<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
--------------------------------------
SCHEDULE 13D
(RULE 13d-101)
UNDER THE SECURITIES EXCHANGE ACT OF 1934
ELECTROPURE, INC.
(Name of Issuer)
Common Stock, $0.01 par value per share
(Title of Class of Securities)
286133
(CUSIP Number)
Catherine Patterson
Electropure, Inc.
23251 Vista Grande, Suite A
Laguna Hills, CA 92653
(714) 770-9347
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
June 2, 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 [ ].
(Continued on following pages)
(Page 1 of 8 pages)
The information required in 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 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).
<PAGE> 2
13D
CUSIP NO. 286133 PAGE 2 OF 8 PAGES
- -------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
FLOYD H. PANNING
- -------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [ ]
- -------------------------------------------------------------------------------
3 SEC USE ONLY
- -------------------------------------------------------------------------------
4 SOURCE OF FUNDS
PF - $250,408
- -------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [ ]
- -------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OR ORGANIZATION
CALIFORNIA, USA
- -------------------------------------------------------------------------------
7 SOLE VOTING POWER
384,839
---------------------------------------------------------
NUMBER OF 8 SHARED VOTING POWER
SHARES
BENEFICIALLY NONE
OWNED BY ---------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON 384,839
WITH ---------------------------------------------------------
10 SHARED DISPOSITIVE POWER
NONE
- -------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
384,839
- -------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
- -------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
9.6% OF THE COMMON STOCK
8.2% OF VOTING POWER
- -------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- -------------------------------------------------------------------------------
* SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE> 3
PAGE 3 OF 8 PAGES
On July 25, 1996, the issuer changed its corporate name to
"Electropure, Inc." and effected a one-for-ten reverse stock split. FOR PURPOSES
OF THIS REPORT, ALL ISSUANCES OF COMMON STOCK AND WARRANTS TO PURCHASE COMMON
STOCK ARE REFLECTED IN POST-REVERSE SPLIT AMOUNTS.
ITEM 1. SECURITY AND ISSUER
Common Stock, $0.01 par value, of Electropure, Inc., a California
corporation ("Electropure"). Electropure's principal executive office is located
at 23251 Vista Grande, Suite A, Laguna Hills, California 92653.
ITEM 2. IDENTITY AND BACKGROUND
(a) Floyd H. Panning
(b) 317 Calle Chueca, San Clemente, CA 92673
(c) President, EDI Components, 23251 Vista Grande, Suite A,
Laguna Hills, CA
(d) Not applicable
(e) Not applicable
(f) U.S.A.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
Of the $250,408 used to acquire securities of Electropure, Mr. Panning
was granted a $100,000 investment position in EDI Components, the exclusive
licensee of Electropure, for two years' of service as its President beginning in
April, 1992. The balance of funds utilized to purchase shares of Common Stock
from Electropure were from Mr. Panning's personal funds.
ITEM 4. PURPOSE OF THE TRANSACTION
Mr. Panning purchased 319,202 shares of Electropure Common Stock in a
private transaction on June 2, 1997 from Anthony M. Frank. Prior to such
transaction, Mr. Panning had owned less than five percent (5%) of the securities
of Electropure.
Electropure is currently negotiating with its licensee, EDI Components,
(of which Mr. Panning is the President) to terminate a July, 1992 license
agreement granting EDI exclusive manufacturing and marketing rights to the
Company's patented water purification technology. It is anticipated that
Electropure will pay EDI up to $2,950,000 to terminate the license relationship
in some combination of cash and equity over a period of time. It is also
anticipated that Electropure will hire the management and staff of EDI; will
grant EDI the right to appoint a Director(s) to the Company's Board; will seek
to obtain sufficient working capital through a private and/or public sale of its
securities; and that manufacturing and marketing of the water purification
technology will then be conducted by Electropure.
<PAGE> 4
PAGE 4 OF 8 PAGES
Mr. Panning may in the future acquire, hold and dispose of shares of
Common Stock or warrants or options for such Common Stock or other securities of
Electropure and such transactions may be in the open market, privately or
directly from Electropure.
Except as set forth above, Mr. Panning does not have any plans or
proposals which may have, which related to or which would result in:
(a) The acquisition by any person of additional securities of
Electropure, or the disposition of securities of Electropure;
(b) An extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving Electropure or any of
its subsidiaries;
(c) A sale or transfer of a material amount of assets of Electropure
or any of its subsidiaries;
(d) Any change in the present Board of Directors or management of
Electropure, including any plans or proposals to change the
number or term of directors or to fill any existing vacancies on
the Board;
(e) Any material change in the present capitalization or dividend
policy of Electropure;
(f) Any other material change in Electropure's business or corporate
structure;
(g) Changes in Electropure's charter, bylaws or instruments,
correspondence thereto or other actions which may impede the
acquisition or control of Electropure by any person;
(h) Causing a class of securities of Electropure to be delisted from
a national securities exchange or to cease to be quoted in an
inter-dealer quotation system of a registered national
securities association;
(i) A class of equity securities of Electropure becoming eligible
for termination of registration pursuant to Section 12(g)(4) of
the Securities Exchange Act of 1934; or
(j) Any action similar to any of those enumerated above.
ITEM 5. INTEREST IN SECURITIES OF ISSUER
(a) Mr. Panning owns the following shares of Electropure:
384,839 shares of Common Stock with one vote per share(1).
- ----------
(1) Includes warrants for 10,000 shares of Common Stock exercisable at $1.25
per share; and 50,000 shares exercisable at $0.50 per share.
<PAGE> 5
PAGE 5 OF 8 PAGES
Mr. Panning owns beneficially 8.2% of the Common Stock; 9.6%
if all of the warrants described in in Item 6 are exercised.
Mr. Panning owns 5.4% of the voting power of all classes of
stock of Electropure.
(b) Mr. Panning has the sole voting and dispositive power over the
shares he owns.
(c) Since June, 1987, Mr. Panning has entered into the following
transactions with regard to Electropure's Common Stock:
In an open market transaction, Mr. Panning purchased 741
shares of Common Stock and 7,401 Class A Warrants in the
Company's initial public offering on June 25, 1987 at a total
purchase price of $14,802. The Class A Warrants of the Company
expired on June 24, 1994.
In June, 1988, Mr. Panning purchased an additional 207 shares
of Common Stock in the open market for a total purchase price
of $5,000.
On July 28, 1988, Mr. Panning purchased 1,596 shares of Common
Stock from the Company in a private placement offering at
$9.40 per share.
On August 18, 1988, Mr. Panning purchased an additional 1,000
shares from the Company in a private placement offering at
$11.70 per share.
Between May, 1989 and February, 1990, Mr. Panning was issued
94 shares of Common Stock, 700 Warrants to purchase Common
Stock at $11.70 per share and 7,500 shares of the Company's
Convertible Preferred Stock, all by a former officer and
director of the Company in exchange for personal debt owed to
Mr. Panning. The Warrants, exercisable until May 20, 1997,
have expired. The Convertible Preferred Stock is currently
redeemable by the Company at $0.01 per share out of legally
available funds.
Mr. Panning acquired a $100,000 investment position in EDI
Components, a privately-held California corporation formed by
Mr. Panning, in exchange for two year's services rendered to
that entity beginning in April, 1992. Electropure entered into
various agreements in July, 1992 granting EDI the exclusive
manufacturing and marketing rights to the Company's patented
water treatment technology. In exchange for cash
consideration, certain royalty rights and the right to
terminate the license, the Company granted EDI's investors
warrants to purchase Common Stock equal to four (4) times such
investors' capital investment in EDI. Consequently, since
April, 1992, Mr. Panning received, as provided by the above
license arrangements, 40,000 Warrants to purchase Common Stock
of Electropure at $0.50 per share.
On December 17, 1992, Mr. Anthony Frank gifted Mr. Panning the
option to purchase 10,000 Warrants to purchase Common Stock at
$1.25 per share. Mr.
<PAGE> 6
PAGE 6 OF 8 PAGES
Panning exercised such options at $0.10 each and recevied the
right to purchase 10,000 shares of Common Stock at $1.25 per
share, exercisable until December 17, 2002.
On February 25, 1993, the Board of Directors of Electropure
granted Mr. Panning, as a bonus, 10,000 warrants to purchase
Common Stock at $0.50 per share. Such Warrants are exercisable
until February 25, 2003.
The following Warrants are currently exercisable by Mr.
Panning:
<TABLE>
<CAPTION>
--------------------- ----------------- ---------------
DATE GRANTED PURCHASE PRICE NO. OF SHARES
--------------------- ----------------- ---------------
<S> <C> <C>
04/20/92 $0.50 20,000
12/17/92 $1.25 10,000
04/23/93 $0.50 20,000
02/25/93 $0.50 10,000
</TABLE>
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO THE SECURITIES OF THE ISSUER
Pursuant to the transactions described in Item 5 above, Mr. Panning has
the right, until December 17, 2002 to purchase 10,000 shares of Electropure's
Common Stock at $1.25 per share. Additionally, Mr. Panning has the right to
purchase 10,000 shares of Common Stock at $0.50 per share until February 25,
2003. Finally, Mr. Panning has the right to purchase 40,000 shares of Common
Stock at $0.50 per share until January 31, 1998 or upon termination of the
license relationship between Electropure and EDI Components, whichever occurs
first.
In addition to the 40,000 Warrants described in Item 5 above, as
partial consideration for his aggregate $100,000 investment in EDI Components,
Mr. Panning received the following rights under the license agreement between
Electropure and EDI:
(a) A Stock Right Agreement providing the right to purchase, in an
amount equal to his investment in EDI, additional shares of
Electropure Common Stock at a 25% discount from the cash
purchase price at which the Company may, in the future, offer
such stock to bona fide third party purchasers;
(b) A Security interest in the Company's patented water
purification technology equal to Mr. Panning's $100,000
investment; and
(c) The right to payment by Electropure in the sum of $400,000
upon the termination of the license relationship with EDI. It
is anticipated that the Company will negotiate an arrangement
with Mr. Panning, and with the other investors of EDI
Components, to satisfy such payment in some combination of
cash and/or securities of the Company.
<PAGE> 7
PAGE 7 OF 8 PAGES
ITEM 7. EXHIBITS
10.11.A Subscription Agreement - 07/28/88
10.11.B Subscription Agreement - 08/18/88
10.11.C Warrants for 10,000 shares (Warrant No. 359 - 12/17/92)*
10.11.D Warrants for 10,000 shares (Warrant No. 372 - 02/25/93) - face
sheet only*
10.11.E Warrants for 20,000 shares (Warrant No. E-1008 - 04/20/92) -
face sheet only*
10.11.F Warrants for 20,000 shares (Warrant No. E-1021 - 04/20/93) -
face sheet only*
10.11.G Stock Right Agreement No. E-1008 - 04/20/92
10.11.H Stock Right Agreement No. E-1021 - 04/20/93 - face sheet only
- ------------
* The number of Warrants reflected have been modified to give effect to the
one-for-ten reverse stock split conducted by the Company in July, 1996.
<PAGE> 8
PAGE 8 OF 8 PAGES
SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this Schedule 13D is true, complete
and correct.
Dated: June 30, 1997
/s/ FLOYD H. PANNING
-------------------------
Floyd H. Panning
<PAGE> 9
SCHEDULE 13D
FLOYD H. PANNING
(Name of Reporting Person)
INDEX TO EXHIBITS
-----------------
<TABLE>
<CAPTION>
PAGE
SEQUENTIALLY
NUMBERED
------------
<C> <S>
10.11.A Subscription Agreement - 07/28/88
10.11.B Subscription Agreement - 08/18/88 - face sheet
only
10.11.C Warrants for 10,000 shares (Warrant No. 359 -
12/17/92)*
10.11.D Warrants for 10,000 shares (Warrant No. 372 -
02/25/93) - face sheet only*
10.11.E Warrants for 20,000 shares (Warrant No. E-1008 -
04/20/92) - face sheet only*
10.11.F Warrants for 20,000 shares (Warrant No. E-1021 -
04/20/93) - face sheet only*
10.11.G Stock Right Agreement No. E-1008 - 04/20/92
10.11.H Stock Right Agreement No. E-1021 - 04/20/93
</TABLE>
<PAGE> 1
EXHIBIT (A); PAGE 1
- --------------------------------------------------------------------------------
SUBSCRIPTION AGREEMENT
- --------------------------------------------------------------------------------
The Board of Directors of
Electropure, Inc.
23251 Vista Grande, Suite A
Laguna Hills, CA 92653
Gentlemen:
The undersigned hereby applies to Electropure, Inc. (the "Company") to purchase
the number of Shares indicated on Page B-7 of this document, in accordance with
the terms of this Subscription Agreement attached to the Confidential Private
Placement Memorandum dated June 24, 1988, relating to the Shares (such
Confidential Private Placement Memorandum, including all financial statements,
exhibits and schedules attached thereto, contained or specified therein as
available from the Company, and any amendments and supplements thereto, is
herein called the "Memorandum"). This subscription is irrevocable.
- --------------------------------------------------------------------------------
INSTRUCTIONS
- --------------------------------------------------------------------------------
Please complete the Subscription Agreement in the following manner:
1. Complete Sections D and E by inserting the amount of your subscription and/or
other information called for in those Sections.
2. Complete the signature page.
A. REPRESENTATIONS AND WARRANTIES. The undersigned acknowledges, represents,
warrants and agrees as follows:
1. The undersigned has received and carefully reviewed the Memorandum
and has relied only on the information contained therein, information otherwise
provided to him in writing by the Company or information from books and records
of the Company. The undersigned acknowledges that all documents, records and
books pertaining to this investment have been made available for inspection by
him, his attorney and/or his accountant and in the Memorandum, and that the
books and records of the Company will be available upon reasonable notice, for
inspection by investors during reasonable business hours at the principal place
of the business of the Company. The undersigned and/or his advisor(s) have had a
reasonable opportunity to ask questions of and receive answers from the Company
or a person or persons acting on its behalf, concerning the terms and conditions
of the Offering, and to obtain additional information, to the extent possessed
or obtainable without unreasonable effort or expense, necessary to verify the
accuracy of the information in the Memorandum. All such questions have been
answered to the full satisfaction of the undersigned. No oral representations
have been made or oral information furnished to the undersigned or his
advisor(s) in connection with the Offering which were in any way inconsistent
with the Memorandum.
<PAGE> 2
EXHIBIT (A); PAGE 2
2. The undersigned (i) has adequate means of providing for his current needs and
possible personal contingencies, (ii) has no need for liquidity in this
investment, (iii) is able to bear the substantial economic risks of an
investment in the Shares for an indefinite period, (iv) at the present time, can
afford a complete loss of such investment, and (v) does not have an overall
commitment to investments which are not readily marketable that is
disproportionate to the undersigned's net worth, and the undersigned's
investment in the Shares will not cause such overall commitment to become
excessive.
3. The undersigned is an "accredited investor" (as set forth in the Purchaser
Questionnaire accompanying this Subscription Agreement) and the undersigned's
total investment in the Shares does not exceed 10% of the undersigned's net
worth or joint net worth the undersigned's spouse.
4. The undersigned recognizes that the Company was incorporated in 1979 and has
had only limited operating revenues to date and no current revenues and that the
Shares as an investment involve significant risks, including those set forth
under the caption "Risk Factors Concerning the Company" in Exhibit A to the
Memorandum.
5. The undersigned understands that the Memorandum has not been filed with or
reviewed by the United States Securities and Exchange Commission and may not
have been filed or reviewed by certain state securities administrators because
of the representation made by the Company as to the private or limited nature of
the Offering.
6. The undersigned understands that neither the Offering nor the sale of the
Shares has been registered under the Securities Act of 1933, as amended (the
"Act") in reliance upon an exemption therefrom. The undersigned understands that
the Shares must be held indefinitely unless the sale or other transfer thereof
is subsequently registered under the Act, as amended, or an exemption from such
registration is available. The undersigned further understands that the Company
is under no obligation to register the Shares on his behalf (except as set forth
in the Memorandum) or to assist him in complying with any exemption from
registration.
7. The Shares are being purchased solely for the undersigned's own account for
investment purposes only and not for the account of any other person and not for
distribution, assignment or resale to others, and no other person has a direct
or indirect beneficial interest in such Shares.
8. The undersigned will not transfer the Shares without registering them under
applicable federal or state securities laws unless the transfer is exempt from
registration under such laws. The undersigned realizes that the Company may not
allow a transfer of the Shares unless the transferee meets the suitability
standards for an initial purchaser of the Shares. The undersigned understands
that legends will be placed on the certificates representing the Shares (or
common shares underlying the Shares), with respect to the above restrictions on
resale or other disposition of the Shares and that stop transfer instructions
have or will be placed with respect to the Shares so as to restrict the
assignment, resale or other disposition thereof.
9. The Company will direct its transfer agent to place such an order in its
books respecting the transfer of the Shares, and the certificate or certificates
representing the Shares (or common shares underlying the Shares) will bear the
following legend or a legend substantially similar thereto:
<PAGE> 3
EXHIBIT (A); PAGE 3
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933. THEY MAY NOT BE SOLD OR OFFERED FOR SALE IN THE ABSENCE OF: (1)
AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER THE ACT,
OR (2) AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED. FURTHER, TRANSFER IS RESTRICTED PURSUANT
TO AN AGREEMENT WITH THE COMPANY."
10. Rules 144, promulgated by the Securities and Exchange Commission under the
Act, may be available for sale of the Shares, but there is no assurance that it
will be available at any particular time in the future. If and when Rule 144 is
available for sale of such Shares, such sales in reliance upon Rule 144 may only
be made (i) in limited quantities after the Shares have been held for two years,
including two years after the exercise of a warrant or (ii) in unlimited
quantities by non-affiliates after the Shares have been held for three years
(including three years after exercise of a warrant), in each case in accordance
with the conditions of the Rule, all of which must be met (including the
requirement, if applicable, that adequate information concerning the Company is
then available to the public). The Company has no obligation to supply the
information required for sales under Rule 144.
11. The undersigned is a citizen of the United States and is at least 21 years
of age.
12. All information which the undersigned has provided to the Company in the
Purchaser Questionnaire or otherwise concerning himself, his investor status,
financial position and knowledge and experience in financial, tax and business
matters is correct and complete as of the date set forth at the end hereof, and
if there should be any adverse change in such information prior to acceptance of
his subscription, the undersigned will immediately provide the Company with such
information.
13. The undersigned, if a corporation, partnership, trust or other entity, is
authorized and otherwise duly qualified to purchase and hold the Shares, such
entity has its principal place of business as set forth on the signature page
hereof and such entity has NOT been formed for the specific purpose of acquiring
Shares unless all of its equity owners qualify as accredited individual
investors under the standards set forth in the accompanying Purchaser
Questionnaire. Beneficiaries of a trust will NOT be considered equity owners.
B. INDEMNIFICATION. The undersigned agrees to indemnify and hold harmless the
Company and its officers, directors and affiliates from and against all damages,
losses, costs and expenses (including reasonable attorneys' fees) which they may
incur by reason of the failure of the undersigned to fulfill any of the terms or
conditions of this Subscription Agreement, or by reason of any breach of the
representations and warranties made by the undersigned herein, in the
undersigned's related Purchaser Questionnaire or in any document provided by the
undersigned to the Company.
C. MISCELLANEOUS.
1. The undersigned agrees not to transfer or assign this Subscription
Agreement, or any of the undersigned's interest herein, and further agrees that
the transfer or assignment of the Shares acquired
<PAGE> 4
EXHIBIT (A); PAGE 4
pursuant hereto shall be made only in accordance with the conditions and
restrictions contained in the Memorandum and all applicable laws.
2. The undersigned agrees that the undersigned may not cancel,
terminate or revoke this Subscription Agreement or any agreement of the
undersigned made hereunder (except as otherwise specifically provided herein)
and that this Subscription Agreement shall survive the death or disability of
the undersigned and shall be binding upon the undersigned's heirs, executors,
administrators, successors and assigns.
3. Notwithstanding any of the representations, warranties,
acknowledgments or agreements made herein by the undersigned, the undersigned
does not thereby or in any other manner waive any rights granted to the
undersigned under federal or state securities laws.
4. This Subscription Agreement constitutes the entire agreement among
the parties with respect to the subject matter hereof and may be amended only by
a writing executed by all parties.
5. This Subscription Agreement shall be enforced, governed and
construed in all respects in accordance with the laws of the State of
California.
6. Within five days after receipt of a written request from the
Company, the undersigned agrees to provide such information and to execute and
deliver such documents as reasonably may be necessary to comply with any and all
laws, rules and regulations to which the Company is subject.
7. The representations and warranties of the undersigned set forth
herein shall survive the sale of the Shares pursuant to this Subscription
Agreement.
D. SUBSCRIPTION AND METHOD OF PAYMENT. The undersigned, acknowledging that Ten
Thousand (10,000) Shares is the minimum subscription required and that this
Offering involves the sale of up to 500,000 Shares at $1.17 per share with
registration rights at set forth in the Memorandum or at $0.94 per share without
registration rights, hereby subscribes for the following number of Shares and
encloses payment as follows:
<TABLE>
<CAPTION>
(1) (2)
<C> <S>
10,000 Shares at $1.17 per Share for an
- ---------------------------- aggregate purchase price of
Number of Shares $11,700.00, payable by check or money order
to "HOH Water Technology Corp."
</TABLE>
- --------------
(1) Fill in the number of Shares you desire to purchase pursuant to this
Offering.
(2) Fill in the aggregate purchase price of the Shares purchased.
<PAGE> 5
EXHIBIT (A); PAGE 5
E. FORM OF OWNERSHIP. Please indicate the form of ownership you desire for the
shares.
X Individual (one signature required)
-------
Joint Tenants with right of survivorship (both parties
------- must sign)
Tenants-in-Common (all parties must sign)
-------
Community Property (one signature required if
------- interest held in one name, i.e., managing spouse;
two signatures required if interest is held in both
names)
- -------------------------------------------------------------------------------
Floyd Panning
- -------------------------------------------------------------------------------
Please PRINT here the exact name(s) (registration) investor
desires for the Shares
ACCEPTED:
HOH WATER TECHNOLOGY CORPORATION
By /s/ CATHERINE PATTERSON
--------------------------
Catherine Patterson
Corporate Secretary
Dated: 07/28/88 Number of Shares: 10,000
<PAGE> 6
EXHIBIT (A); PAGE 6
SIGNATURE PAGE
- -------------------------------------------------------------------------------
INDIVIDUALS/JOINT TENANTS/TENANTS-IN-COMMON/COMMUNITY/PROPERTY
- -------------------------------------------------------------------------------
If the Shares are to be owned by joint tenants or tenants-in-common, all tenants
must sign. If the securities are to be owned as community property, one
signature is required if the securities are to be held in one name (i.e., by
managing spouse) and two signatures if the securities are to be held in both
names.
<TABLE>
<CAPTION>
- -------------------------------------- -------------------------------------
INVESTOR #1 INVESTOR #2
- -------------------------------------- -------------------------------------
<S> <C>
/s/ FLOYD PANNING
- -------------------------------------- -------------------------------------
Signature Signature
Floyd Panning
- -------------------------------------- -------------------------------------
Print Name Print Name
###-##-####
- -------------------------------------- -------------------------------------
Social Security Number Social Security Number
Residence Address: Residence Address:
- -------------------------------------- -------------------------------------
3011 Juaquin Drive
Burbank, CA 91504
- -------------------------------------- -------------------------------------
- -------------------------------------- -------------------------------------
Executed at: Executed at:
Burbank , CA ,
- ------------------- ----------------- ------------------ ----------------
City State City State
this 28th day of July , 1988 this day of , 1996
----- ------ ----- -----------
- -------------------------------------- -------------------------------------
</TABLE>
Mailing Address (if different from residence address):
---------------------------------
---------------------------------
<PAGE> 1
EXHIBIT (B); PAGE 1
- -------------------------------------------------------------------------------
SUBSCRIPTION AGREEMENT
- -------------------------------------------------------------------------------
The Board of Directors of
Electropure, Inc.
23251 Vista Grande, Suite A
Laguna Hills, CA 92653
Gentlemen:
The undersigned hereby applies to Electropure, Inc. (the "Company") to purchase
the number of Shares indicated on Page B-7 of this document, in accordance with
the terms of this Subscription Agreement attached to the Confidential Private
Placement Memorandum dated June 24, 1988, relating to the Shares (such
Confidential Private Placement Memorandum, including all financial statements,
exhibits and schedules attached thereto, contained or specified therein as
available from the Company, and any amendments and supplements thereto, is
herein called the "Memorandum"). This subscription is irrevocable.
- -------------------------------------------------------------------------------
INSTRUCTIONS
- -------------------------------------------------------------------------------
Please complete the Subscription Agreement in the following manner:
1. Complete Sections D and E by inserting the amount of your subscription and/or
other information called for in those Sections.
2. Complete the signature page.
A. REPRESENTATIONS AND WARRANTIES. The undersigned acknowledges, represents,
warrants and agrees as follows:
1. The undersigned has received and carefully reviewed the Memorandum
and has relied only on the information contained therein, information otherwise
provided to him in writing by the Company or information from books and records
of the Company. The undersigned acknowledges that all documents, records and
books pertaining to this investment have been made available for inspection by
him, his attorney and/or his accountant and in the Memorandum, and that the
books and records of the Company will be available upon reasonable notice, for
inspection by investors during reasonable business hours at the principal place
of the business of the Company. The undersigned and/or his advisor(s) have had a
reasonable opportunity to ask questions of and receive answers from the Company
or a person or persons acting on its behalf, concerning the terms and conditions
of the Offering, and to obtain additional information, to the extent possessed
or obtainable without unreasonable effort or expense, necessary to verify the
accuracy of the information in the Memorandum. All such questions have been
answered to the full satisfaction of the undersigned. No oral representations
have been made or oral information furnished to the undersigned or his
advisor(s) in connection with the Offering which were in any way inconsistent
with the Memorandum.
<PAGE> 2
EXHIBIT (B); PAGE 2
2. The undersigned (i) has adequate means of providing for his current needs and
possible personal contingencies, (ii) has no need for liquidity in this
investment, (iii) is able to bear the substantial economic risks of an
investment in the Shares for an indefinite period, (iv) at the present time, can
afford a complete loss of such investment, and (v) does not have an overall
commitment to investments which are not readily marketable that is
disproportionate to the undersigned's net worth, and the undersigned's
investment in the Shares will not cause such overall commitment to become
excessive.
3. The undersigned is an "accredited investor" (as set forth in the Purchaser
Questionnaire accompanying this Subscription Agreement) and the undersigned's
total investment in the Shares does not exceed 10% of the undersigned's net
worth or joint net worth the undersigned's spouse.
4. The undersigned recognizes that the Company was incorporated in 1979 and has
had only limited operating revenues to date and no current revenues and that the
Shares as an investment involve significant risks, including those set forth
under the caption "Risk Factors Concerning the Company" in Exhibit A to the
Memorandum.
5. The undersigned understands that the Memorandum has not been filed with or
reviewed by the United States Securities and Exchange Commission and may not
have been filed or reviewed by certain state securities administrators because
of the representation made by the Company as to the private or limited nature of
the Offering.
6. The undersigned understands that neither the Offering nor the sale of the
Shares has been registered under the Securities Act of 1933, as amended (the
"Act") in reliance upon an exemption therefrom. The undersigned understands that
the Shares must be held indefinitely unless the sale or other transfer thereof
is subsequently registered under the Act, as amended, or an exemption from such
registration is available. The undersigned further understands that the Company
is under no obligation to register the Shares on his behalf (except as set forth
in the Memorandum) or to assist him in complying with any exemption from
registration.
7. The Shares are being purchased solely for the undersigned's own account for
investment purposes only and not for the account of any other person and not for
distribution, assignment or resale to others, and no other person has a direct
or indirect beneficial interest in such Shares.
8. The undersigned will not transfer the Shares without registering them under
applicable federal or state securities laws unless the transfer is exempt from
registration under such laws. The undersigned realizes that the Company may not
allow a transfer of the Shares unless the transferee meets the suitability
standards for an initial purchaser of the Shares. The undersigned understands
that legends will be placed on the certificates representing the Shares (or
common shares underlying the Shares), with respect to the above restrictions on
resale or other disposition of the Shares and that stop transfer instructions
have or will be placed with respect to the Shares so as to restrict the
assignment, resale or other disposition thereof.
9. The Company will direct its transfer agent to place such an order in its
books respecting the transfer of the Shares, and the certificate or certificates
representing the Shares (or common shares underlying the Shares) will bear the
following legend or a legend substantially similar thereto:
<PAGE> 3
EXHIBIT (B); PAGE 3
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933. THEY MAY NOT BE SOLD OR OFFERED FOR SALE IN THE ABSENCE OF: (1)
AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER THE ACT,
OR (2) AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED. FURTHER, TRANSFER IS RESTRICTED PURSUANT
TO AN AGREEMENT WITH THE COMPANY."
10. Rules 144, promulgated by the Securities and Exchange Commission under the
Act, may be available for sale of the Shares, but there is no assurance that it
will be available at any particular time in the future. If and when Rule 144 is
available for sale of such Shares, such sales in reliance upon Rule 144 may only
be made (i) in limited quantities after the Shares have been held for two years,
including two years after the exercise of a warrant or (ii) in unlimited
quantities by non-affiliates after the Shares have been held for three years
(including three years after exercise of a warrant), in each case in accordance
with the conditions of the Rule, all of which must be met (including the
requirement, if applicable, that adequate information concerning the Company is
then available to the public). The Company has no obligation to supply the
information required for sales under Rule 144.
11. The undersigned is a citizen of the United States and is at least 21 years
of age.
12. All information which the undersigned has provided to the Company in the
Purchaser Questionnaire or otherwise concerning himself, his investor status,
financial position and knowledge and experience in financial, tax and business
matters is correct and complete as of the date set forth at the end hereof, and
if there should be any adverse change in such information prior to acceptance of
his subscription, the undersigned will immediately provide the Company with such
information.
13. The undersigned, if a corporation, partnership, trust or other entity, is
authorized and otherwise duly qualified to purchase and hold the Shares, such
entity has its principal place of business as set forth on the signature page
hereof and such entity has NOT been formed for the specific purpose of acquiring
Shares unless all of its equity owners qualify as accredited individual
investors under the standards set forth in the accompanying Purchaser
Questionnaire. Beneficiaries of a trust will NOT be considered equity owners.
B. INDEMNIFICATION. The undersigned agrees to indemnify and hold harmless the
Company and its officers, directors and affiliates from and against all damages,
losses, costs and expenses (including reasonable attorneys' fees) which they may
incur by reason of the failure of the undersigned to fulfill any of the terms or
conditions of this Subscription Agreement, or by reason of any breach of the
representations and warranties made by the undersigned herein, in the
undersigned's related Purchaser Questionnaire or in any document provided by the
undersigned to the Company.
C. MISCELLANEOUS.
1. The undersigned agrees not to transfer or assign this Subscription
Agreement, or any of the undersigned's interest herein, and further agrees that
the transfer or assignment of the Shares acquired
<PAGE> 4
EXHIBIT (B); PAGE 4
pursuant hereto shall be made only in accordance with the conditions and
restrictions contained in the Memorandum and all applicable laws.
2. The undersigned agrees that the undersigned may not cancel,
terminate or revoke this Subscription Agreement or any agreement of the
undersigned made hereunder (except as otherwise specifically provided herein)
and that this Subscription Agreement shall survive the death or disability of
the undersigned and shall be binding upon the undersigned's heirs, executors,
administrators, successors and assigns.
3. Notwithstanding any of the representations, warranties,
acknowledgments or agreements made herein by the undersigned, the undersigned
does not thereby or in any other manner waive any rights granted to the
undersigned under federal or state securities laws.
4. This Subscription Agreement constitutes the entire agreement among
the parties with respect to the subject matter hereof and may be amended only by
a writing executed by all parties.
5. This Subscription Agreement shall be enforced, governed and
construed in all respects in accordance with the laws of the State of
California.
6. Within five days after receipt of a written request from the
Company, the undersigned agrees to provide such information and to execute and
deliver such documents as reasonably may be necessary to comply with any and all
laws, rules and regulations to which the Company is subject.
7. The representations and warranties of the undersigned set forth
herein shall survive the sale of the Shares pursuant to this Subscription
Agreement.
D. SUBSCRIPTION AND METHOD OF PAYMENT. The undersigned, acknowledging that Ten
Thousand (10,000) Shares is the minimum subscription required and that this
Offering involves the sale of up to 500,000 Shares at $1.17 per share with
registration rights at set forth in the Memorandum or at $0.94 per share without
registration rights, hereby subscribes for the following number of Shares and
encloses payment as follows:
<TABLE>
<CAPTION>
(1) (2)
<C> <S>
Shares at $0.94 per Share for an
15,957 aggregate purchase price of
- ---------------------- $10,000.00, payable by check or money order
Number of Shares to "HOH Water Technology Corp."
</TABLE>
- --------------
(1) Fill in the number of Shares you desire to purchase pursuant to this
Offering.
(2) Fill in the aggregate purchase price of the Shares purchased.
<PAGE> 5
EXHIBIT (B); PAGE 5
E. FORM OF OWNERSHIP. Please indicate the form of ownership you desire for the
Shares.
X Individual (one signature required)
-----------
Joint Tenants with right of survivorship (both parties
----------- must sign)
----------- Tenants-in-Common (all parties must sign)
Community Property (one signature required if
----------- interest held in one name, i.e., managing spouse;
two signatures required if interest is held in both
names)
- --------------------------------------------------------------------------------
Floyd Panning
- --------------------------------------------------------------------------------
Please PRINT here the exact name(s) (registration) investor
desires for the Shares
ACCEPTED:
HOH WATER TECHNOLOGY CORPORATION
By /s/ CATHERINE PATTERSON
---------------------------
Catherine Patterson
Corporate Secretary
Dated: 08/18/88 Number of Shares: 15,957
<PAGE> 6
EXHIBIT (B); PAGE 6
SIGNATURE PAGE
- --------------------------------------------------------------------------------
INDIVIDUALS/JOINT TENANTS/TENANTS-IN-COMMON/COMMUNITY/PROPERTY
- --------------------------------------------------------------------------------
If the Shares are to be owned by joint tenants or tenants-in-common, all tenants
must sign. If the securities are to be owned as community property, one
signature is required if the securities are to be held in one name (i.e., by
managing spouse) and two signatures if the securities are to be held in both
names.
<TABLE>
<CAPTION>
- -------------------------------------- -------------------------------------
INVESTOR #1 INVESTOR #2
- -------------------------------------- -------------------------------------
<S> <C>
/s/ FLOYD PANNING
- -------------------------------------- -------------------------------------
Signature Signature
Floyd Panning
- -------------------------------------- -------------------------------------
Print Name Print Name
###-##-####
- -------------------------------------- -------------------------------------
Social Security Number Social Security Number
Residence Address: Residence Address:
- -------------------------------------- -------------------------------------
3011 Juaquin Drive
Burbank, CA 91504
- -------------------------------------- -------------------------------------
- -------------------------------------- -------------------------------------
Executed at: Executed at:
Burbank , CA ,
- ------------------- ----------------- ------------------ ----------------
City State City State
this 18th day of August , 1988 this day of , 1996
----- --------- ----- -----------
- -------------------------------------- -------------------------------------
</TABLE>
Mailing Address (if different from residence address):
---------------------------------
---------------------------------
<PAGE> 1
EXHIBIT (C); PAGE 1
WARRANT NO. 359
THIS WARRANT, AND THE COMMON STOCK ISSUABLE UPON ITS EXERCISE, HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD, PLEDGED,
HYPOTHECATED, OR OTHERWISE TRANSFERRED, DISPOSED OF OR OFFERED FOR SALE, IN
WHOLE OR IN PART, IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER
THAT ACT COVERING THIS WARRANT AND/OR THE COMMON STOCK ISSUABLE UPON ITS
EXERCISE, OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO HOH WATER
TECHNOLOGY CORPORATION THAT AN EXEMPTION FROM REGISTRATION IS AVAILABLE.
----------------------------------------------------
WARRANT TO PURCHASE COMMON STOCK
OF
HOH WATER TECHNOLOGY CORPORATION
----------------------------------------------------
This is to Certify that, FOR VALUE RECEIVED, FLOYD PANNING, or assigns,
("Holder"), is entitled to purchase, subject to the provisions of this Warrant,
from HOH WATER TECHNOLOGY CORPORATION, a California corporation ("Company"), One
Hundred Thousand (100,000) fully paid, validly issued and nonassessable shares
of Common Stock, $0.01 par value, of the Company ("Common Stock") at any time or
from time to time during the period from the date hereof, through and including
December 17, 2002, but not later than 5:00 P.M. Los Angeles City Time on said
date (the "Exercise Period") at an initial exercise price equal to $1.25 per
share. The number of shares of Common Stock to be received upon the exercise of
this Warrant and the price to be paid for each share of Common Stock may be
adjusted from time to time as hereinafter set forth. The shares of Common Stock
deliverable upon such exercise, and as adjusted from time to time are
hereinafter sometimes referred to as "Warrant Shares" and the exercise price of
a share of Common Stock in effect at any time and as adjusted from time to time
is hereinafter sometimes referred to as the "Exercise Price."
(A) EXERCISE OF WARRANT. This Warrant may be exercised in
whole or in part at any time during the Exercise Period, and during the Exercise
Period the Holder shall have the right to exercise this Warrant into the kind
and amount of shares of stock and other securities and property (including cash)
receivable by a holder of the number of shares of Common Stock into which this
Warrant might have been exercisable immediately prior thereto. This Warrant may
be exercised by presentation and surrender hereof to the Company at its
principal office, or at the office of its stock transfer agent, if any, with the
Purchase Form annexed hereto duly executed and accompanied by payment of the
Exercise Price for the number of Warrant Shares specified in such form. As soon
as practicable after each such exercise of the Warrants, but not later than
seven (7) days from the date of such exercise, the Company shall issue and
deliver to the Holder a certificate or certificates for the Warrant Shares
issuable upon such
<PAGE> 2
EXHIBIT (C); PAGE 2
exercise, registered in the name of the Holder or its designee. If this Warrant
should be exercised in part only, the Company shall, upon surrender of this
Warrant for cancellation, execute and deliver a new Warrant evidencing the
rights of the Holder thereof to purchase the balance of the Warrant Shares
purchasable thereunder. Upon receipt by the Company of this Warrant at its
office, or by the stock transfer agent of the Company at its office, in proper
form for exercise, the Holder shall be deemed to be the holder of record of the
shares of Common Stock issuable upon such exercise, notwithstanding that the
stock transfer books of the Company shall then be closed or that certificates
representing such shares of Common Stock shall not then be physically delivered
to the Holder.
(B) RESERVATION OF SHARES. The Company shall at all times reserve for
issuance and/or delivery upon exercise of this Warrant such number of shares of
its Common Stock as shall be required for issuance and delivery upon exercise of
the Warrants.
(C) FRACTIONAL SHARES. No fractional shares or script representing
fractional shares shall be issued upon the exercise of this Warrant. With
respect to any fraction of a share called for upon any exercise hereof, the
Company shall pay to the Holder an amount in cash equal to such fraction
multiplied by the current market value of a share, determined as follows:
(1) If the Common Stock is listed on a National Securities
Exchange or admitted to unlisted trading privileges on such exchange or listed
for trading on the NASDAQ system, the current market value shall be the last
reported sale price of the Common Stock on such exchange or system on the last
business day prior to the date of exercise of this Warrant or if no such sale is
made on such day, the average closing bid and asked prices for such day on such
exchange or system; or
(2) If the Common Stock is not so listed or admitted to
unlisted trading privileges, the current market value shall be the mean of the
last reported bid and asked prices reported by the National Quotation Bureau,
Inc. on the last business day prior to the date of the exercise of this Warrant;
or
(3) If the Common Stock is not so listed or admitted to
unlisted trading privileges and bid and asked prices are not so reported, the
current market value shall be an amount, not less than book value thereof as at
the end of the most recent fiscal year of the Company ending prior to the date
of the exercise of the Warrant, determined in such reasonable manner as may be
prescribed by the Board of Directors of the Company or, if higher, $0.01 per
share.
(D) EXCHANGE, TRANSFER, ASSIGNMENT OR LOSS OF WARRANT. This Warrant is
exchangeable, without expense, at the option of the Holder, upon presentation
and surrender hereof to the Company or at the office of its stock transfer
agent, if any, for other warrants of different denominations entitling the
holder thereof to purchase in the aggregate the same number of shares of Common
Stock purchasable hereunder. Upon surrender of this Warrant to the Company at
its principal office or at the office of its stock transfer agent, if any, with
the Assignment Form annexed hereto duly executed and funds sufficient to pay any
transfer tax, the Company shall, without charge, execute and deliver a new
Warrant I the name of the assignee named in such instrument of assignment and
this Warrant shall promptly be canceled. This Warrant may be divided or combined
with other warrants which carry the same rights upon presentation hereof at the
principal office of the Company or at the office of its stock transfer agent, if
any, together with a written notice specifying the names and denominations in
which new Warrants are to
<PAGE> 3
EXHIBIT (C); PAGE 3
be issued and signed by the Holder hereof. The term "Warrant" as used herein
includes any Warrants into which this Warrant may be divided or exchanged. Upon
receipt of the Company of evidence satisfactory to it of the loss, theft,
destruction or mutilation of this Warrant, and (in the case of loss, theft or
destruction) of reasonably satisfactory indemnification, and upon surrender and
cancellation of this Warrant, if mutilated, the Company will execute and deliver
a new Warrant of like tenor and date. Any such new Warrant executed and
delivered shall constitute an additional contractual obligation on the part of
the Company, whether or not this Warrant so lost, stolen, destroyed, or
mutilated shall be at any time enforceable by anyone.
(E) RIGHTS OF THE HOLDER. The Holder shall not, by virtue hereof, be
entitled to any rights of a shareholder in the Company, either at low or equity,
and the rights of the Holder are limited to those expressed in the Warrant and
are not enforceable against the Company except to the extent set forth herein.
(F) ANTI-DILUTION PROVISIONS. The Exercise Price in effect at any time
and the number and kind of securities purchasable upon the exercise of the
Warrants shall be subject to adjustment from time to time upon the happening of
certain events as follows:
(1) In case the Company shall (i) declare a dividend or make a
contribution on its outstanding shares of Common Stock in shares of Common
Stock, (ii) subdivide or reclassify its outstanding shares of Common Stock into
a greater number of shares, or (iii) combine or reclassify its outstanding
shares of Common Stock into a smaller number of shares, the Exercise Price in
effect at the time of the record date for such dividend or distribution or of
the effective date of such subdivisions, combination or reclassification shall
be adjusted so that it shall equal the price determined by multiplying the
Exercise Price by a fraction, the denominator of which shall be the number of
shares of Common Stock outstanding after giving effect to such action, and the
numerator of which shall be the number of shares of Common Stock outstanding
immediately prior to such action. Such adjustment shall be made successively
whenever any event listed above shall occur.
(2) Whenever the Exercise Price payable upon exercise of each
Warrant is adjusted pursuant to Subsection (1) above, the number of shares
purchasable upon exercise of this Warrant shall simultaneously be adjusted by
multiplying the number of shares initially issuable upon exercise of this
Warrant by the Exercise Price in effect on the date hereof and dividing the
product so obtained by the Exercise Price, as adjusted.
(3) Whenever the Exercise Price is adjusted, as herein
provided, the Company shall promptly cause a notice setting forth the adjusted
Exercise Price and adjusted number of shares issuable upon exercise of each
Warrant to be mailed to the Holders, at their last addresses appearing in the
Warrant Register, and shall cause a certified copy thereof to be mailed to its
transfer agent, if any. The Company may retain a firm of independent certificate
public accountants selected by the Board of Directors (who may be the regular
accountants employed by the Company) to make any computation required by this
Section F and a certificate signed by such firms shall be conclusive evidence of
the correctness of such adjustment.
<PAGE> 4
EXHIBIT (C); PAGE 4
(4) In the event that at any time, as a result of an
adjustment made pursuant to Subsection (1) above, the Holder of this Warrant
thereafter shall become entitled to receive any shares of the Company, other
than Common Stock, thereafter the number of such other shares so receivable upon
exercise of this Warrant shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the provisions with
respect to the Common Stock contained in Subsection (1) above.
(5) Irrespective of any adjustments in the Exercise Price or
the number or kind of shares purchasable upon exercise of this Warrant, Warrants
theretofore or thereafter issued may continue to express the same price and
number and kind of shares as are stated in the similar Warrants initially
issuable pursuant to this Agreement.
(G) OFFICER'S CERTIFICATE. Whenever the Exercise Price shall be
adjusted as required by the provisions of the foregoing Section, the Company
shall forthwith file in the custody of its Secretary or an Assistant Secretary
at its principal office and with its stock transfer agent, if any, an officer's
certificate showing the adjusted Exercise Price determined as herein provided,
setting forth in reasonable detail the facts requiring such adjustment,
including a statement of the number of additional shares of Common Stock, if
any, and such other facts as shall be necessary to show the reason for and the
manner of computing such adjustment. Each such officer's certificate shall be
made available at all reasonable times for inspection by the holder or any
holder of a Warrant executed and delivered pursuant to Section A and the Company
shall, forthwith after each such adjustment, mail a copy by certified mail of
such certificate to the Holder or any such holder.
(H) NOTICES TO WARRANT HOLDERS. So long as this Warrant shall be
outstanding, (i) if the Company shall pay any dividend or make any distribution
upon the Common Stock or (ii) if the Company shall offer to the holders of
Common Stock for subscription or purchase by them any share of any class or any
other rights or (iii) if the capital reorganization of the Company,
reclassification of the capital stock of the Company, consolidation or merger of
the Company with or into another corporation, sale, lease or transfer of all or
substantially all of the property and assets of the Company to another
corporation, or voluntary or involuntary dissolution, liquidation or winding up
of the Company shall be effected, then in any such case, the Company shall cause
to be mailed by certified mail to the Holder, at least fifteen days prior to the
date specified in (x) or (y) below, as the case may be, a notice containing a
brief description of the proposed action and stating the date on which (x) a
record is to be taken for the purpose of such dividend, distribution or rights,
or (y) such reclassification, reorganization, consolidation, merger, conveyance,
lease, dissolution, liquidation or winding up is to take place and the date, if
any is to be fixed, as of which the holders of Common Stock or other securities
shall receive cash or other property deliverable upon such reclassification,
reorganization, consolidation, merger, conveyance, dissolution, liquidation or
winding up.
(I) RECLASSIFICATION, REORGANIZATION OR MERGER. In case of any
reclassification, capital reorganization or other change of outstanding shares
of Common Stock of the Company, or in case of any consolidation or merger of the
Company with or into another corporation (other than a merger with a subsidiary
in which merger the Company is the continuing corporation and which does not
result in any reclassification, capital reorganization or other change of
outstanding shares of Common Stock of the class issuable upon exercise of this
Warrant) or in case of any sale, lease or conveyance to another
<PAGE> 5
EXHIBIT (C); PAGE 5
corporation of the property of the Company as an entirety, the Company shall, as
a condition precedent to such transaction, cause effective provisions to be made
so that the Holder shall have the right thereafter by exercising this Warrant at
any time prior to the expiration of the Warrant, to purchase the kind and amount
of shares of stock and other securities and property receivable upon such
reclassification, capital reorganization and other change, consolidation,
merger, sale or conveyance by a holder of the number of shares of Common Stock
which might have been purchased upon exercise of this Warrant immediately prior
to such reclassification, change, consolidation, merger, sale or conveyance. Any
such provision shall include provision for adjustments which shall be as nearly
equivalent as may be practicable to the adjustments provided for in this
Warrant. The foregoing provisions of this Section I shall similarly apply to
successive reclassifications, capital reorganizations and changes of shares of
Common Stock and to successive consolidations, mergers, sales or conveyances. In
the event that in connection with any such capital reorganization or
reclassification, consolidation, merger, sale or conveyance, additional shares
of Common Stock shall be issued in exchange, conversion, substitution or
payment, in whole or in part, for a security of the Company other than Common
Stock, any such issue shall be treated as an issue of Common Stock covered by
the provisions of Subsection (1) of Section F hereof.
IN WITNESS THEREOF, the Company has caused this Warrant to be signed
and attested by the Undersigned, being duly authorized, as of the date set forth
on the first part hereof.
HOH WATER TECHNOLOGY CORPORATION
By /s/ CATHERINE PATTERSON
------------------------------
Catherine Patterson
Corporate Secretary
<PAGE> 6
EXHIBIT (C); PAGE 6
PURCHASE FORM
-------------
Dated:____________________, 19___
The undersigned hereby irrevocably elects to exercise the within Warrant to the
extent of purchasing _________________ shares of Common Stock and hereby makes
payment of $____________________ in payment of the actual exercise price
thereof.
=====================================================================
INSTRUCTIONS FOR REGISTRATION OF STOCK
--------------------------------------
Name ________________________________________________________________________
(Please typewrite or print in block letters)
Address ______________________________________________________________________
-----------------------------------
Signature of Warrant Holder
<PAGE> 7
EXHIBIT (C); PAGE 7
ASSIGNMENT FORM
FOR VALUE RECEIVED, _______________________________________________ (the
"Warrant Holder") hereby sells, assigns and transfers unto:
Name __________________________________________________________
(Please typewrite or print in block letters)
Address __________________________________________________________
the right to purchase Common Stock represented by this Warrant to the extent of
____________ shares as to which such right is exercisable and does hereby
irrevocably constitute and appoint ________________________________ Attorney, to
transfer the same on the books of the Company with full power of substitution in
the premises.
Dated: _________________, 19 ___
-----------------------------------
Signature of Warrant Holder
<PAGE> 1
EXHIBIT (D); PAGE 1
WARRANT NO. 372
THIS WARRANT, AND THE COMMON STOCK ISSUABLE UPON ITS EXERCISE, HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD, PLEDGED,
HYPOTHECATED, OR OTHERWISE TRANSFERRED, DISPOSED OF OR OFFERED FOR SALE, IN
WHOLE OR IN PART, IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER
THAT ACT COVERING THIS WARRANT AND/OR THE COMMON STOCK ISSUABLE UPON ITS
EXERCISE, OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO HOH WATER
TECHNOLOGY CORPORATION THAT AN EXEMPTION FROM REGISTRATION IS AVAILABLE.
----------------------------------------------------
WARRANT TO PURCHASE COMMON STOCK
OF
HOH WATER TECHNOLOGY CORPORATION
----------------------------------------------------
This is to Certify that, FOR VALUE RECEIVED, FLOYD PANNING, or assigns,
("Holder"), is entitled to purchase, subject to the provisions of this Warrant,
from HOH WATER TECHNOLOGY CORPORATION, a California corporation ("Company"), One
Hundred Thousand (100,000) fully paid, validly issued and nonassessable shares
of Common Stock, $0.01 par value, of the Company ("Common Stock") at any time or
from time to time during the period from the date hereof, through and including
February 25, 2003, but not later than 5:00 P.M. Los Angeles City Time on said
date (the "Exercise Period") at an initial exercise price equal to $0.05 per
share. The number of shares of Common Stock to be received upon the exercise of
this Warrant and the price to be paid for each share of Common Stock may be
adjusted from time to time as hereinafter set forth. The shares of Common Stock
deliverable upon such exercise, and as adjusted from time to time are
hereinafter sometimes referred to as "Warrant Shares" and the exercise price of
a share of Common Stock in effect at any time and as adjusted from time to time
is hereinafter sometimes referred to as the "Exercise Price."
(A) EXERCISE OF WARRANT. This Warrant may be exercised in
whole or in part at any time during the Exercise Period, and during the Exercise
Period the Holder shall have the right to exercise this Warrant into the kind
and amount of shares of stock and other securities and property (including cash)
receivable by a holder of the number of shares of Common Stock into which this
Warrant might have been exercisable immediately prior thereto. This Warrant may
be exercised by presentation and surrender hereof to the Company at its
principal office, or at the office of its stock transfer agent, if any, with the
Purchase Form annexed hereto duly executed and accompanied by payment of the
Exercise Price for the number of Warrant Shares specified in such form. As soon
as practicable after each such exercise of the Warrants, but not later than
seven (7) days from the date of such exercise, the Company shall issue and
deliver to the Holder a certificate or certificates for the Warrant Shares
issuable upon such
<PAGE> 1
EXHIBIT (E); PAGE 1
WARRANT NO. E-1008
THIS WARRANT, AND THE COMMON STOCK ISSUABLE UPON ITS EXERCISE, HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD, PLEDGED,
HYPOTHECATED, OR OTHERWISE TRANSFERRED, DISPOSED OF OR OFFERED FOR SALE, IN
WHOLE OR IN PART, IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER
THAT ACT COVERING THIS WARRANT AND/OR THE COMMON STOCK ISSUABLE UPON ITS
EXERCISE, OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO HOH WATER
TECHNOLOGY CORPORATION THAT AN EXEMPTION FROM REGISTRATION IS AVAILABLE.
----------------------------------------------------
WARRANT TO PURCHASE COMMON STOCK
OF
HOH WATER TECHNOLOGY CORPORATION
----------------------------------------------------
This is to Certify that, FOR VALUE RECEIVED, FLOYD PANNING, or assigns,
("Holder"), is entitled to purchase, subject to the provisions of this Warrant,
from HOH WATER TECHNOLOGY CORPORATION, a California corporation ("Company"), Two
Hundred Thousand (200,000) fully paid, validly issued and nonassessable shares
of Common Stock, $0.01 par value, of the Company ("Common Stock") at any time or
from time to time during the period from the date hereof until the first to
occur to (i) the exercise by HOH of Right provided in and defined in Section
3(b) of that certain Master Agreement between HOH and Electropure, Inc., a
California corporation, dated July 29, 1992, or (ii) 5:00 P.M. Los Angeles City
Time on January 31, 1998 (the "Exercise Period") at an initial exercise price
equal to $0.05 per share. The number of shares of Common Stock to be received
upon the exercise of this Warrant and the price to be paid for each share of
Common Stock may be adjusted from time to time as hereinafter set forth. The
shares of Common Stock deliverable upon such exercise, and as adjusted from time
to time are hereinafter sometimes referred to as "Warrant Shares" and the
exercise price of a share of Common Stock in effect at any time and as adjusted
from time to time is hereinafter sometimes referred to as the "Exercise Price."
(A) EXERCISE OF WARRANT. This Warrant may be exercised in
whole or in part at any time during the Exercise Period, and during the Exercise
Period the Holder shall have the right to exercise this Warrant into the kind
and amount of shares of stock and other securities and property (including cash)
receivable by a holder of the number of shares of Common Stock into which this
Warrant might have been exercisable immediately prior thereto. This Warrant may
be exercised by presentation and surrender hereof to the Company at its
principal office, or at the office of its stock transfer agent, if any, with the
Purchase Form annexed hereto duly executed and accompanied by payment of the
Exercise Price for the number of Warrant Shares specified in such form. As soon
as practicable after each such exercise of the Warrants, but not later than
seven (7) days from the date of such exercise, the Company shall issue and
deliver to the Holder a certificate or certificates for the Warrant Shares
issuable upon such
<PAGE> 1
EXHIBIT (F); PAGE 1
WARRANT NO. E-1021
THIS WARRANT, AND THE COMMON STOCK ISSUABLE UPON ITS EXERCISE, HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD, PLEDGED,
HYPOTHECATED, OR OTHERWISE TRANSFERRED, DISPOSED OF OR OFFERED FOR SALE, IN
WHOLE OR IN PART, IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER
THAT ACT COVERING THIS WARRANT AND/OR THE COMMON STOCK ISSUABLE UPON ITS
EXERCISE, OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO HOH WATER
TECHNOLOGY CORPORATION THAT AN EXEMPTION FROM REGISTRATION IS AVAILABLE.
----------------------------------------------------
WARRANT TO PURCHASE COMMON STOCK
OF
HOH WATER TECHNOLOGY CORPORATION
----------------------------------------------------
This is to Certify that, FOR VALUE RECEIVED, FLOYD PANNING, or assigns,
("Holder"), is entitled to purchase, subject to the provisions of this Warrant,
from HOH WATER TECHNOLOGY CORPORATION, a California corporation ("Company"), Two
Hundred Thousand (200,000) fully paid, validly issued and nonassessable shares
of Common Stock, $0.01 par value, of the Company ("Common Stock") at any time or
from time to time during the period from the date hereof until the first to
occur to (i) the exercise by HOH of Right provided in and defined in Section
3(b) of that certain Master Agreement between HOH and Electropure, Inc., a
California corporation, dated July 29, 1992, or (ii) 5:00 P.M. Los Angeles City
Time on January 31, 1998 (the "Exercise Period") at an initial exercise price
equal to $0.05 per share. The number of shares of Common Stock to be received
upon the exercise of this Warrant and the price to be paid for each share of
Common Stock may be adjusted from time to time as hereinafter set forth. The
shares of Common Stock deliverable upon such exercise, and as adjusted from time
to time are hereinafter sometimes referred to as "Warrant Shares" and the
exercise price of a share of Common Stock in effect at any time and as adjusted
from time to time is hereinafter sometimes referred to as the "Exercise Price."
(A) EXERCISE OF WARRANT. This Warrant may be exercised in
whole or in part at any time during the Exercise Period, and during the Exercise
Period the Holder shall have the right to exercise this Warrant into the kind
and amount of shares of stock and other securities and property (including cash)
receivable by a holder of the number of shares of Common Stock into which this
Warrant might have been exercisable immediately prior thereto. This Warrant may
be exercised by presentation and surrender hereof to the Company at its
principal office, or at the office of its stock transfer agent, if any, with the
Purchase Form annexed hereto duly executed and accompanied by payment of the
Exercise Price for the number of Warrant Shares specified in such form. As soon
as practicable after each such exercise of the Warrants, but not later than
seven (7) days from the date of such exercise, the Company shall issue and
deliver to the Holder a certificate or certificates for the Warrant Shares
issuable upon such
<PAGE> 1
EXHIBIT (G); PAGE 1
STOCK RIGHT AGREEMENT
NO. E-1008
THIS STOCK RIGHT AGREEMENT (the "Agreement") is made and entered into
as of July 29, 1992, by and between FLOYD PANNING ("Investor") and HOH WATER
TECHNOLOGY CORPORATION, a California Corporation ("HOH"), with respect to the
following factsd:
A. HOH has entered into a Master Agreement dated July 29, 1992 and
Amendments to such Master Agreement, with ELECTROPURE, INC., a California
corporation ("Electropure").
B. Investor is an investor in Electropure.
C. The Master Agreement provides for HOH to enter into this Agreement
with Investor.
NOW, THEREFORE, in consideration of the foregoing facts and the mutual
covenants and agreements contained herein, the parties hereby agree as follows:
1. RIGHT TO PURCHASE SHARES. HOH hereby grants to Investor the right
(the "Preferential Right") to purchase shares of HOH Common Stock or Preferred
Stock (the "Shares") as set forth herein. Investor shall have the Preferential
Right to purchase any Shares HOH offers to any bona fide third party for cash
and/or cancellation of indebtedness, provided, however, Investor shall have the
right and priority to purchase only that percentage of the Shares offered as his
investment in Electropure bears to the total investments in Electropure by all
other investors of Electropure who have entered into substantially similar Stock
Right Agreements and desire to purchase Shares, unless cuh other Investor does
not or cannot purchase his full allocated share of the Shares, in which case,
the balance of the Shares not being purchased shall be allocated again based on
the investments in Electropure. Notwithstanding the above, Investor shall not be
able to purchase Shares under this Agreement with an aggregate Purchase Price
(as defined in Section 2 hereof) of more than Fifty Thousand ($50,000.00)
Dollars.
2. PURCHASE PRICE. The total purchase price per Share shall be
seventy-five percent (75%) of the price the third party investor has agreed in
writing to purchase all the Shares for.
3. MECHANICS. Before HOH can enter into a valid sale or transfer of any
Shares which the Investor has a Preferential Right to purchase herein, HOH shall
first offer such Shares to the Investor and the other investors in Electropure
in the manner set forth below:
3.1. HOH shall deliver written notice to the Investor and the
other investors in Electropure stating the name and address of each prospective
bona fide third party purchasers, the bona fide price, terms and conditions of
such proposed sale or transfer, and written evidence of the intentioned
purchasers' agreement to purchase and ability to purchase such Shares.
3.2. Upon receipt of the notice from HOH, the Investor shall
have the Preferential Right to purchase certain of the Shares specified in the
notice by delivery to HOH, by certified or registered mail or by hand, a written
offer to purchase a specific number of the Shares or the Investors' percentage
subject to the notice, upon the terms enclosed in HOH's notice (subject to the
Purchase Price
<PAGE> 2
EXHIBIT (G); PAGE 2
set forth in Section 2 hereof). Such offer must be delivered to HOH within
fourteen (14) days after mailing or delivery of the notice to the Investor.
3.3. If the Investor and all other investors in Electropure
fail to agree to purchase ALL Shares set forth in the HOH notice in accordance
with the provisions of this Agreement and substantially similar Stock Right
Agreements, HOH shall at the end of such fourteen (14) day period, inform
Investor of the failure of Investor and the other investors in Electropure to
agree to purchase all the Shares and unless within five (5) days after receipt
by Investor of such second notice, HOH receives the written agreement to
purchase ALL Shares in the first notice from the Investor and/or the other
investors in Electropure, ALL Shares identified in the notice of intention to
sell or transfer may be sold or transferred at any time within ninety (90) days
after the date of such first notice by HOH, and Investor and all other investors
in Electropure shall not have the right to purchase the Shares. If the proposed
transferee fails to purchase such Shares according to these terms, within ninety
(90) days after the date of HOH's first notice, then the Investor must again be
given the option to purchase such Shares in the manner set forth in this Section
3.
4. TRANSFERS AND DELIVERY OF PURCHASE PRICE. The Shares shall be
purchased by Investor within ten (10) days after HOH notifies Investor that
Investor and other investors in Electropure have elected to purchase all the
Shares offered in accordance with the terms, conditions and procedures set forth
herein. By the close of business on such tenth day, HOH shall deliver to
Investor, Stock Certificates for the Shares to be purchased by Investor upon
delivery of the Purchase Price for such Shares being purchased by Investor.
Payment shall be made by Investor by cash or a certified check payable to HOH.
5. REPRESENTATIONS AND WARRANTIES BY HOH.
5.1. The Company is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of California, has the
corporate power and authority to own or lease its properties and to carry on its
business as now being conducted.
5.2. The Company has the power to enter into this Agreement,
and this Agreement has been duly executed and delivered and constitutes a valid
and binding obligation of the Company.
5.3. The Shares, when issued, will be duly and validly
authorized, fully paid and nonassessable.
6. REPRESENTATIONS AND WARRANTIES OF INVESTOR. Investor represents and
warrants to HOH that:
6.1. The Shares will be acquired by Investor for investment
for an indefinite period, for Investor's own account, not as a nominee or agent,
and not with a view to the sale or distribution of any part thereof, and the
Investor will not have at the time of the purchase of any Shares a then present
intention of selling, granting participation in, or otherwise distributing the
same.
<PAGE> 3
EXHIBIT (G); PAGE 3
6.2. Investor understands that the Shares will not have been
registered under the Securities Act of 1933, as amended (the "Act"), in reliance
upon the exemptions from the registration provisions of the Act contained in
Section 4(2) thereof.
6.3. At the time of purchase of any of the Shares, Investors
will (i) have adequate means of providing for his current needs and possible
personal contingencies, (ii) have no need for liquidity in the investment in the
Shares, (iii) be able to bear the substantial economic risks of an investment in
the Shares for an indefinite period, (iv) be able to afford a complete loss of
such investment, and (v) will not have an overall commitment to investments
which are not readily marketable that is disproportionate to Investor's net
worth, and the Investor's investment in the Shares will not cause such overall
commitment to become excessive.
6.4. At the time of any purchase of the Shares, Investor will
be an "accredited investor" (as set forth in Regulation D promulgated under the
Act) and the undersigned's total investment in the Shares will not then exceed
10% of the Investor's net worth or joint net worth with the Investor's spouse.
6.5. Investor understands that the Shares must be held
indefinitely unless the sale or other transfer thereof is subsequently
registered under the Act, or an exemption from such registration is available.
Investor further understands that HOH is under no obligation to register the
Shares on his behalf or to assist him in complying with any exemption from
registration except as otherwise provided herein.
6.6. Investor agrees not to transfer the Shares without
registering them under applicable federal or state securities laws unless the
transfer is exempt from registration. Investor realizes that HOH may not allow a
transfer of Shares unless the transferee is also an "accredited investor".
Investor understands that legends will be placed on certificates representing
the Shares, with respect to the above restrictions on resale or other
disposition of the Shares and that stop transfer instructions have or will be
placed with respect to the Shares so as to restrict the assignment, resale or
other disposition thereof.
6.7. HOH will direct its transfer agent to place such a stop
transfer order in its books respecting transfer of the Shares, and the
certificate or certificates representing the Shares will bear the following
legend or a legend substantially similar thereto:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD OR OFFERED FOR
SALE IN THE ABSENCE OF: (1) AN EFFECTIVE REGISTRATION
STATEMENT AS TO THE SECURITIES UNDER THAT ACT, OR (2) AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED."
6.8. Investor understands that Rule 144, promulgated by the
Securities and Exchange Commission under the Act, is not currently available for
sale of the Shares, and there is no assurance that it will be available at any
particular time in the future. If and when Rule 144 is available for sale of the
Shares, such sales in reliance upon Rule 144 may only be (i) in limited
quantities after the securities have been held for two years after being sold by
HOH or an affiliate of HOH, or (ii) in unlimited quantities by non-affiliates
after the securities have been held for three years after being sold by HOH or
an affiliate of HOH, in each case in accordance with the conditions of the Rule,
all of which must be met (including the
<PAGE> 4
EXHIBIT (G); PAGE 4
requirement, if applicable, that adequate information concerning HOH is then
available to the public). HOH has no obligation to supply the information
required for sales under Rule 144.
6.9. Any notice to HOH provided under Section 5 hereof to
purchase any Shares shall contain a current reaffirmation of the representations
and warrants contained in this Section 6 as a condition to the purchase of any
Shares.
7. EXCEPTIONS. The Preferential Right set forth in Section I hereof to
purchase Shares shall not apply to any sale of Shares not solely for cash and/or
cancellation of indebtedness, to any sales to employees of HOH or any
subsidiary, or to any merger, reorganization or acquisition involving HOH or
sale of all or substantially all the assets of HOH.
8. REGISTRATION RIGHTS. The Shares issued pursuant to this Agreement
shall be subject to the same registration rights as provided for the "Warrant
Shares" in Section (i) of the Warrant between the Company and the Investor dated
June , 1992. For purpose thereof, "Warrant Shares" in the Warrant shall refer
to the Shares and the parties hereto shall have the same rights and duties
regarding the Shares as provided in Section (j) as to the Warrant Shares.
9. ENTIRE AGREEMENT. This Agreement and the Warrant Agreement embodies
the entire agreement and understanding between the parties hereto with respect
to the subject matter hereof and supersedes all prior and contemporaneous
agreements and understandings relating to such subject matter.
10. AMENDMENT. This Agreement may not be amended except by written
document executed by the parties.
11. SUBJECT HEADINGS. Subject headings are included for convenience
only and shall not be deemed part of this Agreement.
12. SEVERABILITY. If any provision of this Agreement shall be held
unenforceable as applied to any circumstance, the remainder of this Agreement
and the application of such provision to other circumstances shall be
interpreted so as best to effect the intent of the parties. The parties further
agree to replace any such unenforceable provision with an enforceable provision
(and to take such other action) which will achieve, to the extent possible, the
purposes of the unenforceable provision.
13. CHOICE OF LAW AND VENUE. This Agreement shall be governed by and
construed under the laws of the State of California in force from time to time.
Any proceeding arising out of this Agreement shall be brought in orange County,
California.
14. ATTORNEYS' FEES. In any action to enforce this Agreement, the
prevailing party shall be entitled to recover from the non-prevailing party all
reasonable costs, including, without limitation, attorneys' fees.
15. ADDITIONAL DOCUMENTS. The parties agree to execute such additional
documents and perform such other acts as may be necessary or appropriate to
achieve the purposes of this Agreement.
<PAGE> 5
EXHIBIT (G); PAGE 5
16. NON-WAIVER. No waiver by a party of any failure by the other party
to keep any provision of this Agreement shall be deemed a waiver of any
preceding or succeeding breach of the same or any other provision.
17. PARTIES BOUND. This Agreement is binding on and shall inure to the
benefit of the parties and their respective successors, assigns, heirs, and
legal representatives.
18. NUMBER AND GENDER. Wherever required by the context hereof, the
singular shall include the plural and vice versa, and the neuter gender shall
include the masculine and feminine genders, and vice versa; the word "person"
shall include a natural person and a corporation, partnership, firm or other
form of association; the word "or" is not exclusive; and the words "herein,"
"hereof" and "hereunder" refer to this Agreement as a whole and not merely to a
subdivision in which such words appear unless the context expressly requires
otherwise.
19. EXPENSES. HOH and Investor shall each be responsibl e for the
payment of their own expenses incurred in connection with this Agreement and the
transactions contemplated hereunder.
20. JOINT PREPARATION. This Agreement shall be interpreted as if
prepared jointly by the parties.
21. SURVIVAL. The representations, warranties, covenants, and
agreements contained in this Agreement shall survive the consummation of the
transactions contemplated hereby.
22. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
HOH: HOH WATER TECHNOLOGY CORPORATION
By: /s/ CATHERINE PATTERSON
--------------------------------
Catherine Patterson
Chief Financial Officer
Address:
P.O. Box 3613
Laguna Hills, California 92654-3613
Investor: /s/ FLOYD PANNING
------------------------
Floyd Panning
Address:
317 Calle Chueca
San Clemente, CA 94523-3176
<PAGE> 1
EXHIBIT (H); PAGE 1
STOCK RIGHT AGREEMENT
NO. E-1021
THIS STOCK RIGHT AGREEMENT (the "Agreement") is made and entered into
as of July 29, 1992, by and between FLOYD PANNING ("Investor") and HOH WATER
TECHNOLOGY CORPORATION, a California Corporation ("HOH"), with respect to the
following factsd:
A. HOH has entered into a Master Agreement dated July 29, 1992 and
Amendments to such Master Agreement, with ELECTROPURE, INC., a California
corporation ("Electropure").
B. Investor is an investor in Electropure.
C. The Master Agreement provides for HOH to enter into this Agreement
with Investor.
NOW, THEREFORE, in consideration of the foregoing facts and the mutual
covenants and agreements contained herein, the parties hereby agree as follows:
1. RIGHT TO PURCHASE SHARES. HOH hereby grants to Investor the right
(the "Preferential Right") to purchase shares of HOH Common Stock or Preferred
Stock (the "Shares") as set forth herein. Investor shall have the Preferential
Right to purchase any Shares HOH offers to any bona fide third party for cash
and/or cancellation of indebtedness, provided, however, Investor shall have the
right and priority to purchase only that percentage of the Shares offered as his
investment in Electropure bears to the total investments in Electropure by all
other investors of Electropure who have entered into substantially similar Stock
Right Agreements and desire to purchase Shares, unless cuh other Investor does
not or cannot purchase his full allocated share of the Shares, in which case,
the balance of the Shares not being purchased shall be allocated again based on
the investments in Electropure. Notwithstanding the above, Investor shall not be
able to purchase Shares under this Agreement with an aggregate Purchase Price
(as defined in Section 2 hereof) of more than Fifty Thousand ($50,000.00)
Dollars.
2. PURCHASE PRICE. The total purchase price per Share shall be
seventy-five percent (75%) of the price the third party investor has agreed in
writing to purchase all the Shares for.
3. MECHANICS. Before HOH can enter into a valid sale or transfer of any
Shares which the Investor has a Preferential Right to purchase herein, HOH shall
first offer such Shares to the Investor and the other investors in Electropure
in the manner set forth below:
3.1. HOH shall deliver written notice to the Investor and the
other investors in Electropure stating the name and address of each prospective
bona fide third party purchasers, the bona fide price, terms and conditions of
such proposed sale or transfer, and written evidence of the intentioned
purchasers' agreement to purchase and ability to purchase such Shares.
3.2. Upon receipt of the notice from HOH, the Investor shall
have the Preferential Right to purchase certain of the Shares specified in the
notice by delivery to HOH, by certified or registered mail or by hand, a written
offer to purchase a specific number of the Shares or the Investors'
