UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. )*
T/F PURIFINER, INC.
---------------------
(Name of Issuer)
Common Stock, $0.001 Par Value
------------------------------
(Title of Class of Securities)
872405105
-------------------------
(CUSIP Number)
Stephen M. Vine, Esq.
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
590 Madison Avenue
New York, New York 10022
(212) 872-1000
------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
June 19, 1997
--------------------------------
(Date of Event which Requires Filing
of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [_].
Note: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d- 1(a) for other parties to whom copies are to be
sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter disclosure
provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
Continued on following page(s)
Page 1 of 68 Pages
Exhibit Index: Page 17
<PAGE>
Page 2 of 68 Pages
SCHEDULE 13D
CUSIP No. 872405105
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
QUANTUM INDUSTRIAL PARTNERS LDC
2 Check the Appropriate Box If a Member of a Group*
a. [_]
b. [x]
3 SEC Use Only
4 Source of Funds*
WC
5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to
Items 2(d) or 2(e) [_]
6 Citizenship or Place of Organization
Cayman Islands
7 Sole Voting Power
Number of 1,570,000
Shares
Beneficially 8 Shared Voting Power
Owned By 0
Each
Reporting 9 Sole Dispositive Power
Person 1,570,000
With
10 Shared Dispositive Power
0
11 Aggregate Amount Beneficially Owned by Each Reporting Person
1,570,000
12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares*
[_]
13 Percent of Class Represented By Amount in Row (11)
27.81%
14 Type of Reporting Person*
OO; IV
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
Page 3 of 68 Pages
SCHEDULE 13D
CUSIP No. 872405105
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
QIH MANAGEMENT INVESTOR, L.P.
2 Check the Appropriate Box If a Member of a Group*
a. [_]
b. [x]
3 SEC Use Only
4 Source of Funds*
AF
5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to
Items 2(d) or 2(e) [_]
6 Citizenship or Place of Organization
Delaware
7 Sole Voting Power
Number of 1,570,000
Shares
Beneficially 8 Shared Voting Power
Owned By 0
Each
Reporting 9 Sole Dispositive Power
Person 1,570,000
With
10 Shared Dispositive Power
0
11 Aggregate Amount Beneficially Owned by Each Reporting Person
1,570,000
12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares*
[_]
13 Percent of Class Represented By Amount in Row (11)
27.81%
14 Type of Reporting Person*
PN; IA
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
Page 4 of 68 Pages
SCHEDULE 13D
CUSIP No. 872405105
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
QIH MANAGEMENT, INC.
2 Check the Appropriate Box If a Member of a Group*
a. [_]
b. [x]
3 SEC Use Only
4 Source of Funds*
AF
5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to
Items 2(d) or 2(e) [_]
6 Citizenship or Place of Organization
Delaware
7 Sole Voting Power
Number of 1,570,000
Shares
Beneficially 8 Shared Voting Power
Owned By 0
Each
Reporting 9 Sole Dispositive Power
Person 1,570,000
With
10 Shared Dispositive Power
0
11 Aggregate Amount Beneficially Owned by Each Reporting Person
1,570,000
12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares*
[_]
13 Percent of Class Represented By Amount in Row (11)
27.81%
14 Type of Reporting Person*
CO
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
Page 5 of 68 Pages
SCHEDULE 13D
CUSIP No. 872405105
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
Soros Fund Management LLC
2 Check the Appropriate Box If a Member of a Group*
a. [_]
b. [x]
3 SEC Use Only
4 Source of Funds*
AF
5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to
Items 2(d) or 2(e) [_]
6 Citizenship or Place of Organization
Delaware
7 Sole Voting Power
Number of 1,570,000
Shares
Beneficially 8 Shared Voting Power
Owned By 0
Each
Reporting 9 Sole Dispositive Power
Person 1,570,000
With
10 Shared Dispositive Power
0
11 Aggregate Amount Beneficially Owned by Each Reporting Person
1,570,000
12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares*
[_]
13 Percent of Class Represented By Amount in Row (11)
27.81%
14 Type of Reporting Person*
OO; IA
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
Page 6 of 68 Pages
SCHEDULE 13D
CUSIP No. 872405105
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
George Soros (in the capacity described herein)
2 Check the Appropriate Box If a Member of a Group*
a. [_]
b. [x]
3 SEC Use Only
4 Source of Funds*
AF
5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to
Items 2(d) or 2(e) [_]
6 Citizenship or Place of Organization
United States
7 Sole Voting Power
Number of 0
Shares
Beneficially 8 Shared Voting Power
Owned By 1,570,000
Each
Reporting 9 Sole Dispositive Power
Person 0
With
10 Shared Dispositive Power
1,570,000
11 Aggregate Amount Beneficially Owned by Each Reporting Person
1,570,000
12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares*
[_]
13 Percent of Class Represented By Amount in Row (11)
27.81%
14 Type of Reporting Person*
IA
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
Page 7 of 68 Pages
SCHEDULE 13D
CUSIP No. 872405105
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
Stanley F. Druckenmiller (in the capacity described herein)
2 Check the Appropriate Box If a Member of a Group*
a. [_]
b. [x]
3 SEC Use Only
4 Source of Funds*
AF
5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to
Items 2(d) or 2(e) [_]
6 Citizenship or Place of Organization
United States
7 Sole Voting Power
Number of 0
Shares
Beneficially 8 Shared Voting Power
Owned By 1,570,000
Each
Reporting 9 Sole Dispositive Power
Person 0
With
10 Shared Dispositive Power
1,570,000
11 Aggregate Amount Beneficially Owned by Each Reporting Person
1,570,000
12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares*
[_]
13 Percent of Class Represented By Amount in Row (11)
27.81%
14 Type of Reporting Person*
IA
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
Page 8 of 68 Pages
This Statement on Schedule 13D relates to shares of Common Stock,
$0.001 par value per share (the "Shares"), of T/F Purifiner, Inc. (the
"Issuer"). This Statement is being filed by the Reporting Persons (as defined
herein) to report a recent acquisition of Shares and a warrant to purchase
Shares of the Issuer as a result of which the Reporting Persons may be deemed to
be the beneficial owners of more than 5% of the total number of outstanding
Shares.
Item 1. Security and Issuer.
This Statement relates to the Shares. The address of the
principal executive office of the Issuer is 3020 High Ridge Road, Suite 100,
Boynton Beach, Florida 33426-8701.
Item 2. Identity and Background.
This Statement is being filed on behalf of each of the following
persons (collectively, the "Reporting Persons"):
i) Quantum Industrial Partners LDC ("QIP");
ii) QIH Management Investor, L.P. ("QIHMI");
iii) QIH Management, Inc. ("QIH Management");
iv) Soros Fund Management LLC ("SFM LLC");
v) George Soros ("Mr. Soros"); and
vi) Stanley F. Druckenmiller ("Mr. Druckenmiller").
This Statement relates to Shares and warrants held for the
account of QIP.
The Reporting Persons
---------------------
QIP, QIHMI and QIH Management
- -----------------------------
QIP is a Cayman Islands exempted limited duration company with
its principal address at Kaya Flamboyan 9, Willemstad, Curacao, Netherlands
Antilles. The principal business of QIP is investment in securities. Current
information concerning the directors and officers of QIP is set forth in Annex A
hereto, which is incorporated by reference in response to this Item 2.
QIHMI, an investment advisory firm organized as a Delaware
limited partnership, is a minority shareholder of, and (pursuant to constituent
documents of QIP) is vested with investment discretion with respect to the
portfolio assets held for the account of, QIP. The principal business of QIHMI
is to provide management and advisory services to, and to invest in, QIP. QIH
Management, a Delaware corporation of which Mr. Soros is the sole shareholder,
is the sole general partner of QIHMI. The principal business of QIH Management
is to serve as the sole general partner of QIHMI. Current information concerning
<PAGE>
Page 9 of 68 Pages
the directors and officers of QIH Management is set forth in Annex A hereto,
which is incorporated by reference in response to this Item 2. QIHMI and QIH
Management have their principal offices at 888 Seventh Avenue, 33rd Floor, New
York, New York 10106. QIHMI, by reason of its investment discretion over the
securities owned by QIP, and QIH Management, as the sole general partner of
QIHMI, may each be deemed the beneficial owner of the Shares held for the
account of QIP for purposes of Section 13(d) of the Securities Exchange Act of
1934, as amended (the "Act").
Mr. Soros has entered into an agreement dated as of January 1,
1997 with SFM LLC pursuant to which Mr. Soros has, among other things, agreed to
use his best efforts to cause QIH Management, as the general partner of QIHMI,
to act at the direction of SFM LLC, which agreement to so act shall terminate
upon the earlier of (a) the assignment to SFM LLC of the legal and beneficial
ownership interest in QIH Management and (b) the assignment to SFM LLC of the
general partnership interest in QIHMI (the "QIP Contract").
SFM LLC, Mr. Soros and Mr. Druckenmiller
- ----------------------------------------
The business of SFM LLC is managed through a Management Committee
(the "Management Committee") comprised of Mr. Soros, Mr. Druckenmiller and Mr.
Gary Gladstein. SFM LLC, a Delaware limited liability company, has its principal
office at 888 Seventh Avenue, 33rd Floor, New York, New York 10106. Its
principal business is to serve, pursuant to contract, as the principal
investment manager to several foreign investment companies (the "SFM Clients").
Mr. Soros, as Chairman of SFM LLC, has the ability to direct the investment
decisions of SFM LLC and as such may be deemed to have investment discretion
over the securities held for the accounts of the SFM Clients. Mr. Druckenmiller,
as Lead Portfolio Manager of SFM LLC, has the ability to direct the investment
decisions of SFM LLC and as such may be deemed to have investment discretion
over the securities held for the accounts of the SFM Clients. Set forth in Annex
B hereto and incorporated by reference in response to this Item 2 and elsewhere
in this Schedule 13D as applicable is a list of the Managing Directors of SFM
LLC.
The principal occupation of Mr. Soros, a United States citizen,
is his direction of the activities of SFM LLC, which is carried out in his
capacity as Chairman of SFM LLC at SFM LLC's principal office.
The principal occupation of Mr. Druckenmiller, a United States
citizen, is his position as Lead Portfolio Manager and a Member of the
Management Committee of SFM LLC, which is carried out at SFM LLC's principal
office.
Pursuant to regulations promulgated under Section 13(d) of the
Act, SFM LLC, pursuant to the provisions of the QIP Contract, Mr. Soros, in his
capacity as Chairman of SFM LLC, and Mr. Druckenmiller, in his capacity as Lead
Portfolio Manager of SFM LLC, each may be deemed a beneficial owner of the
Shares held for the account of QIP.
During the past five years, none of the Reporting Persons and, to
the best of the Reporting Persons' knowledge, any other person identified in
response to this Item 2 has been (a) convicted in a criminal proceeding, or (b)
a party to any civil proceeding as a result of which it or he has been subject
to a judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state securities
laws, or finding any violation with respect to such laws.
<PAGE>
Page 10 of 68 Pages
Item 3. Source and Amount of Funds or Other Consideration.
On June 19, 1997 QIP entered into a Securities Purchase Agreement
(the "Purchase Agreement") with the Issuer, Taylor (as defined therein) and Ford
(as defined therein), a copy of which is attached hereto as Exhibit E and
incorporated by reference in response to this Item 3. Pursuant to the terms of
the Purchase Agreement QIP expended $783,750 of its working capital to purchase
285,000 Shares from Taylor and expended $2,158,750 of its working capital to
purchase 785,000 Shares from Ford. In addition, in consideration of lending the
Issuer $2,000,000 pursuant to a Promissory Note (the "Note"), a copy of the form
of which is attached hereto as Exhibit G, QIP received a warrant from the
Issuer, which expires on December 31, 2000, for the purchase of up to 500,000
Shares at an exercise price of $2.75 per Share, subject to certain anti-dilution
provisions (the "Warrant"), a copy of which is attached hereto as Exhibit H.
The Shares held for the account of QIP may be held through margin
accounts maintained with brokers, which extend margin credit as and when
required to open or carry positions in their margin accounts, subject to
applicable federal margin regulations, stock exchange rules and such firms'
credit policies. The Shares which may be held in the margin accounts are pledged
as collateral security for the repayment of debit balances in the respective
accounts.
Item 4. Purpose of Transaction.
All of the Shares reported herein as having been acquired for or
disposed of from the account of QIP were acquired or disposed of for investment
purposes. Neither the Reporting Persons nor, to the best of their knowledge, any
of the other individuals identified in response to Item 2, has any plans or
proposals that relate to or would result in any of the transactions described in
subparagraphs (a) through (j) of Item 4 of Schedule 13D.
Mr. Soros, Mr. Druckenmiller and SFM LLC reserve the right to
acquire, or cause to be acquired, additional securities of the Issuer, to
dispose, or cause to be disposed of, such securities at any time or to formulate
other purposes, plans or proposals regarding the Issuer or any of its
securities, to the extent deemed advisable in light of general investment and
trading policies of the Reporting Persons and/or the SFM Clients, market
conditions or other factors.
Item 5. Interest in Securities of the Issuer.
(a) Each of the Reporting Persons may be deemed the
beneficial owner of the 1,570,000 Shares held for the account of QIP
(approximately 27.81% of the total number of Shares which would be outstanding
assuming the exercise of all of the warrants held for the account of QIP).
(b) (i) Each of QIP, QIHMI (pursuant to QIP's constituent
documents), QIH Management (by virtue of its position as sole general partner of
QIHMI) and SFM LLC (pursuant to the terms of the QIP Contract) may be deemed to
have the sole power to direct the voting and disposition of the 1,570,000 Shares
held for the account of QIP (assuming the exercise of all of the warrants held
for the account of QIP).
(ii) Pursuant to the terms of the QIP Contract and as a
result of the positions held by Mr. Soros and Mr. Druckenmiller with SFM LLC,
each of Mr. Soros and Mr. Druckenmiller may be deemed to have shared power to
direct the voting and disposition of the 1,570,000 Shares held for the account
of QIP (assuming the exercise of all of the warrants held for the account of
QIP).
<PAGE>
Page 11 of 68 Pages
(c) Except for the transactions described in Item 3 and
Item 6 hereto, there have been no transactions with respect to the Shares since
May 1, 1997 (60 days prior to the date hereof) by any of the Reporting Persons.
(d) The shareholders of QIP, including Quantum Industrial
Holdings, Ltd., a British Virgin Islands international business company, have
the right to participate in the receipt of dividends from, or proceeds from the
sale of, the Shares held for the account of QIP in accordance with their
ownership interests in QIP.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with
Respect to Securities of the Issuer.
In connection with its acquisition of the Shares and the Warrant
reported herein, QIP entered into the Purchase Agreement which is incorporated
herein by reference. The description of the terms of the Purchase Agreement
below is qualified in its entirety by reference to the specific provisions of
such agreement, which is attached hereto as Exhibit E.
Pursuant to Section 6.2 of the Purchase Agreement, QIP agreed to
take all action within its power, including the voting of all Shares held for
its account, to have certain persons (as set forth therein) serve as the
directors of the Issuer.
On June 19, 1997, the Issuer entered into a Registration Rights
Agreement (the "Rights Agreement") with QIP, a copy of which is attached hereto
as Exhibit F and the provisions of which are incorporated herein by reference.
The description of the terms of the Rights Agreement below is qualified in its
entirety by reference to the specific provisions of such agreement.
Pursuant to Section 2(a) of the Rights Agreement, the holders of
a majority of the "Registrable Securities" (the "Majority Holders") may make a
written request for registration under the Securities Act of 1933, as amended
(the "1933 Act") of all or part of its "Registrable Securities", provided that
the Issuer need effect only three (3) such registrations. As defined in the
Rights Agreement, "Registrable Securities" include (i) the Shares issued and
sold pursuant to the Purchase Agreement, (ii) the Shares issuable upon exercise
of the Warrant and (iii) Shares issued in the form of a dividend, stock split or
other distribution or in connection with a combination of Shares,
recapitalization, merger, consolidation, reorganization or otherwise on either
(i) or (ii) above. Unless the Majority Holders consent in writing, no other
parties (except other holders of Registrable Securities) shall be permitted to
offer securities under such demand registration.
Pursuant to Section 3 of the Rights Agreement, at any time after
the Issuer shall become eligible to register securities under Form S-3 under the
1933 Act, the Majority Holders may make a written request for registration on
Form S-3 of all or part of its Registrable Securities, provided that the Issuer
need effect only two (2) such registrations in a calendar year. Unless the
Majority Holders consent in writing, no other parties (except other holders of
Registrable Securities) shall be permitted to offer securities under such demand
registration.
Pursuant to Section 4(a) of the Rights Agreement, if the Issuer
proposes to file a registration statement under the 1933 Act with respect to an
offering for its own account of any class of security (other than a registration
statement on Form S-4 or S-8 or successor forms thereto), then the Issuer shall
in each case give written notice of such proposed filing to each holder of
<PAGE>
Page 12 of 68 Pages
Registrable Securities at least twenty (20) days before the anticipated filing
date, and such notice shall offer each such holder (subject to certain
conditions) the opportunity to register its Shares.
Section 4(b) of the Rights Agreement provides that, subject to
certain conditions, the Issuer shall use its best efforts to cause the managing
underwriter or underwriters of a proposed underwritten offering to permit the
holders of Registrable Securities to include such securities in such offering on
the same terms and conditions as any similar securities of the Issuer included
therein.
From time to time each of the Reporting Persons and/or the SFM
Clients may lend portfolio securities to brokers, banks or other financial
institutions. These loans typically obligate the borrower to return the
securities, or an equal amount of securities of the same class, to the lender
and typically provide that the borrower is entitled to exercise voting rights
and to retain dividends during the term of the loan. From time to time to the
extent permitted by applicable law, each of such persons or entities may borrow
the Shares for the purpose of effecting, and may effect, short sale
transactions, and may purchase securities for the purpose of closing out short
positions in such securities.
Except as set forth above and as described in Items 3 hereto,
which is incorporated in this Item 6 by reference, the Reporting Persons and the
SFM Clients do not have any contracts, arrangements, understandings or
relationships with respect to any securities of the Issuer.
Item 7. Material to be Filed as Exhibits.
A. Power of Attorney dated as of January 1, 1997 granted by Mr.
Soros in favor of Mr. Sean C. Warren and Mr. Michael C. Neus.
B. Power of Attorney dated as of January 1, 1997 granted by Mr.
Druckenmiller in favor of Mr. Sean C. Warren and Mr. Michael C.
Neus.
C. Joint Filing Agreement dated June 30, 1997 by and among QIP,
QIHMI, QIH Management, SFM LLC, Mr. Soros and Mr. Druckenmiller.
D. Power of Attorney dated May 23, 1996 granted by QIP in favor of
Mr. Gary Gladstein, Mr. Sean Warren and Mr. Michael Neus.
E. Securities Purchase Agreement dated as of June 19, 1997 by and
among the Issuer, Taylor, Ford and QIP.
F. Registration Rights Agreement dated as of June 19, 1997 by and
among the Issuer and QIP.
G. Form of Issuer's Promissory Note.
H. Warrant issued by Issuer to QIP.
<PAGE>
Page 13 of 68 Pages
SIGNATURES
After reasonable inquiry and to the best of my knowledge and
belief, the undersigned certifies that the information set forth in this
statement is true, complete and correct.
Date: June 30, 1997
QUANTUM INDUSTRIAL PARTNERS LDC
By: /S/ MICHAEL C. NEUS
-----------------------------
Michael C. Neus
Attorney-in-Fact
QIH MANAGEMENT INVESTOR, L.P.
By: QIH Management, Inc.,
its General Partner
By: /S/ MICHAEL C. NEUS
------------------------
Michael C. Neus
Vice President
QIH MANAGEMENT, INC.
By: /S/ MICHAEL C. NEUS
-----------------------------
Michael C. Neus
Vice President
SOROS FUND MANAGEMENT LLC
By: /S/ MICHAEL C. NEUS
-----------------------------
Michael C. Neus
Assistant General Counsel
<PAGE>
Page 14 of 68 Pages
GEORGE SOROS
By: /S/ MICHAEL C. NEUS
-----------------------------
Michael C. Neus
Attorney-in-Fact
STANLEY F. DRUCKENMILLER
By: /S/ MICHAEL C. NEUS
-----------------------------
Michael C. Neus
Attorney-in-Fact
<PAGE>
Page 15 of 68 Pages
ANNEX A
Directors and Officers of Quantum Industrial Partners LDC
Name/Title/Citizenship Principal Occupation Business Address
- ---------------------- -------------------- ----------------
Curacao Corporation Managing Director of Kaya Flamboyan 9
Company N.V. Netherlands Antilles Willemstad
Managing Director corporations Curacao,
(Netherlands Antilles) Netherlands Antilles
Inter Caribbean Services Administrative services Citco Building
Limited Secretary Wickhams Cay
(British Virgin Islands) Road Town
Tortola
British Virgin
Islands
Directors and Officers of QIH Management, Inc.
Name/Title/Citizenship Principal Occupation Business Address
- ---------------------- -------------------- ----------------
Gary Gladstein Managing Director of 888 Seventh Avenue
Director and President SFM LLC 33rd Floor
(United States) New York, NY 10106
Sean C. Warren Managing Director of 888 Seventh Avenue
Director, Vice President SFM LLC 33rd Floor
and Secretary New York, NY 10106
(United States)
Peter Streinger Chief Financial Officer of 888 Seventh Avenue
Treasurer SFM LLC 33rd Floor
(United States) New York, NY 10106
Michael C. Neus Assistant General Counsel 888 Seventh Avenue
Vice President and of SFM LLC 33rd Floor
Assistant Secretary New York, NY 10106
(United States)
To the best of the Reporting Persons' knowledge:
(a) None of the above persons holds any Shares.
(b) None of the above persons has any contracts, arrangements,
understandings or relationships with respect to the Shares.
<PAGE>
Page 16 of 68 Pages
ANNEX B
The following is a list of all of the persons (other than Stanley
Druckenmiller) who serve as Managing Directors of SFM LLC:
Scott K. H. Bessent
Walter Burlock
Brian J. Corvese
Jeffrey L. Feinberg
Arminio Fraga
Gary Gladstein
Ron Hiram
Robert K. Jermain
David N. Kowitz
Alexander C. McAree
Paul McNulty
Gabriel S. Nechamkin
Steven Okin
Dale Precoda
Lief D. Rosenblatt
Mark D. Sonnino
Filiberto H. Verticelli
Sean C. Warren
Each of the above-listed persons is a United States citizen whose principal
occupation is serving as Managing Director of SFM LLC, and each has a business
address c/o Soros Fund Management LLC, 888 Seventh Avenue, 33rd Floor, New York,
New York 10106.
To the best of the Reporting Persons' knowledge:
(a) None of the above persons holds any Shares.
(b) None of the above persons has any contracts, arrangements,
understandings or relationships with respect to the Shares.
<PAGE>
Page 17 of 68 Pages
EXHIBIT INDEX
Page No.
--------
A. Power of Attorney dated as of January 1, 1997 granted by
Mr. George Soros in favor of Mr. Sean C. Warren and Mr.
Michael C. Neus...................................................... 18
B. Power of Attorney dated as of January 1, 1997 granted by
Mr. Stanley F. Druckenmiller in favor of Mr. Sean C. Warren
and Mr. Michael C. Neus.............................................. 19
C. Joint Filing Agreement dated June 30, 1997 by and among
Quantum Industrial Partners LDC, QIH Management Investor,
L.P., QIH Management, Inc., Soros Fund Management LLC, Mr.
George Soros and Mr. Stanley F. Druckenmiller........................ 20
D. Power of Attorney dated May 23, 1996 granted by Quantum
Industrial Partners LDC in favor of Mr. Gary Gladstein, Mr.
Sean Warren and Mr. Michael Neus..................................... 22
E. Securities Purchase Agreement dated as of June 19, 1997
by and among T/F Purifiner, Inc., Taylor (as defined
therein), Ford (as defined therein) and Quantum Industrial
Partners LDC......................................................... 23
F. Registration Rights Agreement dated as of June 19, 1997
by and among T/F Purifiner, Inc. and Quantum Industrial
Partners LDC......................................................... 40
G. Form of T/F Purifiner Inc.'s Promissory Note......................... 54
H. Warrant issued by T/F Purifiner Inc. to Quantum Industrial
Partners LDC......................................................... 58
Page 18 of 68 Pages
EXHIBIT A
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, GEORGE SOROS, hereby make, constitute
and appoint each of SEAN C. WARREN and MICHAEL C. NEUS, acting individually, as
my agent and attorney-in-fact for the purpose of executing in my name, (a) in my
personal capacity or (b) in my capacity as Chairman of, member of or in other
capacities with Soros Fund Management LLC, all documents, certificates,
instruments, statements, filings and agreements ("documents") to be filed with
or delivered to any foreign or domestic governmental or regulatory body or
required or requested by any other person or entity pursuant to any legal or
regulatory requirement relating to the acquisition, ownership, management or
disposition of securities or other investments, and any other documents relating
or ancillary thereto, including but not limited to, all documents relating to
filings with the United States Securities and Exchange Commission (the "SEC")
pursuant to the Securities Act of 1933 or the Securities Exchange Act of 1934
(the "Act") and the rules and regulations promulgated thereunder, including: (1)
all documents relating to the beneficial ownership of securities required to be
filed with the SEC pursuant to Section 13(d) or Section 16(a) of the Act
including, without limitation: (a) any acquisition statements on Schedule 13D or
Schedule 13G and any amendments thereto, (b) any joint filing agreements
pursuant to Rule 13d-1(f) and (c) any initial statements of, or statements of
changes in, beneficial ownership of securities on Form 3, Form 4 or Form 5 and
(2) any information statements on Form 13F required to be filed with the SEC
pursuant to Section 13(f) of the Act.
All past acts of the attorney-in-fact in furtherance of the foregoing are hereby
ratified and confirmed.
This power of attorney shall be valid from the date hereof until revoked by me.
IN WITNESS WHEREOF, I have executed this instrument as of the 1st day of
January, 1997.
/S/ GEORGE SOROS
-----------------------------
GEORGE SOROS
Page 19 of 68 Pages
EXHIBIT B
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, STANLEY F. DRUCKENMILLER, hereby make,
constitute and appoint each of SEAN C. WARREN and MICHAEL C. NEUS, acting
individually, as my agent and attorney-in-fact for the purpose of executing in
my name, (a) in my personal capacity or (b) in my capacity as Lead Portfolio
Manager of, member of or in other capacities with Soros Fund Management LLC, all
documents, certificates, instruments, statements, filings and agreements
("documents") to be filed with or delivered to any foreign or domestic
governmental or regulatory body or required or requested by any other person or
entity pursuant to any legal or regulatory requirement relating to the
acquisition, ownership, management or disposition of securities or other
investments, and any other documents relating or ancillary thereto, including
but not limited to, all documents relating to filings with the United States
Securities and Exchange Commission (the "SEC") pursuant to the Securities Act of
1933 or the Securities Exchange Act of 1934 (the "Act") and the rules and
regulations promulgated thereunder, including: (1) all documents relating to the
beneficial ownership of securities required to be filed with the SEC pursuant to
Section 13(d) or Section 16(a) of the Act including, without limitation: (a) any
acquisition statements on Schedule 13D or Schedule 13G and any amendments
thereto, (b) any joint filing agreements pursuant to Rule 13d-1(f) and (c) any
initial statements of, or statements of changes in, beneficial ownership of
securities on Form 3, Form 4 or Form 5 and (2) any information statements on
Form 13F required to be filed with the SEC pursuant to Section 13(f) of the Act.
All past acts of the attorney-in-fact in furtherance of the foregoing are hereby
ratified and confirmed.
This power of attorney shall be valid from the date hereof until revoked by me.
IN WITNESS WHEREOF, I have executed this instrument as of the 1st day of
January, 1997.
/S/ STANLEY F. DRUCKENMILLER
-----------------------------
STANLEY F. DRUCKENMILLER
Page 20 of 68 Pages
EXHIBIT C
JOINT FILING AGREEMENT
The undersigned hereby agree that the statement on Schedule 13D
with respect to the Common Stock of T/F Purifiner, Inc. dated June 30, 1997 is,
and any amendments thereto signed by each of the undersigned shall be, filed on
behalf of each of us pursuant to and in accordance with the provisions of Rule
13d- 1(f) under the Securities Exchange Act of 1934.
Date: June 30, 1997
QUANTUM INDUSTRIAL PARTNERS LDC
By: /S/ MICHAEL C. NEUS
-----------------------------
Michael C. Neus
Attorney-in-Fact
QIH MANAGEMENT INVESTOR, L.P.
By: QIH Management, Inc.,
its General Partner
By: /S/ MICHAEL C. NEUS
------------------------
Michael C. Neus
Vice President
QIH MANAGEMENT, INC.
By: /S/ MICHAEL C. NEUS
-----------------------------
Michael C. Neus
Vice President
SOROS FUND MANAGEMENT LLC
By: /S/ MICHAEL C. NEUS
-----------------------------
Michael C. Neus
Assistant General Counsel
<PAGE>
Page 21 of 68 Pages
GEORGE SOROS
By: /S/ MICHAEL C. NEUS
-----------------------------
Michael C. Neus
Attorney-in-Fact
STANLEY F. DRUCKENMILLER
By: /S/ MICHAEL C. NEUS
-----------------------------
Michael C. Neus
Attorney-in-Fact
Page 22 of 68 Pages
EXHIBIT D
QUANTUM INDUSTRIAL PARTNERS LDC
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENT, that the undersigned QUANTUM INDUSTRIAL PARTNERS
LDC (the "Company"), an exempted limited duration company existing and operating
under the laws of the Cayman Islands does, pursuant to a duly adopted resolution
of its Managing Director, hereby designate, constitute and appoint:
GARY GLADSTEIN, SEAN WARREN and MICHAEL NEUS
acting, singly and not jointly, as its true and lawful agent and attorney in
fact for the purpose of executing in its name, all documents, certificates,
instruments, statements, filings and agreements ("documents") to be filed with
or delivered to any foreign or domestic governmental or regulatory body or
required or requested by any other person or entity pursuant to any legal or
regulatory requirement relating to the acquisition, ownership, management or
disposition of securities or other investments, and any other documents relating
or ancillary thereto, including but not limited to, all documents relating to
filings with the United States Securities and Exchange Commission (the "SEC")
pursuant to the Securities Act of 1933 or the Securities Exchange Act of 1934
(the "Act") and the rules and regulations promulgated thereunder, including: (1)
all documents relating to the beneficial ownership of securities required to be
filed with the SEC pursuant to Section 13(d) or Section 16(a) of the Act
including, without limitation: (a) any acquisition statements on Schedule 13D or
Schedule 13G and any amendments thereto, (b) any joint filing agreements
pursuant to Rule 13d-1(f) and (c) any initial statements of, or statements of
changes in, beneficial ownership of securities on Form 3, Form 4 or Form 5 and
(2) any information statements on Form 13F required to be filed with the SEC
pursuant to Section 13(f) of the Act.
Each attorney-in-fact is hereby authorized and empowered to perform all other
acts and deeds, which he or she in his or her sole discretion deems necessary or
appropriate to carry out to the fullest extent the terms and the intent of the
foregoing. All prior acts of each attorney-in-fact in furtherance of the
foregoing are hereby ratified and confirmed.
IN WITNESS WHEREOF, the Company has caused this document to be execute this 23rd
day of May, 1996.
QUANTUM INDUSTRIAL PARTNERS LDC
----------------------------------
Curacao Corporation Company N.V.
Managing Director
Page 23 of 68 Pages
EXHIBIT E
SECURITIES PURCHASE AGREEMENT
AGREEMENT dated as of June 19, 1997 among Quantum Industrial Partners
LDC, a Cayman Islands exempted limited liability duration company (the "Buyer"),
T/F Purifiner, Inc., a Delaware corporation (the "Company"), the members of the
Taylor family listed on the signature pages hereto (collectively, "Taylor"), and
the members of the Ford family listed on the signature pages hereto
(collectively, "Ford").
W I T N E S S E T H
WHEREAS, Buyer desires to purchase the Note, the Warrant, the Taylor
Shares and the Ford Shares (each as hereinafter defined) on the terms and
subject to the conditions set forth herein;
WHEREAS, the Company desires to sell the Note and the Warrant to the
Buyer on the terms and subject to the conditions herein set forth; and
WHEREAS, Taylor desires to sell the Taylor Shares to the Buyer on the
terms and subject to the conditions herein set forth; and
WHEREAS, Ford desires to sell the Ford Shares to the Buyer on the
terms and subject to the conditions herein set forth.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. The following terms, as used herein, have the
following meanings:
"Affiliate" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under common control with
such Person.
"Common Stock" means the Common Stock, par value $.001 per share, of
the Company.
"Encumbrances" means all voting trusts, arrangements, stockholder
agreements, proxies, liens, encumbrances, transfer restrictions, preemptive
rights, security, interests or community property rights.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Ford Shares" shall have the meaning set forth in Section 2.1(c)
hereof.
"Material Adverse Effect" means a material adverse effect on the
<PAGE>
Page 24 of 68 Pages
assets, properties, business, prospects, operations or condition, financial or
otherwise, on the Company.
"Note" shall have the meaning set forth in Section 2.1(a)(i) hereof.
"Person" means an individual, corporation, limited liability company,
partnership, association, trust or other entity or organization, including a
government or political subdivision or an agency or instrumentality thereof.
"Registration Agreement" means the Registration Rights Agreement dated
as of the date hereof between the Company and the Buyer, substantially in the
form attached hereto as Exhibit A.
"SEC" means the Securities and Exchange Commission.
"SEC Documents" means all documents required to have been filed by the
Company with the SEC under Sections 13, 14(a) and 15(d) of the Exchange Act
since its registration of its Common Stock under Section 12(g) of the Exchange
Act.
"Securities" means the Note, the Warrant, the Taylor Shares and the
Ford Shares, collectively.
"Securities Act" means the Securities Act of 1933, as amended.
"Taylor Shares" shall have the meaning set forth in Section 2.1(b)
hereof.
"Warrant" shall have the meaning set forth in Section 2.1(a)(ii)
hereof.
-2-
<PAGE>
Page 25 of 68 Pages
ARTICLE II
PURCHASE AND SALE
2.1 Purchase and Sale of Securities.
(a) The Company hereby agrees to sell to the Buyer and, subject
to the terms and conditions herein set forth, the Buyer agrees to purchase from
the Company, the following:
(i) the Company's promissory note (the "Note") in the aggregate
principal amount of $2,000,000, dated the date hereof and attached hereto as
Exhibit B; and
- ---------
(ii) the Company's common stock purchase warrant (the "Warrant")
for the purchase of 500,000 shares of Common Stock at an exercise price of $2.75
per share, dated the date hereof and attached hereto as Exhibit C.
---------
(b) Each Person on Schedule I hereto agrees severally to sell to
----------
the Buyer and, subject to the terms and conditions hereinafter set forth, the
Buyer agrees to purchase from each person on Schedule I hereto that number of
shares of Common Stock set forth opposite such person's name, the total amount
of such shares aggregating 285,000 shares of Common Stock (collectively, the
"Taylor Shares"), in each case at $2.75 per share for an aggregate purchase
price of $783,750.
(c) Each Person on Schedule II hereto agrees severally to sell
-----------
to the Buyer and, subject to the terms and conditions hereinafter set forth, the
Buyer agrees to purchase from each person on Schedule II hereto that number of
shares of Common Stock set for opposite such persons name, the total amount of
such shares aggregating 785,000 shares of Common Stock (collectively, the "Ford
Shares"), in each case at $2.75 per share for an aggregate purchase price of
$2,158,750.
2.2 Closing. The closing (the "Closing") of the several purchases and
sales of the Securities shall take place at the offices of Akin, Gump, Strauss,
Hauer & Feld, L.LP., 590 Madison Avenue, New York, New York 10022 on the date
hereof. All transactions at the Closing shall be deemed to take place
simultaneously. At the Closing:
(a) The Buyer shall deliver to the Company $2,000,000 in cash or other
immediately available funds to an account designated by the Company.
(b) The Buyer shall deliver to Atlas, Pearlman, Trop & Borkson, P.A.,
as escrow agent for Taylor (the "Escrow Agent"), $783,750 in cash or other
immediately available funds to an account designated by the Escrow Agent, which
the parties hereto agree is in full satisfaction of the purchase price for the
Taylor Shares.
(c) The Buyer shall deliver (i) to Richard J. Ford, as representative
of Ford, $2,158,750 less $209,078.01 (such amount paid to the Company as
specified in Section 2.2(c)(ii)) in cash or other immediately available funds to
an account designated by Richard J. Ford, and (ii) to the Company $209,078.01 in
partial satisfaction of loans made to Richard C. Ford by the Company, which the
parties hereto agree is in full satisfaction of the purchase price for the Ford
Shares.
-3-
<PAGE>
Page 26 of 68 Pages
(d) The Escrow Agent, on behalf of the Taylors, shall deliver to the
Buyer the certificates representing the Taylor Shares duly endorsed or with duly
executed stock powers attached and in proper form for transfer to the Buyer.
(e) Ford shall deliver to the Buyer the certificates representing the
Ford Shares duly endorsed or with duly executed stock powers attached and in
proper form for transfer to the Buyer.
(f) Upon receipt by the Buyer of the certificates representing the
Taylor Shares and the Ford Shares, the Buyer shall surrender such certificates
to the Company in exchange for a certificate representing the aggregate number
of shares of the Taylor Shares and the Ford Shares duly registered in the name
of the Buyer.
(g) The Company shall deliver to the Buyer, the Note, the Warrant, the
Taylor Shares and the Ford Shares, in each case duly registered in the name of
the Buyer.
(h) The Company shall deliver to an account designated by Akin, Gump,
Strauss, Hauer & Feld, L.L.P., the amounts owed it pursuant to Section 7.2.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Buyer that:
3.1 Corporate Existence and Power; Capitalization. The Company is a
corporation duly incorporated and validly existing and in good standing under
the laws of the State of Delaware, and has all corporate powers required to
carry on its business as now being conducted. The Company has no Subsidiaries.
The Company is authorized or duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction where the character of
the property owned or leased by it or the nature of its activities make such
qualification necessary. The capitalization of the Company as of the date hereof
is set forth on Schedule 3.1 hereto. The SEC Documents describe accurately all
outstanding stock options, warrants and other rights to purchase any equity
securities of the Company. Except as set forth on Schedule 3.1, there are no
outstanding options, warrants, rights to subscribe to, or securities or rights
convertible or exercisable into or exchangeable for any shares of capital stock
of the Company or arrangements by which the Company is or may become bound to
issue additional shares of its capital stock other than pursuant to this
Agreement and the Warrant.
3.2 Corporate Authorization. The execution, delivery and performance by
the Company of this Agreement, Registration Agreement, the Note and the Warrant
and the consummation by the Company of the transactions contemplated hereby and
thereby, are within the Company's corporate power and have been duly authorized
by all necessary corporate action on the part of the Company. This Agreement,
the Registration Agreement, the Note and the Warrant have each been duly and
validly executed by the Company and constitute the valid and binding agreements
of the Company, each enforceable against the Company in accordance with its
terms.
-4-
<PAGE>
Page 27 of 68 Pages
3.3 Governmental and Court Authorization. The execution, delivery and
performance by the Company of this Agreement, the Registration Agreement, the
Note and the Warrant require no consent, approval or authorization of, or
filing, registration or qualification with, any governmental body, agency,
official, court or other authority that has not been obtained or made.
3.4 Non-Contravention. The execution, delivery and performance by the
Company of this Agreement, the Registration Agreement, the Note and the Warrant
do not and will not (A) contravene or conflict with the Company's certificate of
incorporation or by-laws, or (B) (i) contravene or conflict with or constitute a
violation of any provision of any federal or state law, regulation, judgment,
injunction, order or decree binding upon or applicable to the Company, (ii)
except as set forth on Schedule 3.4, require any consent, approval or other
action by any Person or constitute a default under or give rise to any right of
termination, cancellation or acceleration of any right or obligation of the
Company or to a loss of any benefit to which the Company is entitled under any
provision of any agreement, contract, indenture, lease or other instrument
binding upon the Company or any license, franchise, permit or other similar
authorization held by the Company or (iii) result in the creation or imposition
of any Encumbrances on the Securities.
3.5 SEC Documents; Disclosure Documents. Each report or proxy
statement delivered to the Buyer is a true and complete copy of such document as
filed by the Company with the SEC. The Company has delivered to the Buyer all
SEC Documents filed with the SEC since January 1, 1994. The Company has filed in
a timely manner all documents that the Company was required to file with the SEC
under Sections 13, 14(a) and 15(d) of the Exchange Act since its registration of
its Common Stock under Section 12(g) of the Exchange Act. As of their respective
filing dates, all SEC Documents filed by the Company with the SEC complied in
all material respects with the Exchange Act or the Securities Act, as
applicable. None of the SEC Documents as of their respective dates contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements made therein, in light
of the circumstances under which they were made, not misleading. The financial
statements of the Company included in the SEC Documents (the "Financial
Statements") complied as to form in all material respects with applicable
accounting requirements and with the published rules and regulations of the SEC
with respect thereto. The Financial Statements have been prepared in accordance
with generally accepted accounting principles consistently applied and fairly
present the financial position of the Company at the dates thereof and the
results of operations and cash flows for the periods then ended (subject, in the
case of unaudited statements, to normal, recurring adjustments).
3.6 Due Authorization and Validity of the Securities. All of the
Securities have been duly authorized and, when delivered against payment
therefor as contemplated hereby, will be validly issued, fully paid and
non-assessable and, will not be subject to any preemptive or similar rights.
3.7 Absence of Certain Changes. Since March 31, 1997, there has been
no Material Adverse Effect.
3.8 Litigation. Except as set forth in the SEC Documents, there is no
action, suit, investigation or proceeding pending against, or to the knowledge
of the Company threatened against or affecting, the Company or any of their
-5-
<PAGE>
Page 28 of 68 Pages
respective properties before any court or arbitrator or any governmental body,
agency, official or authority which (i) could reasonably be expected to have a
Material Adverse Effect or (ii) in any manner would enjoin, alter, call into
question, affect or delay the transactions contemplated by this Agreement.
3.9 FIRPTA. The Company is not a "United States real property holding
corporation" within the meaning of Section 896(c)(2) of the Internal Revenue
Code of 1986, as amended.
3.10 No Undisclosed Liabilities. Except as set forth on Schedule 3.14,
the Company has no liabilities or obligations not disclosed in the SEC Documents
and those incurred in the ordinary course of the Company's business since March
31, 1997.
3.11 No Brokers. The Company has taken no action which would give rise
to any claim by any Person for brokerage commissions, finders' fees or similar
payments by the Buyer relating to this Agreement or the transactions
contemplated thereby.
3.12 Disclosure. No representation, warranty or statement made by the
Company in this Agreement, the Registration Agreement or any agreement,
certificate, statement or document furnished by or on behalf of the Company in
connection herewith or therewith contains any untrue statement of a material
fact or omits to state a material fact necessary in order to make the statements
contained herein or therein, in light of the circumstances under which they were
made, misleading.
3.13 Transactions with Affiliates. Except as set forth in the SEC
Documents, there are no business relationships or related party transactions
that would be required to be disclosed therein by Item 404 of Regulation S-K of
the SEC that are not so disclosed.
3.14 Intellectual Property. Except as disclosed in the SEC Documents
or Schedule 3.14 hereto:
(a) the Company owns, possesses, controls or is licensed under,
such patents (or applications therefor), trademarks and service marks (and
registrations thereof), copyrights (and registrations thereof), utility models,
inventions, know-how, trade secrets, and other intellectual property (all of
aforesaid referred to as "Necessary Intellectual Property Rights") as are
necessary for the operation of the business now conducted or operated by the
Company, including but not limited to the property listed on Schedule 3.14;
(b) to the knowledge of Company all Necessary Intellectual
Property Rights are valid and subsisting and the Company is unaware of any fact
which, individually or in the aggregate, would materially detrimentally affect
the validity, ownership or enforceability of the Necessary Intellectual Property
Rights;
(c) the Company is not aware of, or has not received notice of,
any asserted right with respect to any of the Necessary Intellectual Property
Rights which, if determined unfavorably with respect to the interests of the
Company would have a Material Adverse Effect;
(d) the Company is unaware of any patent, trademark, copyright or
other intellectual property license to which the Company is a party as licensor
or licensee, which has been revoked, terminated or canceled, or which is likely
-6-
<PAGE>
Page 29 of 68 Pages
or subject to being revoked, terminated or canceled, where the revocation,
cancellation or termination would have a Material Adverse Effect; and
(e) the Company has not been notified or advised, has not been
the recipient of a claim, or is otherwise not aware, that any activity of the
Company infringes or violates the patent, trademark, copyright or other
intellectual property right of any third party.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF TAYLOR AND FORD
(A) Taylor and Ford hereby represent and warrant, severally and not
jointly, to the Buyer that:
4.1 Authorization. This Agreement has been duly and validly authorized
by it and constitutes its valid and binding agreement and is enforceable against
it in accordance with its terms.
4.2 Governmental and Court Authorization. The execution, delivery and
performance by it of this Agreement requires no consent, approval or
authorization of, or filing, registration or qualification with, any
governmental body, agency, official, court or other authority that has not been
obtained or made.
4.3 Non-Contravention. The execution, delivery and performance by it
of this Agreement do not and will not (i) contravene or conflict with or
constitute a violation of any provision of any federal or state law, regulation,
judgment, injunction, order or decree binding upon or applicable to it, (ii)
require any consent, approval or other action by any Person, or (iii) result in
the creation or imposition of any Encumbrances on the Taylor Shares or the Ford
Shares.
4.4 Title to Shares. It is the owner of, and each has valid and
marketable title to, the Common Stock proposed to be sold by it, free and clear
of all Encumbrances. There is no litigation pending or threatened which
questions the validity of the ownership of the shares of Common Stock to be sold
to it pursuant to the terms of this Agreement. Upon delivery of the such shares
to be sold by it, and payment of the purchase price for such shares, the Buyer
shall receive good and marketable title to such shares free and clear of any
Encumbrances.
4.5 No Brokers. It has not taken any action which would give rise to
any claim by any Person for brokerage commissions, finders' fees or similar
payments by the Buyer to this Agreement or to the transactions contemplated
thereby.
(B) Ford represents and warrants to the Buyer that it has (A) no
reason to believe that the representations and warranties of the Company
contained herein or any information in the SEC Documents are not true and
correct and (B) no knowledge of any material fact, condition or information not
disclosed in the SEC Documents which could have a Material Adverse Effect and
(ii) the sale of the Securities by it pursuant to this Agreement is not prompted
by any information concerning the Company which is not set forth in the SEC
Documents.
-7-
<PAGE>
Page 30 of 68 Pages
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer hereby represents and warrants, to the Company, Taylor and
Ford as of the date hereof that:
5.1 Organization; Existence. The Buyer is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation, and the Buyer has all necessary corporate powers and all material
governmental licenses, authorizations, consents and approvals required to carry
on its business as now being conducted.
5.2 Corporate Authorization. The execution, delivery and performance
by the Buyer of this Agreement and the Registration Agreement and the
consummation by the Buyer of the transactions contemplated hereby and thereby
are within the Buyer's corporate powers and have been duly authorized by all
necessary corporate or other action on the part of the Buyer.
5.3 Governmental and Court Authorization. The execution, delivery and
performance by the Buyer of this Agreement and the Registration Agreement
require no consent, approval or authorization of, or filing, registration or
qualification with, any governmental body, agency, official, court or authority
that has not been obtained or made.
5.4 Non-Contravention. The execution, delivery and performance by the
Buyer of this Agreement and the Registration Agreement do not and will not (A)
contravene or conflict with the certificate of incorporation or bylaws of it or
(B) contravene or conflict with or constitute a violation of any provision of
any law, regulation, judgment, injunction, order or decree binding upon or
applicable to it.
5.5 Purchase for Investment; Legends.
(a) The Securities are being acquired for its own account, and not
with a view to the public distribution of such Company Securities in violation
of the Securities Act. Notwithstanding the foregoing, the Buyer shall have the
right at all times to sell or otherwise dispose of all or any part of the
Securities pursuant to a registration, or exemption therefrom, under the
Securities Act. It is an "accredited investor" as defined in Rule 501 under the
Securities Act.
(b) Upon original issuance thereof, and until such time as the same is
no longer required under the applicable requirements of the Securities Act, the
Securities (and all securities issued in exchange therefor or substitution
thereof) shall bear the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933 AND MAY NOT BE SOLD, ASSIGNED, OR
OTHERWISE TRANSFERRED OR DISPOSED OF EXCEPT IN
COMPLIANCE WITH SUCH ACT AND THE APPLICABLE RULES
AND REGULATIONS THEREUNDER.
-8-
<PAGE>
Page 31 of 68 Pages
5.6 Reliance on Taylor. Except for the representations set forth in
Article IV hereof, the Company is not relying on any other information supplied
by Taylor, or anyone in their capacity as Taylor's agent, in connection with its
investment in the Securities pursuant to this Agreement.
ARTICLE VI
COVENANTS
6.1 Registration. If and to the extent required by the Registration
Agreement, the Company agrees that it will register any or all of the Securities
(and any or all securities issued in exchange thereof or substitution thereof)
for sale under federal and state securities laws in accordance with the
Registration Agreement.
6.2 Board Representation. The Company, Ford and the Buyer shall take
all action within their respective powers, including without limitation, the
voting of all their respective shares of Common Stock, the execution of written
consents, the calling of special meetings, the removal of directors, the filling
of vacancies on the Board of Directors, the waiving of notice and the attending
of meetings, so as to cause the Board of Directors of the Company to have as
directors commencing on the date hereof (a) Keith Hart so long as he becomes and
remains Chief Executive Officer of the Company; (b) Garo Amen or one of his
designees; (c) one representative designated by Ford; (d) one representative
designated by the Buyer so long as the Buyer owns shares of Common Stock and/or
securities convertible or exercisable into or exchangeable for shares of Common
Stock in an amount equal to 40% of the aggregate number of shares of Common
Stock and securities convertible and exercisable into and exchangeable for
shares of Common Stock purchased by the Buyer pursuant to this Agreement and the
Warrant, and (e) upon the completion by the Company of a future equity or debt
financing between the Company and a third-party investor, a representative
designated by such third party investor of the Company. The Company shall
reimburse each director of the Company for reasonable expenses incurred in
attending each meeting of the Board of Directors or any committee thereof.
6.3 Proceeds of Financing. The proceeds of the sale of the Notes shall
be used by the Company solely for (i) general operating expenses of the Company
and (ii) to hire additional marketing employees for the Company. The portion of
the proceeds of the sale of the Ford Shares which would have otherwise been
received by Richard C. Ford, as such portion is set forth opposite Mr. Ford's
name on Schedule II hereto, shall be delivered directly to the Company in
partial satisfaction of loans made to Mr. Ford by the Company. Except for the
Agreement in Partial Settlement of T/F Purifiner, Inc. Issues (the "Settlement
Agreement"), the Company will not use any of the proceeds from the sale of the
Note for the repayment of any loans made to any shareholder of the Company or
dividends or other Restricted Payments (as defined in Section 6.5 below).
6.4 Transactions with Affiliates. So long as the Note is outstanding,
without the Buyer's written consent, the Company shall not conduct any business
or enter into any transaction or series of similar transactions with any
Affiliate of the Company or any legal or beneficial owner of 5% or more of any
class of capital stock of the Company with an affiliate of such owner unless the
-9-
<PAGE>
Page 32 of 68 Pages
terms of such business, transaction or series of transactions are set forth in
writing and as favorable to the Company as terms that would be obtainable at the
time for a comparable transaction or series of similar transactions in arm's
length dealings with an unrelated third person. Notwithstanding the foregoing,
so long as the Note is outstanding the Company shall not make, or cause any
other party to make, any loans to any shareholders of the Company.
6.5 Restricted Payments. So long as the Note is outstanding, the
Company will not, without the prior written consent of the Buyer, (i) declare or
pay any dividend or make any other payment or distribution on account of any
capital stock of the Company, (ii) purchase redeem or otherwise acquire or
retire for value any capital stock of the Company or (iii) except for the
Settlement Agreement, purchase, redeem, defease or otherwise acquire or retire
for value any indebtedness that is subordinate or pari passu to the Note (each a
"Restricted Payment").
ARTICLE VII
CLOSING DELIVERIES
Simultaneously with the execution and delivery of this Agreement, the
following deliveries shall be made:
7.1 Registration Rights Agreement. The Buyer and the Company shall
enter into the Registration Agreement.
7.2 Reimbursement. The Company shall have reimbursed the Buyer for its
out-of-pocket costs and expenses incurred in connection with the closing of the
transactions contemplated by this Agreement and the Registration Rights
Agreement, including without limitation, all out-of-pocket costs and expenses
incurred by the Buyer in connection with the Buyer's legal assessment of patents
and any litigation relating to the Company's patents; provided, however, that
such in no event shall reimbursement for out-of-pocket costs and expenses
relating to patent issues exceed $10,000.
7.3 Officer's Certificate. The Company shall deliver a certificate
from its Secretary attesting to the authenticity of the following documents: (i)
the certificate of incorporation of the Company; (ii) the by-laws of the
Company; (iii) the resolutions of the Company authorizing the sale of the Note
and Warrant; and (iv) the form of certificate for Common Stock (representing
shares of Common Stock equal to the sum of the Taylor Shares and the Ford
Shares).
7.4 Opinion. The Company shall cause Atlas, Pearlman, Trop & Borkson,
P.A., to deliver to the Buyer an opinion in the form attached hereto as Exhibit
-------
D.
- -
7.5 Amendment to Escrow Agreement. Taylor, the Company, Richard C.
Ford and the Escrow Agent shall enter into and deliver to the Buyer an amendment
to that Escrow Agreement dated March 7, 1997 among said parties in the form
attached hereto as Exhibit E.
---------
-10-
<PAGE>
Page 33 of 68 Pages
ARTICLE VIII
SURVIVAL; INDEMNIFICATION
8.1 Survival. The covenants, agreements, representations and
warranties of the parties hereto contained in this Agreement or in any
certificate or other writing delivered pursuant hereto or in connection herewith
shall survive the Closing.
8.2 Indemnification. (a) The Company shall indemnify and hold harmless
the Buyer (and its directors, officers, employees, Affiliates and permitted
assigns) from and against all losses, liabilities, charges, damages,
deficiencies, costs and expenses (including interest, penalties and attorney's
fees and disbursements) (collectively, "Loss"), sustained or incurred by the
Buyer based upon or arising out of (i) any inaccuracy or defect or breach of any
representation or warranty by the Company in this Agreement or (ii) any failure
by the Company to perform or observe any term or covenant of this Agreement or
the Registration Agreement required to be performed by it, and will reimburse
the Buyer for any reasonable legal or other expenses incurred by it in
connection with the investigating or defending of any Loss.
-11-
<PAGE>
Page 34 of 68 Pages
(b) Taylor shall indemnify and hold harmless the Buyer (and its
directors, officers, employees, Affiliates and permitted assigns) from and
against all Loss sustained or incurred by the Buyer based upon or arising out of
(i) any inaccuracy or defect or breach of any representation or warranty by
Taylor in this Agreement, or (ii) any failure by Taylor to perform or observe
any term or covenant of this Agreement required to be performed by it, and will
reimburse the Buyer for any reasonable legal or other expenses incurred by it in
connection with the investigating or defending of any Loss.
(c) Ford shall indemnify and hold harmless the Buyer (and its
directors, officers, employees, Affiliates and permitted assigns) from and
against all Loss sustained or incurred by the Buyer based upon or arising out of
(i) any inaccuracy or defect or breach of any representation or warranty by Ford
in this Agreement, or (ii) any failure by Ford to perform or observe any term or
covenant of this Agreement required to be performed by it, and will reimburse
the Buyer for any legal or other expenses incurred by it in connection with the
investigating or defending of any Loss. In addition, Ford shall indemnify and
hold harmless the Buyer from and against 50% of all Loss sustained or incurred
by it based upon or arising out of any inaccuracy or defect or breach of any
representation or warranty by the Company in this Agreement and will reimburse
the Buyer in such 50% pro rata portion for any reasonable legal or other
expenses incurred by it in connection with the investigating or defending of any
Loss.
ARTICLE IX
MISCELLANEOUS
9.1 Notices. All notices, requests and other communications to any
part hereunder shall be in writing (including telecopy or similar writing) and
shall be effective upon receipt and shall be given, if to the Buyer, to:
Quantum Industrial Partners LDC
c/o Curacao Corporation Company, N.V.
Kaya Flamboyan
Willemstad, Curacao
Netherlands, Antilles
Fax: 599-9-322-001
with a copy to:
Soros Fund Management
888 Seventh Avenue
New York, New York 10106
Attention: Robert Soros
Fax: (212) 664-0544
and
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
590 Madison Avenue
New York, New York 10022
Attention: Edward D. Sopher
Fax: (212) 872-1002
-12-
<PAGE>
Page 35 of 68 Pages
If the Company to:
T/F Purifiner, Inc.
3036 High Ridge Road
Suite 100
Boyton Beach, Florida 33426
Attention: Keith T.J. Hart
Fax: (561) 547-4025
with a copy to:
Atlas, Pearlman, Trop & Borkson, P.A.
New River Center - Suite 1900
200 East Los Olas Boulevard
Fort Lauderdale, Florida 33301
Attention: Jim Schneider
Fax: (954) 523-1952
If to Taylor to:
James W. Taylor
c/o Taylor Made Group
66 Kingsboro Avenue
P.O. Box 1190
Gloversville, New York 12078
Fax: (518) 725-4335
with a copy to:
Bond, Schoeneck & King, LLP
One Lincoln Center
Syracuse, New York 13202
Attention: James N. Seeley
Fax: (315) 422-3598
-13-
<PAGE>
Page 36 of 68 Pages
If to Ford to:
Richard C. Ford
4720 S. Ocean Blvd.
Highland Beach, Florida 33487
with a copy to:
Atlas, Pearlman, Trop & Borkson, P.A.
New River Center - Suite 1900
200 East Los Olas Boulevard
Fort Lauderdale, Florida 33301
Attention: Jim Schneider
Fax: (954) 523-1952
or to such other address or Person as any of the parties may designate by
written notice hereunder.
9.2 Amendments: No Waivers.
(a) Any provision of this Agreement may be amended or waived if, and
only if, such amendment or waiver is in writing and signed, in the case of an
amendment, by the Buyers and the Company, or in the case of a waiver, by the
party against whom the waiver is to be effective.
(b) No failure or delay by either party in exercising any right, power
or privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law;
9.3 Expenses. Subject to the proviso contained in Section 7.3, all
reasonable costs and expenses incurred by the Buyer in connection with this
Agreement and the Registration Agreement shall be paid by the Company. Each of
the Company, Taylor and Ford shall pay its own expenses incurred in connection
with this Agreement.
9.4 Successors and Assigns. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns; provided that no party may assign, delegate or otherwise
transfer any of its rights or obligations under this Agreement without the
consent of the other parties hereto.
9.5 Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW YORK.
9.6 Counterparts; Effectiveness. This Agreement may be signed in any
number of counterparts, each of which shall be an original, with the same effect
as if the signatures thereto and hereto were upon the same instrument. This
Agreement shall become effective when each party hereto shall have received a
counterpart hereof signed by the other parties hereto.
9.7 Entire Agreement. This Agreement and the Registration Agreement
-14-
<PAGE>
Page 37 of 68 Pages
constitute the entire agreement between the parties with respect to the subject
matter hereof and supersede all prior agreements, understandings and
negotiations, both written and oral, between the parties with respect to the
subject matter of this Agreement.
9.8 Jurisdiction. Any suit, action or proceeding seeking to enforce
any provision of, or based on any matter arising out of or in connection with,
this Agreement or the transactions contemplated hereby may be brought against
any of the parties in the courts of the State of New York in New York City, or,
if it has or can acquire jurisdiction, in the United States District Court for
the Southern District of New York, and each of the parties hereby consents to
the jurisdiction of such courts (and of the appropriate appellate courts) in any
such suit, action or proceeding and waives any objection to venue laid therein.
Process in any such suit, action or proceeding may be served on any party
anywhere in the world, whether within or without the State of New York.
9.9 Captions. The captions herein are included for convenience of
reference only and shall be ignored in the construction or interpretation
hereof.
-15-
<PAGE>
Page 38 of 68 Pages
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized signatories as of the day and
year first above written.
QUANTUM INDUSTRIAL PARTNERS LDC
By: /s/ Sean C. Warren
----------------------------------
Name: Sean C. Warren
Title: Attorney-in-fact
T/F PURIFINER, INC.
By: /s/ Keith T.J. Hart
----------------------------------
Name: Keith T.J. Hart
Title: President
RICHARD C. FORD
By: /s/ Richard J. Ford
----------------------------------
Richard J. Ford
Attorney-in-Fact
JENNIFER ROE FORD
By: /s/ Richard J. Ford
----------------------------------
Richard J. Ford
Attorney-in-Fact
/s/ Richard J. Ford
---------------------------------------
Richard J. Ford
TRACI FORD
By: /s/ Richard J. Ford
----------------------------------
Richard J. Ford
Attorney-in-Fact
-16-
<PAGE>
Page 39 of 68 Pages
JAMES W. TAYLOR
/s/ John E. Taylor
---------------------------------------
John E. Taylor
Attorney-in-Fact
/s/ John E. Taylor
---------------------------------------
John E. Taylor
MARGARET A. TAYLOR
/s/ John E. Taylor
---------------------------------------
John E. Taylor
Attorney-in-Fact
BARBARA A.B. TAYLOR
/s/ John E. Taylor
---------------------------------------
John E. Taylor
Attorney-in-Fact
-17-
Page 40 of 68 Pages
EXHIBIT F
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is made and
entered into as of this 19th day of June, 1997, by and between T/F PURIFINER,
INC., a Delaware corporation (the "Company"), and QUANTUM INDUSTRIAL PARTNERS
LDC, a Cayman Islands limited duration company (the "Investor").
This Agreement is made pursuant to the Securities Purchase
Agreement, dated as of June 19, 1997, by and among the Company, the Investor and
the other signatories thereto (the "Securities Purchase Agreement"). In order to
induce the Investor to enter into the Securities Purchase Agreement, the Company
has agreed to provide registration rights with respect to (i) the shares of
common stock, par value $.001 per share (the "Common Stock"), of the Company
issued to the Investor pursuant to the Securities Purchase Agreement and (ii)
the shares of Common Stock issued or issuable upon exercise of the warrant
issued to the Investor pursuant to the Securities Purchase Agreement.
The parties hereby agree as follows:
1. Securities Subject to this Agreement
------------------------------------
The term "Registrable Securities" shall mean (i) shares of the
Company's common stock, par value $.001 per share (the "Common Stock"), issued
and sold to the Investor pursuant to the Securities Purchase Agreement, (ii)
shares of Common Stock issuable upon exercise of the warrant (the "Warrant")
issued to the Investor pursuant to the Securities Purchase Agreement, that are
from time to time held by the Investor or any subsequent holder thereof
(together with the Investor, the "Holders") and (iii) shares of Common Stock
issued or issuable to the Holders by way of a dividend, stock split or other
distribution or in connection with a combination of shares, recapitalization,
merger, consolidation, reorganization or otherwise; provided, that such
--------
securities shall cease to be Registrable Securities when (a) a registration
statement with respect to the sale of such securities shall have become
effective under the Securities Act and such securities shall have been disposed
of in accordance with such registration statement, (b) they shall cease to be
outstanding or (c) they are distributed to the public pursuant to Rule 144 (or
any similar provision then in effect) under the Securities Act.
2. Demand Registration
-------------------
(a) Request for Registration. At any time after the date hereof,
------------------------
the Holders of a majority of the Registrable Securities (the "Majority Holders")
may make a written request for registration under the Securities Act of 1933, as
amended (the "Securities Act"), pursuant to this Section 2 of all or part of its
Registrable Securities (a "Demand Registration"); provided, that the Company
--------
need effect only three (3) such Demand Registrations. Such request shall specify
the number of shares of Registrable Securities proposed to be sold and will also
specify the intended method of disposition thereof. Unless the Majority Holders
requesting such Demand Registration shall consent in writing, no other parties
(except other Holders) shall be permitted to offer securities under any such
Demand Registration.
<PAGE>
Page 41 of 68 Pages
(b) Effective Registration and Expenses. A registration will not
------------------------------------
count as a Demand Registration until it has become effective. In any
registration initiated as a Demand Registration, the Company will pay all
Registration Expenses (as hereinafter defined) in connection therewith, whether
or not it becomes effective.
(c) Selection of Underwriters. If the Majority Holders requesting
-------------------------
a Demand Registration so elect, the offering of such Registrable Securities
pursuant to such Demand Registration shall be in the form of an underwritten
offering. If any Demand Registration is in the form of an underwritten offering,
the Majority Holders requesting such Demand Registration will select and obtain
the investment banker or investment bankers that will administer the offering.
3. Registration on Form S-3
------------------------
(a) Request for Registration. In addition to Demand
----------------------------
Registrations, at any time after the Company shall be eligible to register
securities under Form S-3 under the Securities Act, the Majority Holders may
make a written request for registration on Form S-3 (or any equivalent successor
form under the Securities Act) pursuant to this Section 3 of all or part of its
Registrable Securities (an "S-3 Demand Registration"); provided, that the
--------
Company need effect only two (2) such S-3 Demand Registrations in a calendar
year. Such request shall specify the number of shares of the issue of
Registrable Securities proposed to be sold and will also specify the intended
method of disposition thereof. Unless the Majority Holders requesting a S-3
Demand Registration shall consent in writing, no other parties (except other
Holders) shall be permitted to offer securities under any such S-3 Demand
Registration.
(b) Expenses. The Company will pay all Registration Expenses in
--------
connection with any S-3 Demand Registration.
(c) Selection of Underwriters. If the Majority Holders requesting
-------------------------
a Demand Registration so elects, the offering of such Registrable Securities
pursuant to such S-3 Demand Registration shall be in the form of an underwritten
offering. If any S-3 Demand Registration is in the form of an underwritten
offering, the Majority Holders requesting a Demand Registration will select and
obtain the investment banker or investment bankers that will administer the
offering.
4. Piggy-Back Registration
-----------------------
(a) Request for Registration. If the Company proposes to file a
-------------------------
registration statement under the Securities Act with respect to an offering for
its own account of any class of security (other than a registration statement on
Form S-4 or S-8 or successor forms thereto), then the Company shall in each case
give written notice of such proposed filing to each Holder at least twenty days
before the anticipated filing date, and such notice shall offer (except as
otherwise contemplated by Section 4(b)) each Holder the opportunity to register
(a "Piggy-Back Registration") such number of shares of Registrable Securities as
such Holder may request.
-2-
<PAGE>
Page 42 of 68 Pages
(b) Priority on Piggy-Back Registrations. The Company shall use
-------------------------------------
its best efforts to cause the managing underwriter or underwriters of a proposed
underwritten offering to permit Registrable Securities of the Holders to include
such securities in such offering on the same terms and conditions as any similar
securities of the Company included therein. Notwithstanding the foregoing, if
the managing underwriter or underwriters of such offering delivers a written
opinion to the Holders that the inclusion of such Registrable Securities would
materially and adversely affect the success or offering price of, or materially
increase the consideration (including commissions) to be paid to the underwriter
in connection with, such offering, then the amount of securities to be offered
for the accounts of the Holders shall be reduced pro rata (or eliminated
entirely) to the extent necessary to reduce the total amount of securities to be
included in such offering to the amount recommended by such managing
underwriter; provided, that if securities similar to those represented by the
--------
Registrable Securities are being offered for the account of other Persons (as
defined herein) as well as the Company, such reduction shall not represent a
greater fraction of the number of securities intended to be offered by the
Holders than the fraction of similar reductions imposed on such other Persons
other than the Company over the amount of securities they intended to offer.
Unless a majority of the Holders registering Registrable Securities hereunder
shall consent in writing, no other parties (except the Company and the other
parties set forth on Schedule I hereto pursuant to registration rights granted
prior to the date hereof) shall be permitted to offer securities pursuant to
such Piggy-Back Registration.
(c) Expenses. The Company will pay all Registration Expenses in
--------
connection with any Piggy-Back registration.
5. Holdback Agreement
------------------
The Company agrees (i) not to effect any public sale or
distribution of any securities similar to those being registered, or any
securities convertible into or exchangeable or exercisable for such securities
(other than any such sale or distribution of such securities in connection with
any merger or consolidation by either the Company or any subsidiary thereof or
the acquisition by the Company or a subsidiary thereof of the capital stock or
all or substantially all of the assets of any other individual, corporation,
partnership, association, joint-stock company, trust, unincorporated
organization, government or subdivision thereof (each, a "Person") or in
connection with an employee stock option or benefit plan), during the 14 days
prior to, and during the 90-day period beginning on, the effective date of any
registration statement in which the Holders are participating or the
commencement of a public distribution of the Registrable Securities; and (ii)
that any agreement entered into after the date of this agreement pursuant to
which the Company issues or agrees to issue any securities similar to the
Registrable Securities (other than pursuant to an effective registration
statement) shall contain a provision under which any holders of at least one
percent (1%) of such securities agree not to effect any public sale or
distribution of any such securities during the periods described in (i) above,
in each case including a sale pursuant to Rule 144 under the Securities Act.
-3-
<PAGE>
Page 43 of 68 Pages
6. Registration Procedures
-----------------------
Whenever any Holders have requested that any Registrable
Securities be registered pursuant to this Agreement, the Company will, within
ten (10) days of the receipt of such request, give written notice of such
request to all Holders and use its best efforts to effect the registration and
the sale of all Registrable Securities which all Holders request to be
registered under the Securities Act, as provided herein, and as expeditiously as
possible:
(a) prepare and file with the Securities and Exchange Commission
(the "Commission"), not later than 60 days after receipt of a request
to file a registration statement with respect to Registrable
Securities, a registration statement on any form for which the Company
then qualifies or which counsel for the Company shall deem appropriate
and which form shall be available for the sale of such issue of
Registrable Securities in accordance with the intended method of
distribution thereof, and use its best efforts to cause such
registration statement to become effective as promptly as practicable
thereafter; provided, that before filing a registration statement or
--------
prospectus or any amendments or supplements thereto, the Company will
(i) furnish to counsel selected by each seller of Registrable
Securities copies of all such documents proposed to be filed and (ii)
notify each seller of Registrable Securities of any stop order issued
or threatened by the Commission and take all actions required to
prevent the entry of such stop order or to remove it if entered;
(b) prepare and file with the Commission 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 for a period of not less than 120 days or such
shorter period which will terminate when all Registrable Securities
covered by such registration statement have been sold (but not before
the expiration of the applicable period referred to in Section 4(3) of
the Securities Act and Rule 174 thereunder, if applicable), and comply
with the provisions of the Securities Act with respect to the
disposition of all securities covered by such registration statement
during such period in accordance with the intended methods of
disposition by the sellers thereof set forth in such registration
statement;
(c) furnish to each seller of Registrable Securities to be
included in a registration statement copies of such registration
statement as filed and each amendment and supplement thereto (in each
case including all exhibits thereto), the prospectus included in such
registration statement (including each preliminary prospectus) and
-4-
<PAGE>
Page 44 of 68 Pages
such other documents as such seller may reasonably request in order to
facilitate the disposition of the Registrable Securities owned by such
seller;
(d) use its best efforts to register or qualify such Registrable
Securities under such other securities or blue sky laws of such
jurisdictions as any seller reasonably requests and do any and all
other acts and things which may be necessary or advisable to enable
such seller to consummate the disposition in such jurisdictions of the
Registrable Securities owned by such seller; provided, that the
Company will not be required to (i) qualify generally to do business
in any jurisdiction where it would not otherwise be required to
qualify but for this paragraph (d), (ii) subject itself to taxation in
any such jurisdiction or (iii) consent to general service of process
in any such jurisdiction, but the Company will be required to consent
to service of process in actions arising out of or in connection with
the sale of the Registrable Securities or any violation of state
securities laws;
(e) use its best efforts to cause the Registrable Securities
covered by such registration statement to be registered with or
approved by any other governmental agencies or authorities as may be
necessary by virtue of the business and operations of the Company to
enable the seller or sellers thereof to consummate the disposition of
such Registrable Securities;
(f) notify each seller of such Registrable Securities at any time
when a prospectus relating thereto is required to be delivered under
the Securities Act, of the happening of any event as a result of which
the prospectus included in such registration statement contains an
untrue statement of a material fact or omits to state any material
fact required to be stated therein or necessary to make the statements
therein not misleading, and the Company will prepare a supplement or
amendment to such prospectus so that, as thereafter delivered to the
purchaser of such Registrable Securities, such prospectus will not
contain an 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 light of the circumstances under which they
were made, not misleading;
(g) enter into customary agreements (including an underwriting
agreement in customary form) and take such other actions as are
required in order to expedite or facilitate the disposition of such
Registrable Securities;
(h) use its best efforts to obtain a comfort letter from the
-5-
<PAGE>
Page 45 of 68 Pages
Company's independent public accountants in customary form and
covering such matters of the type customarily covered by comfort
letters with respect to offerings of such type as the Holders may
reasonably request;
(i) otherwise comply with all applicable rules and regulations of
the Commission, and make available to its security holders, as soon as
reasonably practicable, an earnings statement covering a period of
twelve months, beginning within three months after the effective date
of the registration statement, which earnings statement shall satisfy
the provisions of Section 11(a) of the Securities Act and Rule 158
thereunder; and
(j) cause all such Registrable Securities to be listed on each
securities exchange on which similar securities issued by the Company
are then listed, provided that the applicable listing requirements are
satisfied.
The Company may require each seller of Registrable Securities as
to which any registration is being effected to furnish to the Company such
information regarding the distribution of such Registrable Securities as the
Company may from time to time reasonably request in writing.
Each seller of Registrable Securities agrees that, upon receipt
of any notice from the Company of the happening of any event of the kind
described in Section 6(f) hereof, the seller will forthwith discontinue
disposition of Registrable Securities pursuant to the registration statement
covering such Registrable Securities until such seller's receipt of the copies
of the supplemented or amended prospectus contemplated by Section 6(f) hereof,
and, if so directed by the Company, such seller will deliver to the Company (at
the Company's expense) all copies, other than permanent file copies then in such
seller's possession, of the prospectus covering such Registrable Securities
current at the time of receipt of such notice. In the event the Company shall
give any such notice, the Company shall extend the period during which such
registration statement shall be maintained effective pursuant to this Agreement
(including the period referred to in Section 6(b)) by the number of days during
the period from and including the date of the giving of such notice pursuant to
Section 6(f) hereof to and including the date when each seller of Registrable
Securities covered by such registration statement shall have received the copies
of the supplemented or amended prospectus contemplated by Section 6(f) hereof.
-6-
<PAGE>
Page 46 of 68 Pages
7. Preparation; Reasonable Investigation.
-------------------------------------
In connection with the preparation and filing of each
registration statement under the Securities Act pursuant to this Agreement, the
Company will give each seller of Registrable Securities, their underwriters, if
any, and their respective counsel and accountants, the opportunity to
participate in the preparation of such registration statement, each prospectus
included therein or filed with the Commission, and each amendment thereof or
supplement thereto, and will give each of them such access to its books and
records and such opportunities to discuss the business of the Company with its
officers and the independent public accountants who have certified its financial
statements as shall be necessary, in the opinion of such sellers' and such
underwriters' respective counsel, to conduct a reasonable investigation within
the meaning of the Securities Act.
8. Registration Expenses
---------------------
All expenses incident to the Company's performance of or
compliance with this Agreement, including, without limitation, all registration
and filing fees, fees and expenses of compliance with securities or blue sky
laws (including fees and disbursements of counsel in connection with blue sky
qualifications of the Registrable Securities), printing expenses, messenger and
delivery expenses, internal expenses (including, without limitation, all
salaries and expenses of the Company's officers and employees performing legal
or accounting duties), the fees and expenses incurred in connection with the
listing of the securities to be registered on each securities exchange on which
similar securities issued by the Company are then listed, and fees and
disbursements of counsel for the Company and their independent certified public
accountants (including the expenses of any special audit or "comfort" letters
required by or incident to such performance), securities acts liability
insurance (if the Company elects to obtain such insurance), the fees and
expenses of any special experts retained by the Company in connection with such
registration, fees and expenses of other Persons retained by the Company, fees
and expenses of one counsel (who shall be reasonably acceptable to the Company)
for the sellers of Registrable Securities incurred in connection with each
registration hereunder (but not including any underwriting discounts or
commissions attributable to the sale of Registrable Securities) and any
out-of-pocket expenses of the sellers of Registrable Securities (or the agents
who manage their accounts) (all such expenses being herein referred to as
"Registration Expenses"), will be borne by the Company.
-7-
<PAGE>
Page 47 of 68 Pages
9. Indemnification; Contribution
-----------------------------
(a) Indemnification by the Company. The Company agrees to
---------------------------------
indemnify, to the full extent permitted by law, each seller of Registrable
Securities, its officers, directors and agents and each Person who controls such
seller (within the meaning of the Securities Act) against all losses, claims,
damages, liabilities and expenses (including reasonable fees and expenses of
counsel) ("Losses") caused by any untrue or alleged untrue statement of material
fact contained in any registration statement, prospectus or preliminary
prospectus or any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein (in
case of a prospectus or preliminary prospectus, in light of the circumstances
under which they were made) not misleading, except insofar as the same are
caused by, contained in, or, with respect to any material omission, omitted from
any information with respect to such seller furnished in writing to the Company
by such seller expressly for use therein or by such seller's failure to deliver
a copy of the registration statement or prospectus or any amendments or
supplements thereto after the Company has furnished such seller with a
sufficient number of copies of the same. The Company will also indemnify any
underwriters of the Registrable Securities, their officers and directors and
each Person who controls such underwriters (within the meaning of the Securities
Act) to the same extent as provided above with respect to the indemnification of
the sellers of Registrable Securities.
(b) Indemnification by Seller of Registrable Securities. In
-------------------------------------------------------
connection with any registration statement in which a seller of Registrable
Securities is participating, each such seller will furnish to the Company in
writing such information with respect to such seller as the Company reasonably
requests for use in connection with any such registration statement or
prospectus and agrees to indemnify, to the full extent permitted by law, the
Company, its directors and officers and each Person who controls the Company
(within the meaning of the Securities Act) against any Losses resulting from any
untrue or alleged untrue statement of a material fact or any omission or alleged
omission of a material fact required to be stated in the registration statement,
prospectus or preliminary prospectus or any amendment thereof or supplement
thereto or necessary to make the statements therein (in the case of a prospectus
or preliminary prospectus, in the light of the circumstances under which they
were made) not misleading, to the extent, but only to the extent, that any
untrue statement is contained in information with respect to such seller
furnished in writing by such seller expressly for use therein. In no event shall
the liability of any seller of Registrable Securities hereunder be greater in
amount than the dollar amount of the proceeds received by such seller upon the
sale of such seller's Registrable Securities in connection with any registration
statement giving rise to such indemnification obligation.
-8-
<PAGE>
Page 48 of 68 Pages
(c) Conduct of Indemnification Proceedings. Any Person entitled
---------------------------------------
to indemnification hereunder (each, an "Indemnified Party") agrees to give
prompt written notice to the indemnifying party (each, an "Indemnifying Party")
after the receipt by such Person of any written notice of the commencement of
any action, suit, proceeding or investigation or threat thereof made in writing
for which such Person will claim indemnification or contribution pursuant to
this Agreement (but the failure to give such notice will not affect the right to
indemnification or contribution hereunder unless the Indemnifying Party is
materially prejudiced by such failure) and the Indemnifying Party shall assume
the defense thereof, including the employment of counsel reasonably satisfactory
to such Indemnified Party and payment of all reasonable fees and expenses
(regardless of whether it is ultimately determined that an Indemnified Party is
entitled to indemnification hereunder). Such Indemnified Party shall have the
right to employ separate counsel in any such action and participate in the
defense thereof, but the fees and expenses of such counsel shall be at the
expense of such Indemnified Party unless (i) the employment of such counsel
shall have been specifically authorized in writing by the Indemnifying Party,
(ii) the Indemnifying Party shall have failed to assume the defense and employ
counsel or (iii) the named parties to any such action (including any impleaded
parties) include both such Indemnified Party and the Indemnifying Party and such
Indemnified Party shall have been advised by such counsel that there may be one
or more legal defenses available to it which are different from or additional to
those available to the Indemnifying Party (in which case, the Indemnifying Party
shall not have the right to assume the defense of such action on behalf of such
Indemnified Party, it being understood, however, that the Indemnifying Party
shall not, in connection with any one such action or separate but substantially
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the fees and expenses of
more than one separate firm of attorneys (in addition to any local counsel) for
all such Indemnified Parties, which firm shall be designated in writing by the
Indemnified Parties and that all such reasonable fees and expenses shall be
reimbursed as they are incurred). An Indemnifying Party shall not settle,
compromise or consent to the entry of any judgment in any proceeding without the
Indemnified Party's prior written consent, unless the terms of such settlement,
compromise or consent include an unconditional release of each Indemnified Party
from all liability or loss arising out of such proceeding.
(d) Contribution. If for any reason the indemnity provided for in
------------
this Section 9 is unavailable to, or is insufficient to hold harmless, an
Indemnified Party, then the Indemnifying Party shall contribute to the amount
paid or payable by the Indemnified Party as a result of such Losses (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Indemnifying Party on the one hand and the Indemnified Party on the other or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law, or provides a lesser sum to the Indemnified Party than the
amount hereinafter calculated, in such proportion as is appropriate to reflect
not only the relative benefits received by the Indemnifying Party on the one
hand and the Indemnified Party on the other but also the relative fault of the
Indemnifying Party and the Indemnified Party as well as any other relevant
equitable considerations. The relative fault of such Indemnifying Party and
-9-
<PAGE>
Page 49 of 68 Pages
Indemnified Parties shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue statement
of a material fact or omission or alleged omission to state a material fact, has
been made by, or relates to information supplied by, such Indemnifying Party or
Indemnified Parties; and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action. The amount paid
or payable by a party as a result of the Losses referred to above shall be
deemed to include, subject to the limitations set forth in Section 9(c), any
legal or other fees or expenses reasonably incurred by such party in connection
with any investigation or proceeding.
The parties hereto agree that it would not be just and equitable
if contribution pursuant to this Section 9(d) were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
No Person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any Person
who was not guilty of such fraudulent misrepresentation.
If indemnification is available under this Section 9, the
Indemnifying Parties shall indemnify each Indemnified Party to the full extent
provided in Section 9(a) and (b) without regard to the relative fault of said
Indemnifying Party or Indemnified Party or any other equitable consideration
provided for in this Section 9(d).
10. Rule 144
--------
The Company covenants that it will file the reports required to
be filed by it under the Securities Act and the Securities Exchange Act of 1934,
as amended, and the rules and regulations adopted by the Commission thereunder.
Upon the request of any Holder, the Company will deliver to such Holder a
written statement as to whether it has complied with such requirements.
11. Miscellaneous
-------------
(a) No Inconsistent Agreements. The Company will not hereafter
----------------------------
enter into any agreement with respect to its securities which is inconsistent
with the rights granted to the Holders in this Agreement, including, without
-10-
<PAGE>
Page 50 of 68 Pages
limitation, entering into any agreement which would permit the registration of
any securities to the exclusion of any portion of the Registrable Securities,
unless such exclusion is first waived in writing by the Holders, as the case may
be. Without limiting the generality of the foregoing, any registration rights
hereafter granted by the Company shall be subordinate to the registration rights
granted under this Agreement, and the Company shall obtain the written agreement
of each Person to whom such other registration rights may be granted or may
become available to such effect. The Company has not previously entered into any
agreement with respect to any of its securities granting any registration rights
to any Person.
(b) Remedies. Each Holder, in addition to being entitled to
exercise all rights granted by law, including recovery of damages, will be
entitled to specific performance of its rights under this Agreement. The Company
agrees that monetary damages would not be adequate compensation for any loss
incurred by reason of a breach by it of the provisions of this Agreement and
hereby agrees to waive (to the extent permitted by law) the defense in any
action for specific performance that a remedy of law would be adequate.
(c) Notices. All notices, requests and other communications to
any part hereunder shall be in writing (including telecopy or similar writing)
and shall be effective upon receipt and shall be given, if to the Investor, to:
Quantum Industrial Partners LDC
c/o Curacao Corporation Company, N.V.
Kaya Flamboyan
Willemstad, Curacao
Netherlands, Antilles
Fax: 599-9-322-001
with a copy to:
Soros Fund Management
888 Seventh Avenue
New York, New York 10106
Attention: Robert Soros
Fax: (212) 664-0544
and
-11-
<PAGE>
Page 51 of 68 Pages
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
590 Madison Avenue
New York, New York 10022
Attention: Edward D. Sopher
Fax: (212) 872-1002
If to the Company to:
T/F Purifiner, Inc.
3036 High Ridge Road
Suite 100
Boyton Beach, Florida 33426
Attention: Keith T.J. Hart
Fax: (561) 547-4025
with a copy to:
Atlas, Pearlman, Trop & Borkson, P.A.
New River Center - Suite 1900
200 East Los Olas Boulevard
Fort Lauderdale, Florida 33301
Attention: Jim Schneider
Fax: (954) 523-1952
If to a Holder, at the most current address, with a copy to be sent to each
additional address given by such Holder to the Company in writing.
(d) Amendments: No Waivers.
----------------------
(i) Any provision of this Agreement may be amended or waived
if, and only if, such amendment or waiver is in writing and signed, in
the case of an amendment, by the Majority Holders and the Company, or
in the case of a waiver, by the party against whom the waiver is to be
effective.
(ii) No failure or delay by any party in exercising any
right, power or privilege hereunder shall operate as a waiver thereof
nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies herein provided shall be cumulative
and not exclusive of any rights or remedies provided by law;
(e) Successors and Assigns. The provisions of this Agreement
-----------------------
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; provided that no party may assign, delegate
--------
or otherwise transfer any of its rights or obligations under this Agreement
without the consent of the other parties hereto.
-12-
<PAGE>
Page 52 of 68 Pages
(f) Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
--------------
ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW YORK.
(g) Counterparts; Effectiveness. This Agreement may be signed in
----------------------------
any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement shall become effective when each party hereto shall have received
a counterpart hereof signed by the other parties hereto.
(h) Entire Agreement. This Agreement and the Securities Purchase
----------------
Agreement constitute the entire agreement between the parties with respect to
the subject matter hereof and supersede all prior agreements, understandings and
negotiations, both written and oral, between the parties with respect to the
subject matter of this Agreement.
(i) Jurisdiction. Any suit, action or proceeding seeking to
------------
enforce any provision of, or based on any matter arising out of or in connection
with, this Agreement or the transactions contemplated hereby may be brought
against any of the parties in the courts of the State of New York in New York
City, or, if it has or can acquire jurisdiction, in the United States District
Court for the Southern District of New York, and each of the parties hereby
consents to the jurisdiction of such courts (and of the appropriate appellate
courts) in any such suit, action or proceeding and waives any objection to venue
laid therein. Process in any such suit, action or proceeding may be served on
any party anywhere in the world, whether within or without the State of New
York.
(j) Captions. The captions herein are included for convenience of
--------
reference only and shall be ignored in the construction or interpretation
hereof.
-13-
<PAGE>
Page 53 of 68 Pages
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed by their respective authorized signatories as of the day and
year first above written.
QUANTUM INDUSTRIAL PARTNERS LDC
By: /s/ Sean C. Warren
----------------------------------
Name: Sean C. Warren
Title: Attorney-in-fact
T/F PURIFINER, INC.
By: /s/ Keith T.J. Hart
----------------------------------
Name: Keith T.J. Hart
Title: President
-14-
Page 54 of 68 Pages
EXHIBIT G
PROMISSORY NOTE
New York, New York
US$2,000,000 June 19, 1997
FOR VALUE RECEIVED, the undersigned, T/F PURIFINER, INC. (the
"Maker") unconditionally promises to pay to the order of QUANTUM INDUSTRIAL
PARTNERS LDC or its assigns (the "Holder") on the Termination Date (as defined
below) at such place or to such bank account in the United States of America as
the Holder may from time to time direct in lawful money of the United States of
America and in immediately available funds, the principal amount (the "Principal
Amount") of TWO MILLION DOLLARS ($2,000,000). The Termination Date shall mean
with respect to this promissory note (this "Note") the date which is six months
from the date hereof.
Any amounts that have become due and payable hereunder and remain
unpaid by the Maker shall accrue interest thereafter until payment in full of
such amounts at the rate of twelve percent (12%) (the "Default Rate") per annum
and shall be payable upon demand by the Holder. Interest shall be computed on
the basis of a fraction, the denominator of which is three hundred sixty (360)
and the numerator of which is the actual number of days elapsed from the date
such interest becomes due and payable, but in no case shall the interest rate
exceed the maximum rate allowed by law. The Default Rate shall be effective both
before and after any judgment as may be rendered in a court of competent
jurisdiction; provided, however, that if such Default Rate is deemed to be
interest in excess of the amount permitted to be charged to Maker under
applicable law, Holder shall be entitled to collect a Default Rate only at the
highest rate permitted by law, and any interest actually collected by Holder in
excess of such lawful amount shall be deemed a payment in reduction of the
Principal Amount then outstanding under this Note and shall be so applied.
This Note can be prepaid at any time without premium or penalty.
This note is also subject to mandatory prepayment prior to the Termination Date
upon the Maker's consummation of any public offering of either debt or equity
securities.
All payments due under this Note are payable in lawful money to
Holder at Curacao Corporation Company, N.V., Kaya Flamboyan, Willemstad,
Curacao, Netherlands, Antilles or at such other place as Holder or other holder
hereof shall notify the Maker in writing.
All payments received by Holder on this Note shall be applied by
Holder as follows: first, to the payment of delinquency or "late" charges, if
any; and second, to the reduction of the Principal Amount.
The payment obligations represented by this Note shall be
subordinate to any indebtedness of the Maker for cash advanced by any bank or
financial institution ("Bank Debt") but shall rank at least pari passu with all
<PAGE>
Page 55 of 68 Pages
other indebtedness of the Maker. The Maker hereby covenants that it will not
issue, directly or indirectly, any debt which is senior to the indebtedness
represented by this Note unless such indebtedness is Bank Debt.
The occurrence of any of the following events or conditions shall
constitute an event of default (each an "Event of Default") with respect to the
Maker under this Note:
(a) Any amounts due under any of this Note are not paid on the
day after the due date therefore;
(b) The Maker (i) shall commence any case, proceeding or other
action (A) under any existing or future law of any
jurisdiction, domestic or foreign, relating to bankruptcy,
insolvency, reorganization, arrangement, adjustment,
winding-up, liquidation, dissolution, composition or other
relief with respect to it or its debts, or (B) seeking
appointment of a receiver, trustee, custodian or other
similar official for it or for all or any substantial part
of its assets, or Maker shall make a general assignment for
the benefit of its creditors; or (ii) there shall be
commenced against Maker any case, proceeding or other action
of a nature referred to in clause (i) above which (A)
results in the entry of an order for relief or any such
adjudication or appointment or (B) remains undismissed,
undischarged or unbonded for a period of 90 days; or
(c) The Maker shall fail to perform any agreement or covenant on
its part contained herein or in the Securities Purchase
Agreement, dated as of June 19, 1997, among the Maker, the
Holder and other signatories thereto.
Upon the occurrence and during the continuance of an Event of
Default, the Holder will have the option, upon notice to the Maker, of declaring
the Principal Amount hereunder together with unpaid accrued Default Interest
thereon, if any, to be immediately due and payable.
The Maker agrees to pay on demand all of the Holder's costs and
expenses, including, without limitation, reasonable attorneys' fees, in
connection with the collection of any sums due to the Holder and the enforcement
or protection of its rights or interests hereunder.
No failure on the part of Holder or other holder hereof to
exercise any right or remedy hereunder, whether before or after the happening of
a default shall constitute a waiver thereof, and no waiver of any past default
shall constitute waiver of any future default or of any other default. No
failure to accelerate the debt evidenced hereby by reason of default hereunder,
or acceptance of a past due installment, or indulgence granted from time to time
shall be construed to be a waiver of the right to insist upon prompt payment
thereafter or to impose late charges retroactively or prospectively, or shall be
deemed to be a novation of this Note or as a reinstatement of the debt evidenced
hereby or as a waiver of such right or acceleration or any other right, or be
2
<PAGE>
Page 56 of 68 Pages
construed so as to preclude the exercise of any right which Holder may have,
whether by the laws of the State of New York, by agreement or otherwise; and
Maker hereby expressly waives the benefit of any statute or rule of law or
equity which would produce a result contrary to or in conflict with the
foregoing. This Note may not be changed orally, but only by an agreement in
writing signed by the party against whom such agreement is sought to be
enforced.
The Maker may not assign any of its rights or delegate any of its
obligations under this Note (or any part thereof) without the prior written
consent of the Holder.
Maker represents, warrants and covenants to Holder that it shall
use its best efforts to repay this Note in accordance with the terms hereof.
The Maker hereby waives diligence, presentment, protest, demand,
and notice of every kind and, to the full extent permitted by law, the right to
plead any statute of limitations as a defense to any demand hereunder.
It is the intention of the parties to conform strictly to
applicable usury laws from time to time in force, and all agreements between
Maker and Holder, whether now existing or hereafter arising and whether oral or
written, are hereby expressly limited so that in no contingency or event
whatsoever, whether by acceleration of maturity hereof or otherwise, shall the
amount paid or agreed to be paid to Holder or the holder hereof, or collected by
Holder or such holder, for the use, forbearance, or detention of the money to be
lent hereunder or otherwise, or for the payment or performance of any covenant
or obligation contained herein, or in any other document pertaining to the
indebtedness evidenced hereby, exceed the maximum amount permissible under
applicable usury laws. If under any circumstances whatsoever fulfillment of any
provision hereof at the time performance of such provision shall be due, shall
involve transcending the limit of validity prescribed by law, then ipso facto,
----------
the obligation to be fulfilled shall be reduced to the limit of such validity;
and if under any circumstances Holder or other holder hereof shall ever receive
an amount deemed interest, by applicable law, which would exceed the highest
lawful rate, such amount that would be excessive interest under applicable usury
law shall be applied to the reduction of the Principal Amount owing hereunder
and not to the payment of interest, or if such excessive interest exceeds the
unpaid principal amount and other indebtedness, the excess shall be deemed to
have been a payment made by mistake and shall be refunded to Maker or to any
other person making such payment on Maker's behalf. The terms and provisions of
this paragraph shall control and supersede every other provision of all
agreements between Maker and Holder.
3
<PAGE>
Page 57 of 68 Pages
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE CONFLICTS OF LAW
PRINCIPLES OF SUCH STATE.
T/F PURIFINER, INC.
/S/ KEITH T.J. HART
----------------------------------
Name: KEITH T.J. HART
Title: PRESIDENT
4
Page 58 of 68 Pages
EXHIBIT H
The security represented by this Certificate has not been registered
under the Securities Act of 1933, as amended " Securities Act"), or
applicable state securities laws, and may not be transferred or
otherwise disposed of unless it has been registered under the
Securities Act or an exemption from registration is available.
T/F PURIFINER, INC.
COMMON STOCK PURCHASE WARRANT
-----------------------------
Certificate No. W- 1
--
FOR VALUE RECEIVED, T/F Purifiner, Inc., a Delaware corporation "
Corporation"), hereby grants to Quantum Industrial Partners LDC or its
- -----------
registered assigns (the "Registered Holder" or Holder") this warrant (the
------------------ ------
"Warrant") to purchase, in accordance with the terms set forth herein, 500,000
-------
shares of the Corporation's Common Stock, par value $.001 per share (the "Common
------
Stock"). This Warrant is issued pursuant to the Securities Purchase Agreement,
- -----
dated as of June 19, 1997 (the "Purchase Agreement"), by and among the
-------------------
Corporation, the other signatories thereto and Quantum Industrial Partners LDC
(the "Purchaser"). Each capitalized term used in this Warrant which is defined
---------
in the Purchase Agreement but not otherwise defined herein has the meaning given
such term in the Purchase Agreement.
This Warrant is subject to the following provisions:
Section 1. Warrant Terms. The Warrant is for the purchase of up
--------------
to FIVE HUNDRED THOUSAND (500,000) shares of Common Stock (the "Warrant Amount")
at a price per share equal to the then applicable Exercise Price. Subject to the
provisions of Section 2, the Exercise Price" shall be $2.75 per share (the
"Exercise Price"). This Warrant will expire on December 31, 2000 (the
"Expiration Date").
Section 2. Anti-dilution Provisions. In order to prevent dilution
------------------------
of the purchase rights granted under Section 1 of this Warrant, the Exercise
Price and the number of shares of Common Stock purchasable upon exercise of this
Warrant shall be subject to adjustment from time to time as set forth herein.
(a) If and whenever the Corporation issues or sells, or in
accordance with Section 2(b) is deemed to have issued or sold, any shares of its
Common Stock (other than shares issued pursuant to the Corporation's 1996 Stock
Option Plan and other than options and warrants outstanding on the date hereof
and set forth on Schedule I attached hereto) for a consideration per share less
than (a) the Exercise Price in effect immediately prior to the time of such
issue or sale or (b) Market Price determined as of the date of such issue or
sale, then immediately upon such issue or sale the Exercise Price shall be
reduced to whichever of the following Exercise Prices is lower:
<PAGE>
Page 59 of 68 Pages
(1) the Exercise Price determined by dividing (A) the sum of
(x) the product derived by multiplying the Exercise Price in
effect immediately prior to such issue or sale by the number of
shares of Common Stock Deemed Outstanding (as defined in Section
2(g)) immediately prior to such issue or sale, plus (y) the
consideration, if any, received by the Corporation upon such
issue or sale, by (B) the number of shares of Common Stock Deemed
Outstanding immediately after such issue or sale; or
(2) the Exercise Price determined by multiplying the
Exercise Price in effect immediately prior to such issue or sale
by a fraction, the numerator of which shall be the sum of (A) the
number of shares of Common Stock Deemed Outstanding immediately
prior to such issue or sale multiplied by the Market Price
determined as of the date of such issuance or sale, plus (B) the
consideration, if any, received by the Corporation upon such
issue or sale, and the denominator of which shall be the product
derived by multiplying the Market Price by the number of shares
of Common Stock Deemed Outstanding immediately after such issue
or sale.
(b) Effect on Exercise Price of Certain Events. For purposes
------------------------------------------
of determining the adjusted Exercise Price under Section 2(a), the following
shall be applicable:
(1) If the Corporation in any manner grants or sells any
Options (as defined in Section 2(g)) and the price per share for
which Common Stock is issuable upon the exercise of such Options,
or upon conversion or exchange of any Convertible Securities (as
defined in Section 2(g)) issuable upon exercise of such Options,
is less than (A) the Exercise Price in effect immediately prior
to the time of the granting or sale of such Options or (B) the
Market Price determined as of such time, then the total maximum
number of shares of Common Stock issuable upon the exercise of
such Options or upon conversion or exchange of the total maximum
amount of such Convertible Securities issuable upon the exercise
of such Options shall be deemed to be outstanding and to have
been issued and sold by the Corporation at the time of the
granting or sale of such Options for such price per share. For
purposes of this paragraph, the price per share for which Common
Stock is issuable" shall be determined by dividing (A) the total
amount, if any, received or receivable by the Corporation as
consideration for the granting or sale of such Options, plus the
minimum aggregate amount of additional consideration payable to
the Corporation upon exercise of all such Options, plus in the
case of such Options which relate to Convertible Securities, the
minimum aggregate amount of additional consideration, if any,
payable to the Corporation upon the issuance or sale of such
Convertible Securities and the conversion or exchange thereof, by
(B) the total maximum number of shares of Common Stock issuable
upon the exercise of such Options or upon the conversion or
exchange of all such Convertible Securities issuable upon the
2
<PAGE>
Page 60 of 68 Pages
exercise of such Options. No further adjustment of the Exercise
Price shall be made when Convertible Securities are actually
issued upon the exercise of such Options or when Common Stock is
actually issued upon the exercise of such Options or the
conversion or exchange of such Convertible Securities.
(2) Issuance of Convertible Securities. If the Corporation
-----------------------------------
in any manner issues or sells any Convertible Securities and the
price per share for which Common Stock is issuable upon
conversion or exchange thereof is less than (A) the Exercise
Price in effect immediately prior to the time of such issue or
sale or (B) the Market Price determined as of such time, then the
maximum number of shares of Common Stock issuable upon conversion
or exchange of such Convertible Securities shall be deemed to be
outstanding and to have been issued and sold by the Corporation
at the time of the issuance or sale of such Convertible
Securities for such price per share. For the purposes of this
paragraph, the price per share for which Common Stock is
issuable" shall be determined by dividing (A) the total amount
received or receivable by the Corporation as consideration for
the issue or sale of such Convertible Securities, plus the
minimum aggregate amount of additional consideration, if any,
payable to the Corporation upon the conversion or exchange
thereof, by (B) the total maximum number of shares of Common
Stock issuable upon the conversion or exchange of such
Convertible Securities, and if any such issue or sale of such
Convertible Securities is made upon exercise of any Options for
which adjustments of the Exercise Price had been or are to be
made pursuant to other provisions of this Section 2, no further
adjustment of the Exercise Price shall be made by reason of such
issue or sale.
(3) Change in Option Price or Conversion Rate. If the
----------------------------------------------
purchase price provided for in any Options, the additional
consideration, if any, payable upon the conversion or exchange of
any Convertible Securities or the rate at which any Convertible
Securities are convertible into or exchangeable for Common Stock
changes at any time, the Exercise Price in effect at the time of
such change shall be immediately adjusted to the Exercise Price
which would have been in effect at such time had such Options or
Convertible Securities still outstanding provided for such
--------
changed purchase price, additional consideration or conversion
rate, as the case may be, at the time initially granted, issued
or sold; provided, that if such adjustment would result in an
--------
increase of the Exercise Price then in effect, such adjustment
shall not be effective until 30 days after written notice thereof
has been given by the Corporation to all holders of the Shares.
For purposes of this Section 2(b), if the terms of any Option or
Convertible Security which was outstanding as of the date of
issuance of this Warrant are changed in the manner described in
the immediately preceding sentence, then such Option or
Convertible Security and the Common Stock deemed issuable upon
exercise, conversion or exchange thereof shall be deemed to have
been issued as of the date of such change; provided that no such
--------
3
<PAGE>
Page 61 of 68 Pages
change shall at any time cause the Exercise Price hereunder to be
increased.
(4) Treatment of Expired Options and Unexercised Convertible
--------------------------------------------------------
Securities. Upon the expiration of any Option or the termination
----------
of any right to convert or exchange any Convertible Security
without the exercise of any such Option or right, the Exercise
Price then in effect hereunder shall be adjusted immediately to
the Exercise Price which would have been in effect at the time of
such expiration or termination had such Option or Convertible
Security, to the extent outstanding immediately prior to such
expiration or termination, never been issued; provided that if
such expiration or termination would result in an increase in the
Exercise Price then in effect, such increase shall not be
effective until 30 days after written notice thereof has been
given to the Holder. For purposes of this Section 2(b), the
expiration or termination of any Option or Convertible Security
which was outstanding as of the date of issuance of this Warrant
shall not cause the Exercise Price to be adjusted unless, and
only to the extent that, a change in the terms of such Option or
Convertible Security caused it to be deemed to have been issued
after the date of issuance of such Warrant.
(5) Calculation of Consideration Received. If any Common
---------------------------------------
Stock, Option or Convertible Security is issued or sold or deemed
to have been issued or sold for cash, the consideration received
therefor shall be deemed to be the amount received by the
Corporation therefor (net of discounts, commissions and related
expenses). If any Common Stock, Option or Convertible Security is
issued or sold for consideration other than cash, the amount of
the consideration other than cash received by the Corporation
shall be the fair value of such consideration, except where such
consideration consists of securities, in which case the amount of
consideration received by the Corporation shall be the Market
Price as of the date of receipt. If any Common Stock, Option or
Convertible Security is issued to the owners of the non-surviving
entity in connection with any merger in which the Corporation is
the surviving corporation, the amount of consideration therefor
shall be deemed to be the fair value of such portion of the net
assets and business of the non-surviving entity as is
attributable to such Common Stock, Option or Convertible
Security, as the case may be. The fair value of any consideration
other than cash and securities shall be determined by the Board
of Directors of the Corporation.
(6) Integrated Transactions. In case any Option is issued in
-----------------------
connection with the issue or sale of other securities of the
Corporation, together comprising one integrated transaction in
which no specific consideration is allocated to such Option by
the parties thereto, the Board of Directors of the Corporation
shall determine in good faith the consideration for such Option.
(7) Treasury Shares. The number of shares of Common Stock
----------------
outstanding at any given time shall not include shares owned or
4
<PAGE>
Page 62 of 68 Pages
held by or for the account of the Corporation or any Subsidiary
(as defined in Section 2(g)), and the disposition of any shares
so owned or held shall be considered an issue or sale of Common
Stock.
(8) Record Date. If the Corporation takes a record of the
-----------
holders of Common Stock for the purpose of entitling them (a) to
receive a dividend or other distribution payable in Common Stock,
Options or in Convertible Securities or (b) to subscribe for or
purchase Common Stock, Options or Convertible Securities, then
such record date shall be deemed to be the date of the issue or
sale of the shares of Common Stock deemed to have been issued or
sold upon the declaration of such dividend or upon the making of
such other distribution or the date of the granting of such right
of subscription or purchase, as the case may be.
(c) Subdivision or Combination of Common Stock. If the
------------------------------------------------
Corporation at any time subdivides (by any stock split, stock dividend,
recapitalization or otherwise) one or more classes of its outstanding shares of
Common Stock into a greater number of shares, the Exercise Price in effect
immediately prior to such subdivision shall be proportionately reduced, and if
the Corporation at any time combines (by reverse stock split or otherwise) one
or more classes of its outstanding shares of Common Stock into a smaller number
of shares, the Exercise Price in effect immediately prior to such combination
shall be proportionately increased.
(d) Reorganization, Reclassification, Consolidation, Merger or
-------------------------------------------------------------
Sale. Any recapitalization, reorganization, reclassification, consolidation,
- ----
merger, sale of all or substantially all of the Corporation's assets or other
transaction, in each case which is effected in such a manner that the holders of
Common Stock are entitled to receive (either directly or upon subsequent
liquidation) stock, securities or assets with respect to or in exchange for
Common Stock, is referred to herein as an Organic Change." Prior to the
---------------
consummation of any Organic Change, the Corporation shall make appropriate
provisions to insure that the Holder shall thereafter have the right to acquire
and receive, in lieu of or in addition to (as the case may be) the shares of
Common Stock immediately theretofore acquirable and receivable upon the exercise
of this Warrant, such shares of stock, securities or assets as such Holder would
have received in connection with such Organic Change if such Holder had
exercised this Warrant immediately prior to such Organic Change. In each such
case, the Corporation shall also make appropriate provisions (in form and
substance satisfactory to the Majority Warrant Holders) to insure that the
provisions of this Section 2 shall thereafter be applicable to this Warrant
(including, in the case of any such consolidation, merger or sale in which the
successor entity or purchasing entity is other than the Corporation, an
immediate adjustment of the Exercise Price to the value for the Common Stock
reflected by the terms of such consolidation, merger or sale, and a
corresponding immediate adjustment in the number of shares of Common Stock
acquirable and receivable upon exercise of this Warrant, if the value so
reflected is less than the Exercise Price in effect immediately prior to such
consolidation, merger or sale). The Corporation shall not effect any such
consolidation, merger or sale, unless prior to the consummation thereof, the
successor entity (if other than the Corporation) resulting from consolidation or
merger or the entity purchasing such assets assumes by written instrument (in
5
<PAGE>
Page 63 of 68 Pages
form and substance satisfactory to the Majority Warrant Holders), the obligation
to deliver to each such Holder such shares of stock, securities or assets as, in
accordance with the foregoing provisions, such holder may be entitled to
acquire.
(e) Certain Events. If any event occurs of the type contemplated
--------------
by the provisions of this Section 2 but not expressly provided for by such
provisions (including, without limitation, the granting of stock appreciation
rights, phantom stock rights or other rights with equity features) other than
the grant of options to purchase Common Stock pursuant to the Corporation's 1996
Stock Option Plan, then the Corporation's Board of Directors shall make an
appropriate adjustment in the Exercise Price so as to protect the rights of the
Holder; provided that no such adjustment shall increase the Exercise Price as
otherwise determined pursuant to this Section 2 or decrease the number of shares
of Common Stock issuable upon exercise of this Warrant.
(f) Notices. Immediately upon any adjustment of the Exercise
-------
Price, the Corporation shall give written notice thereof to the Holder, setting
forth in reasonable detail and certifying the calculation of such adjustment.
The Corporation shall give written notice to the Holder at least 20 days prior
to the date on which the Corporation closes its books or takes a record (A) with
respect to any dividend or distribution upon Common Stock, (B) with respect to
any pro rata subscription offer to holders of Common Stock or (C) for
determining rights to vote with respect to any Organic Change, dissolution or
liquidation. The Corporation shall also give written notice to the Holder at
least 20 days prior to the date on which any Organic Change shall take place.
(g) Definitions.
Common Stock Deemed Outstanding" means, at any given time, the
--------------------------------
number of shares of Common Stock actually outstanding at such time, plus the
number of shares of Common Stock deemed to be outstanding pursuant to Sections
2(b)(1) and 2(b)(2) whether or not the Options or Convertible Securities are
actually exercisable at such time.
Convertible Securities" means any stock or securities of the
-----------------------
Corporation directly or indirectly convertible into or exchangeable for Common
Stock.
Majority Warrant Holders" means the holders of more than 50% of
--------------------------
all shares of Common Stock underlying this Warrant initially issued to the
Holders.
Market Price" means the average of the closing prices of shares
-------------
of the Common Stock's sales on all securities exchanges on which such security
may at the time be listed, or, if there have been no sales on any such exchange
on any day, the average of the highest bid and lowest asked prices on all such
exchanges at the end of such day, or, if on any day such security is not so
listed, the average of the representative bid and asked prices quoted in the
NASDAQ System as of 4:00 P.M., New York time, on such day, or, if on any day
shares of the Common Stock are not quoted in the NASDAQ System, the Market
6
<PAGE>
Page 64 of 68 Pages
Price" shall be the fair value thereof determined in good faith by the Board of
Directors of the Corporation. If such parties are unable to reach agreement
within a reasonable period of time, such fair value shall be determined by an
independent appraiser experienced in valuing securities jointly selected by the
Corporation and the Majority Warrant Holders. The determination of such
appraiser shall be final and binding upon the parties, and the Corporation shall
pay the fees and expenses of such appraiser.
Options" means any rights, warrants or options to subscribe for
-------
or purchase Common Stock or Convertible Securities other than options (i)
granted pursuant to the Corporation's 1996 Stock Option Plan or (ii) set forth
on Schedule I hereto.
Subsidiary" means, with respect to the Corporation, any
----------
corporation, limited liability company, partnership, association or other
business entity of which (i) if a corporation, a majority of the total voting
power of shares of stock entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof
is at the time owned or controlled, directly or indirectly, by the Corporation
or one or more of the other Subsidiaries of the Corporation or a combination
thereof, or (ii) if a limited liability company, partnership, association or
other business entity, a majority of the partnership or other similar ownership
interest thereof is at the time owned or controlled, directly or indirectly, by
the Corporation or one or more Subsidiaries of the Corporation or a combination
thereof. For purposes hereof, the Corporation shall be deemed to have a majority
ownership interest in a limited liability company, partnership, association or
other business entity if the Corporation shall be allocated a majority of
limited liability company, partnership, association or other business entity
gains or losses or shall be or control the managing general partner of such
limited liability company, partnership, association or other business entity.
(h) Number of Shares. Upon each adjustment of the Exercise Price
----------------
as a result of the calculations made in this Section 2, each Warrant outstanding
immediately prior to the making of such adjustment shall thereafter evidence the
right to purchase, at the adjusted Exercise Price, that number of shares
(calculated to the nearest hundredth) obtained by (i) multiplying the number of
shares of Common Stock purchasable upon exercise of the Warrant immediately
prior to adjustment by the Exercise Price in effect immediately prior to
adjustment of the Exercise Price and (ii) dividing the product so obtained by
the Exercise Price in effect immediately after such adjustment of the Exercise
Price.
Section 3. Exercise of Warrant.
-------------------
(a) The Holder shall have the right to exercise all or a
portion of this Warrant:
(i) at any time and from time to time on or prior to
the Expiration Date, by surrendering at the principal office of the Corporation
this Warrant and a completed Exercise Agreement (in the form of Exhibit I
hereto) and by paying the Exercise Price by check or wire transfer to an account
7
<PAGE>
Page 65 of 68 Pages
designated by the Corporation as to the number of shares of Common Stock as to
which the Warrant is being exercised (the "Exercise Amount") and receiving in
exchange therefor the number of shares of Common Stock equal to the Exercise
Amount;
(ii) at any time and from time to time on or prior to
the Expiration Date, by surrendering at the principal office of the Corporation
this Warrant and a completed Exercise Agreement (in the form of Exhibit I
hereto) and receiving in exchange therefor the number of shares equal to the
product of the Exercise Amount multiplied by a fraction, the numerator of which
is the Market Price (as defined in Section 2(g)) less the Exercise Price and the
denominator of which is such Market Price; and/or
(iii) at any time and from time to time on or prior to
the Expiration Date, by surrendering at the principal office of the Corporation
this Warrant and a completed Exercise Agreement (in the form of Exhibit I
hereto) and by surrendering shares of Common Stock of the Corporation valued at
the Market Price and receiving in exchange therefor the number of shares of
Common Stock equal to the Exercise Amount.
(b) A Holder may use one or more of the methods of exercise
outlined in Section 3(a) when exercising this Warrant so long as the completed
Exercise Agreement accurately states which method or methods such Holder intends
to use and the number of shares as to which each such method will be used.
(c) Certificates for shares of Common Stock acquired through
exercise of this Warrant shall be delivered by the Corporation to the Holder
within five (5) business days after receipt by the Corporation of the items
required by Section 3(a) for the respective method or methods of exercise.
Unless this Warrant has expired or all of the purchase rights represented hereby
have been exercised, the Corporation shall prepare a new Warrant, substantially
identical hereto, representing the rights formerly represented by this Warrant
which have not expired or been exercised and shall, within such five-day period,
deliver such new Warrant to such Holder.
(d) The Common Stock issuable upon exercise of this Warrant
shall be deemed to have been issued to the Holder on the date by which the
Corporation receives the completed Exercise Agreement and payment of the
Exercise Price, if any, and such Holder shall be deemed for all purposes to have
become the record holder of such Common Stock on such date.
(e) The issuance of certificates for shares of Common Stock
upon exercise of this Warrant shall be made without charge to the Holder for any
issuance tax in respect thereof or other cost incurred by the Corporation in
connection with such exercise and the related issuance of shares of Common
Stock.
(f) The Corporation shall at all times reserve and keep
available out of its authorized but unissued shares of Common Stock, solely for
the purpose of issuance upon exercise of this Warrant, such number of shares of
8
<PAGE>
Page 66 of 68 Pages
Common Stock as are issuable upon exercise of this Warrant. All such shares of
Common Stock shall, when issued, be duly and validly issued, fully paid and
nonassessable and free from all taxes, liens and charges. The Corporation shall
take all such actions as may be necessary to assure that all such shares of
Common Stock may be so issued without violation of any applicable law or
governmental regulation or any requirements of any domestic securities exchange
upon which shares of Common Stock may be listed (except for official notice of
issuance which shall be immediately delivered by the Corporation upon each such
issuance). In addition, prior to the issuance of any Common Stock upon an
exercise of this Warrant, the Company shall at its expense procure the listing
of such Common Stock which shall be issued upon exercise of this Warrant as then
may be required on all stock exchanges or interdealer quotation systems on which
the Common Stock is then listed and shall maintain such listing if and so long
as any shares of the Common Stock shall be listed on such stock exchanges or
interdealer quotation systems.
Section 4. Warrant Transferable. Subject to the transfer
----------------------
conditions referred to in the legend endorsed hereon, this Warrant and all
rights hereunder are transferable, in whole or in part, without charge to the
Holder; upon surrender of this Warrant with a properly executed Assignment (in
the form of Exhibit II hereto) at the principal office of the Corporation.
----------
Section 5. Warrant Exchangeable for Different Denominations. This
------------------------------------------------
Warrant is exchangeable, upon the surrender hereof by the Holder at the
principal office of the Corporation, for new Warrants, substantially identical
hereto, representing in the aggregate the rights formerly represented by this
Warrant, and each of such new Warrants shall represent such portion of such
rights as is designated by the Holder at the time of such surrender. The date
the Corporation initially issues this Warrant shall be the date of issuance of
such new Warrants regardless of the number of times new certificates
representing the unexpired and unexercised rights formerly represented by this
Warrant shall be issued.
Section 6. Replacement. Upon receipt of evidence reasonably
-----------
satisfactory to the Corporation (an affidavit of the Holder shall be
satisfactory) of the ownership and the loss, theft, destruction or mutilation of
any certificate evidencing this Warrant, and in the case of any such loss, theft
or destruction, upon receipt of indemnity reasonably satisfactory to the
Corporation (provided that if such Holder is a financial institution or other
institutional investor its own agreement shall be satisfactory), or, in the case
of any such mutilation, upon surrender of such certificate, the Corporation
shall (at its expense) execute and deliver in lieu of such certificate a new
certificate, substantially identical hereto, representing the rights represented
by such lost, stolen, destroyed or mutilated certificate and dated the date of
such lost, stolen, destroyed or mutilated certificate.
Section 7. Successors and Assigns. This instrument is intended to
----------------------
bind and inure to the benefit of and be enforceable by the Investor and his
respective heirs, successors and assigns.
Section 8. Amendment and Waiver. Except as otherwise provided
---------------------
herein, the provisions of this Warrant may be amended only if the Corporation
has obtained the written consent of the Holder.
9
<PAGE>
Page 67 of 68 Pages
Section 9. Descriptive Headings; Governing Law. The descriptive
-------------------------------------
headings of this Warrant are inserted for convenience only and do not constitute
a part of this Warrant. The corporate laws of the State of Delaware will govern
all questions concerning the relative rights of the Corporation and its
stockholders. All other questions concerning the construction, validity and
interpretation of this Warrant will be governed by and construed in accordance
with the domestic laws of the State of New York, without giving effect to any
choice of law or conflict of law provision or rule (whether of the State of New
York or any other jurisdiction) that would cause the application of the laws of
any jurisdiction other than the State of New York.
Section 10. Complete Agreement; Severability. Except as otherwise
--------------------------------
expressly set forth herein, this Warrant, the Purchase Agreement and any other
agreement executed by the parties and contemplated by the Purchase Agreement
embodies the complete agreement and understanding among the parties hereto with
respect to the subject matter hereof and supersedes and preempts any prior
understandings, agreements or representations by or among the parties, written
or oral, which may have related to the subject matter hereof in any way.
Whenever possible, each provision of this Warrant will be interpreted in such
manner as to be effective and valid under applicable law, but if any provision
of this Warrant is held to be invalid, illegal or unenforceable in any respect
under any applicable law or rule in any jurisdiction, such invalidity,
illegality or unenforceability will not affect any other provision or any other
jurisdiction, but this Warrant will be reformed, construed and enforced in such
jurisdiction as if such invalid, illegal or unenforceable provision had never
been contained herein.
Section 11. Notices. Except as otherwise expressly provided
-------
herein, all notices referred to in this Warrant shall be in writing and shall be
delivered personally, sent by reputable overnight courier service (charges
prepaid) or sent by registered or certified mail, return receipt requested,
postage prepaid and shall be deemed to have been given when so delivered, sent
or deposited in the U.S. Mail (i) to the Corporation, at its principal executive
offices and (ii) to the Holder, at such Holder's address as it appears in the
records of the Corporation (unless otherwise indicated by any such Holder). If
the Holder is a Purchaser, notices to such Holder shall be sent to the address
for such Holder set forth in the Purchase Agreement (unless otherwise indicated
by such Holder) with copies to such persons as are indicated therein.
10
<PAGE>
Page 68 of 68 Pages
* * * *
IN WITNESS WHEREOF, the Corporation has caused this Warrant to be
signed and attested by its duly authorized officer and to be dated the date of
issuance hereof.
T/F PURIFINER, INC.
By: /s/ Keith T.J. Hart
-----------------------------
Its: President
Attest:
/S/ SECRETARY
- -----------------------------
Secretary
11
