AGREEMENT TERMINATING WARRANTS AND REGISTRATION RIGHTS
EXHIBIT
10.1
AGREEMENT
TERMINATING WARRANTS
AND
REGISTRATION RIGHTS
THIS
AGREEMENT TERMINATING WARRANTS AND REGISTRATION RIGHTS (the “Agreement”)
is
entered into this 9th day of May, 2007, by and between EAU TECHNOLOGIES, INC.,
a
Delaware corporation (“Company”),
WATER
SCIENCE, LLC, a Florida limited liability company (“Water
Science”)
and
▇▇▇▇▇ ▇▇▇▇▇▇▇, a resident of Florida and the sole member of Water Science
(“▇▇▇▇▇▇▇”).
Background
WHEREAS,
the Company issued to Water Science the following warrants to purchase common
stock issued by the Company: (i) a warrant, dated September 16, 2005, to
purchase 2 million shares for a purchase price of $2.76 per share, such warrant
expiring on September 16, 2008; and (ii) a warrant, dated May 1, 2006, to
purchase 6.4 million shares for a purchase price of $2.76 per share, such
warrant expiring on May 1, 2009 (collectively, the “Original
Warrants”);
WHEREAS,
Water Science and the Company executed two registration rights agreements,
one
dated September 16, 2005 and the other May 1, 2006 (collectively, the
“Original
Registration Rights Agreements”)
pursuant to which the Company agreed, among other things, to file a registration
statement with the Securities Exchange Commission for the shares of common
stock
of the Company to be issued to Water Science upon Water Science’s exercise of
the Original Warrants; and
WHEREAS,
the Company and Water Science desire to execute this Agreement to terminate
the
Original Warrants and the Original Registration Rights Agreements, among other
items.
NOW,
THEREFORE, in consideration of the mutual obligations and agreements set forth
herein, the receipt, adequacy and sufficiency of which are hereby acknowledged,
Water Science and the Company hereby covenant and agree as follows:
1. Termination.
The
Original Warrants and the Original Registration Rights Agreements are hereby
unconditionally and irrevocably terminated, effective on the date hereof, and
neither such warrants or agreements are of any force or effect.
2. Issuance
of Replacement Warrants and Replacement Registration Rights
Agreement.
Simultaneously with the execution of this Agreement:
(a) The
Company has issued to Water Science, and Water Science has accepted, the
following warrants, both of which expire, if unexercised, on the third
anniversary of the date hereof (the “Replacement
Warrants”):
| i. |
A
warrant to purchase 5,169,231 shares of EAU common stock for an exercise
price of $1.30 per share (“Exercise
Price”);
and
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| ii. |
A
warrant to purchase 3,230,769 shares of EAU common stock for the
Exercise
Price, as evidenced by the Warrant and Put Agreement of even date
herewith
(the “Put
Warrant”).
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(b) The
Company and Water Science have executed and delivered that certain Registration
Rights Agreement which covers the Replacement Warrants, among other things,
and
supersedes the Original Registration Rights Agreements (the “Replacement
Registration Rights Agreement”).
3. Representations
and Warranties.
To
induce the Company to enter into this Agreement, Water Science hereby makes
the
following representations and warranties to the Company (each of which is
material to, and relied upon by, the Company):
(a) Due
Organization.
Water
Science is a limited liability company duly organized, validly existing and
in
good standing under the laws of the State of Florida and has all necessary
corporate power and authority to own, operate or lease the properties and assets
now owned, operated or leased by it and to carry on its business.
(b) Power
& Authority; Due Authorization & Execution;
Enforceability.
Water
Science has all necessary company power and authority to enter into this
Agreement and each certificate, agreement, document and instrument to be
executed and delivered by Water Science in connection with the transactions
contemplated by this Agreement (collectively, the “Water
Science Ancillary Documents”)
and to
carry out its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby.
This
Agreement and the Water Science Ancillary Documents have been duly authorized,
executed and delivered by Water Science. This Agreement and Water Science
Ancillary Documents each constitute the legal, valid and binding obligation
of
Water Science and, assuming due authorization, execution and delivery by the
Company, will be enforceable against Water Science in accordance with its terms,
subject to the effect, if any, of bankruptcy, insolvency, reorganization,
moratorium and other similar laws affecting the rights of creditors generally
and the effect, if any, of general principles of equity.
(c) No
Conflicts.
The
execution and delivery by Water Science of this Agreement and Water Science
Ancillary Documents and the consummation by Water Science of the transactions
contemplated hereby and thereby do not and will not:
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(i)
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violate
any
law, rule or regulation of, or any order, writ, judgment, injunction,
decree, stipulation, determination or award entered by or with, any
foreign, federal, state or local governmental authority, body, agency,
official, regulatory or administrative agency, body or official,
or
governmental commission, court, tribunal, body, or agency (singularly
and
collectively, the “Governmental
Authority”)
applicable to Water Science;
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(ii)
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require
the consent, approval or action of, or any filing or notice to, any
corporation, firm, person or other entity or any Governmental Authority;
or
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(iii)
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violate
the terms of any instrument, document or agreement to which Water
Science
is a party or bound.
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(d) Title
to the Original Warrants.
Water
Science has good, valid and marketable title to all of the Original Warrants,
free and clear of all Encumbrances (defined below). Water Science has not
(directly or indirectly) exercised, attempted to exercise, or transferred any
of
the Original Warrants.
As
used
in this Agreement, “Encumbrances”
shall
mean any security interest, pledge, lien (whether or not filed or recorded,
whether or not inchoate and whether or not perfected), charge, adverse claim
of
ownership or any other encumbrance of any kind.
4. Representations
and Warranties.
To
induce Water Science to enter into this Agreement, the Company hereby makes
the
following representations and warranties to Water Science (each of which is
material to, and relied upon by Water Science):
(a) Due
Organization.
The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware and has all necessary corporate power
and authority to own, operate or lease the properties and assets now owned,
operated or leased by the Company and to carry on its business.
(b) Power
& Authority; Due Authorization & Execution;
Enforceability.
The
Company has all necessary company power and authority to enter into this
Agreement and each other certificate, agreement, document and instrument to
be
executed and delivered by the Company in connection with the transactions
contemplated by this Agreement (including without limitation, the Put Warrant)
(collectively, the “Company
Ancillary Documents”)
and to
carry out its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby.
This
Agreement and the Company Ancillary Documents have been duly authorized,
executed and delivered by the Company. This Agreement and The Company Ancillary
Documents each constitute the legal, valid and binding obligation of the Company
and, assuming due authorization, execution and delivery by Water Science, will
be enforceable against the Company in accordance with its terms, subject to
the
effect, if any, of bankruptcy, insolvency, reorganization, moratorium and other
similar laws affecting the rights of creditors generally and the effect, if
any,
of general principles of equity.
(c) No
Conflicts.
The
execution and delivery by the Company of this Agreement and the Company
Ancillary Documents and the consummation by the Company of the transactions
contemplated hereby and thereby do not and will not:
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(i)
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violate
any
law, rule or regulation of, or any order, writ, judgment, injunction,
decree, stipulation, determination or award entered by or with, any
Governmental Authority
applicable to the Company;
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(ii)
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require
the consent, approval or action of, or any filing or notice to, any
corporation, firm, person or other entity or any Governmental Authority;
or
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(iii)
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violate
the terms of any instrument, document or agreement to which the Company
is
a party or bound.
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5. Release.
Water
Science hereby covenants not to ▇▇▇, and releases and forever discharges, the
Company and its directors, officers, agents, employees, subsidiaries,
affiliates, successors, and assigns from any and all claims, demands, actions,
causes of action, liabilities, losses, costs and damages of every kind or nature
whatsoever, whether known or unknown, whether or not previously asserted, even
though unexpected, from the beginning of time, (A) which arise out of actions
or
omissions occurring on or prior to the date hereof or which arise out of
conditions existing on or prior to the date hereof, and (B) which are related
to
the Original Warrants and/or the Original Registration Rights Agreement.
This
release is intended to be a general release relating only to the Original
Warrants and the Original Registration Rights Agreements, including, without
limitation, any penalties pursuant to Section 1(b) of both such registration
rights agreements. Notwithstanding anything herein to the Agreement to the
contrary, nothing in this release shall release the Company for any claim for
a
breach of this Agreement.
Water
Science hereby represents and warrants to the Company that Water Sceince has
not
(directly or indirectly) conveyed, sold, transferred or assigned (expressly,
by
operation of law or otherwise) to any other person or entity any of the claims
or actions it is releasing in this Section 5.
This
release shall survive without limitation.
6. Agreement
Regarding Put Right.
Water
Science and ▇▇▇▇▇▇▇ hereby each agree that neither shall take any action
(directly or indirectly) as a shareholder of the Company to cause the Company
(including, without limitation, its board of directors) to terminate the put
rights of the Company set forth in the Put Warrant, or to cause the Company
(including, without limitation, its board of directors) to waive or release
such
rights in any manner. Water Science and ▇▇▇▇▇▇▇ hereby each agree to execute
and
deliver any additional documents or instruments reasonably requested by the
Company to acknowledge their agreement to the foregoing or to further effectuate
the foregoing, including, without limitation, executing a proxy or a voting
agreement.
7. Agreement
Regarding Convertible Note.
Water
Science and ▇▇▇▇▇▇▇ hereby each acknowledge and agree that, notwithstanding
Sections 9(a)(iv) and 9(a)(v) of that certain Senior Secured Convertible
Promissory Note (“Convertible
Note”),
dated
as of September 16, 2005, in the principal amount of $3,000,000 and payable
to
the order of Water Science, (a) the issuance of neither the Original Warrants
nor the Replacement Warrants shall cause an adjustment to the Conversion Price
(as defined in the Convertible Note), and (b) as of the date hereof, the
Conversion Price of the Convertible Note shall be deemed to be
$3.00.
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8. Acknowledgments:
By
executing this Agreement, Water Science and ▇▇▇▇▇▇▇ each certify to the Company
that:
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(i)
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it/he
has carefully read and fully understands the terms and provisions
of this
Agreement:
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(ii)
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it/he
has been encouraged to consult with an attorney before
signing this Agreement;
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(iii)
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it/he
agrees to the terms of this Agreement knowingly, voluntarily, without
intimidation, coercion or pressure, as its/his own free act and deed,
and
with full understanding that it/he is waiving and relinquishing certain
rights, claims, remedies, damages, and/or causes of action as stated
in
this Agreement; and
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(iv)
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that
no promise or inducement has been offered or made except as set forth
or
referenced herein.
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9. General
Provisions.
(a) Entire
Agreement.
This
Agreement constitutes the entire agreement and understanding of Water Science,
▇▇▇▇▇▇▇ and the Company with respect to the subject matter of this Agreement
and
supersedes and terminates all other prior commitments, arrangements or
understandings, whether oral or written, between Water Science, ▇▇▇▇▇▇▇ and
the
Company with respect to the subject matter of this Agreement.
(b) Modification.
This
Agreement may not be modified or amended except by an instrument in writing
executed by Water Science and the Company.
(c) Binding.
This
Agreement shall be binding upon the parties hereto and their respective
successors and assigns.
(d) Counterparts.
This
Agreement may be executed with multiple signature pages in one or more
counterparts, and fully executed counterparts shall be considered one and the
same instrument.
(e) Governing
Law.
This
Agreement shall be governed and construed in accordance with the laws of the
State of Georgia.
(f) Severability.
If any
provision of this Agreement or any of the provisions of the exhibits attached
hereto is prohibited by or invalid under applicable law, such provision will
be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this
Agreement or the exhibits attached hereto.
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(g) Further
Assurances.
Water
Science and ▇▇▇▇▇▇▇ hereby agree to execute all such further and additional
documents as shall be reasonably necessary to carry out the provision of this
Agreement.
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IN
WITNESS WHEREOF, the undersigned have executed and delivered this Agreement
as
of the date first set forth above.
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Water
Science,
LLC
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By
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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By:
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
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▇▇▇▇
▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇
▇▇▇▇▇▇▇, Manager
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Chief
Executive Officer
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▇▇▇▇▇▇▇
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/s/
▇▇▇▇▇ ▇▇▇▇▇▇▇
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▇▇▇▇▇
▇▇▇▇▇▇▇
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