<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
--------------------------------------
AMENDMENT NO. 2
TO
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.
23456 South Pointe Drive
Laguna Hills, CA 92653
(949) 770-9347
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
March 31, 1998
(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 9 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 - AMENDMENT NO. 2
CUSIP NO. 286133 PAGE 2 OF 9 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
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES 835,240
----------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY NONE
----------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 835,240
----------------------------------------------------------
PERSON 10 SHARED DISPOSITIVE POWER
WITH NONE
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
835,240
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
9.1% OF THE COMMON STOCK
5.1% OF VOTING POWER
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- --------------------------------------------------------------------------------
* SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE> 3
PAGE 3 OF 9 PAGES
This Amendment No. 2 amends, in relevant part as follows, the Schedule
13D, filed September 11, 1997, of Floyd H. Panning (the "Reporting Person") with
respect to the common stock, $0.01 par value per share ("Common Stock") of
Electropure, Inc., a California corporation.
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 23456 South Pointe Drive, Laguna Hills, California 92653.
ITEM 2. IDENTITY AND BACKGROUND
(a) Floyd H. Panning
(b) 317 Calle Chueca, San Clemente, CA 92673
(c) President, Electropure, Inc., 23456 South Pointe Drive,
Laguna Hills, CA
(d) Not applicable
(e) Not applicable
(f) U.S.A.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
The funds used to purchase the 100 shares of Common Stock of
Electropure which the Reporting Person gifted in November, 1998 were from Mr.
Panning's personal funds. The warrants granted to the Reporting Person, as
indicated below, were granted to the Reporting Person both as a bonus for
services rendered as an employee of the Company and as a stipend for annual
service to the Board of Directors.
ITEM 4. PURPOSE OF THE TRANSACTION
On March 31, 1998, the Board of Directors authorized the granting to
Mr. Panning of 250,000 ten-year warrants to purchase Common Stock of the Company
at $1.125 per share. Such warrants, which were granted as a bonus for services
rendered, are exercisable in annual increments of 50,000, commencing on the
grant date, and automatically terminate if Mr. Panning ceases to be employed by
the Company
On August 14, 1997, the Company's Board of Directors authorized the
granting of 10,000 warrants to each Director as annual consideration for service
on the Board. Consequently, on August 14, 1998, Mr. Panning (as well as all
other Directors) was granted 10,000 ten-year warrants to purchase Common Stock
at $1.375 per share.
<PAGE> 4
PAGE 4 OF 9 PAGES
On November 1, 1998, Mr. Panning gifted 100 shares of Electropure, Inc. common
Stock to a non-affiliated third party in a private transaction. The shares in
question were originally acquired by Mr. Panning in August, 1997 upon the
exercise of warrants to purchase Common Stock at $0.50 per share. The shares
gifted continue the legend and stop transfer restrictions contained on the
shares acquired by Mr. Panning.
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:
<PAGE> 5
PAGE 5 OF 9 PAGES
827,740 shares of Common Stock with one vote per share(1).
Mr. Panning owns beneficially 4.6% of the Common Stock; 9.1%
if all of the warrants described in Items 5 and 6 are
exercised. Mr. Panning owns 5.1% 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 September 11, 1997, Mr. Panning has entered into the
following transactions with regard to Electropure's Common
Stock:
On March 31, 1998, Mr. Panning was granted 250,000 ten-year
warrants to purchase Common Stock at $1.125 per share as a
bonus for services rendered. Such warrants are exercisable in
annual increments of 50,000, commencing on the grant date;
provided, however, that Mr. Panning is employed by the Company
on the exercise date
On August 14, 1998, Mr. Panning, along with each of the
Company's Directors, was granted 10,000 ten-year warrants to
purchase Common Stock at $1.375 per share.
On November 1, 1998, Mr. Panning transferred 100 shares of
Common Stock to an unaffiliated third party as a gift. Mr.
Panning had acquired such shares at $0.50 per share, upon the
exercise of certain warrants in August, 1997.
The following Warrants are currently exercisable by Mr.
Panning:
<TABLE>
<CAPTION>
DATE GRANTED PURCHASE PRICE NO. OF SHARES
------------ -------------- -------------
<S> <C> <C>
12/17/92 $1.25 10,000
08/14/97 $0.375 10,000
08/14/97 $0.28125 125,000
03/31/98 $1.125 250,000
08/14/98 $1.375 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 and the
Schedules 13D filed on June 2, 1997 and September 11, 1997, Mr. Panning has the
right, until December 17, 2002 to purchase 10,000 shares of Electropure's Common
Stock at $1.25 per share; 10,000 shares and
- --------
(1) Includes warrants for 125,000 shares of Common Stock exercisable at
$0.28125 per share; 10,000 shares exercisable at $1.25 per share; 10,000
shares exercisable at $0.375 per share; 10,000 shares exercisable at $1.375
per share; and 250,000 shares exercisable at $1.125 per share.
<PAGE> 6
PAGE 6 OF 9 PAGES
125,000 shares of Common Stock at $0.375 and $0.28125, respectively, until
August 14, 2007. Additionally, Mr. Panning has the right to purchase 250,00
shares of Common Stock at $1.125 per share until March 31, 2008, subject to his
continued employment. Finally, Mr. Panning currently holds the right to
purchase, at $1.375 each, 10,000 shares of Common Stock until August 14, 2008.
Pursuant to an August, 1997 License Termination Agreement between the
Company and its former licensee, EDI Components, the Company is obligated to
issue shares to the investors of EDI Components upon the Common Stock of the
Company first having a per share market value for thirty consecutive trading
days equal to or in excess each of $3.00, $4.00 and $5.50 per share (each a
"Trigger Value"). Of such shares, if and when issued by the Company, Mr. Panning
is to receive 33,333, 25,000 and 18,182 shares valued at $99,999, $100,000 and
$100,001, respectively, for a total additional value of $300,000.
On August 14, 1997, the Company entered into a five-year Employment
Agreement (effective 08/05/97) with Mr. Panning engaging him as the Company's
President and Chief Executive Officer. Mr. Panning has the unilateral option to
extend such employment for a period of two (2) years. The Agreement provides Mr.
Panning with five weeks' vacation, the use of a company car2 and cellular
telephone and participation in any benefit programs offered by the Company (none
at this time). In addition to the 125,000 Warrants granted to Mr. Panning
pursuant to the Employment Agreement, as described in Items 4 and 5 above, the
terms of such Employment Agreement also provide for the following:
(a) A base monthly salary of $6,500 increasing to $8,000 per month
once the Company has realized a minimum of $1 million in
financing3. Each year thereafter, the base salary shall
automatically increase by an amount equal to five (5%) percent.
(b) Upon realizing the above minimum financing, the Company has agreed
to reimburse Mr. Panning for certain wages deferred while he was
employed at EDI Components (a total of $63,700 was deferred). A
$25,000 promissory note issued by Mr. Panning, in consideration
for his exercise of 50,000 warrants to purchase Common Stock at
$0.50 per share, will be satisfied (including accrued interest)
with such deferred wages, net of normal federal, state and local
income and payroll taxes. Mr. Panning agreed to waive any
remaining balance of deferred wages after payment of such
promissory note.
(c) Mr. Panning has the right to nominate, subject to shareholder
approval, one person to the Company's Board of Directors during
the term of his employment. In the meantime, Mr. Panning has been
named to the Company's Board of Directors.
- ----------
(2) On August 1, 1998, the Company entered into a Motor Vehicle Contract and
Security Agreement whereby the Company purchased from Mr. Panning a 1994
Cadillac Seville for the total purchase price of $23,000. The Company made
a $3,000 down payment on such purchase and will pay 36 installment payments
of $636 per month. Such automobile is being utilized by Mr. Panning for
business purposes.
(3) As of April 9, 1998, such milestone had been met and Mr. Panning's base
monthly salary was increased as provided in the employment agreement.
<PAGE> 7
PAGE 7 OF 9 PAGES
(d) Mr. Panning may, without cause, terminate his employment and
retain the right to a the following percentage of his base monthly
salary:
<TABLE>
<CAPTION>
YEAR OF PERCENT
TERMINATION OF SALARY
----------- ---------
<S> <C>
1 60%
2 70%
3 80%
4 90%
5 100%
6 0%
7 0%
</TABLE>
(e) Any termination of employment by the Company shall immediately
vest all 125,000 warrants granted to Mr. Panning under the
employment agreement. In addition, termination by the Company of
Mr. Panning's employment without cause, shall automatically
accelerate the issuance of Additional Shares due EDI's investors
under the License Termination Agreement at the then fair market
value; provided, however, Mr. Panning's successor has not been
approved by simple majority vote of such EDI investors (excluding
Mr. Panning).
ITEM 7. EXHIBITS
<TABLE>
<C> <S>
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) *
10.11.E Warrants for 20,000 shares (Warrant No. E-1008 - 04/20/92) *
10.11.F Warrants for 20,000 shares (Warrant No. E-1021 - 04/20/93) *
10.11.G Stock Right Agreement No. E-1008 - 04/20/92 *
10.11.H Stock Right Agreement No. E-1021 - 04/20/93 *
10.11.I Warrants for 10,000 shares (Warrant No. A-3010 - 08/14/97)***
10.11.J Full Recourse Term Note and Security Agreement - 08/22/97***
10.11.K Warrants for 250,000 shares (Warrant No. A-3047 - 03/31/98)
</TABLE>
<PAGE> 8
PAGE 8 OF 9 PAGES
<TABLE>
<C> <S>
10.11.L Warrants for 10,000 shares (Warrant No. A-3051 -
08/14/98)
10.11.M Motor Vehicle Contract and Security Agreement dated
08/01/98
10.47.8 License Termination Agreement dated August 14, 1997
(effective 08/05/97) **
10.47.9 Employment Agreement dated August 14, 1997 (effective
08/05/97), including exhibits thereto, particularly
Warrant No. A-3001 (08/14/97) to purchase 125,000
shares. **
</TABLE>
- --------------
* Previously filed in connection with Schedule 13D filed on June 2, 1997 by
the Reporting Person.
** Previously filed in connection with Issuer's Form 10-QSB for the fiscal
quarter ended July 31, 1997.
*** Previously filed in connection with Schedule 13D filed on September 11,
1997 by the Reporting Person.
<PAGE> 9
PAGE 9 OF 9 PAGES
SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this Amendment No. 1 to Schedule 13D
is true, complete and correct.
Dated: January 30, 1999
/S/ FLOYD H. PANNING
---------------------------------------
FLOYD H. PANNING
<PAGE> 10
AMENDMENT NO. 2
TO
SCHEDULE 13D
FLOYD H. PANNING
(Name of Reporting Person)
INDEX TO EXHIBITS
-----------------
<TABLE>
<CAPTION>
PAGE
SEQUENTIALLY
NUMBERED
------------
<C> <S>
10.11.K. Warrants for 250,000 shares (Warrant No. A-3047 - 03/31/98)
10.11.L. Warrants for 10,000 shares (Warrant No. A-3051 - 08/14/98)
10.11.M Motor Vehicle Contract and Security Agreement dated 08/01/98
</TABLE>
<PAGE> 1
EXHIBIT 10.11.K; PAGE 1
23456 SOUTH POINTE DRIVE
Laguna Hills, California 92653-1512
949-770-9347 o Fax 949-770-9209
ELECTROPURE, INC.
================================================================================
WARRANT NO. A-3047
DATED SEPTEMBER 10, 1998
Void after 5:00 P.M. Los Angeles City Time,
on March 31, 2008
Warrant to Purchase 250,000 Shares of Common Stock
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 ELECTROPURE, INC.
THAT AN EXEMPTION FROM REGISTRATION IS AVAILABLE.
- --------------------------------------------------------------------------------
WARRANT TO PURCHASE COMMON STOCK
OF
ELECTROPURE, INC.
- --------------------------------------------------------------------------------
This is to certify that, for value received, FLOYD H. PANNING, or assigns,
("Holder"), is entitled to purchase, subject to the provisions of this Warrant,
from ELECTROPURE, INC., a California corporation ("Company"), Two Hundred Fifty
Thousand ([OBJECT OMITTED]) 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 set forth below until the 5:00 P.M. Los
Angeles City Time on [OBJECT OMITTED] until the date upon which Holder's
employment with the Company shall terminate, whichever shall first occur (the
"Exercise Period") at an initial exercise price equal to $1.125 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 PERIOD. Holder shall have the right to exercise this Warrant into
shares of Common Stock in increments of up to but not more than Fifty Thousand
(50,000) each year, commencing on the date hereof. Holder shall be entitled to
accumulate and exercise in successive years any and all Warrants
<PAGE> 2
EXHIBIT 10.11.K; PAGE 2
which have become exercisable hereunder in prior years. This Warrant shall
terminate at 5:00 P.M. Los Angeles City Time on[OBJECT OMITTED]008
notwithstanding the fact that the Warrants granted hereunder are exercisable in
the increments stated.
NOTWITHSTANDING ANY PROVISION HEREIN TO THE CONTRARY, HOLDER MAY
EXERCISE THIS WARRANT, IN THE INCREMENTS STATED ABOVE; PROVIDED, HOWEVER, THAT
AT SUCH TIME OF ANY EXERCISE, HOLDER MUST THEN BE EMPLOYED BY THE COMPANY. IN
THE EVENT HOLDER'S EMPLOYMENT WITH THE COMPANY SHALL TERMINATE, FOR ANY REASON,
ALL WARRANTS REMAINING UNEXERCISED UNDER THIS WARRANT AGREEMENT AS OF THE DATE
OF SUCH TERMINATION SHALL THEN BECOME NULL AND VOID.
B. EXERCISE OF WARRANT. During and subject to the Exercise Period, this Warrant
may be exercised in whole or in part at any time and 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 fourteen (14) 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 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.
C. 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.
D. 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
<PAGE> 3
EXHIBIT 10.11.K; PAGE 3
(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.
E. EXCHANGE, TRANSFER, ASSIGNMENT OR LOSS OF WARRANT. This Warrant is
exchangeable, without expense to Holder or any assignee or exchangee of Holder,
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 to Holder or any assignee or exchangee of Holder, execute
and deliver a new Warrant in 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 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.
F. 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.
G. 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
<PAGE> 4
EXHIBIT 10.11.K; PAGE 4
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 G and a certificate signed by such firms shall be conclusive evidence of
the correctness of such adjustment.
(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.
H. 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 B 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.
I. 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
<PAGE> 5
EXHIBIT 10.11.K; PAGE 5
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.
J. 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 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 J 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 G 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.
ELECTROPURE, INC.
BY /S/ CATHERINE PATTERSON
-------------------------------------------
CATHERINE PATTERSON
CORPORATE SECRETARY
<PAGE> 6
EXHIBIT 10.11.K; PAGE 6
23456 South Pointe Drive
Laguna Hills, California 92653-1512
949-770-9347 o Fax 949-770-9209
ELECTROPURE, INC.
================================================================================
PURCHASE FORM
WARRANT NO. A-3047
MARCH 31, 1998
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 10.11.K; PAGE 7
23456 South Pointe Drive
Laguna Hills, California 92653-1512
949-770-9347 o Fax 949-770-9209
ELECTROPURE, INC.
================================================================================
ASSIGNMENT FORM
WARRANT NO. A-3047
MARCH 31, 1998
FOR VALUE RECEIVED, the undersigned 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 10.11.L; PAGE 1
WARRANT NO. A-3051
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 H. PANNING, or
assigns, ("Holder"), is entitled to purchase, subject to the provisions of this
Warrant, from HOH WATER TECHNOLOGY CORPORATION, a California corporation
("Company"), Ten Thousand (10,000) 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 5:00 P.M.
Los Angeles City Time on August 14, 2008 (the "Exercise Period") at an initial
exercise price equal to $1.375 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 exercise, registered in the name of the Holder or its
designee. If this Warrant should be exercised in part
<PAGE> 2
EXHIBIT 10.11.L; PAGE 2
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 be issued and signed by the Holder hereof. The term
"Warrant" as used herein includes any Warrants
<PAGE> 3
EXHIBIT 10.11.L; PAGE 3
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.
(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
<PAGE> 4
EXHIBIT 10.11.L; PAGE 4
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 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
<PAGE> 5
EXHIBIT 10.11.L; PAGE 5
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 10.11.L; PAGE 6
PURCHASE FORM NO. A-3051
------------------------
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 10.11.L; PAGE 7
ASSIGNMENT FORM NO. A-3051
--------------------------
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 10.11.M; PAGE 1
MOTOR VEHICLE CONTRACT AND SECURITY AGREEMENT
This Motor Vehicle Contract and Security Agreement (the "Agreement") is made
effective as of August 1, 1998, by and between Floyd Panning and Lorraine
Panning, JTWROS (collectively, the "Seller"), 317 Calle Chueca, San Clemente, CA
92673, and Electropure, Inc. (the "Buyer"), 23456 South Pointe Drive, Laguna
Hills, CA 92653, and states the agreement of the parties as follows:
MOTOR VEHICLE DESCRIPTION
<TABLE>
<S> <C> <C> <C>
NEW/USED USED ODOMETER READING 40,010
YEAR 1994 VEHICLE ID NO. 1G6KS52Y3RU831536
MAKE CADILLAC COLOR FOREST GREEN
BODY STYLE 4 DOOR SEDAN LICENSE NO. 3HNX906
MODEL SEVILLE (SLS)
</TABLE>
DISCLOSURES PURSUANT TO THE TRUTH-IN-LENDING ACT
<TABLE>
<CAPTION>
ANNUAL PERCENTAGE RATE FINANCE CHARGE AMOUNT FINANCED TOTAL OF PAYMENTS TOTAL SALE PRICE
The cost of your The dollar amount the The amount of credit The amount you will The total cost of
credit as a yearly credit will cost you. provided to you or on have paid after you your purchase on
rate. your behalf. have made all credit, including
payments as scheduled. your down payment of
$3,000.
<S> <C> <C> <C> <C>
9.00% $2,296.00 20,000.00 $22,896.00 $25,896.00
</TABLE>
PAYMENT SCHEDULE
<TABLE>
<CAPTION>
NUMBER OF PAYMENTS AMOUNT OF PAYMENTS WHEN PAYMENTS ARE DUE
<S> <C> <C>
One Payment 3,000.00 August 1, 1998
35 Payments 636.00 August 15, 1998
One Payment 636.00 July 15, 2001
</TABLE>
ADDITIONAL TERMS AND AGREEMENTS
A. PROMISE TO PAY: Buyer promises to pay the down payment and the Amount
Financed, plus the finance charges on the Amount Financed, as shown in the
Payment Schedule. The Finance charges are to be computed daily on a simple
interest basis by applying the Annual Percentage Rate to the unpaid portion of
the Amount Financed until all sums due under this contract are fully paid.
Payments will be applied first to any unpaid deferred downpayment, then to the
finance charges and then to repay the Amount Financed.
B. SIMPLE INTEREST CONTRACT: This is a simple interest contract. The Finance
Charge, Total of Payments and Payment Schedule shown may differ from the amount
Buyer will
1
<PAGE> 2
EXHIBIT 10.11.M; PAGE 2
ultimately have to pay if payments are not received on their exact due dates or
the Seller adds amounts to the amount Buyer owes for any of the reasons stated
below.
C. SECURITY INTEREST: Buyer hereby grants Seller a security interest under the
California Uniform Commercial Code in the vehicle and all parts or accessories
put on the vehicle and in all insurance premiums financed for you or rebates
from insurance premiums, service contracts, and in the proceeds of any insurance
policies covering the vehicle or credit or disability insurance policies
financed hereunder, which security interest secures all sums which may become
due under this contract, as well as any modifications, extensions, renewals,
amendments, or re-financing of it.
D. USE OF VEHICLE: Buyer agrees to keep the vehicle free of all taxes and liens,
except in favor of Seller, and not to use the vehicle, or permit the vehicle to
be used, illegally, improperly, or for hire, or to expose the vehicle to misuse,
seizure, or confiscation, or other involuntary transfer, even if the vehicle was
not the subject of judicial or administrative action. Buyer agrees not to make
any material change in the vehicle or allow any material change in it to be
made, or to remove the vehicle, or allow it to be removed from this State for a
period in excess of 30 days or transfer any interest in the vehicle. Buyer
agrees to keep the vehicle in good working condition and make all necessary
repairs. Buyer agrees not to remove the vehicle, or to permit its removal, from
this country. Although Seller is not obligated to do so, if Seller elects to pay
any liens, fees or taxes in connection with the vehicle, or to expend any other
amount to protect Seller's interest in the vehicle, Buyer will reimburse Seller,
at Seller's options: (i) within 5 days of Seller's demand upon Buyer to do so,
or (ii) Seller may add the dollar amount of any such liens, fees, taxes or other
charges Seller pays to the balance of this contract, accruing interest, from the
time Seller pays such amounts until the time Buyer pays them to Seller, at the
annual percentage rate shown on the face of this contract, with such dollar
amount and interest due at maturity of this contract or in monthly installments
due on the remaining payment dates shown on the face of this contract, as Seller
might choose.
E. INSURANCE: Buyer agrees to keep the vehicle insured in favor of Seller with a
policy satisfactory to Seller, with comprehensive, fire, theft and collision
coverage, insuring the vehicle in an amount sufficient to cover the value of the
vehicle. Buyer agrees to deliver the policies to Seller, and Buyer agrees that
Seller may (i) contact Buyer's insurance agent to verify coverage or to add
Seller as a loss payee or lienholder, (ii) make any claim under Buyer's
insurance policy, (iii) cancel the insurance on Buyer's default, and (iv)
receive any payment of loss or return premium, and apply the amounts received,
at Seller's option, to replacement of the property or to Buyer's indebtedness
under this Agreement, including indebtedness not yet due. If Buyer fails to
maintain such insurance, Seller may, at Seller's option, procure such insurance
to protect Seller's interest in the property, and Buyer agrees to pay for such
insurance and finance charges on the premiums on demand at the annual percentage
rate shown on the reverse, according to the notice Seller sends Buyer. Buyer
agrees that any insurance Seller purchases may be for the protection of only
Seller's interest in the property, and may be for the remaining term of the
contract or any shorter period as Seller may determine. Buyer understands that
the insurance premiums may be higher if Seller must purchase insurance than if
Buyer had purchased the insurance itself. Buyer agrees that Seller can use any
proceeds from insurance to either repair or replace the vehicle or to reduce
Buyer's debt under this contract as Seller may decide. Whether or not the
vehicle is insurance, Buyer must pay for it if it is lost, damaged or destroyed.
2
<PAGE> 3
EXHIBIT 10.11.M; PAGE 3
F. PREPAYMENT OF AMOUNT OWED: Buyer may prepay all amounts due under this
contract at any time without penalty. In addition, if Buyer fails to make any
payment when due or perform any other agreement provided for in this contract,
Seller may, in addition to other remedies, declare all sums immediately due and
payable. If Buyer prepays a portion of the balance, the payment will be credited
first to interest and the balance to the unpaid Amount Financed. The next
payment will be due on the next regular installment date.
G. DEFAULT: If Buyer breaches any warranty or defaults in the performance in any
promise Buyer makes in this agreement, including, but not limited to, making of
any payment when due, or becomes insolvent, or files any proceeding under the
U.S. Bankruptcy Code, or upon Buyer's dissolution, or if the vehicle is damages,
destroyed, or impounded, Seller may at the Seller's option and without notice or
demand (1) declare all unpaid sums immediately due and payable (2) file suit
against Buyer for all unpaid sums (3) take immediate possession of the motor
vehicle (4) exercise any other legal or equitable remedy. Upon taking possession
of the motor vehicle and giving notice as provided by law, if Buyer does not
redeem the vehicle, Seller will sell it, at public or private sale. Seller may
purchase the vehicle at any public sale. The proceeds of the sale will be
applied first to the expenses of retaking, reconditioning, storing and selling
the property, and the remainder will be applied to unpaid sums owing under this
contract, including collection costs and attorney fees. If there is any money
left over (surplus) it will be paid to Seller. If a balance still remains
owning, Buyer promises to pay the same upon demand. If Buyer defaults or
breaches this agreement, Buyer agrees to pay finance charges at the annual
percentage rate shown on the first paid until all sums owing Seller are paid in
full or judgment is entered. Seller's remedies are cumulative and taking of any
action shall not be a waiver or prohibit Seller from pursuing any other remedy.
Buyer agrees that upon Buyer's default, Seller shall be entitled to recover from
Buyer all reasonable collection costs, including, but not limited to, an
attorney's fee. In addition, if Seller repossesses the vehicle, Buyer grants to
Seller and Seller's agents permission to enter upon any premises owned by Buyer.
Buyer agrees that Seller is entitled to recover from Buyer all reasonable costs
and expenses arising out of that repossession, including, but not limited to,
any sums Seller pays third party agents. With respect to any sums Seller is
entitled to recover pursuant to the previous two sentences, Buyer will reimburse
Seller, at Seller's option (i) within 5 days of demand upon Buyer to do so or
(ii) Seller may add the dollar amount of any such sums, costs and expenses to
the balance of this contract, accruing interest, from the time Seller pays such
amounts until the time Buyer pays them to Seller, at the annual percentage rate
shown on the face of this contract.
H. EXCELLERATION OF CONTRACT: In the event that the employment of Floyd H.
Panning ("Panning") by Buyer shall terminate for any reason which is not a
voluntary act by Panning prior to the final payment shown in the Payment
Schedule, Seller may at Seller's option and without notice or demand (1) declare
all unpaid sums immediately due and payable, or (2) take immediate possession of
the motor vehicle. Buyer agrees that if Seller repossesses the vehicle pursuant
to the preceding sentence, Buyer's obligations under the Payment Schedule shown
in this contract shall terminate. However, Buyer agrees that Seller shall be
entitled to collect from Buyer any reasonable costs, expenses and attorneys fees
incurred by Seller resulting from the excelleration of the contract.
3
<PAGE> 4
EXHIBIT 10.11.M; PAGE 4
I. WARRANTIES OF SELLER: Seller agrees to take all necessary steps to transfer
to Buyer all of Seller's rights in the Limited Warranty on the vehicle described
in Exhibit "A" attached hereto and made a part hereof and except for the
warranty provided thereby, Buyer agrees that there are no express or implied
warranties with respect to the merchantability, suitability, fitness for
purpose, or otherwise concerning the vehicle, parts or accessories described
herein. Seller disclaims any warranty or representation as to the accuracy of
the mileage on the odometer. Seller does not warrant the correctness of the year
of manufacture or model of said vehicle. Buyer agrees that it has verified the
description of the vehicle to its satisfaction and there is no warranty as to
the correctness of the description of the vehicle.
J. AMENDMENT: This Agreement may not be amended except by written document
executed by all parties.
K. SUBJECT HEADINGS: Subject headings are included for convenience only and
shall not be deemed part of this Agreement.
L. 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.
M. 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.
N. 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.
O. SURVIVAL: The representations, warranties, covenants, and agreements
contained in this Agreement shall survive the consummation of the transactions
contemplated hereby.
IN WITNESS WHEREOF, the parties have executed this Motor Vehicle Contract and
Security Agreement as of the date first above written.
SELLER: BUYER:
ELECTROPURE, INC.
BY /S/ FLOYD H. PANNING BY /S/ CATHERINE PATTERSON
--------------------------- ---------------------------
FLOYD H. PANNING CATHERINE PATTERSON
CHIEF FINANCIAL OFFICER
BY /S/ LORRAINE PANNING
---------------------------
LORRAINE PANNING
317 Calle Chueca 23456 South Pointe Drive
San Clemente, CA 92673 Laguna Hills, CA 92653
4
