Document:

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                                                                    EXHIBIT 10.7

                          REGISTRATION RIGHTS AGREEMENT

         This Registration Rights Agreement ("Agreement"), dated as of June 14,
2000, is made by and between Aquasearch, Inc., a Colorado corporation
("Company"), and Alpha Venture Capital, Inc., a Cook Islands corporation (the
"Subscriber").

                                    Recitals

         WHEREAS, upon the terms and subject to the conditions of the Common
Stock Purchase Agreement ("Purchase Agreement"), between the Subscriber and the
Company, the Company has agreed to issue and sell to the Subscriber up to ten
million dollars ($10,000,000) of the common stock of the Company ("Subscribed
Shares") par value $.0001 per share (the "Common Stock"), and

         WHEREAS, pursuant to the terms of the Purchase Agreement the Company
will issue to the Subscriber warrants: (i) upon the execution hereof, to
purchase one hundred fifty thousand (150,000) shares of Common Stock at an
exercise price equal to eighty percent (80%) of the closing bid price of the
Common Stock on the date hereof (the "Initial Warrant"); (ii) upon the
effectiveness of the Registration Statement required to filed pursuant to
Section 2 hereof, to purchase one million, three hundred fifty thousand
(1,350,000) shares of Common Stock at an exercise price equal to eighty percent
(80%) of the average Market Price of the Common Stock on the last five trading
days immediately prior to the date that such Registration Statement is declared
effective by the Securities and Exchange Commission (the "Registration
Warrant"); and (iii) to purchase a maximum of nine hundred and fifty thousand
(950,000) shares of Common Stock ("Further Warrants") on a pro rata basis in
conjunction with the draw downs, as set forth in the Purchase Agreement,
exercisable at the closing bid price, at the date of each draw down.

         WHEREAS, to induce the Subscriber to execute and deliver the Purchase
Agreement, the Company has agreed to provide certain registration rights under
the Securities Act of 1933, as amended, and the rules and regulations
thereunder, or any similar successor statute (collectively, "Securities Act"),
and applicable state securities laws with respect to the Subscribed Shares;

         NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and the
Subscriber hereby agree as follows:

         1.       DEFINITIONS.

         (a)      As used in this Agreement, the following terms shall have the
following meaning:

         (i)      "Effective Date" means the date of this Agreement.

         (ii)     "Subscriber", has the meaning set forth in the preamble to
this Agreement.

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         (iii)    "Register", "registered" and "registration" refer to a
registration effected by preparing and filing a Registration Statement or
Statements in compliance with the Securities Act and pursuant to Rule 415 under
the Securities Act or any successor rule providing for offering securities on a
delayed or continuous basis ("Rule 415"), and the declaration or ordering of
effectiveness of such Registration Statement by the United States Securities and
Exchange Commission (the "SEC").

         (iii)    "Registrable Securities" means the Subscribed Shares and the
Warrants.

         (iv)     "Registration Statement" means a registration statement of the
Company under the Securities Act.

         (v)      "Warrant" means the Initial Warrant, Registration Warrant, and
any Further Warrants.

         (b)      Capitalized terms used herein and not otherwise defined herein
shall have the respective meanings set forth in the Purchase Agreement.

         2.       REGISTRATION.

         (a)      MANDATORY REGISTRATION. The Company shall prepare and file
with the SEC, no later than twenty (20) business days after the Effective Date,
a Registration Statement on Form SB-2 ("Registration Statement"), covering a
sufficient number of shares of Common Stock for the Subscribers to cover the
registration of the ten million dollars ($10,000,000) of Subscribed Shares and
the conversion of the Warrants based on the closing bid price of the Common
Stock as of the most recent practicable date, and in any event not less than
20,000,000 shares of the Common Stock. Such Registration Statement shall state
that, in accordance with the Securities Act, it also covers such indeterminate
number of additional shares of Common Stock as may become issuable to prevent
dilution resulting from stock splits, or stock dividends. If at any time (i) the
number of Subscribed Shares and (ii) the number of shares of Common Stock
issuable upon exercise of the Warrants exceeds the aggregate number of shares of
Common Stock then registered, the Company shall, within ten (10) business days
after receipt of written notice from the Subscriber, file with the SEC an
additional Registration Statement on Form SB-2 or any other applicable
registration statement, to register (i) Subscribed Shares and (ii) the shares of
Common Stock issuable upon exercise of the Warrants that exceed the aggregate
number of shares of Common Stock already registered.

         (b)      PAYMENT BY THE COMPANY. If the Registration Statement covering
the Registrable Securities required to be filed by the Company pursuant to
Section 2(a) hereof is not declared effective within one hundred and fifty (150)
days from the Effective Date (i) for any reason other than the requirement by
the SEC of modifications to the structure of the transactions contemplated
hereby that are unacceptable to the Company or the Subscriber, then the
commitment contained in the Common Stock Purchase Agreement and in this
Agreement (the "Commitment") shall terminate and the Subscriber shall retain the
Initial Warrant, the

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Registration Warrant (which shall be exercisable at a price equal to eighty
percent (80%) of the closing bid price of the Common Stock on the date hereof)
and the non-refundable fee of $17,500 to cover legal fees and expenses incurred
by Subscriber or (ii) because the SEC has required modification of the structure
of the transactions contemplated hereby that are unacceptable to the Company or
the Subscriber, then the Commitment shall terminate and the Subscriber shall
retain the Initial Warrant and the non-refundable fee of $17,500 to cover legal
fees and expenses incurred by Subscriber.

         The Company acknowledges that its failure to have the Registration
Statement declared effective within one hundred (150) days from the Effective
Date (for any reason other than the requirement by the SEC of modifications to
the structure of the transactions contemplated hereby that are unacceptable to
the Company or the Subscriber) shall cause the Subscriber to suffer damages in
an amount that shall be difficult to ascertain. Accordingly, the parties agree
that it is appropriate to include in this Agreement a provision for liquidated
damages. The parties acknowledge and agree that the liquidated damages provision
set forth in this section represents the parties' good faith effort to quantify
such damages and, as such, agree that the form and amount of such liquidated
damages are reasonable and will not constitute a penalty. The payment of
liquidated damages shall not relieve the Company from its obligations to
register the Common Stock and deliver the Common Stock pursuant to the terms of
this Agreement, the Purchase Agreement and the Subscribed Shares.

         3.       OBLIGATION OF THE COMPANY. In connection with the registration
of the Registrable Securities, the Company shall do each of the following:

         (a)      Prepare promptly, and file with the SEC within twenty (20)
days of the Effective Date, a Registration Statement with respect to not less
than the number of Registrable Securities provided in Section 2(a) above, and,
thereafter, use all diligent efforts to cause the Registration Statement
relating to the Registrable Securities to become effective the earlier of (a)
five (5) business days after notice from the Securities and Exchange Commission
that the Registration Statement may be declared effective, or (b) one hundred
fifty (150) days after the Effective Date, and keep the Registration Statement
effective at all times until the earliest of (i) the date that is one year after
the completion of the last Closing Date under the Purchase Agreement, (ii) the
date when the Subscriber may sell all Registrable Securities under Rule 144
without volume limitations, or (iii) the date the Subscriber no longer owns any
of the Registrable Securities (collectively, the "Registration Period"), which
Registration Statement (including any amendments or supplements, thereto and
prospectuses contained therein) shall not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading;

         (b)      Prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to the Registration Statement and the
prospectus used in connection with the Registration Statement as may be
necessary to keep the Registration Statement effective at all times during the
Registration Period, and, during the Registration Period, and to comply with the
provisions of the Securities Act with respect to the disposition of

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all Registrable Securities of the Company covered by the Registration Statement
until the expiration of the Registration Period.

         (c)      Permit a single firm of counsel designated by Subscriber to
review the Registration Statement and all amendments and supplements thereto a
reasonable period of time (but not less than one (1) Business Day) prior to
their filing with the SEC, and not file any document in a form to which such
counsel reasonably objects.

         (d)      Notify Subscriber and Subscriber's legal counsel identified to
the Company (which, until further notice, shall be deemed to be Krieger &
Prager, LLP, ATTN: Samuel Krieger, Esq.; "SUBSCRIBER'S COUNSEL") (and, in the
case of (i)(A) below, not less than one (1) Business Day prior to such filing)
and (if requested by any such person) confirm such notice in writing no later
than one (1) Business Day following the day (i): (A) when a prospectus or any
prospectus supplement or post-effective amendment to the Registration Statement
is proposed to be filed; (B) whenever the SEC notifies the Company whether there
will be a "review" of such Registration Statement; (C) whenever the Company
receives (or a representative of the Company receives on its behalf) any oral or
written comments from the SEC respect of a Registration Statement (copies or, in
the case of oral comments, written or oral summaries of such comments shall be
promptly furnished by the Company to Subscriber's Counsel); and (D) with respect
to the Registration Statement or any post-effective amendment, when the same has
become effective; (ii) of any request by the SEC or any other Federal or state
governmental authority for amendments or supplements to the Registration
Statement or the prospectus or for additional information; (iii) of the issuance
by the SEC of any stop order suspending the effectiveness of the Registration
Statement covering any or all of the Registrable Securities or the initiation of
any proceedings for that purpose; (iv) if at any time any of the representations
or warranties of the Company contained in any agreement (including any
securities purchase agreement) contemplated hereby ceases to be true and correct
in all material respects; (v) of the receipt by the Company of any notification
with respect to the suspension of the qualification or exemption from
qualification of any of the Registrable Securities for sale in any jurisdiction,
or the initiation or threatening of any proceeding for such purpose; and (vi) of
the occurrence of any event that to the knowledge of the Company makes any
statement made in the Registration Statement or the prospectus or any document
incorporated or deemed to be incorporated therein by reference untrue in any
material respect or that requires any revisions to the Registration Statement,
the prospectus or other documents so that, in the case of the Registration
Statement or the prospectus, as the case may be, it will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading. In addition, the
Company shall furnish Subscriber's Counsel with copies of all intended written
responses to the comments contemplated in clause (C) of this Section not later
than one (1) Business Day in advance of the filing of such responses with the
SEC so that Subscriber shall have the opportunity to comment thereon.

         (e)      Furnish to Subscriber, (i) promptly after the same is prepared
and publicly distributed, filed with the SEC, or received by the Company, one
(1) copy of the Registration Statement, each preliminary prospectus and the
prospectus, and each amendment or supplement

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thereto, and (ii) such number of copies of a prospectus, including a preliminary
prospectus, and all amendments and supplements thereto and such other documents,
as the Subscriber may reasonably request in order to facilitate the disposition
of the Registrable Securities owned by the Subscriber;

         (f)      Use all diligent efforts to (i) register and/or qualify the
Registrable Securities covered by the Registration Statement under such other
securities or blue sky laws of such jurisdictions as the Subscriber may
reasonably request and in which significant volumes of shares of Common Stock
are traded, (ii) prepare and file in those jurisdictions such amendments
(including post-effective amendments) and supplements to such registrations and
qualifications as may be necessary to maintain the effectiveness thereof at all
times during the Registration Period, (iii) take such other actions as may be
necessary to maintain such registrations and qualification in effect at all
times during the Registration Period, and (iv) take all other actions reasonably
necessary or advisable to qualify the Registrable Securities for sale in such
jurisdictions: PROVIDED, HOWEVER, that the Company shall not be required in
connection therewith or as a condition thereto to (A) qualify to do business in
any jurisdiction where it would not otherwise be required to qualify but for
this Section 3(f), (B) subject itself to general taxation in any such
jurisdiction, (C) file a general consent to service of process in any such
jurisdiction, (D) provide any undertakings that cause more than nominal expense
or burden to the Company or (E) make any change in its charter or by-laws or any
then existing contracts, which in each case the Board of Directors of the
Company determines to be contrary to the best interests of the Company and its
stockholders;

         (g)      As promptly as practicable after becoming aware of such event,
notify the Subscriber of the happening of any event of which the Company has
knowledge, as a result of which the prospectus included in the Registration
Statement, as then in effect, includes any untrue statement of a material fact
or omits to state a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading ("Registration Default"), and uses all diligent
efforts to promptly prepare a supplement or amendment to the Registration
Statement or other appropriate filing with the SEC to correct such untrue
statement or omission, and any other necessary steps to cure the Registration
Default, and deliver a number of copies of such supplement or amendment to the
Subscriber as the Subscriber may reasonably request. Failure to cure the
Registration Default within ten (10) business days shall result in the Company
including liquidated damage penalty of $1,000 per day for so long as more than
10,000 shares of Common Stock are held by the Subscriber;

         (h)      As promptly as practicable after becoming aware of such event,
notify the Subscriber (or, in the event of an underwritten offering, the
managing underwriters) of the issuance by the SEC of any notice of effectiveness
or any stop order or other suspension of the effectiveness of the Registration
Statement at the earliest possible time;

         (i)      Use its commercially reasonable efforts, if eligible, either
to (i) cause all the Registrable Securities covered by the Registration
Statement to be listed on a national securities exchange and on each additional
national securities exchange on which securities of the same

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class or series issued by the Company are then listed, if any, if the listing of
such Registrable Securities is then permitted under the rules of such exchange,
or (ii) secure designation of all the Registrable Securities covered by the
Registration Statement as a National Association of Securities Dealers Automated
Quotations System ("Nasdaq) "Small Capitalization" within the meaning of Rule
11Aa2-1 of the SEC under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the quotation of the Registrable Securities on the Nasdaq
Small Cap Market; or if, despite the Company's commercially reasonable efforts
to satisfy the preceding clause (i) or (ii), the Company is unsuccessful in
doing so, to secure NASD authorization and quotation for such Registrable
Securities on the over-the-counter bulletin board and, without limiting the
generality of the foregoing, to arrange for at least two market makers to
register with the National Association of Securities Dealers, Inc. ("NASD") as
such with respect to such registrable securities; PROVIDED, HOWEVER, that the
Subscriber acknowledges that the Company does not currently meet the
requirements for listing on a national securities exchange or the Nasdaq Small
Cap Market pursuant to (i) or (ii) and that nothing in this section shall be
construed to require the Company to pursue such qualification until such time as
the Company satisfies such requirements for a period of not less than forty-five
(45) days:

         (j)      Provide a transfer agent for the Registrable Securities not
later than the effective date of the Registration Statement;

         (k)      Cooperate with the Subscriber to facilitate the timely
preparation and delivery of certificates for the Registrable Securities to be
offered pursuant to the Registration Statement and enable such certificates for
the Registrable Securities to be in such denominations or amounts as the case
may be, as the Subscriber may reasonably request and registration in such names
as the Subscriber may request; and, within five (5) business days after a
Registration Statement which includes Registrable Securities is ordered
effective by the SEC, the Company shall deliver, and shall cause legal counsel
selected by the Company to deliver, to the transfer agent for the Registrable
Securities (with copies to the Subscriber) an appropriate instruction and
opinion of such counsel, if so required by the Company's transfer agent; and

         (l)      Take all other reasonable actions necessary to expedite and
facilitate distribution to the Subscriber of the Registrable Securities pursuant
to the Registration Statement.

         4.       OBLIGATIONS OF THE SUBSCRIBER. In connection with the
registration of the Registrable Securities, the Subscriber shall have the
following obligations;

         (a)      It shall be a condition precedent to the obligations of the
Company to complete the registration pursuant to this Agreement with respect to
the Registrable Securities of the Subscriber that the Subscriber shall timely
furnish to the Company such information regarding itself, the Registrable
Securities held by it, and the intended method of disposition of the Registrable
Securities held by it, as shall be reasonably required to effect the
registration of such Registrable Securities and shall timely execute such
documents in connection with such registration as the Company may reasonably
request.

         (b)      The Subscriber by such Subscriber's acceptance of the
Registrable Securities

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agrees to cooperate with the Company as reasonably requested by the Company in
connection with the preparation and filing of the Registration Statement
hereunder; and

         (c)      The Subscriber agrees that, upon receipt of any notice from
the Company of the happening of any event of the kind described in Section 3(g)
or 3(h) above, the Subscriber will immediately discontinue disposition of
Registrable Securities pursuant to the Registration Statement covering such
Registrable Securities until the Subscriber receives the copies of the
supplemented or amended prospectus contemplated by Section 3(g) or 3(h) and, if
so directed by the Company, the Subscriber shall deliver to the Company (at the
expense of the Company) or destroy (and deliver to the Company a certificate of
destruction) all copies in the Subscriber's possession, of the prospectus
covering such Registrable Securities current at the time of receipt of such
notice.

         5.       EXPENSES OF REGISTRATION. All reasonable expenses, other than
underwriting discounts and commissions incurred in connection with
registrations, filing or qualifications pursuant to Section 3, but including,
without limitations, all registration, listing, and qualifications fees,
printers and accounting fees, the fees and disbursements of counsel for the
Company, shall be borne by the Company. Nothing in this paragraph 5 shall be
construed as obligating the Company to pay legal fees to Subscriber's counsel in
excess of the non-refundable fee $17,500 referenced in Section 2(b) hereof.

         6.       INDEMNIFICATION. After Registrable Securities are included in
a Registration Statement under this Agreement:

         (a)      To the extent permitted by law, the Company will indemnify and
hold harmless, the Subscriber, the directors, if any, of such Subscriber, the
officers, if any, of such Subscriber, each person, if any, who controls the
Subscriber within the meaning of the Securities Act or the Exchange Act (each,
an "Indemnified Person"), against any losses, claims, damages, liabilities or
expenses (joint or several) incurred (collectively, "Claims") to which any of
them may become subject under the Securities Act, the Exchange Act or otherwise,
insofar as such Claims (or actions or proceedings, whether commenced or
threatened, in respect thereof) arise out of or are based upon: (i) any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement or any post-effective amendment thereof or the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, (ii) any
untrue statement or alleged untrue statement of a material fact contained in any
preliminary prospectus if used prior to the effective date of such Registration
Statement, or contained in the final prospectus (as amended or supplemented, if
the Company files any amendment thereof or supplement thereto with the SEC) or
the omission or alleged omission to state therein any material fact necessary to
make the statements made therein, in the light of the circumstances under which
the statements therein were made, not misleading or (iii) any violation or
alleged violation by the Company of the Securities Act, the Exchange Act, any
state securities law or any rule or regulation under the Securities Act, the
Exchange Act or any state securities law (the matters in the foregoing clauses
(i) through (iii) being collectively referred to as "Violations"). The Company
shall reimburse the Subscriber, promptly as such expenses are incurred and are
due and payable, for any reasonable legal fees or

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other reasonable expenses incurred by them in connection with investigating or
defending any such Claim. Notwithstanding anything to the contrary contained
herein, the indemnification agreement contained in this Section 6(a) shall not
(i) apply to any Claims arising out of or based upon a Violation which occurs in
reliance upon and in conformity with information furnished in writing to the
Company by or on behalf of any Indemnified Person expressly for use in
connection with the preparation of the Registration Statement or any such
amendment thereof or supplement thereto, if such prospectus was timely made
available by the Company pursuant to Section 3(b) hereof; (ii) with respect to
any preliminary prospectus, inure to the benefit of any such person from whom
the person asserting any such Claim purchased the Registrable Securities that
are the subject thereof (or to the benefit of any person controlling such
person) if the untrue statement or omission of material fact contained in the
preliminary prospectus was corrected in the prospectus, as then amended or
supplemented, if such prospectus was timely made available by the Company
pursuant to Section 3(b) hereof; (iii) be available to the extent such Claim is
based on a failure of the Subscriber to deliver or cause to be delivered the
prospectus made available by the Company; or (iv) apply to amounts paid in
settlement of any Claim if such settlement is effected without the prior written
consent of the Company, which consent shall not be unreasonably withheld. The
Subscriber will indemnify the Company, its officers, directors and agents
(including legal counsel) against any claims arising out of or based upon a
Violation which occurs in reliance upon and in conformity with information
furnished in writing to the Company, by or on behalf of such Subscriber,
expressly for use in connection with the preparation of the Registration
Statement, subject to such limitations and conditions set forth in the previous
sentence. Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of the Indemnified Person or Indemnified
Party.

         (b)      Promptly after receipt by an Indemnified Person under this
Section 6 of notice of the commencement of any action (including any
governmental action), such Indemnified Person shall, if a Claim in respect
thereof is to be made against any indemnifying party under this Section 6,
deliver to the indemnifying party a written notice of the commencement thereof
and the indemnifying party shall have the right to participate in, and, to the
extent the indemnifying party so desires, jointly with any other indemnifying
party similarly noticed, to assume control of the defense thereof with counsel
mutually satisfactory to the indemnifying party and the Indemnified Person, as
the case may be; PROVIDED, HOWEVER, that an Indemnified Person shall have the
right to retain its own counsel with the reasonable fees and expenses to be paid
by the indemnifying party, if, in the reasonable opinion of counsel retained by
the indemnifying party, the representation by such counsel of the Indemnified
Person and the indemnifying party would be inappropriate due to actual or
potential differing interests between such Indemnified Person and any other
party represented by such counsel in such proceeding. In such event, the Company
shall pay for only one separate legal counsel for the Subscriber selected by the
Subscriber. The failure to deliver written notice to the indemnifying party
within a reasonable time of the commencement of any such action shall not
relieve such indemnifying party of any liability to the Indemnified Person under
this Section 6, except to the extent that the indemnifying party is prejudiced
in its ability to defend such action. The indemnification required by this
Section 6 shall be made by periodic payments of the amount thereof during the
course of the investigation or defense, as such expense, loss, damage or
liability is incurred and is due and payable.

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         7.       CONTRIBUTION. To the extent any indemnification by an
indemnifying party is prohibited or limited by law, the indemnifying party
agrees to make the maximum contribution with respect to any amounts for which it
would otherwise be liable under Section 6 to the fullest extent permitted by
law; PROVIDED, HOWEVER, that (a) no contribution shall be made under
circumstances where the maker would not have been liable for indemnification
under the fault standards set forth in Section 6; (b) no seller of Registrable
Securities guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any seller
of Registrable Securities who was not guilty of such fraudulent
misrepresentation; and (c) contribution by any seller of Registrable Securities
shall be limited in amount to the net amount of proceeds received by such seller
from the sale of such Registrable Securities.

         8.       REPORTS UNDER EXCHANGE ACT. With a view to making available to
the Subscriber the benefits of Rule 144 promulgated under the Securities Act or
any other similar rule or regulation of the SEC that may at any time permit the
Subscriber to sell securities of the Company to the public without registration
("Rule 144"), the Company agrees to use its reasonable best efforts to:

         (a)      make and keep public information available, as those terms are
understood and defined in Rule 144;

         (b)      file with the SEC in a timely manner all reports and other
documents required of the Company under the Exchange Act; and

         (c)      furnish to the Subscriber so long as the Subscriber owns
Registrable Securities, promptly upon request, (i) a written statement by the
Company that it has complied with the reporting requirements of Rule 144, the
Securities Act and the Exchange Act, (ii) a copy of the most recent annual or
quarterly report of the Company and such other reports and documents so filed by
the Company and (iii) such other information as may be reasonably requested to
permit the Subscribers to sell such securities pursuant to Rule 144 without
registration.

         9.       MISCELLANEOUS.

         (a)      OTHER FUNDING. The Company represents and warrants that the
Company is not at present engaged in discussions, and will not be so engaged,
with any persons, except the Subscriber for the placement of any equity
financing for the Company via any offerings and the Company will not be
permitted to issue any of its equity securities (or instruments convertible into
or exercisable for equity securities) in any offerings, except to the Subscriber
during the period from the date of this Agreement until May 25, 2001, or until
the minimum amount of ten million dollars ($10,000,000) of the Common Stock has
been sold to the Subscriber, except for (i) the scheduled Regulation D financing
in the amount up to four million dollars ($4,000,000.00) which is to be
completed by the Company on or before September 4, 2000 and (ii) the issuance of
equity securities (or instruments convertible into or exercisable for equity
securities) to strategic partners and/or in connection with mergers and
acquisitions.

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         (b)      REGISTERED OWNERS. A person or entity is deemed to be a holder
of Registrable Securities whenever such person or entity owns of record such
Registrable Securities. If the Company receives conflicting instructions,
notices or elections from two or more persons or entities with respect to the
same Registrable Securities, the Company shall act upon the basis of
instructions, notice or election received from the registered owner of such
Registrable Securities.

         (c)      RIGHTS CUMULATIVE; WAIVERS. The rights of each of the parties
under this Agreement are cumulative. The rights of each of the parties hereunder
shall not be capable of being waived or varied other than by an express waiver
or variation in writing. Any failure to exercise or any delay in exercising any
of such rights shall not operate as a waiver or variation of that or any other
such right. Any defective or partial exercise of any of such rights shall not
preclude any other or further exercise of that or any other such right. No act
or course of conduct or negotiation on the part of any party shall in any way
preclude such party from exercising any such right or constitute a suspension or
any variation of any such right.

         (d)      BENEFIT; SUCCESSORS BOUND. This Agreement and the terms,
covenants, conditions, provisions, obligations, undertakings, rights, and
benefits hereof, shall be binding upon, and shall inure to the benefit of, the
undersigned parties and their heirs, executors, administrators, representatives,
successors, and permitted assigns.

         (e)      ENTIRE AGREEMENT. This Agreement contains the entire agreement
between the parties with respect to the subject matter hereof. There are no
promises, agreements, conditions, undertakings, understandings, warranties,
covenants or representations, oral or written, express or implied, between them
with respect to this Agreement or the matters described in this Agreement,
except as set forth in this Agreement and in the other documentation relating to
the transactions contemplated by this Agreement. Any such negotiations,
promises, or understandings shall not be used to interpret or constitute this
Agreement.

         (f)      ASSIGNMENT. The rights to have the Company register
Registrable Securities pursuant to this Agreement may be assigned by the
Subscribers to any transferee, only if: (a) the assignment relates to not less
than one million dollars ($1,000,000) of Registrable Securities and the
Transferee is an Institutional Accredited Investor under Regulation D; (b) the
Company receives a legal opinion in form and substance satisfactory to the
Company that the proposed transfer complies with federal and state securities
laws and does not adversely effect the validity of the transactions executed (or
to be executed) under this Agreement and the Purchase Agreement under federal
and state securities laws; (c) the assignment requires that the Transferee be
bound by all of the provisions contained in this Agreement, and Subscriber, the
Company and the transferee or assignee (the "Transferee") enter into a written
agreement, which shall be enforceable by the Company against the Transferee and
by the Transferee against the Company, to assign such rights; and (d)
immediately following such transfer or assignment the further disposition of
such securities by the transferee or assignee is restricted under the Securities
Act and applicable state securities laws. In the event of any delay in filing or
effectiveness of the Registration Statement as a result of such assignment, the
Company shall not be liable for any damages arising from such delay, or the
payments set forth in Section 2(c) hereof.

                                       10
<PAGE>

         (g)      AMENDMENT. Any provision of this Agreement may be amended and
the observance thereof may be waived (either generally or in a particular
instance and either retroactively or prospectively), only with the written
consent of the Company and Subscriber. Any amendment or waiver effected in
accordance with this Section 9 shall be binding upon the Company and any
subsequent Transferees.

         (h)      SEVERABILITY. Each part of this Agreement is intended to be
severable. In the event that any provision of this Agreement is found by any
court or other authority of competent jurisdiction to be illegal or
unenforceable, such provision shall be severed or modified to the extent
necessary to render it enforceable and as so severed or modified, this Agreement
shall continue in full force and effect.

         (i)      NOTICES. Notices required or permitted to be given hereunder
shall be in writing and shall be deemed to be sufficiently given when personally
delivered (by hand, by courier, by telephone line facsimile transmission,
receipt confirmed, or other means) or sent by certified mail, return receipt
requested, properly addressed and with proper postage pre-paid (i) if to the
Company, at its executive office and (ii) if to the Subscriber, at the address
set forth under its name in the Purchase Agreement, with a copy to its
designated attorney, or at such other address as each such party furnishes by
notice given in accordance with this Section 9(b), and shall be effective, when
personally delivered, upon receipt and, when so sent by certified mail, five (5)
business days after deposit with the United States Postal Service.

         (j)      GOVERNING LAW. This Agreement shall be governed by the
interpreted in accordance with the laws of the State of California without
reference to its conflicts of laws rules or principles. Each of the parties
consents to the exclusive jurisdiction of the federal courts of the State of
California in connection with any dispute arising under this Agreement and
hereby waives, to the maximum extent permitted by law, any objection, including
any objection based on FORUM NON COVENIENS, to the bringing of any such
proceeding in such jurisdictions.

         (k)      CONSENTS. The person signing this Agreement on behalf of each
party hereby represents and warrants that he has the necessary power, consent
and authority to execute and deliver this Agreement on behalf of that party.

         (l)      FURTHER ASSURANCES. In addition to the instruments and
documents to be made, executed and delivered pursuant to this Agreement, the
parties hereto agree to make, execute and deliver or cause to be made, executed
and delivered, to the requesting party such other instruments and to take such
other actions as the requesting party may reasonably require to carry out the
terms of this Agreement and the transactions contemplated hereby.

         (m)      SECTION HEADINGS. The Section headings in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.

         (n)      CONSTRUCTION. Unless the context otherwise requires, when used
herein, the singular shall be deemed to include the plural, the plural shall be
deemed to include each of the

                                       11
<PAGE>

singular, and pronouns of one or no gender shall be deemed to include the
equivalent pronoun of the other or no gender.

         (o)      EXECUTION IN COUNTERPARTS. This Agreement may be executed in
two or more counterparts, each of which shall be deemed an original but all of
which shall constitute one and the same agreement. This Agreement, once executed
by a party, may be delivered to the other party hereto by telephone line
facsimile transmission of a copy of this Agreement bearing the signature of the
party so delivering this Agreement. A facsimile transmission of this signed
Agreement shall be legal and binding on all parties hereto.

                                       12
<PAGE>

         IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their respective officers thereunto duly authorized as of the day
and year first above written.

                                       COMPANY:

                                       AQUASEARCH, INC.

                                       By: /s/ David G. Watumull
                                           ------------------------------------
                                          David G. Watumull
                                          Executive Vice President

                                       SUBSCRIBER:

                                       ALPHA VENTURE CAPITAL, INC.

                                       By:  /s/ Barry W. Herman
                                            -----------------------------------
                                       Name:  Barry W. Herman
                                              ---------------------------------
                                       Title:    President
                                              ---------------------------------

                                       13<PAGE>

                                                          EXHIBIT 10.21

                              PHARSIGHT CORPORATION

                            STOCK OPTION GRANT NOTICE

            (2000 CEO NON-QUALIFIED STOCK OPTION PLAN AND AGREEMENT)

PHARSIGHT CORPORATION, a California corporation (the "Company"), pursuant to its
2000 CEO Non-Qualified Stock Option Plan and Agreement (the "CEO Plan and
Agreement") and this Stock Option Grant Notice (the "Grant Notice"), hereby
grants to Optionee an option (the "Option") to purchase the number of shares of
the Company's common stock set forth below (the "Shares"). This Option is
subject to all of the terms and conditions as set forth herein and in the CEO
Plan and Agreement and the Notice of Exercise, all of which are attached hereto
and incorporated herein in their entirety.

          OPTIONEE:                           Arthur H. Reidel

          OPTION GRANT NUMBER:                OP-267

          TYPE OF OPTION:                     Non-Qualified Stock Option

          DATE OF GRANT:                      May 16, 2000

          SHARES SUBJECT TO OPTION:           442,750

          EXERCISE PRICE PER SHARE:           $6.83

          EXPIRATION DATE:                    May 15, 2008

          VESTING SCHEDULE:                   The Shares shall vest as follows:
                                              one thirty-fourth (1/34th) of the
                                              Shares shall vest on June 1, 2001;
                                              one thirty-fourth (1/34th) of the
                                              Shares shall vest monthly on the
                                              first day of each month for each
                                              of the next thirty-three (33)
                                              months.

          EXERCISE SCHEDULE:                  Same as "Vesting Schedule."  Early
                                              Exercise is not permitted.

PAYMENT: Payment of the Option exercise price may be made in cash or check or by
any other method provided in the CEO Plan and Agreement.

ADDITIONAL TERMS/ACKNOWLEDGEMENTS: The undersigned Optionee acknowledges receipt
of, and understands and agrees to, this Grant Notice and the attached CEO Plan
and Agreement. Optionee further acknowledges that as of the Date of Grant, this
Grant Notice, and the CEO Plan and Agreement, set forth the entire understanding
between Optionee and the Company regarding the acquisition of stock in the
Company and supersedes all prior oral and written agreements on that subject. At
the time the Option is exercised, in whole or in part, or at any time thereafter
as requested by the Company, Optionee hereby authorizes withholding from payroll
and any other amounts payable to him, and otherwise agrees to make adequate
provision for (including by means of a "cashless exercise" pursuant to a program
developed under Regulation T (or similar rule or regulation) as promulgated by
the Federal Reserve Board), any sums required to satisfy the federal, state,
local and foreign tax withholding obligations of the Company or an Affiliate (as
defined in the CEO Plan and Agreement), if any, which arise in connection with
the Option.

PHARSIGHT CORPORATION                         OPTIONEE:  ARTHUR H. REIDEL

By:           /s/ Robin A. Kehoe                  /s/ Arthur H. Reidel
    -----------------------------------       -------------------------------
Name:         Robin A. Kehoe                            Signature
     ----------------------------------
Title:        Chief Financial Officer
     ----------------------------------
Date:         June 15, 2000
     ----------------------------------

Attachments: 2000 CEO Non-Qualified Stock Option Plan and Agreement, Notice of
Exercise

<PAGE>

                              PHARSIGHT CORPORATION
             2000 CEO NON-QUALIFIED STOCK OPTION PLAN AND AGREEMENT

     Pursuant to this 2000 CEO Non-Qualified Stock Option Plan and Agreement
(the "CEO Plan and Agreement") and the Stock Option Grant Notice ("Grant
Notice") and the Notice of Exercise, PHARSIGHT CORPORATION, a California
corporation (the "Company"), hereby grants a non-qualified stock option (the
"Option") to the Company's Chief Executive Officer to purchase the number of
shares of the common stock of the Company (the "Common Stock") indicated in the
Grant Notice (the "Option Shares") at the exercise price indicated in the Grant
Notice. The Option shall be effective on the date of grant specified in the
Grant Notice.

     The Option is not intended to qualify as an "incentive stock option" within
the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code") The Option is intended to comply with the exemption from qualification
provided by Section 25102(f) of the California Corporations Code. The Option
Shares covered by the grant of this Option are intended to be exempt from
registration pursuant to Section 4(2) of the Securities Act of 1933, as amended
(the "Securities Act"), but specifically not in reliance on Rule 701 promulgated
thereunder.

     1. ELIGIBILITY. Subject to Section 10 related to transferability, the sole
person eligible to receive an Option under the CEO Plan and Agreement is Arthur
H. Reidel, the Company's Chief Executive Officer (the "Optionee").

     2. SHARES SUBJECT TO THE CEO PLAN AND AGREEMENT. Subject to the provisions
of Section 11 relating to adjustments upon changes in stock, the stock that may
be issued under the CEO Plan and Agreement shall not exceed in the aggregate
Four Hundred Forty-Two Thousand Seven Hundred Fifty (442,750) shares of Common
Stock. If the Option shall for any reason expire or otherwise terminate, in
whole or in part, without having been exercised in full, the stock not acquired
under the Option shall not revert to and shall not again become available for
issuance under the CEO Plan and Agreement. At all times, the Company shall
reserve and keep available a sufficient number of shares of Common Stock as will
be required to satisfy the requirements of the Option granted under this CEO
Plan and Agreement.

     3. NUMBER OF SHARES AND EXERCISE PRICE.

          (a) The total number of shares of Common Stock subject to the Option
is equal to the Option Shares.

          (b) The exercise price per share of Common Stock shall be the price
provided on the Grant Notice, which price shall be one hundred five percent
(105%) of the Fair Market Value (as defined below) on the date of grant.

          (c) For purposes of the Option, "Fair Market Value" means, as of any
date, the value of the Common Stock determined as follows:

               (i) If the Common Stock is listed on any established stock
exchange or traded on the Nasdaq National Market or the Nasdaq SmallCap Market,
the Fair Market Value

<PAGE>

of a share of Common Stock shall be the closing sales price for such stock (or
the closing bid, if no sales were reported) as quoted on such exchange or market
(or the exchange or market with the greatest volume of trading in the Common
Stock) on the last market trading day prior to the day of determination, as
reported in THE WALL STREET JOURNAL or such other source as the Board of
Directors (the "Board") deems reliable.

               (ii) In the absence of such markets for the Common Stock, the
Fair Market Value shall be determined in good faith by the Board.

     4. VESTING AND EXERCISABILITY. Subject to the limitations contained herein,
the Option shall vest as provided in Grant Notice, provided that vesting will
cease upon the termination of the Optionee's continuous service with the Company
or of any Affiliate of the Company as an employee (hereinafter, "Continuous
Service"). For purposes of this CEO Plan and Agreement, Affiliate means any
parent corporation or subsidiary corporation of the Company as such terms are
defined in Sections 424(e) and (f) respectively of the Code. On all exercises,
fractions of shares shall be rounded to the next lowest number. The Option will
be exercisable only to the extent the Option Shares have vested.

     5. METHOD OF PAYMENT. Payment of the exercise price is due in full upon
exercise of all or any part of the Option. The Optionee may elect to make
payment of the exercise price in cash or by check or in any other manner that is
specified in the Grant Notice, which may include one or more of the following:

          (a) In the Company's sole discretion at the time the Option is
exercised and provided that at the time of exercise the Common Stock is publicly
traded and quoted regularly in THE WALL STREET JOURNAL, pursuant to a program
developed under Regulation T (or similar rule or regulation) as promulgated by
the Federal Reserve Board that, prior to the issuance of Common Stock, results
in either the receipt of cash (or check) by the Company or the receipt of
irrevocable instructions to pay the aggregate exercise price to the Company from
the sales proceeds.

          (b) Provided that at the time of the exercise of the Option the Common
Stock is publicly traded and quoted regularly in THE WALL STREET JOURNAL, by
delivery of already-owned shares of Common Stock, held for the period required
to avoid a charge to the Company's reported earnings (generally six months) or
that were not acquired, directly or indirectly from the Company, that are owned
free and clear of any liens, claims, encumbrances or security interests, and
valued at its Fair Market Value (as defined below) on the date of exercise.
"Delivery" for these purposes, in the sole discretion of the Company at the time
of the exercise of the Option, shall include delivery to the Company of the
Optionee's attestation of ownership of such shares of Common Stock in a form
approved by the Company. Notwithstanding the foregoing, the Option may not be
exercised by tender to the Company of Common Stock to the extent such tender
would constitute a violation of the provisions of any law, regulation or
agreement restricting the redemption of the Company's stock.

          (c) Pursuant to the following deferred payment alternative:

                                      -2-
<PAGE>

               (i) Not less than one hundred percent (100%) of the aggregate
exercise price, plus accrued interest, shall be due four (4) years from date of
exercise or, at the Company's election, upon earlier termination of the
Optionee's Continuous Service with the Company or an Affiliate of the Company.

               (ii) Interest shall be paid at least annually and shall be
charged at the minimum rate of interest necessary to avoid the treatment as
interest, under any applicable provisions of the Code, of any portion of any
amounts other than amounts stated to be interest under the deferred payment
arrangement.

               (iii) At any time that the Company is incorporated in Delaware,
payment of the Common Stock's "par value," as defined in the Delaware General
Corporation Law, shall be made in cash and not by deferred payment.

               (iv) In order to elect the deferred payment alternative, the
Optionee must, as a part of his written notice of exercise, give notice of the
election of this payment alternative and, in order to secure the payment of the
deferred exercise price to the Company hereunder, if the Company so requests,
the Optionee must tender to the Company a full recourse promissory note and a
security agreement covering the purchased shares, both in form and substance
satisfactory to the Company, or such other or additional documentation as the
Company may request.

     6. WHOLE SHARES. The Option may only be exercised for whole shares.

     7. SECURITIES LAW COMPLIANCE. Notwithstanding anything to the contrary
contained herein, the Option may not be exercised unless the shares issuable
upon exercise of the Option are then registered under the Securities Act or, if
such shares are not then so registered, the Company has determined that such
exercise and issuance would be exempt from the registration requirements of the
Securities Act. The exercise of the Option must also comply with other
applicable laws and regulations governing the Option, and the Option may not be
exercised if the Company determines that the exercise would not be in material
compliance with such laws and regulations.

     8. TERM. The term of the Option commences on the Date of Grant and expires
upon the EARLIEST of the following:

          (a) three (3) months after the termination of Continuous Service for
any reason other than Disability (as defined below) or death, provided that if
during any part of such three (3) month period the Option is not exercisable
solely because of the condition set forth in Section 7, the Option shall not
expire until the earlier of the expiration date specified in the Grant Notice
(the "Expiration Date") or until it shall have been exercisable for an aggregate
period of three (3) months after the termination of the Optionee's Continuous
Service;

          (b) twelve (12) months after the termination of Optionee's Continuous
Service due to Optionee's Disability (as defined below).

                                      -3-
<PAGE>

          (c) eighteen (18) months after the Optionee's death if Optionee dies
either during Optionee's Continuous Service or within three (3) months after
Optionee's Continuous Service terminates;

          (d) the Expiration Date indicated in the Grant Notice; or

          (e) the day before the eight (8th) anniversary of the Date of Grant.

     For purposes of this CEO Plan and Agreement, "Disability" means the
inability of the Optionee, in the opinion of a qualified physician acceptable to
the Company, to perform the major duties of Optionee's position with the Company
or an Affiliate of the Company because of sickness or injury of the person.

     9. EXERCISE.

          (a) The Optionee may exercise the vested portion of the Option during
its term by delivering a Notice of Exercise (in a form designated by the
Company) together with the exercise price to the Secretary of the Company, or to
such other person as the Company may designate, during regular business hours,
together with such additional documents as the Company may then require.

          (b) As a condition to any exercise of the Option, the Company may
require the Optionee to enter an arrangement providing for the payment by the
Optionee to the Company of any tax withholding obligation of the Company arising
by reason of (i) the exercise of the Option, (ii) the lapse of any substantial
risk of forfeiture to which the shares are subject at the time of exercise, or
(iii) the disposition of shares acquired upon such exercise.

          (c) The Company (or a representative of the underwriters) may, in
connection with the first underwritten registration of the offering of any
securities of the Company under the Securities Act, require that the Optionee
not sell, dispose of, transfer, make any short sale of, grant any option for the
purchase of, or enter into any hedging or similar transaction with the same
economic effect as a sale, any shares of Common Stock or other securities of the
Company held by the Optionee, for a period of time specified by the
underwriter(s) (not to exceed one hundred eighty (180) days) following the
effective date of the registration statement of the Company filed under the
Securities Act. The Optionee further agrees to execute and deliver such other
agreements as may be reasonably requested by the Company and/or the
underwriter(s) which are consistent with the foregoing or which are necessary to
give further effect thereto. In order to enforce the foregoing covenant, the
Company may impose stop-transfer instructions with respect to the Optionee's
Common Stock until the end of such period.

     10. TRANSFERABILITY. The Option is not transferable, except by will or by
the laws of descent and distribution, and is exercisable during the Optionee's
life only by the Optionee. Notwithstanding the foregoing, by delivering written
notice to the Company, in a form satisfactory to the Company, the Optionee may
designate a third party who in the event of the Optionee's death shall
thereafter be entitled to exercise the Option subject to all of the terms and
conditions herein.

                                      -4-
<PAGE>

     11. ADJUSTMENTS UPON CHANGES IN STOCK

          (a) CAPITALIZATION ADJUSTMENTS. If any change is made in the Common
Stock subject to the CEO Plan and Agreement, without the receipt of
consideration by the Company (through merger, consolidation, reorganization,
recapitalization, reincorporation, stock dividend, dividend in property other
than cash, stock split, liquidating dividend, combination of shares, exchange of
shares, change in corporate structure or other transaction not involving the
receipt of consideration by the Company), the CEO Plan and Agreement will be
appropriately adjusted in the class(es) and maximum number of securities subject
to the CEO Plan and Agreement pursuant to Section 2 and the maximum number of
securities subject to the Option will be appropriately adjusted in the class(es)
and number of securities and price per share of Common Stock. The Board shall
make such adjustments, and its determination shall be final, binding and
conclusive. (The conversion of any convertible securities of the Company shall
not be treated as a transaction "without receipt of consideration" by the
Company.)

          (b) DISSOLUTION OR LIQUIDATION. In the event of a dissolution or
liquidation of the Company, then the Option shall terminate immediately prior to
such event.

          (c) ASSET SALE, MERGER, CONSOLIDATION OR REVERSE MERGER. In the event
of (i) a sale, lease or other disposition of all or substantially all of the
assets of the Company, (ii) a merger or consolidation in which the Company is
not the surviving corporation or (iii) a reverse merger in which the Company is
the surviving corporation but the shares of Common Stock outstanding immediately
preceding the merger are converted by virtue of the merger into other property,
whether in the form of securities, cash or otherwise (individually, a "Corporate
Transaction"), then any surviving corporation or acquiring corporation may
assume the Option or may substitute a similar stock award (including an award to
acquire the same consideration paid to the shareholders in the Corporate
Transaction) for the Option. In the event any surviving corporation or acquiring
corporation does not assume the Option or substitute a similar stock award for
the Option, provided the Optionee is then providing Continuous Service, then the
vesting of the Option (and the time during which Option may be exercised) shall
be accelerated in full, and the Option shall terminate if not exercised at or
prior to the Corporate Transaction.

     12. REPRESENTATIONS.

     (a) By executing the Grant Notice, Optionee hereby warrants and
represents that Optionee is acquiring the Option for Optionee's own account
and that Optionee has no intention of distributing, transferring or selling
all or any part of the Option except in accordance with the terms of the CEO
Plan and Agreement and Section 25102(f) of the California Corporations Code.
Optionee also hereby warrants and represents that Optionee has either (i)
preexisting personal or business relationships with the Company or any of its
officers, directors or controlling persons, or (ii) the capacity to protect
Optionee's own interests in connection with the grant of the Option by virtue
of Optionee's business or financial expertise or the business or financial
expertise of any of Optionee's professional advisors who are unaffiliated
with and who are not compensated by the Company or any of its Affiliates,
directly or indirectly.

     (b) The Company may require Optionee, as a condition of exercising or
acquiring Common Stock under the Option, (i) to give written assurances
satisfactory to the

                                      -5-
<PAGE>

Company as to the Optionee's knowledge and experience in financial and business
matters and/or to employ a purchaser representative reasonably satisfactory to
the Company who is knowledgeable and experienced in financial and business
matters and that he or she is capable of evaluating, alone or together with the
purchaser representative, the merits and risks of exercising the Option; and
(ii) to give written assurances satisfactory to the Company stating that
Optionee is acquiring Common Stock subject to the Option for Optionee's own
account and not with any present intention of selling or otherwise distributing
the Common Stock. The foregoing requirements, and any assurances given pursuant
to such requirements, shall be inoperative if (1) the issuance of the shares of
Common Stock upon exercise of the Option has been registered under a then
current effective registration statement under the Securities Act or (2) as to
any particular requirement, a determination is made by counsel for the Company
that such requirement need not be met in the circumstances under the then
applicable securities laws. The Company may, upon advice of counsel to the
Company, place legends on stock certificates issued under the CEO Plan and
Agreement as such counsel deems necessary or appropriate in order to comply with
applicable securities laws, including, but not limited to, legends restricting
the transfer of the Common Stock.

     13. RIGHT OF REPURCHASE. To the extent provided in the Company's bylaws as
amended from time to time, the Company shall have the right to repurchase all or
any part of the shares of Common Stock received pursuant to the exercise of the
Option. The Company's right of repurchase shall expire on the date of the first
registration of the Common Stock under Section 12 of the Securities and Exchange
Act of 1934, as amended (the "Exchange Act").

     14. RIGHT OF FIRST REFUSAL. Shares of Common Stock that Optionee acquires
upon exercise of the Option are subject to any right of first refusal that may
be described in the Company's bylaws in effect at such time the Company elects
to exercise its right. The Company's right of first refusal shall expire on the
date of the first registration of the Common Stock under Section 12 of the
Exchange Act.

     15. OPTION NOT A SERVICE CONTRACT. Neither the Option nor the CEO Plan and
Agreement nor the Grant Notice constitutes an employment or service contract,
and nothing in the Option shall be deemed to create in any way whatsoever any
obligation on the Optionee's part to continue in the employ of the Company or an
Affiliate, or of the Company or an Affiliate to continue the Optionee's
employment. In addition, nothing in the Option shall obligate the Company or an
Affiliate, their respective shareholders, Boards of Directors, officers or
employees to continue any relationship that the Optionee might have as a
director or consultant for the Company or an Affiliate.

     16. WITHHOLDING OBLIGATIONS.

    (a) At the time Optionee exercises the Option, in whole or in part, or at
any time thereafter as requested by the Company, the Optionee hereby
authorizes withholding from payroll and any other amounts payable to Optionee
and otherwise agrees to make adequate provisions for (including by means of a
"cashless exercise" pursuant to a program developed under Regulation T (or
similar rule or regulation) as promulgated by the Federal Reserve Board to
the extent permitted by the Company) any sums required to satisfy the
federal, state, local and

                                      -6-
<PAGE>

foreign tax withholding obligations of the Company or any Affiliate, if any,
which arise in connection with the Option.

          (b) Upon the Optionee's request and subject to approval by the
Company, in its sole discretion, and compliance with any applicable conditions
or restrictions of law, the Company may withhold from fully vested shares of
Common Stock otherwise issuable to the Optionee upon the exercise of the Option
a number of whole shares of Common Stock having a Fair Market Value, determined
as of the date of exercise, not in excess of the minimum amount of tax required
to be withheld by law. If the date of determination of any tax withholding
obligation would be deferred to a date later than the date of exercise of the
Option, withholding of shares of Common Stock pursuant to the preceding sentence
shall not be permitted unless the Optionee makes a proper and timely election
under Section 83(b) of the Code, covering the aggregate number of shares of
Common Stock acquired upon such exercise with respect to which such
determination is otherwise deferred, to accelerate the determination of such tax
withholding obligation to the date of exercise of the Option. Notwithstanding
the filing of such election, shares of Common Stock shall be withheld solely
from fully vested shares of Common Stock determined as of the date of exercise
of the Option that are otherwise issuable to the Optionee upon such exercise.
Any adverse consequences to the Optionee arising in connection with such share
withholding procedure shall be the Optionee's sole responsibility.

          (c) The Option is not exercisable unless the tax withholding
obligations of the Company and/or any Affiliate are satisfied. Accordingly, the
Optionee may not be able to exercise the Option when desired even though the
Option is vested, and the Company shall have no obligation to issue a
certificate for such shares or release such shares from any escrow provided for
herein.

     17. NOTICES. Any notices provided for in the CEO Plan and Agreement shall
be given in writing and shall be deemed effectively given upon receipt or, in
the case of notices delivered by the Company to the Optionee, five (5) days
after deposit in the United States mail, postage prepaid, addressed to the
Optionee at the last address the Optionee provided to the Company.

     18. GOVERNING PLAN AND AGREEMENT DOCUMENT. The Option is subject to all the
provisions of the CEO Plan and Agreement, Grant Notice and Notice of Exercise,
and is further subject to all interpretations, amendments, rules and regulations
which may from time to time be promulgated and adopted pursuant to the CEO Plan
and Agreement. With respect to (i) any and all matters relating to the Option
granted under this CEO Plan and Agreement, Grant Notice and Notice of Exercise,
(ii) any Option shares and (iii) any shares of Common Stock to be received upon
exercise of such Option, the terms and conditions of the CEO Plan and Agreement,
Grant Notice and Notice of Exercise shall govern at all times.

                                      -7-
<PAGE>

     19. ADMINISTRATION BY THE BOARD.

          (a) The CEO Plan and Agreement shall be administered by the Board,
unless and until the Board delegates administration to a committee as provided
in subsection (b). The Board shall have the authority to construe and interpret
the CEO Plan and Agreement and to establish, amend or waive rules and
regulations for its administration. All determinations, interpretations and
constructions made by the Board in good faith shall not be subject to review by
any person and shall be final, binding and conclusive on all persons.

          (b) The Board may delegate administration of the CEO Plan and
Agreement to a committee of one (1) or more members of the Board, and the term
"Committee" shall apply to any person or persons to whom such authority has been
delegated. If administration is delegated to a Committee, the Committee shall
have, in connection with the administration of the CEO Plan and Agreement, the
powers possessed by the Board, subject to such resolutions, not inconsistent
with the provisions of the CEO Plan and Agreement, as may be adopted from time
to time by the Board. The Board may abolish the Committee at any time and revest
in the Board the administration of the CEO Plan and Agreement. At such time as
the common stock of the Company is publicly traded, at the discretion of the
Board, a Committee may consist solely of two or more Outside Directors (as
defined below), in accordance with Section 162(m) of the Code, and/or solely of
two or more Non-Employee Directors (as defined below), in accordance with Rule
16b-3.

     For purposes of this CEO Plan and Agreement, "Outside Director" means a
director who either (i) is not a current employee of the Company or an
"affiliated corporation" (within the meaning of Treasury Regulations promulgated
under Section 162(m) of the Code), is not a former employee of the Company or an
"affiliated corporation" receiving compensation for prior services (other than
benefits under a tax qualified pension plan), was not an officer of the Company
or an "affiliated corporation" at any time and is not currently receiving direct
or indirect remuneration from the Company or an "affiliated corporation" for
services in any capacity other than as a director or (ii) is otherwise
considered an "outside director" for purposes of Section 162(m) of the Code.

     For purposes of this CEO Plan and Agreement, "Non-Employee Director" means
a director who either (i) is not a current employee or officer of the Company or
its parent or a subsidiary, does not receive compensation (directly or
indirectly) from the Company or its parent or a subsidiary for services rendered
as a consultant or in any capacity other than as a director (except for an
amount as to which disclosure would not be required under Item 404(a) of
Regulation S-K promulgated pursuant to the Securities Act ("Regulation S-K")),
does not possess an interest in any other transaction as to which disclosure
would be required under Item 404(a) of Regulation S-K and is not engaged in a
business relationship as to which disclosure would be required under Item 404(b)
of Regulation S-K or (ii) is otherwise considered a "non-employee director" for
purposes of Rule 16b-3.

     20. WAIVER. The waiver by either party herein of a breach of any provision
of this CEO Plan and Agreement shall not operate or be construed as a waiver of
any other or subsequent breach.

                                      -8-
<PAGE>

     21. BINDING ON SUCCESSORS. This CEO Plan and Agreement shall inure to the
benefit of and be binding upon the parties hereto and, to the extent not
prohibited herein, their respective heirs and successors.

     22. COUNTERPARTS. This CEO Plan and Agreement may be executed in two (2) or
more counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.

     23. GOVERNING LAW. The Grant Notice, CEO Plan and Agreement, and the Notice
of Exercise shall be construed in accordance with and governed by the laws of
the State of California without giving effect to the doctrine of conflict of
laws.

     24. EFFECTIVE DATE AND DURATION OF THE CEO PLAN AND AGREEMENT. The CEO Plan
and Agreement shall be effective as of May 16, 2000. The Board may suspend or
terminate the CEO Plan and Agreement at any time. Unless sooner terminated, the
CEO Plan and Agreement shall terminate at midnight on May 15, 2008 .

     25. NO RIGHTS AS SHAREHOLDER. The Optionee shall have no rights as a
shareholder with respect to any stock subject to the Option prior to the date of
exercise and until the Optionee has satisfied all requirements for exercise of
the Option pursuant to its terms.

Dated as of the 16 day of May, 2000.

                                      Very truly yours,

                                      PHARSIGHT CORPORATION

                                      By:      /s/ Robin A. Kehoe
                                          ----------------------------------
                                               Duly authorized on behalf of
                                                  the Board of Directors

                                      Name:    Robin A. Kehoe
                                          ----------------------------------
                                      Title:      Chief Financial Officer
                                          ----------------------------------
                                      OPTIONEE

                                                /s/ Arthur H. Reidel
                                      --------------------------------------
                                      Arthur H. Reidel

                                      Address:

                                      P. O. Box 61030
                                      --------------------------------------
                                      Palo Alto, CA  94306
                                      --------------------------------------

                                      --------------------------------------

                                      --------------------------------------

<PAGE>

                               NOTICE OF EXERCISE

PHARSIGHT CORPORATION
800 West El Camino Real
Suite 200
Mountain View, California  94040

                                                              Date of Exercise:

Ladies and Gentlemen:

         This constitutes notice under my Option that I elect to purchase the
number of shares for the price set forth below.

         Stock option dated:
                                                              -----------------

         Option Grant Number:                                 OP-267

         Number of shares as
         to which option is
         exercised:
                                                              -----------------
         Certificate to be
         issued in name of:                                   Arthur H. Reidel

         Total exercise price:                                $
                                                              -----------------
         Cash payment (or check)
         delivered herewith:                                  $
                                                              -----------------
         Promissory Note delivered
         herewith:                                            $
                                                              -----------------
         Value of Pharsight Corporation
         shares of Common Stock delivered
         herewith(1):                                         $
                                                              -----------------

         By this exercise, I agree (i) to provide such additional documents as
you may require pursuant to the terms of the 2000 CEO Non-Qualified Stock Option
Plan and Agreement and (ii) to provide for the payment by me to you (in the
manner designated by you) of your withholding obligation, if any, relating to
the exercise of this option.

--------------
(1) Shares must be valued in accordance with the terms of the option being
exercised, must have been owned for the minimum period required in the
option, and must be owned free and clear of any liens, claims, encumbrances
or security interests. Certificates must be endorsed or accompanied by an
executed assignment separate from certificate.

<PAGE>

         I hereby make the following statements with respect to the shares of
Common Stock (the "Shares"), which are being acquired by me for my own account
upon this exercise of the option as set forth above:

         I warrant and represent that I am acquiring the Shares for my own
account and that I have no intention of distributing, transferring or selling
all or any part of the Shares except in accordance with the terms of the option
agreement and Section 25102(f) of the California Corporations Code. I also
hereby warrant and represent that I have either (i) preexisting personal or
business relationships with the Company or any of its officers, directors or
controlling persons, or (ii) the capacity to protect my own interests in
connection with the sale of the Shares by virtue of my own business or financial
expertise or the business or financial expertise of my professional advisors who
are unaffiliated with and who are not compensated by the Company or any of its
affiliates, directly or indirectly.

         I acknowledge that the Shares have not been registered under the
Securities Act of 1933, as amended (the "Securities Act"), and are deemed to
constitute "restricted securities" under Rule 144 promulgated under the
Securities Act. I am aware that among the conditions imposed on the transfer of
the Shares is the availability of current information to the public about the
Company and that the Company has not made such information available and has no
present plans to do so. I warrant and represent to the Company that I have no
present intention of distributing or selling said Shares, except as permitted
under the Securities Act and any applicable state securities laws.

         I acknowledge and agree that the Shares being acquired by me must be
held indefinitely unless they are subsequently registered under the Securities
Act or an exemption from such registration is available. I acknowledge and agree
that the Company has no obligation to register the Shares or to comply with any
exemption from such registration. I acknowledge and agree that under Rule 144,
as an affiliate of the Company, I will not be able to resell the Shares without
observing all restrictions imposed by Rule 144.

         I acknowledge and agree that all certificates representing any of the
Shares subject to the provisions of the option shall have endorsed thereon
appropriate legends reflecting the foregoing limitations, as well as any legends
reflecting restrictions pursuant to the Company's Articles of Incorporation,
Bylaws and/or applicable securities laws.

         I further agree that, if required by the Company (or a representative
of the underwriters) in connection with the first underwritten registration of
the offering of any securities of the Company under the Securities Act, I will
not to sell, dispose of, transfer, make any short sale of, grant any option for
the purchase of, or enter into any hedging or similar transaction with the same
economic effect as a sale, any Shares or other securities of the Company held by
me, for a period of time specified by the underwriter(s) (not to exceed one
hundred eighty (180) days) following the effective date of a registration
statement of the Company filed under the Securities Act. I further agree to
execute and deliver such other agreements as may be reasonably requested by the
Company and/or the underwriter(s) which are consistent with the foregoing or
which are necessary to give further effect thereto. In order to enforce the
foregoing covenant, the Company may impose stop-transfer instructions with
respect to my Shares until the end of such period.

                                       Very truly yours,

                                       ----------------------------------
                                       Arthur H. Reidel

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