30 days of Conversion , the Company shall deliver the Warrants, dated the Initial Closing Date, to the Investors. Investors converting their Notes into common stock (or any other equity offering by the Company) within the Conversion Period shall deliver the Notes to the Company for cancellation. E. "Piggyback" Registration Rights: Upon conversion of the Note to common stock within the Conversion Period, the Investor shall have the right to require the Company to register with the Securities and Exchange Commission (the "SEC") both the common shares into which the Note was converted and the Warrant Common as part of any subsequent registration of common shares the Company undertakes. If the Investor chooses to convert his Note into any equity offering other than common stock during the Conversion Period, the Registration Rights of such other equity offering, if any, shall supersede any registration rights defined herein. II. Representations and Warranties of the Company. A. Organization and Standing. The Company is a corporation duly organized and validly existing under, and by virtue of, the laws of Colorado and is in good standing under such laws. The Company has all requisite corporate power and authority to own its properties and assets and to carry on its business as presently conducted. The Company is qualified to do business as a foreign corporation in each jurisdiction in which the failure to be so qualified would have materially adverse impact on the business or financial condition of the Company taken as a whole. B. Corporate Power. The Company has all requisite legal and corporate power (i) to execute and deliver this Agreement, the Notes and the Warrants (collectively the "Transaction Documents"), (ii) to sell and issue the Notes and the Warrants pursuant to this Agreement, (iii) to issue the Warrant Common upon exercise of the Warrants and (iv) to carry out and perform its obligations under the 2 terms of the Transaction Documents. C. Subsidiaries. The Company does not presently control, directly or indirectly, or have an ownership interest in any other corporation, partnership, business trust, association or other business entity. D. Capitalization. The authorized capital stock of the Company consists of 100,000,000 shares of Common Stock. The outstanding capital stock of the Company consists of 45,410,513 shares of Common Stock. All of the outstanding shares are duly authorized, validly issued, fully paid and nonassessable. E. Authorization. All corporate action on the part of the Company, its directors and shareholders necessary for the sale and issuance of the Notes and Warrants and the performance of the Company's obligations under the Transaction Documents has been taken or will be taken prior to the Closing. The Notes, the Warrants, and the Warrant Common are hereinafter referred to collectively as the "Securities"). Each of the Transaction Documents, when executed and delivered by the Company, shall constitute a valid, binding and enforceable obligation of the Company, except as the enforcement thereof may be limited by applicable bankruptcy, insolvency, reorganization or similar laws relating to or affecting the enforcement of creditor's rights and to the availability of the remedy of specific performance. The execution and delivery of the Transaction Documents, and the performance by the Company of their various terms, do not violate, conflict with or result in a material breach of (i) the Company's Articles of Incorporation, as amended through the Closing Date; (ii) the Company's Bylaws; (iii) any judgment, order or decree of any court or arbitrator to which the Company is a party; or (iv) any contract, undertaking, indenture or other agreement or instrument by which the Company is now bound or to which it is now a party. The Company is not subject to any judgment, order or decree of any court or arbitrator. Except for notices required or permitted to be filed with certain state and federal securities commissions, which notices the Company agrees to file on a timely basis, the execution, delivery and performance by the Company of the Transaction Documents in compliance with their respective provisions do not require any governmental consent or approval. III. Representations, Warranties of the Investor and Restrictions on Transfer Imposed by the Securities Act of 1933. A. Representations and Warranties of the Investor. Investor represents and warrants to the Company upon acquisition of the Note and the Warrant and upon exercise of the Warrant as follows: 1. All action on the part of the Investor for the authorization, execution, delivery and performance by the Investor of this Agreement has been taken, and this Agreement constitutes a valid and binding obligation of the Investor, enforceable in accordance with its terms, except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws effecting the enforcement of creditor's rights and the availability of the remedy of specific performance. 3 2. The Investor is experienced in evaluating and investing in new companies and companies with limited operating histories such as the Company. 3. The Investor is acquiring the Securities for investment for his or her own account and not with a view to, or for resale in connection with, any distribution. The Investor understands that the Securities to be purchased have not been registered under the Securities Act of 1933, as amended (the "Act") by reason of a specific exemption from the registration provisions of the Act which depends upon, among other things, the bona fide nature of the investment intent as expressed herein. 4. The Investor acknowledges that the Securities must be held indefinitely unless subsequently registered under the Act or an exemption from such registration is available. The Investor is aware of the provisions of Rule 144 promulgated under the Act which permits limited resale of securities purchased in a private placement subject to the satisfaction of certain conditions, including, in case the Investor has held the securities for less than two years or is an affiliate of the Company, among other things: the availability of certain current public information about the Company, the resale occurring not less than one year after a party has purchased and paid for the securities to be sold, the sale being through a "broker's transaction" or in transactions directly with a "market maker," and the number of shares being sold during any three-month period not exceeding specified limitations. 5. The Investor understands that a limited public market now exists for the Common Stock of the Company and that no public market exists for the Warrants. 6. The Investor is a sophisticated investor with such knowledge and experience in financial and business matters so as to be capable of evaluating the merits and risks of a prospective investment in the Securities and who is capable of bearing the economic risks of such investment. 7. In taking any action or performing any role relative to arranging the proposed investment, the Investor has acted solely in the Investor's own interest. Neither the Investor nor any of its agents or employees has acted as an agent of the Company, or as an issuer, underwriter, broker, dealer or investment advisor relative to any of the Securities. B. Legends. Each certificate representing the Securities shall be endorsed with the following legend (in addition to any legend required under applicable state securities laws): THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS OF CERTAIN STATES. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS 4 INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS. The Company need not record a transfer of Securities, unless the conditions specified in the foregoing legends are satisfied. The Company may also instruct its transfer agent not to record the transfer of any of the Securities unless the conditions specified in the foregoing legends are satisfied. C. Removal of Legends and Transfer Restrictions. The legend relating to the Act endorsed on a certificate pursuant to paragraph IVA 8 of this Agreement and the stop transfer instructions with respect to the Securities represented by such certificate shall be removed and the Company shall issue a certificate without such legend to the holder of such Securities if such Securities are registered under the Act and a prospectus meeting the requirements of Section 10 of the Act is available or if such holder provides to the Company an opinion of counsel for such holder of the Securities reasonably satisfactory to the Company, or a no-action letter or interpretive opinion of the staff of the Securities and Exchange Commission (the "Commission") to the effect that a public sale, transfer or assignment of such Securities may be made without registration and without compliance with any restriction such as Rule 144. V. Miscellaneous. A. Waivers and Amendments. With the written consent of the record holders of a majority of the principal amount of the Notes then outstanding, the obligations of the Company and the rights of the holders of the Securities under this Agreement may be waived (either generally or in a particular instance, either retroactively or prospectively and either for a specified period of time or indefinitely), and with the same consent the Company, when authorized by resolution of its Board of Directors, may enter into a supplementary agreement for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Agreement; provided, however, that no such waiver or supplemental agreement shall reduce the above percentage of Securities, the holders of which are required to consent to any waiver or supplemental agreement, without the consent of the record or beneficial holders of all of the Securities, nor increase the obligations of any holder of Securities without such holder's written consent. Upon the effectuation of each such waiver, consent, agreement, amendment or modification the Company shall promptly give written notice thereof to the record holders of the Securities who have not previously consented thereto in writing. Neither this Agreement nor any provisions hereof may be changed, waived, discharged or terminated orally, but only by a signed statement in writing. B. Governing Law. This Agreement shall be governed in all respects by the laws of the State of Hawaii as such laws are applied to agreements between Hawaii residents entered into and to be performed entirely within Hawaii. 5 C. Survival. The representations, warranties, covenants and agreements made herein shall survive any investigation made by the Investor and the Closing of the transactions contemplated hereby. D. Successors and Assigns. Except as otherwise expressly provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors and administrators of the parties hereto. E. Entire Agreement. This Agreement (including the exhibits attached hereto) and the other documents delivered pursuant hereto constitute the full and entire understanding and agreement between the parties with regard to the subjects hereof and thereof. F. Separability of Agreements; Severability of this Agreement. The Company's agreement with each of the Investors is a separate agreement and the sale of the Securities to each of the Investors is a separate sale. Unless otherwise expressly provided herein, the rights of each Investor hereunder are several rights, not rights jointly held with any of the other Investors. If any provision of this Agreement shall be judicially determined to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. G. California Corporate Securities Law. The following provision applies to Investors that are residents of the State of California: THE SALE OF THE SECURITIES WHICH ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF THE SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR PRIOR TO SUCH QUALIFICATION IS UNLAWFUL UNLESS THE SALE OF SECURITIES IS EXEMPT FROM THE QUALIFICATION BY SECTION 25100, 25102, OR 25105 OF THE CALIFORNIA CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS SO EXEMPT. H. Titles and Subtitles. The titles of the paragraphs and subparagraphs of this Agreement are for convenience of reference only and are not to be considered in construing this Agreement. I. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one instrument. J. Delays or Omissions. It is agreed that no delay or omission to exercise any right, power or remedy accruing to the Investor, upon any breach or default of the Company under this Agreement, shall impair any such right, power or remedy, nor shall it be construed to be a waiver of any such breach or default, or any acquiescence therein, or of or in any similar breach or default thereafter occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or 6 default theretofore or thereafter occurring. It is further agreed that any waiver, permit, consent or approval of any kind or character by the Investors of any breach or default under this Agreement, or any waiver by the Investors of any provisions or conditions of this Agreement must be in writing and shall be effective only to the extent specifically set forth in writing and that all remedies, either under this Agreement, or by law or otherwise afforded to the Investors, shall be cumulative and not alternative. K. Notices. All notices, reports and other communications required or permitted hereunder shall be in writing and may be delivered in person, by telecopy with written confirmation, overnight delivery service or U.S. mail, in which event it may be mailed by first-class, certified or registered, postage prepaid, addressed (a) if to an Investor, at such Investor's address set forth in the Schedule of Investors (or such other address as such Investor shall have furnished the Company in writing) and (b) if to the Company at the address set forth at the beginning of this Agreement (or such other address as the Company shall have furnished the Investors in writing) attention of Mark E. Huntley, Ph.D., President and Chief Executive Officer. Each such notice, report or other communication shall for all purposes under this Agreement be treated as effective or having been given when delivered if delivered personally or, if sent by mail, at the earlier of its receipt or 72 hours after the same has been deposited in a regularly maintained receptacle for the deposit of the United States mail, addressed and mailed as aforesaid, or, if sent by telecopier with written confirmation, at the earlier of (i) 24 hours after confirmation of transmission by the sending telecopier machine or (ii) delivery of written confirmation. IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed and delivered by their proper and duly authorized officers or agents as of the date and year first written above. INVESTOR: AQUASEARCH, INC. By: - --------------------------- --------------------------------- (Signature) Earl Fusato - --------------------------- --------------------------------- (Signature) (Print Name) Title: Chief Financial Officer - --------------------------- ------------------------------ (Print Name and Title) 7 EXHIBIT A - SCHEDULE OF INVESTORS
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EX-5.1 5 EXHBITI 5.1 Exhibit 5.1 WILSON SONSINI GOODRICH & ROSATI PROFESSIONAL CORPORATION September 29, 1998 Aquasearch, Inc. 73-4460 Queen Ka'ahumanu Hwy. Suite 110 Kailua-Kona, HI 96740 Re: Registration Statement on Form SB-2 Ladies and Gentlemen: We have examined the Registration Statement on Form SB-2 to be filed with the Securities and Exchange Commission (the "Registration Statement"), in connection with the registration under the Securities Act of 1933, as amended, of the continuous offering of 20,075,648 shares of your Common Stock (the "Shares") and the exercise of Warrants to Purchase Common Stock (the "Warrants"). As your counsel, we have examined the proceedings proposed to be taken in connection with the sale and issuance of the above-referenced securities. In our opinion, the Shares, and the issuance of the shares of your Common Stock upon the exercise of the Warrants, will be legally and validly issued, fully paid and nonassessable. We consent to the use of this opinion as an exhibit to the Registration Statement, and further consent to the use of our name wherever appearing in the Registration Statement, including the Prospectus constituting a part thereof, and any amendment thereto. Very truly yours, /s/Wilson Sonsini Goodrich & Rosati ----------------------------------- WILSON SONSINI GOODRICH & ROSATI Professional Corporation -----END PRIVACY-ENHANCED MESSAGE-----