EXHIBIT 10.4
 

 
AMENDED AND RESTATED
REGISTRATION RIGHTS AGREEMENT
 
THIS REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is entered into as of May
9, 2007, by and between EAU Technologies, Inc., a Delaware corporation (the
“Company”), and Water Science, LLC, a Florida limited liability company (the
“Investor”).
 
RECITALS
 
WHEREAS, prior to the date hereof, the Investor owned warrants to purchase
8,400,000 shares of Common Stock of the Company at an exercise price of $2.76
per share, 6,400,000 of which expire on May 1, 2009 and 2,000,000 of which
expire on September 16, 2008 (collectively, the “Original Warrants”);

WHEREAS, in connection with that certain Agreement Terminating Warrants and
Registration Rights Agreement of even date herewith (the “Termination
Agreement”), by and between the Company and the Investor, the Original Warrants
were cancelled and the Investor was issued (i) a Warrant to purchase 5,169,231
shares of the Company’s Common Stock at an exercise price of $1.30 per share,
which expires on the third anniversary hereof and (ii) a Warrant to purchase
3,230,769 shares of the Company’s Common Stock at an exercise price of $1.30 per
share, which expires on the third anniversary hereof ((i) and (ii),
collectively, the “Warrants”);

WHEREAS, the shares underlying the Original Warrants, together with 1,600,000
shares of the Company’s Common Stock issued to the Investor on May 1, 2006 and
up to 1,000,000 shares of Common Stock issuable upon conversion of that certain
Senior Secured Convertible Promissory Note in the principal amount of $3,000,000
issued to the Investor on September 16, 2005 (“Convertible Note”), were subject
to the registration rights granted to the Investor pursuant to the Registration
Rights Agreement, dated as of September 16, 2005, and the Registration Rights
Agreement, dated as of May 1, 2006 (collectively, the “Initial Registration
Rights Agreements”); and
 
WHEREAS, the Company and the Investor deem it to be in their respective best
interests to set forth the rights of the Investor in connection with the sale of
shares of Common Stock and upon exercise of the Warrants and/or conversion of
the Convertible Note (the “Registrable Shares”) and terminate the Initial
Registration Rights Agreements, and are entering into this Agreement as a
condition to and in connection with the Termination Agreement.
 
NOW, THEREFORE, in consideration of the premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
each of the parties hereto hereby agrees as follows:

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AGREEMENT
 
1.  Registration Rights.
 
(a)  Beginning on the date hereof but no later than 45 days after the date
hereof (the “Registration Period”), the Company shall use its best efforts to
prepare and file with the Securities and Exchange Commission (the “SEC”), a
registration statement and such other documents as may be necessary, and use its
best efforts to have such registration statement declared effective as soon as
reasonably practicable after such filing, so as to permit the registered resale
of the Registrable Shares, for a period of two (2) years following the issuance
of the last Registrable Share; provided, however, that the Registration Period
may be extended to the extent of any delay in (i) the receipt of the
questionnaires from the Investor as required by Section 5(b) below, and (ii)
Investor’s compliance with the beneficial ownership reporting requirements under
Sections 13 and 16 of the Securities Exchange Act of 1934, as amended. The
Company will include in such registration statement the information required
under the Securities Act of 1933, as amended (the “Securities Act”) to be so
included concerning the Investor, as provided by the Investor pursuant to this
Agreement and any other agreements between the parties, including any changes in
such information that may be provided by the Investor in writing to the Company
from time to time.
 
(b) Notwithstanding the foregoing provisions of this Section 1, the Company may
voluntarily suspend the effectiveness of any such registration statement for a
limited time, which in no event shall be longer than 60 days in any three-month
period and no longer than 120 days in any twelve month period, if the Company
has been advised in writing by counsel or underwriters to the Company that the
offering of any Registrable Shares pursuant to the registration statement would
materially adversely affect, or would be improper in view of (or improper
without disclosure in a prospectus), a proposed financing, reorganization,
recapitalization, merger, consolidation, or similar transaction involving the
Company, in which case the Company shall keep such registration statement
effective for an additional period of time beyond two (2) years following the
last issuance of a Registrable Share equal to the number of days the
effectiveness thereof is suspended pursuant to this provision. The Company shall
notify the Investor to such effect, and, upon receipt of such notice, the
Investor shall immediately discontinue any sales of Registrable Shares pursuant
to such registration statement until the Investor has received copies of a
supplemented or amended prospectus or until the Investor is advised in writing
by the Company that the then current prospectus may be used and has received
copies of any additional or supplemental filings that are incorporated or deemed
incorporated by reference in such prospectus.
 
(c) If any event occurs that would cause any such registration statement to
contain a material misstatement or omission or not to be effective and usable
during the period that such registration statement is required to be effective
and usable, the Company shall promptly notify the Investor of such event and, if
requested, the Investor shall immediately cease making offers of Registrable
Shares and return all prospectuses to the Company. The Company shall promptly
file an amendment to the registration statement to correct such misstatement or
omission and use its commercially reasonable efforts to cause such amendment to
be declared effective as soon as practicable thereafter. The Company shall
promptly provide the Investor with revised prospectuses and, following receipt
of the revised prospectuses, the Investor shall be free to resume making offers
of the Registrable Shares. In the event of such an occurrence, the Company shall
keep such registration statement effective for an additional period of time
beyond two (2) years following the last issuance of a Registrable Share equal to
the number of days the effectiveness thereof is suspended pursuant to this
provision.
 
 
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(d) Notwithstanding any provision contained herein to the contrary, the
Company’s obligation to include, or continue to include, Registrable Shares in
any such registration statement under this Section 1 shall terminate to the
extent such shares are eligible for resale under Rule 144(k) promulgated under
the Securities Act. In addition, the Company’s obligation to include, or
continue to include, Registrable Shares in any such registration will be
suspended during any periods during which the Investor is delinquent in his
beneficial ownership reporting requirements under the Securities Exchange Act of
1934, as amended.
 
(e) If and whenever the Company is required by the provisions of this Agreement
to use its commercially reasonable efforts to effect the registration of the
Registrable Shares under the Securities Act for the account of the Investor, the
Company will, as promptly as possible:
 
(i) prepare and file with the SEC a registration statement complying with
applicable requirements under the Securities Act with respect to such securities
and use its commercially reasonable efforts to cause such registration statement
to become and remain effective;

(ii) prepare and file with the SEC such amendments and supplements to such
registration statement and the prospectus used in connection therewith as may be
necessary to keep such registration statement effective and to comply with the
requirements of the Securities Act and the rules and regulations promulgated by
the SEC thereunder relating to the sale or other disposition of the securities
covered by such registration statement; and
 
(iii) furnish to the Investor such numbers of copies of a prospectus complying
with the requirements of the Securities Act, and such other documents as the
Investor may reasonably request in order to facilitate the public sale or other
disposition of the Registrable Shares owned by the Investor, but the Investor
shall not be entitled to use any selling materials other than a prospectus and
such other materials as may be approved by the Company, which approval will not
be unreasonably withheld.
 
(f) As a condition to the inclusion of the Investor’s Registrable Securities in
any registration statement, the Investor will furnish in writing to the Company
such information with respect to the Investor as is required to be disclosed in
the registration statement (and the prospectus included therein) by the
applicable rules, regulations and guidelines of the Securities Exchange
Commission.

(g) The expenses incurred by the Company in connection with action taken by the
Company to comply with this Section 1, including, without limitation, all
registration and filing fees, printing and delivery expenses, accounting fees,
fees and disbursements of counsel to the Company, consultant and expert fees,
and premiums for liability insurance, if the Company chooses to obtain such
insurance, obtained in connection with a registration statement filed to effect
such compliance and all expenses, including counsel fees, of complying with any
state securities laws, shall be paid by the Company. All fees and disbursements
of any counsel, experts, or consultants employed by the Investor shall be borne
by the Investor. The Company shall not be obligated in any way in connection
with any registration pursuant to this Section 1 for any selling commissions or
discounts payable by the Investor to any underwriter or broker of securities to
be sold by the Investor. The Investor agrees that any such selling commissions
or discounts shall be borne by the Investor.
 
 
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(h) The Company will indemnify and hold harmless the Investor, its officers,
directors and each underwriter of such securities, and any person who controls
the Investor or underwriter within the meaning of Section 15 of the Securities
Act (each an “Investor Indemnified Party”), against all claims, actions, losses,
damages, liabilities and expenses, joint or several, to which any of such
persons may become subject under the Securities Act or otherwise, insofar as
such losses, claims, damages, liabilities or actions arise out of or are based
upon any untrue statement of any material fact contained in any registration
statement under which such securities were registered under the Securities Act,
any preliminary prospectus or final prospectus contained therein, or any
amendment or supplement thereof, or arise out of or are based upon the omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading, and will reimburse such Investor Indemnified Party for any
legal and any other expenses reasonably incurred by such Investor Indemnified
Party in connection with investigating or defending any such loss, claim,
damage, liability, or action; provided, however, that the Company will not be
liable in any such case to the extent that any such loss, claim, damage,
liability or action arises directly out of or is based primarily upon an untrue
statement or omission made in said registration statement, said preliminary
prospectus or said prospectus, or said amendment or supplement in reliance upon
and in conformity with written information furnished to the Company by the
Investor or such underwriter specifically for use in the preparation thereof.

(i) At any time when a prospectus relating to the Registrable Shares is required
to be delivered under the Securities Act, the Company will notify the Investor
of the happening of any event, upon the notification or awareness of such event
by an executive officer of the Company, as a result of which the prospectus
included in such registration statement, as then in effect, includes an untrue
statement of material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein not misleading in
light of the circumstances then existing.
 
(j) In the event of any registration of any securities under the Securities Act
pursuant to this Section 1, the Investor agrees to indemnify and hold harmless
the Company, its officers, directors and any person who controls the Company
within the meaning of Section 15 of the Securities Act (each a “Company
Indemnified Party”), against any losses, claims, damages, liabilities, or
actions, joint or several, to which a Company Indemnified Party may become
subject under the Securities Act or otherwise, insofar as such losses, claims,
damages, liabilities, or actions arise out of or are based upon any untrue
statement of any material fact contained in any registration statement under
which such securities were registered under the Securities Act, any preliminary
prospectus or final prospectus contained therein, or any amendment or supplement
thereto, or arise out of or are based upon the omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, in each case to the extent that any such loss, claim,
damage, liability, or action arises out of or is based upon an untrue statement
or omission made in said registration statement, preliminary prospectus or
prospectus or amendment or supplement in reliance upon and in conformity with
written information furnished to the Company by the Investor or any affiliate
(as defined in the Securities Act) of the Investor specifically for use in the
preparation thereof.
 
 
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(k) Any party entitled to indemnification hereunder will (i) give prompt written
notice to the indemnifying party of any claim with respect to which it seeks
indemnification, and (ii) unless in such indemnified party’s reasonable
judgment, based upon advise of counsel, a conflict of interest between such
indemnified and indemnifying parties may exist with respect to such claim,
permit such indemnifying party to assume the defense of such claim with counsel
reasonably satisfactory to the indemnified party. If such defense is assumed,
the indemnified party will not be subject to any liability for any settlement
made by the indemnifying party without its consent (which consent may not be
unreasonably withheld). An indemnifying party who is not entitled to, or elects
not to, assume the defense of a claim will not be obligated to pay the fees and
expenses of more than one counsel for all parties indemnified by such
indemnifying party, based upon advise of counsel, with respect to such claim,
unless in the reasonable judgment of any indemnified party a conflict of
interest may exist between such indemnified party and any other of such
indemnified parties with respect to such claim.
 
(l) With a view to making available to the Investor the benefits of Rule 144
promulgated under the Securities Act, the Company agrees that it will use its
commercially reasonable efforts to maintain registration of its Common Stock
under Section 12 or 15 of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), and to file with the SEC in a timely manner all reports and
other documents required to be filed by an issuer of securities registered under
the Exchange Act so as to maintain the availability of Rule 144. Upon the
request of any record owner, the Company will deliver to such owner a written
statement as to whether it has complied with the reporting requirements of Rule
144.
 
2. Representations and Warranties of the Investor. The Investor hereby
represents and warrants to the Company as follows:
 
(a) The Investor is acquiring the Registrable Shares for its own account, for
investment and not with a view to, or for resale in connection with, any
distribution or public offering thereof within the meaning of the Securities
Act, and applicable state securities laws.
 
(b) The Investor acknowledges that the certificate(s) representing the
Registrable Shares acquired by the Investor shall bear a restrictive legend
substantially as follows:
 
THIS SECURITY HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES ACT OF
1933 (THE “ACT”) OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE OFFERED OR
SOLD UNLESS REGISTERED AND QUALIFIED PURSUANT TO THE APPLICABLE PROVISIONS OF
FEDERAL AND STATE SECURITIES LAWS OR UNLESS AN EXEMPTION FROM SUCH REGISTRATION
OR QUALIFICATION APPLIES. THEREFORE, NO SALE OR TRANSFER OF THIS SECURITY SHALL
BE MADE, NO ATTEMPTED SALE OR TRANSFER SHALL BE VALID, AND THE ISSUER SHALL NOT
BE REQUIRED TO GIVE ANY EFFECT TO ANY SUCH TRANSACTION UNLESS (A) SUCH
TRANSACTION HAS BEEN DULY REGISTERED UNDER THE ACT AND QUALIFIED OR APPROVED
UNDER APPROPRIATE STATE SECURITIES LAWS, OR (B) THE ISSUER HAS FIRST RECEIVED AN
OPINION OF COUNSEL REASONABLY SATISFACTORY TO IT THAT SUCH REGISTRATION,
QUALIFICATION OR APPROVAL IS NOT REQUIRED.
 
 
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(c) The Investor acknowledges that the Registrable Shares will be “restricted
securities” within the meaning of Rule 144 under the Securities Act, are subject
to restrictions on transferability and resale and may not be transferred or
resold except as permitted under the Securities Act and applicable state
securities laws, pursuant to registration or exemption therefrom. The Investor
is aware that the Investor may be required to bear the financial risks of this
investment for an indefinite period of time.
(d) The Investor further represents and warrants that the Investor is an
“accredited investor” within the meaning of Rule 501(a) of Regulation D under
the Securities Act.
 
(e) (i) The Investor has full power and authority to execute and deliver this
Agreement, (ii) the execution and delivery by the Investor of this Agreement and
the performance by it of its obligations hereunder have been authorized by all
necessary action of the Investor, (iii) the Termination Agreement has been duly
and validly executed and delivered by the Investor and constitutes the legal,
valid and binding obligation of the Investor, and (iv) this Agreement is
enforceable against the Investor in accordance with its terms.
 
3. Representations and Warranties of the Company. The Company hereby represents
and warrants to the Investor as follows:
 
(a) The Company is duly incorporated, validly existing and in good standing
under the laws of its state of incorporation, and is duly qualified to do
business as a foreign corporation in all jurisdictions in which the failure to
be so qualified would materially and adversely affect the business or financial
condition, properties or operations of the Company.
 
(b) The Company has duly authorized the issuance and sale of the Registrable
Shares in accordance with the terms of this Agreement (as described herein) by
all requisite corporate action, including the authorization of the Company’s
Board of Directors of the issuance and sale of the Registrable Shares in
accordance herewith, and the execution, delivery and performance of any other
agreements and instruments executed in connection herewith. This Agreement
constitutes a valid and legally binding obligation of the Company, enforceable
in accordance with its terms, except (i) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium, and other laws of general application
affecting enforcement of creditors’ rights generally, (ii) as limited by laws
relating to the availability of specific performance, injunctive relief, or
other equitable remedies, and (iii) to the extent the indemnification provisions
contained herein may be limited by applicable federal or state securities laws.
 
 
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4. Survival; Indemnification. All representations, warranties, covenants and the
indemnification obligations contained in this Agreement shall survive (i) the
acceptance of this Agreement by the Company, (ii) changes in the transactions,
documents and instruments described herein which are not material or which are
to the benefit of the Investor, and (iii) the liquidation or dissolution of the
Investor. The Investor understands the meaning and legal consequences of the
representations, warranties and covenants in Section 2 hereof and that the
Company has relied upon such representations, warranties and covenants in
determining the Investor’s qualification and suitability to purchase Registrable
Shares. The Investor hereby agrees to indemnify, defend and hold harmless the
Company and its respective officers, directors, employees, agents and
controlling persons, from and against any and all losses, claims, damages,
liabilities, expenses (including attorneys’ fees and disbursements), judgments
or amounts paid in settlement of actions arising out of or resulting from the
untruth of any representation of the Investor herein or the breach of any
warranty or covenant of the Investor made herein. Notwithstanding the foregoing,
no representation, warranty, covenant or acknowledgment made herein by the
Investor shall in any manner be deemed to constitute a waiver of any rights
granted to it under the Securities Act or state securities laws or otherwise.
 
5. Additional Rights and Obligations. 

(a) The Initial Registration Rights Agreements are hereby terminated.

(b) The Investor shall timely file all beneficial ownership reports as required
by the Exchange Act.

(b)  In connection with the registration of any Registrable Securities pursuant
to any registration statement, the Investor shall:

(i) within ten (10) days of the date hereof, complete and deliver to the Company
a selling security holder questionnaire to include the information required
under Section 2(f) hereof;

(ii) promptly notify the Company when the Investor has sold such Registrable
Securities; and

(iii) promptly notify the Company in the event that any information supplied by
the Investor in writing for inclusion in such registration statement or related
prospectus or any document referred to therein is untrue or omits to state a
material fact required to be stated therein or necessary to make such
information not misleading.
 
6. Notices. Any notice, request or other document required or permitted to be
given or delivered to the Investor or the Company shall be in writing and shall
be delivered or sent to the Investor at the Investor’s address as shown on the
books of the Company or to the Company at its principal place of business and
shall be deemed received by the Investor or the Company, as the case may be,
upon personal delivery, or upon delivery by overnight courier or three days
following deposit in the U.S. mail (sent registered or certified and postage
prepaid).
 
 
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7. Assignability. This Agreement is not assignable by the Investor, and may not
be modified, waived or terminated except by an instrument in writing signed by
the party against whom enforcement of such modification, waiver or termination
is sought.
 
8. Binding Effect. Except as otherwise provided herein, this Agreement shall be
binding upon and inure to the benefit of the parties and their respective heirs,
executors, administrators, successors, legal representatives and permitted
assigns, and the agreements, representations, warranties and acknowledgments
contained herein shall be deemed to be made by and be binding upon such heirs,
executors, administrators, successors, legal representatives and permitted
assigns.
 
9. Obligations Irrevocable. The obligations of the Investor shall be
irrevocable, except with the consent of the Company, until the issuance of the
Registrable Shares.
 
10. Entire Agreement. This Agreement and the Termination Agreement constitute
the entire agreement of the Investor and the Company relating to the matters
contained herein, superseding all prior contracts or agreements, whether oral or
written.
 
11. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without regard to the
principles of conflicts of law thereof that would require the application of the
laws of any jurisdiction other than Delaware.
 
12. Severability. If any provision of this Agreement or the application thereof
to the Investor or any circumstance shall be held invalid or unenforceable to
any extent, the remainder of this Agreement and the application of such
provision to other subscriptions or circumstances shall not be affected thereby
and shall be enforced to the greatest extent permitted by law.
 
13. Headings. The headings in this Agreement are inserted for convenience and
identification only and are not intended to describe, interpret, define, or
limit the scope, extent or intent of this Agreement or any provision hereof.
 
14. Counterparts. This Agreement may be executed in any number of counterparts,
each of which when so executed and delivered shall be deemed to be an original
and all of which together shall be deemed to be one and the same agreement.
 
(Remainder of Page Intentionally Left Blank)

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IN WITNESS WHEREOF, the parties have caused the execution of this Agreement by
their duly authorized representatives as of the day and the year first above
written.
 
 
EAU TECHNOLOGIES, INC.
 
 
 
 
 
By:  /s/ Wade R. Bradley
 
Wade R. Bradley
 
Chief Executive Officer
   
 
 
 
 
 
WATER SCIENCE, LLC
 
 
 
 
 
By:   /s/ Peter Ullrich
 
Peter Ullrich
 
Sole Member

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