<PAGE>
As filed with the Securities and Exchange Commission on September 17, 1996,
Registration No. 0-18049
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8 POS
POST-EFFECTIVE AMENDMENT
NO. 1
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
NEROX ENERGY CORPORATION
(Exact name of registrant as specified in its charter)
Nevada 31-1166419
- ------------------------------- -----------------------------
(State or other jurisdiction of (I.R.S. Employer I.D. Number)
incorporation or organization)
846 West Foothill Boulevard, Suite Y, Upland, CA 91786-3770
- ------------------------------------------------ ----------
(Address of principal executive offices) (Zip Code)
SERVICES AGREEMENT
(Full title of plan(s))
Laughlin Associates, Inc.
2533 North Carson Street
Carson City, Nevada 89700
800-648-0966
(name, address and telephone number of agent for service)
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED PROPOSED
TITLE OF SECURITIES AMOUNT TO BE MAXIMUM OFFERING MAXIMUM AGGREGATE AMOUNT OF
TO BE REGISTERED REGISTERED PRICE PER SHARE OFFERING PRICE REGISTRATION FEE
<S> <C> <C> <C> <C>
COMMON STOCK,
PAR VALUE $0.02
PER SHARE (1) 200,000 $1.25 $250,000 $100.00
COMMON STOCK,
PAR VALUE $0.02
PER SHARE (2) 10,000 $0.00 $ 0.0 $ 0.0
</TABLE>
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities and
on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ----- ----
<S> <C> <C>
/s/ NICHOLAS E. ROSS
- -------------------- Chief Executive Officer,
Nicholas E. Ross President and Director Sept. 17, 1996
Vice President and Director ____________ 1996
- ---------------------
William D. Artus
Director ____________ 1996
- ---------------------
Joe Brock
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INDEX TO EXHIBITS
<C> <S>
NO. DESCRIPTION
- ------ -----------
1. Opinion and Consent of Jack Utter, Esq.*
2. Services Agreement with Chapel Hill Partners, Inc. dated September 4, 1996
3. Option Agreement with Chapel Hill Partners, Inc. dated September 4, 1996
4. Subscription Agreement with Chapel Hill Partners, Inc., dated September 4, 1996
5. Certificate for Common Stock Purchase Options, Chapel Hill Partners, Inc., dated September 4, 1996
6. Services Agreement with Griffin Financial Corp. dated September 4, 1996
7. Option Agreement with Griffin Financial Corp. dated September 4, 1996
8. Subscription Agreement with Griffin Financial Corp., dated September 4, 1996
9. Certificate for Common Stock Purchase Options, Griffin Financial Corp., dated September 4, 1996
10. Consent of Saddington-Cacciamatta, Certified Public Accountants
11. Services Agreement with Charles A. Koenig, dated August 1, 1996
* Already filed.
</TABLE>
<PAGE>
EXHIBIT 2
SERVICES AGREEMENT
This Agreement, effective this 4 day of September, 1996, is entered into
by and between NEROX ENERGY CORPORATION ("Client"), with the mailing address of
846 West Foothill Boulevard, Suite Y, Upland, California 91786-3770, and CHAPEL
HILL PARTNERS, INC.. ("Consultant"), with the mailing address of 200 Rector
Place, Suite 41C, New York, NY 10280.
1. SERVICES.
Consultant is hereby retained by Client for the purpose of providing services of
the nature and type requested by Client in the areas of Consultant's expertise,
as more fully described on Exhibit A attached hereto, during the term described
below (all such past and future services hereinafter referred to as the
"Services"). Upon the reasonable request of Client, Consultant shall provide
Client with future Services pursuant to the terms and conditions of this
Agreement.
2. STANDARDS.
Consultant will provide Services in accordance with all applicable laws and
regulations, including but not limited to, the rules and ethical standards of
the Securities and Exchange Commission and National Association of Security
Dealers, Inc.
3. INDEPENDENT CONTRACTOR.
Individuals who perform Services for or on behalf of Consultant to Client shall
be considered the agents, consultants, contractors or employees of Consultant.
The relationship between Consultant and Client is solely one of independent
contractor. Consultant is entitled to perform the Services required herein
through the use of its own personnel. Nothing herein shall be construed or
interpreted to deem the relationship between Client and Consultant to be that of
an employer/employee. Consultant shall be responsible for all contract
obligations it may have with its personnel, for the payment of all wages and
salaries payable to its personnel, and the cost of providing its personnel with
any fringe benefits to which they may be entitled by reason of being personnel
of Consultant. Consultant shall also be responsible for withholding payroll
taxes from the wages and salaries paid to its personnel and the payment of all
payroll taxes relating to their employment to
<PAGE>
government agencies and shall provide workman's compensation insurance,
unemployment insurance and any other insurance required by statute.
4. CHARGES FOR SERVICES.
In consideration for the Services, Client agrees to sell to Consultant the sum
of One Hundred Thousand (100,000) shares of the common stock of Client, upon the
terms and conditions set forth in the Option Agreement attached hereto as
Exhibit B.
5. INABILITY TO PERFORM.
Consultant and Client shall not be required to perform their respective
obligations under this Agreement, or be liable for their failure to perform or
for delay in performance of their obligations hereunder, if such performance is
prevented, hindered, or delayed by reason of any cause beyond the reasonable
control of the other party, including, without limitation, any labor dispute,
personal illness or injury, act of God, or regulation or order of any government
authority. If performance is not possible for thirty (30) consecutive days,
either party may terminate this Agreement upon written notice to the other.
6. TERM AND TERMINATION.
This Agreement shall be effective upon the date first written above and shall
continue in effect for six (6) months thereafter or until terminated by either
party upon giving the other party not less than thirty (30) days prior written
notice of termination; provided, however, Services being provided at the time of
termination shall continue pursuant to the terms of this Agreement until
completed. This Agreement may be terminated by either party in the event of the
refusal or inability of the other party to perform hereunder as provided in
Section 6, or in the event of the breach of any obligation under this Agreement
by the other party. Such termination upon breach shall be made by written
notice to the other party and shall become effective ten (10) days after
delivery of such notice, provided the defaulting party has not cured any such
default to the satisfaction of the other party within said ten (10) day period.
7. INDEMNIFICATION.
Consultant and Client mutually agree that they will indemnify and hold harmless
each other and each other's respective directors, officers, employees and each
person, if any, who controls such other entity within the meaning of Section 15
of the Securities Act of 1933, as amended, or Section 20 of the Securities Act
of 1934, as
<PAGE>
amended, (each such person being indemnified hereinafter referred to as the
"Indemnified Party") from and against any and all losses, claims, damages and
liabilities, joint or several (including all legal and other expenses reasonably
incurred by any Indemnified Party in connection with the preparation for or
defense of any claim, action or proceeding, whether or not resulting in
liability), to which such Indemnified Party may become subject under any
applicable federal or state law or otherwise caused by or arising out of, or
allegedly caused by or arising out of, this Agreement or any transaction covered
by this Agreement or the performance of the services provided for herein;
provided, however, that such party will not be liable hereunder to the extent
that any loss, claim, damage or liability is found in a final nonappealable
judgment by a court of competent jurisdiction to have resulted from gross
negligence or bad faith in performing the services described herein. This
provision shall survive the termination of this Agreement.
8. CONFIDENTIALITY.
Client and Consultant will not, unless otherwise required by law, either during
or subsequent to the term of this Agreement, directly or indirectly disclose or
publish to any unauthorized person any information designated in writing as
secret or confidential by Client or by Consultant without the written consent of
the other party; nor will either party disclose to anyone other than personnel
of one of the parties, or use in any way other than in the course of the
performance of this Agreement, any information not known to the general public
or recognized as standard practice, whether acquired or developed during
performance of this Agreement obtained from either party or obtained prior to
contract.
Neither party shall be obligated by this Section 7 with respect to any
information which is published or becomes publicly available through no fault of
the party receiving such information under this Agreement or rightfully received
from third parties, is developed independently, or is in their possession one
(1) year after the termination of this Agreement. Each party is likely to be
exposed to certain business information of the other party not related to the
Services, which is considered by the other party to be proprietary and
confidential, including but not limited to customer, product and financial
information. The parties hereto agree to avoid the unauthorized dissemination
or publication of such proprietary information by using the same degree of care
with regard to such information and the same methods to prevent the publication
thereof as each employs with respect to its own proprietary information of a
similar nature.
<PAGE>
The confidentiality obligation imposed hereunder shall survive the termination
of this Agreement.
9. MISCELLANEOUS.
(a) Unless otherwise stated, all notices, demands, payments and other
communications required or permitted to be given hereunder shall be in writing
and shall be deemed to have been given on the date delivery is acknowledged, and
shall be made only by recognized courier service, or by U.S. Mail, registered or
certified, postage prepaid, return receipt requested, to the address of each
party set forth in the heading of the Agreement, or to such other address as
either party may substitute by written notice to the other party.
(b) This Agreement shall be binding on, and inure to the benefit of, the parties
hereto and their respective heirs, legal representatives, successors or assigns.
Neither party shall assign its obligations hereunder without the express written
consent of the other party.
(c) The captions used in this Agreement are for purposes of identification only
and are not to be used to construe any of the terms of the Agreement.
(d) The following Exhibits, annexed hereto, or incorporated herein and are
hereby made a part of this Agreement:
Exhibit A: Description of Services
Exhibit B: Option Agreement
(e) This Agreement may be executed as a single document bearing all necessary
signatures or may be executed simultaneously in two (2) or more counterparts,
each of which shall be deemed an original and all of which together shall
constitute one and the same instrument.
(f) This Agreement constitutes the entire Agreement and understanding between
the parties hereto and integrates all prior negotiations, discussions and
agreements between them. No modifications of the terms of this Agreement shall
be valid unless in writing and signed by an authorized representative of each
party hereto (or their successors).
<PAGE>
(g) If any provisions or provisions of this Agreement shall be held to be
invalid, illegal or unenforceable, the validity, legality, and enforceability of
the remaining provision shall not in any way be affected or impaired thereby.
(h) This Agreement shall be governed by and interpreted under the laws of the
State of California.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day
and year first above written.
CLIENT:
NEROX ENERGY CORPORATION
By: /s/ NICHOLAS E. ROSS
-------------------------
Its: President
-------------------------
CONSULTANT:
CHAPEL HILL PARTNERS, INC.
By: /s/ [Illegible Signature]
-------------------------
Its: President
------------------------
<PAGE>
EXHIBIT A
DESCRIPTION OF SERVICES
Pursuant to the terms of the Services Agreement dated September 4, 1996,
Consultant hereby agrees to provide the following Services to Client:
1. Perform a comprehensive review and analysis of such financial and other
factors as deemed appropriate, including, among other things:
(i) the historic and current financial positions and results of
operations of Client;
(ii) the business prospects of Client:
(iii) a comparative analysis of Client, vis-a-vis other companies within
Client's industry sector; and
(iv) Client's operating projections;
2. Prepare a written research report of Client and establish a strategic
dialogue with Client's management to explore strategies for increasing
shareholder value;
3. Assist Client as a financial advisor in implementing any strategies Client
chooses to implement;
4. Advise Client with respect to all requirements for NASDAQ listing, develop
strategies for satisfying such requirements and introduce Client to such firms
or persons as may be appropriate to develop a group of market makers, stock
analysts and fund managers; and
5. Provide such other and further financial advisory consulting services as
may be mutually agreed upon between Client and Consultant from time to time.
<PAGE>
for convenience and references only and shall not limit or otherwise affect the
meaning hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the date first above written.
NEROX ENERGY CORPORATION
By: /s/ NICHOLAS E. ROSS
--------------------------
Its: President
--------------------------
REGISTERED HOLDER
/s/ Chapel Hill Partners, Inc.
- ---------------------------------------
CHAPEL HILL PARTNERS, INC.
- ---------------------------------------
(print name)
200 Rector Place, Suite 41C
- ---------------------------------------
(street address)
New York NY 10280
- ---------------------------------------
(city) (state) (zip)
- ---------------------------------------
(social security or employer ID number)
<PAGE>
EXHIBIT 3
THE REGISTERED HOLDER OF THIS OPTION BY ITS ACCEPTANCE HEREOF, AGREES THAT IT
WILL NOT SELL, ASSIGN, PLEDGE, HYPOTHECATE OR OTHERWISE TRANSFER THIS OPTION
EXCEPT AS HEREIN PROVIDED. THIS OPTION HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT) OR UNDER THE SECURITIES LAWS OF
ANY STATE.
VOID AFTER 5:00 P.M., PACIFIC STANDARD TIME, DECEMBER 31, 1996
OPTION AGREEMENT
This Option Agreement (the "Agreement") is dated as of September 4, 1996,
between NEROX ENERGY CORPORATION (the "Company"), and CHAPEL HILL PARTNERS, INC.
(the "Registered Holder").
WHEREAS, the Company and the Registered Holder are parties to a Services
Agreement, dated September 4, 1996, between the Company and the Registered
Holder, which Services Agreement provides for the issuance of options to
purchase common stock of the Company on terms and conditions as more fully set
forth herein; and
WHEREAS, the Company desires to provide for issuance of option certificates (the
"Option Certificates") representing One Hundred Thousand (100,000) Options as
compensation under the aforementioned Services Agreement on such terms and
conditions as are more fully set forth herein; and
NOW, THEREFORE, in consideration of the promises and mutual agreements
hereinafter set forth, it is agreed that:
1. OPTIONS/OPTION CERTIFICATES. Each Option shall entitle the holder thereof
---------------------------
(the "Registered Holder"), in whose name the Option Certificate shall be
registered on the books maintained by the Company, to purchase one (1) share of
the Company's $0.02 par value Common Stock (the "Option Shares") upon exercise
thereof at the Option Exercise Price (set forth in Section 3 hereof), subject to
modification and adjustment as provided in Sections 7 and 8 hereof. The Option
Certificate representing the right to purchase Option Shares shall be executed
as provided in Section 2 hereof and delivered to the Registered Holder upon
execution of this Agreement.
Subject to the provisions hereof, the Company shall deliver Option Certificates
in required whole number denominations to Registered Holders in connection with
any transfer or exchange permitted under this Agreement. No Option Certificates
shall be issued except: (i) Option Certificates initially issued hereunder; (ii)
Option Certificates issued on or after the initial issuance date, upon the
exercise of any Options, to evidence the unexercised Options held by the
exercising Registered
<PAGE>
Holder; or (iii) Option Certificates issued after the initial issuance date upon
any transfer or exchange of Option Certificates or replacement of lost or
mutilated Option Certificates.
2. FORM AND EXECUTION OF OPTION CERTIFICATES. The Option Certificates shall be
-----------------------------------------
substantially in the form attached hereto as Exhibit A (the "Option
Certificate"). The Option Certificates shall be dated as of the date of their
issuance, whether on initial issuance, transfer or exchange, or in lieu of
mutilated, lost, stolen or destroyed Option Certificates. The Option
Certificates shall be signed by the Company's Chief Executive Officer or
President and attested to by the Company's Secretary or Assistant Secretary, and
embossed with the Company's seal, and shall not be valid for any purpose unless
so originally signed and embossed.
3. EXERCISE. Subject to the provisions of Sections 7 and 8 hereof, each Option
--------
may be exercised at a price of One and 25/100 Dollars ($1.25) (the "Option
Exercise Price") per Option. The Options represented by an Option Certificate
may be exercised in whole or in part at any time during the period commencing
with the date of this Agreement (the "Initial Exercise Date") and terminating at
5:00 p.m. Pacific Standard Time on December 31, 1996 (the "Termination Date").
Each Option shall be deemed to have been exercised immediately prior to the
close of business on the date (the "Exercise Date") of the surrender for
exercise of the Option Certificate. The exercise form, attached hereto as
Exhibit B shall be executed by the Registered Holder, or by his duly authorized
attorney, in writing and shall be delivered to the Company at its corporate
office together with payment to the order of the Company in cash or by official
bank or certified check, of an amount equal to the aggregate Exercise Price, in
lawful money of the United States of America.
Unless Option Shares may not be issued as provided herein, the person entitled
to receive the number of Option Shares deliverable on such exercise shall be
treated for all purposes as the holder of such Option Shares as of the close of
business on the Exercise Date. In addition, the Company shall also, at such
time, verify that all of the conditions precedent to the issuance of Option
Shares, set forth in Section 4, have been satisfied as of the Exercise Date. If
any one of the conditions precedent set forth in Section 4 are not satisfied as
of the Exercise Date, the Company may, at its option, return the Option
Certificate and pertinent Exercise Price payment to the exercising Registered
Holder or may hold the same until all such conditions have been satisfied. The
Company shall not be obligated to issue any fractional share interests in Option
Shares issuable or deliverable on the exercise of any Option or scrip or cash
therefor, and such fractional shares shall be of no value whatsoever and shall
be canceled on the Company's books of record. If more than one Option shall be
exercised at one time by the same Registered Holder, the number of full Option
Shares which shall be issuable on exercise thereof shall be computed on the
basis of the aggregate number of full Option Shares issuable on such exercise.
Once the Company has determined that the funds are or will be collected, the
Company shall notify its Common Stock transfer agent who shall cause a Common
Stock share certificate representing the exercised Options to be issued. The
Company may deem and treat the Registered Holder of the Options at any time as
the absolute owner thereof for all purposes, and the Company shall not be
affected
<PAGE>
by any notice to the contrary, other than notice by the Registered Holder. The
Options shall not entitle the holder thereof to any of the rights of
shareholders or to any dividend declared on the Company's Common Stock or Option
unless the holder shall have exercised the Options and purchased the Option
Shares prior to the record date fixed by the Board of Directors of the Company
for the determination of holders of Common Stock entitled to such dividend or
other right.
4. RESERVATION OF SHARES AND PAYMENT OF TAXES. The Company covenants that it
------------------------------------------
will at all times reserve and have available from its authorized Common Stock
such number of shares as shall then be issuable on the exercise of all
outstanding Options. The Company covenants that all Option Shares which shall be
so issuable shall be duly and validly issued, fully paid and non-assessable and
free from all taxes, liens and charges with respect to such issue.
The Registered Holders shall pay all documentary, stamp or similar taxes and
other governmental charges that may be imposed with respect to the issuance of
the Options, or the issuance, transfer or delivery of the Options or any Option
Shares on exercise of the Options. In the event the Option Shares are to be
delivered in the name other than the name of the Registered Holder of the Option
Certificate, no such delivery shall be made unless the person requesting the
same has paid to the Company the amount of any such taxes or charges incident
thereto.
5. REGISTRATION OF TRANSFER. The Option Certificates may be transferred in
------------------------
whole or in part as provided for herein. Option Certificates to be transferred
shall be surrendered to the Company at its corporate office. The Company shall
execute, issue and deliver in exchange therefor the Option Certificate or
Certificates which the holder making the transfer shall be entitled to receive.
The Company shall keep transfer books at its corporate office which shall
register Option Certificates and the transfer thereof. On due presentment for
registration of transfer of any Option Certificate at such office, the Company
shall execute, and the Company shall issue and deliver to the transferee or
transferees, a new Option Certificate or Certificates representing an equal
aggregate number of Options. All Option Certificates presented for registration
of transfer or exercise shall be duly endorsed or be accompanied by a written
instrument or instruments or transferred in a form satisfactory to the Company
and the Company's counsel. The Company may require payment of a sum sufficient
to cover any tax or other government charge that may be imposed in connection
therewith.
All Option Certificates so surrendered, or surrendered for exercise or for
exchange in case of mutilated Option Certificates, shall be promptly canceled by
the Company. Prior to due presentment for registration of transfer thereof, the
Company may treat the Registered Holder of any Option Certificate as the
absolute owner thereof (notwithstanding any notations of ownership or writing
thereon made by anyone other than the Company), and the parties hereto shall not
be affected by any notice to the contrary.
6. LOSS OR MUTILATION. On receipt by the Company of evidence satisfactory as
------------------
to the ownership of the loss, theft, destruction or mutilation of any Option
Certificate, the Company shall execute and deliver in lieu thereof, a new Option
Certificate
<PAGE>
representing an equal aggregate number of Options. In the case of loss, theft or
destruction of any Option Certificates, the individual requesting issuance of a
new Option Certificate shall be required to indemnify the Company in an amount
satisfactory to the Company. In the event an Option Certificate is mutilated,
such Certificate shall be surrendered and canceled by the Company prior to
delivery of a new Option Certificate. Applicants for a new Option Certificate
shall also comply with such other regulations and pay such other reasonable
charges as the Company may reasonably prescribe.
7. ADJUSTMENT OF EXERCISE PRICE AND SHARES. In the event and upon the
---------------------------------------
occurrence of any of the following events, the Exercise Price and the number of
Option Shares purchasable on the exercise of the Company's Options shall be
subject to adjustment as follows:
(a) Prior to the expiration of the Options by exercise or by their terms, in
the event the Company shall issue any shares of its Common Stock as a share
dividend or shall subdivide the number of outstanding shares of Common Stock
into a greater number of shares, then, in either of such events, the number of
shares of Common Stock purchasable pursuant to the Options in effect at the
time of such action shall be increased proportionately such that there results
in no change in the percentage of the Company's outstanding Common Stock for
which such Options may be exercised, and the Exercise Price per share of
Common Stock purchasable pursuant to the Options in effect at the time of such
action shall be reduced proportionately such that there results in no change
in the total consideration to be paid to the Company upon exercise of the
Options. Conversely, in the event the Company shall reduce the number of
shares of its outstanding Common Stock by combining such shares into a smaller
number of shares, then, in such event, the number of shares of Common Stock
purchasable pursuant to the Options in effect at the time of such action shall
be decreased proportionately such that there results in no change in the
percentage of the Company's outstanding Common Stock for which such Options
may be exercised, and the Exercise Price per share of Common Stock purchasable
pursuant to the Options in effect at the time of such action shall be
increased proportionately such that there results in no change in the total
consideration to be paid to the Company upon exercise of the Options. Any
dividend paid or distributed on the Common Stock in shares of Common Stock of
the Company shall be treated as a share dividend pursuant to the preceding
sentence. However, any dividend paid or distributed on the Common Stock in
securities other than Common Stock of the Company, regardless if exercisable
for or convertible into Common Stock of the Company, shall not be treated as a
share dividend pursuant to the foregoing.
(b) At any time while the Options shall remain unexpired and unexercised, in
the event the Company shall sell all or substantially all of its property, and
thereafter dissolve, liquidate or wind up its affairs, then no provision need
be made as part of the terms of any such sale, dissolution, liquidation or
winding
<PAGE>
up to allow Registered Holders to exercise all or any Options held, in
order to receive the same kind and amount of any share, securities or assets
as may be issuable, distributable or payable on any such sale, dissolution,
liquidation or winding up with respect to each share of Common Stock of the
Company.
(c) Notwithstanding the provisions of this Section 7, no adjustment on the
Exercise Price shall be made whereby such price is adjusted in an amount less
than $0.01 or until the aggregate of such adjustments shall equal or exceed
$1,000.00.
(d) No adjustment of the Exercise Price shall be made as a result of or in
connection with: (i) the issuance of Common Stock of the Company pursuant to
options, warrants and share purchase agreements outstanding or in effect on
the date hereof; (ii) the establishment of additional option plans, common
stock purchase warrants or security offerings of the Company, the
modification, renewal or extension of any such plan, warrants or offerings now
in effect or hereafter created, or the issuance of Common Stock on exercise of
any such options or warrants; or (iii) the issuance of Common Stock in
connection with an acquisition or merger of any type.
Before taking any action which would cause an adjustment reducing the Exercise
Price below the then par value of the shares of Common Stock issuable upon
exercise of the Options, the Company will take any corporate action which may,
in the opinion of its counsel, be necessary in order that the Company may
validly and legally issue fully paid and nonassessable shares of such Common
Stock at such adjusted Exercise Price.
Upon any adjustment of the Exercise Price required to be made pursuant to this
Section 7, the Company shall, within thirty (30) days thereafter, cause to be
mailed to each Registered Holder written notice of such adjustment, setting
forth the new Exercise Price and number of shares of Common Stock which may be
acquired upon exercise of the Options after such adjustment and setting forth in
reasonable detail the method of calculation and the facts upon which such
calculation is based.
8. REDUCTION IN EXERCISE PRICE AT COMPANY'S OPTION. In addition to any
-----------------------------------------------
adjustments made to the Exercise Price pursuant to Section 7, the Company's
Board of Directors may, in its sole discretion, reduce the Exercise Price of the
Options in effect at any time either for the life of the Options or any shorter
period of time as may be determined by the Company's Board of Directors. The
Company shall, within thirty (30) days thereafter, cause to be mailed to each
Registered Holder written notice of any such reduction in the Exercise Price.
9. LEGEND. Each Option Certificate and each certificate for Option Shares
------
purchased under this Option shall bear a legend as follows, unless such Option
or Option Shares have been registered under the Act and the issuance complies
with applicable state securities laws:
<PAGE>
"The securities represented by this certificate have been acquired for
investment and have not been registered under the Securities Act of 1933,
as amended (the "Act"). The securities represented by this certificate may
not be sold, assigned, pledged, hypothecated or otherwise transferred
except pursuant to an effective registration statement under the Act and in
compliance with applicable state securities laws, or the Company receives
an opinion of counsel, satisfactory to the Company and Company counsel,
that such registration is not required and that the sale, assignment,
pledge, hypothecation or transfer is in compliance with applicable state
securities laws."
10. TRANSFERS.
---------
(a) Transfers to Successors, Officers and Directors of Registered Holder. This
--------------------------------------------------------------------
Option shall not be transferred sold, assigned or hypothecated except that it
may be transferred to any successors of a Registered Holder, and may be assigned
in whole or in part to any person who is an officer or director of Registered
Holder on the date first written hereinabove (each such transferee and assignee
hereinafter referred to as a "Transferee Holder"). All such transfers, sales,
assignments or hypothecation shall be fully identified to the Company, and the
transferor shall execute and deliver to the Company such certificates,
endorsements and other documents as the Company or Company's counsel may
require.
(b) Transfer of Option Or Option Shares. The Registered Holder, and each
-----------------------------------
Transferee Holder, agrees that he shall not sell, assign, pledge, hypothecate or
otherwise transfer the Option or the Option Shares, in whole or in part, except
(I) pursuant to an effective registration under the Securities Act of 1933, as
amended (the "Act") and in compliance with applicable state securities laws, or
(ii) the Company receives an opinion of counsel, satisfactory to the Company and
Company counsel, that such registration is not required and that the sale,
assignment, pledge, hypothecation or transfer is in compliance with applicable
federal and state securities laws. In order to make any sale, assignment,
pledge or hypothecation, the transferor must deliver to the Company the
assignment form attached hereto duly executed and completed, together with the
applicable certificate and payment of all transfer taxes, if any, payable in
connection therewith. As to the Option, the Company shall transfer the
transferred Option on the books of the Company and shall execute and deliver a
new Option Certificate of like tenor to the appropriate assignee(s) expressly
evidencing the right to purchase the number of Option Shares purchasable
thereunder. As to the Option Shares, the Company shall cause its duly
authorized common stock transfer agent to transfer the common stock being
transferred.
11. REGISTRATION. The Company, upon the one time written demand (the "Demand
------------
Notice") of the Registered Holder, agrees to use its best efforts to register
all or any portion of the Option Shares, as requested by the Registered Holder.
On such occasion, the Company will use its best efforts to file a Form S-8
Registration Statement covering such Option Shares within thirty (30) days after
receipt of the Demand Notice and use its best efforts to have such registration
statement declared
<PAGE>
effective promptly thereafter. The demand for registration may be made at any
time prior to the Termination Date. The Company covenants and agrees to give
written notice of its receipt of any Demand Notice by a Registered Holder to all
other Registered Holders of the Options within thirty (30) days from the date of
the receipt of any such Demand Notice. In the event of registration, the Company
and the Registered Holders whose Option Shares have been registered shall
execute such documents as may be reasonably required by the Company and Company
counsel to carry out such registration.
(a) Terms of Registration. The Company shall bear all fees and expenses
---------------------
attendant to registering the Option Shares under this Section 11, but the
Registered Holders whose Option Shares are being registered shall pay any and
all underwriting and broker-dealer discounts, commissions and non-accountable
expenses of any underwriter or broker-dealer selected to sell the such Option
Shares, together with the expenses of any legal counsel selected by the such
Registered Holders to represent them in connection with the sale of their
Option Shares. The Company shall cause any registration statement filed
pursuant to the demand rights granted hereto to remain effective for a period
of sixteen (16) months from the date of the latest balance sheet of the
audited financial statements contained therein on the initial effective date
of such registration statement.
(b) Restriction on Registration. The Company shall not be obligated to
---------------------------
register any Option Shares if such securities may be sold pursuant to the
exemption from registration as provided by Rule 144 as promulgated under the
Act, nor shall the Company be obligated to register any Option Shares in any
state in which the principal stockholders, officers, directors or employees of
the Company may in any way be obligated to escrow any of their shares of
Common Stock of the Company or in a state in which the Company may be
restricted from conducting its business in any way, including but not limited
to, qualifying to do business, restricted from issuing additional securities
or restricted on compensating officers, directors or employees.
(c) Right To Redeem In Lieu Of Registration. The Company may, in its sole
---------------------------------------
discretion, in lieu of registration hereunder of any Option Shares, pay to a
Registered Holder an amount equal to (i) the amount which would be realized by
the Registered Holder upon sale of the such Option Shares, (ii) reduced by the
Exercise Price, and (iii) reduced further by the expenses, fees and
broker/dealer commissions which would be paid by the Company in the event of
registration and sale of the Option Shares. The Company may elect to make
such payment upon notice to such Registered Holder within thirty (30) days of
receipt of a notice of Demand Registration.
12. MODIFICATION OF AGREEMENT. The Company and the Registered Holder may by
-------------------------
supplemental agreement make any changes or corrections in this Agreement: (i)
that they shall deem appropriate to cure any ambiguity or to correct any
defective or inconsistent provision or mistake or error herein contained; or
(ii) that they may deem necessary or desirable and which shall not adversely
affect the interest of the holders of Option Certificates; provided, however,
this Agreement shall not otherwise be modified, supplemented or altered in any
respect except with the
<PAGE>
consent in writing of the Registered Holders of Option Certificates representing
not less than fifty-one percent (51%) of the Options outstanding. Additionally,
except as provided in Sections 7 and 8 hereof, no change in the number or nature
of the Option Shares purchasable upon exercise of an Option, or increase of the
Exercise Price therefor, shall be made without the consent in writing of the
Registered Holder or Transferee Holder of the Option Certificate representing
such Option, other than such changes as are specifically prescribed or allowed
by this Agreement.
13. NOTICES. All notices, demands, elections options or requests (however
-------
characterized or described) required or authorized hereunder shall be deemed
sufficient if made in writing and sent by registered or certified mail, return
receipt requested and postage prepaid, or by tested telex, telegram or cable, to
the principal office of the addressee, and if to the Registered Holder or
Transferee Holder of an Option Certificate, at the address of such holder as set
forth on the books maintained by the Company.
14. BINDING AGREEMENT. This Agreement shall be binding upon and inure to the
-----------------
benefit of the Company, the Registered Holder, each Transferee Holder and their
respective successors and assigns. Nothing in this Agreement is intended or
shall be construed to confer upon any other person any right, remedy or claim or
to impose on any other person any duty, liability or obligation.
15. FURTHER INSTRUMENTS. The parties hereto shall execute and deliver any and
-------------------
all such other instruments and shall take any and all other actions as may be
reasonably necessary to carry out the intention of this Agreement.
16. SEVERABILITY. If any provision of this Agreement shall be held, declared
------------
or pronounced void, voidable, invalid, unenforceable or inoperative for any
reason by any court of competent jurisdiction, government authority or
otherwise, such holding, declaration or pronouncement shall not affect adversely
any other provision of this Agreement, which shall otherwise remain in full
force and effect and be enforced in accordance with its terms, and the effect of
such holding, declaration or pronouncement shall be limited to the territory or
jurisdiction in which made.
17. WAIVER. All the rights and remedies of either party to this Agreement are
------
cumulative and not exclusive of any other rights and remedies as provided by
law. No delay or failure on the part of either party in the exercise of any
right or remedy arising from the breach of this Agreement will constitute a
waiver of any other right or remedy. The consent of any party where required
hereunder to act or occurrence shall not be deemed to be a consent to any other
action or occurrence.
18. GENERAL PROVISIONS. This Agreement shall be construed and enforced in
------------------
accordance with, and governed by, the laws of the State of California. This
Agreement embodies the entire agreement and understanding between the parties
and supersedes all prior agreements and understandings relating to the subject
matter hereof. Other than as provided in Section 12 hereof, this Agreement may
not be modified or amended, nor any term or provision hereof waived or
discharged, except in writing, signed by the party against whom such amendment,
modification, waiver or discharge is sought to be enforced. The headings of
this Agreement are for convenience and references only and shall not limit or
otherwise affect the meaning hereof.
<PAGE>
EXERCISE FORM
This Option may be exercised only in its entirety or for a minimum purchase of
at least Five Thousand (5,000) shares of common stock as provided in Section 3
of the Option Agreement, subject to adjustment as provided in Section 7 of the
Option Agreement.
To: NEROX ENERGY CORPORATION
846 West Foothill Boulevard
Suite Y
Upland, California 91786-3770
Date: September 5, 1996
-----------
The undersigned hereby irrevocably elects to exercise the within Option and to
purchase One Hundred Thousand shares of $0.02 par value common stock of
--------------------
NEROX ENERGY CORPORATION, and hereby makes payment of $125,000.00 (at the rate
-----------
of $1.25 per share) in satisfaction of the Exercise Price pursuant to the Option
Agreement. Please issue the shares of common stock in accordance with the
instructions provided below.
/s/ [Illegible Signature]
- -----------------------------------
Signature Chapel Hill Partner, Inc.
Signature Guaranteed: /s/ [Illegible Signature]
------------------------------
SIGNATURE MUST BE GUARANTEED BY A COMMERCIAL BANK OR MEMBER FIRM OF ONE OF THE
FOLLOWING STOCK EXCHANGES: NEW YORK STOCK EXCHANGE, PACIFIC COAST STOCK
EXCHANGE, AMERICAN STOCK EXCHANGE, OR MIDWEST STOCK EXCHANGE.
INSTRUCTIONS FOR REGISTRATION OF SECURITIES
Please issue the shares of common stock underlying the Options exercised hereby
as follows:
- -------------------------------------
Print Name
- --------------------------------------------------------------------------------
Address
- ----------------------------------
Social security or tax identification number
<PAGE>
EXHIBIT 4
SUBSCRIPTION AGREEMENT
----------------------
To: NEROX ENERGY CORPORATION
846 West Foothill Boulevard, Suite Y
Upland, California 91786-3770
1. Subject to the terms and conditions hereinafter set forth, the
undersigned hereby subscribes and acquires 100,000 options ("Options") of NEROX
-------
ENERGY CORPORATION (the "Company"), a Nevada corporation, in consideration for
services to be provided by the undersigned pursuant a Services Agreement dated
September 4, 1996. Each Option will entitle the holder thereof to purchase one
(1) share of the Company's common stock (the "Common Stock") for the exercise
price of One and 25/100 Dollars ($1.25) per share.
A purchaser of Options will be unable to resell them unless they are
registered pursuant to a current registration statement and qualified for sale
in jurisdictions in which the holder resides or an exemption from such
registration and/or qualification exists in each jurisdiction. The Company has
agreed to file a registration statement on Form 8 with respect to the Company
Stock underlying the Options.
2. The undersigned hereby represents that he has been furnished by the
Company with the following listed documents of the Company (the "Offering
Documents"), and with all information regarding the Company which he had
requested or desired to know and has inquired of the President of the Company as
to any questions or additional information he has required and that all of such
additional information and Offering Documents are satisfactory to him:
The Offering Documents consist of: (i) this Subscription Agreement; (ii)
Option Agreement with Exhibits dated September 4, 1996.
3. The undersigned hereby understands and agrees that the Company has
undertaken to register the shares of Common Stock underlying the Options on Form
S-8 with the Securities & Exchange Commission, in reliance upon the Company's
and the undersigned's compliance with the rules and regulations relating
thereto. The undersigned represents that to the best of his knowledge, his
acquisition of the Options and the shares of Common Stock underlying the Options
will in all respects comply with the requirements for registration on Form S-8.
4. AN INVESTMENT IN THE SECURITIES OF THE COMPANY OFFERED HEREBY INVOLVES
A HIGH DEGREE OF RISK, RESTRICTED TRANSFERABILITY AND SUBSTANTIAL DILUTION.
ACCORDINGLY, OPTIONS SHOULD BE PURCHASED ONLY BY THOSE PERSONS WHO CAN AFFORD A
LOSS OF THEIR ENTIRE INVESTMENT. PROSPECTIVE INVESTORS, PRIOR TO MAKING AN
INVESTMENT SHOULD CAREFULLY CONSIDER, AMONG OTHERS, THE FOLLOWING RISK FACTORS
IN MAKING AN INVESTMENT IN THE COMPANY.
<PAGE>
The fact that certain risks are discussed herein does not mean there are not
other material risks of which an investor should be aware. The undersigned is
aware that:
(a) NEITHER THE SECURITIES AND EXCHANGE COMMISSION ("SEC") NOR ANY STATE
AGENCY HAS PASSED ON THE ADEQUACY OR ACCURACY OF THIS OFFERING NOR MADE ANY
FINDING OR DETERMINATION AS TO THE FAIRNESS OF THIS INVESTMENT. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
(b) None of the Options have been registered under the Securities Act of
1933, as amended (the "Securities Act") or the securities laws of any state, and
will be offered and sold in reliance on exemptions from the registration
requirements of these laws.
(c) An investment in the Company depends upon the undersigned's particular
circumstances. No information concerning the Company other than that contained
herein or in the Offering Documents has been provided to offerees. The
information presented herein and therein is not complete. Subscribers are
---
cautioned not to construe this Subscription Agreement, the Offering Documents or
any prior or subsequent communications as constituting legal advice. AN INVESTOR
SHOULD CONFER WITH AND RELY ON HIS OWN INVESTMENT AND TAX ADVISORS AS TO THE
SUBSTANTIAL RISKS INHERENT IN AN INVESTMENT HEREIN AND THE TAX CONSEQUENCES TO
HIM AS A RESULT OF HIS INVESTMENT. THE COMPANY AND ITS OFFICERS, DIRECTORS,
EMPLOYEES AND REPRESENTATIVES MAKE NO REPRESENTATIONS OR WARRANTIES WITH RESPECT
TO THE COMPANY EXCEPT AS SPECIFICALLY SET FORTH HEREIN OR IN THE OFFERING
DOCUMENTS.
(d) This Subscription Agreement does not constitute an offer to sell or a
solicitation of an offer to buy any of the Options to anyone in any state or in
any other jurisdiction in which an offer or solicitation is not authorized.
(e) The Company will provide additional information, if such is reasonably
available, which an offeree or his representative may request for the purpose of
evaluating the merits and risks of this Offering including any such information,
if available, as would be included in a registration statement. The Company will
also provide each offeree or his representative with an opportunity to meet and
confer with its principals regarding all aspects of the Company's business.
No offering literature or advertising in any form is being employed in the
Offering of the Options except for this Subscription Agreement and the Offering
Documents. No person is authorized to give any information or to make any
representation not contained in this Subscription Agreement or the Offering
Documents. Any representation not contained herein or therein must not be relied
upon as having been authorized by the Company or its officers. Any distribution
or reproduction of this Subscription Agreement of the Offering Documents, in
whole or part, or the divulgence of any of their contents, without the prior
written consent of the Company, is prohibited.
<PAGE>
(f) An investment in the Company is an illiquid investment. In particular,
the undesigned recognizes that the undersigned must bear the economic risk of
investment in the Company for an indefinite period of time since the Options
have not been registered under the Securities Act, and, therefore, cannot be
sold unless either they are subsequently registered under the Securities Act or
an exemption from such registration is available and a favorable opinion of
counsel for the Company to such effect is obtained.
The Company may place a legend on the certificates evidencing the Options
stating that they have not been registered under the Securities Act and setting
forth or referring to the restriction on the sale, transfer or disposition
thereof. The Subscriber is aware that the Company will make a notation in its
appropriate records with respect to the restrictions on the sale, transfer, or
disposition of the Options.
5. The undersigned represents and warrants to the Company that:
(a) The undersigned has the ability to bear the risks of an investment in
the Company and is suitable as an investor in the Company.
(b) The undersigned has reviewed the Offering Documents, in connection
with deciding to acquire Options of this Offering.
(c) The undersigned has the requisite knowledge and experience in
financial and business matters for properly evaluating the merits and risks of
investment in the Company and of making an informed investment decision. The
undersigned represents that he also has significant prior investment experience,
including investment in non-registered securities and recognizes the highly
speculative nature of this investment.
(d) The undersigned has evaluated the risks of receiving the Options as
consideration for the amount invested in the Company.
(e) The undersigned has sufficient available financial resources to
provide adequately for his current needs, including possible personal
contingencies, and can bear the economic risk of a complete loss of any
investment hereunder without materially affecting his financial condition.
(f) The undersigned understands that the Company's operations are subject
to all the risks inherent in financing the operations of a new business; the
Company is, accordingly, subject to numerous risks; and the Options are,
therefore, a speculative investment which involves a high degree of risk of
loss, including the potential loss of his entire investment in the Company.
(g) The undersigned has been given the opportunity to ask questions of the
Company concerning the financial condition of the Company and its contemplated
acquisition and to obtain additional information necessary to verify the
accuracy of the information as the undesigned desires.
<PAGE>
(h) The undersigned is familiar with the financial condition and prospects
of the Company's business, has been furnished all materials relating to the
Company and its activities, the offering of the Options or anything set forth in
the Subscription Agreement which he has requested and has been afforded the
opportunity to obtain any additional information necessary to verify the
accuracy of any representation or information set forth in the Subscription
Agreement and Offering Documents.
(i) The Company, its officers, directors and employees have answered all
inquiries that the undersigned has asked of them concerning the Company and its
activities and this Offering.
(j) The undersigned has not been furnished any offering literature other
than this Subscription Agreement and the Offering Documents and the undersigned
has relied only on the information contained herein, in the Offering Documents
and the information furnished or made available by the Company as described
above.
Furthermore, as set forth above, no representations or warranties have been
made to the undersigned by the Company, or its officers, directors, employees or
representatives with respect to the business of the Company, the financial
condition of the Company and/or the economic, tax or any other aspects or
consequences of a purchase of the Options and that the undersigned has not
relied upon any information concerning this offering, written or oral, other
than contained in this Agreement and the Offering Documents, or provided by the
Company upon request.
(k) The undersigned is relying upon his, her or its own counsel,
accountant, business advisor(s) and/or others, concerning legal, tax, business
and related aspects of the subscription hereunder and investment in the Company.
(l) The undersigned understands that the Options have not been registered
under the Securities Act or under any applicable Blue Sky law, and agrees that
the Options may not be sold, offered for sale, transferred, pledged,
hypothecated, or otherwise disposed of except in compliance with the Securities
Act and any applicable state securities laws or pursuant to an acceptable and
proper exemption therefrom, and that the Options will bear an appropriate legend
setting forth these restrictions. The undersigned further understands and
acknowledges that the Company has no obligation to cause the Options to be
registered under any other provision of the Securities Act or any other
applicable Blue Sky laws or to comply with any exemption under the Securities
Act or any Blue Sky law that would permit the Options to b sold by the
undersigned. The undersigned understands the legal consequences of the foregoing
to mean that the undersigned must bear the economic risk of an investment in the
Options for an indefinite period of time.
(m) The undersigned understands that the Offering Documents have not been
approved or disapproved by the SEC or any state securities commission, nor has
any such commission passed upon the accuracy or adequacy of the Offering
<PAGE>
Documents or the fairness of the Offering. Any representation to the contrary is
unlawful.
(n) The undersigned is acquiring the Options subscribed for his own
account, as principal, and no other person has a direct or indirect beneficial
interest in the Options. The undersigned agrees that he will not sell, transfer
or otherwise dispose of any of the Options unless they are registered under the
Securities Act or unless an exemption from such registration is available.
(o) All of the information which the undersigned has furnished to the
Company, and all representations provided by the undersigned, are correct and
complete as of the date of this Agreement, and the undersigned covenants that
until the closing on the Options subscribed for, the undersigned shall inform
the Company of any changes in the representations provided by the undersigned
hereunder.
(p) If the undersigned is a corporation, partnership, trust or other
entity, (i) it is authorized and qualified to become a stockholder in, and
authorized to make its investment in, the Company; (ii) in the event all of its
equity owners are not accredited investors, it has not been formed for the
purpose of acquiring any interest in the Company, has been in existence for more
than 90 days prior to the date hereof; and on a consolidated basis, it meets
the net worth requirements for qualifying as an accredited investor, as
indicated by its most recent financial statement; and (iii) the person signing
this Agreement on behalf of such entity has been authorized to do so.
(q) The undersigned hereby acknowledges that the Options have not been
registered under Section 49:3-56 of the New Jersey Blue Sky Laws and are subject
to restrictions on transferability and sale of securities as set forth herein.
The undersigned hereby agrees that the Options will not be transferred or resold
without registration under such Laws or exemption therefrom.
The foregoing representations, warranties, agreements, undertakings, and
ackowledgments are made by the undersigned with the intent that they be relied
upon in determining the undersigned's suitability as a purchaser of Options, and
the undesigned agrees that those representations, warranties, agreements,
undertakings, and acknowledgments shall survive the undersigned's admission as a
Option holder of the Company. In addition, the undersigned undertakes to notify
the Company immediately of any change in any representation, warranty, or other
information relating to the undersigned set forth in this Agreement.
6. The undersigned's representations and warranties in paragraph 6 shall
survive the delivery of this Agreement, the receipt of payment for the Options
by the Company and the issuance and delivery of the Options. The undersigned
agrees to hold the Company and its respective directors, officers, employees,
agents, counsel and controlling persons (and their respective heirs,
representatives, successors and assigns) harmless and to indemnify them against
all liabilities, costs and expenses incurred by them as a result of any breach
by the undersigned of any
<PAGE>
such representations and warranties, or as a result of any sale or distribution
by the undersigned of the Options in violation of any securities laws.
7. Miscellaneous
(a) All notices or other communications given or made hereunder shall be in
writing and shall be delivered by hand, against written receipt, or mailed by
registered or certified mail, return receipt requested, postage prepaid, to the
undersigned at the address set forth below and to the Company at their address
set forth above. Notices shall be deemed given on the date of receipt or, if
mailed, three business days after mailing, except notices of change of address,
which shall be deemed given when received.
(b) Notwithstanding the place where this Agreement may be executed by the
undersigned or the Company, they agree that all the terms and provisions hereof
shall be construed in accordance with and governed by the laws of the State of
Nevada without regard to principles of conflict of laws.
(c) This Agreement constitutes the entire agreement between the undersigned
and the Company with respect to the subject matter hereof and may be amended
only by a writing executed by each of them.
(d) This Agreement shall be binding upon and inure to the benefit of each
of the undersigned and the Company and their respective heirs, legal
representatives, successors and assigns.
(e) The undersigned and the Company each hereby submit to the exclusive
jurisdiction of the courts of the State of California with respect to any action
or legal proceeding commenced by either of them with respect to this Agreement
or to the Securities. Each of them irrevocably waives any objection they now
have or hereinafter may have respecting the venue of any such action or
proceeding brought in such a court or respecting the fact that such court is
an inconvenient forum and consents to the service of process in any such action
or proceeding by means of registered or certified mail, return receipt
requested, in care of the address set forth above or below or at such other
address as either of them shall furnish in writing to the other.
(f) In order to discourage frivolous claims, the undersigned and the
Company agree that, unless the party who is a claimant succeeds in obtaining a
judgment against the other in an action or proceeding, the other shall be
entitled to recover all of their legal costs and expenses relating to such
action or proceeding and/or incurred in the preparation therefor.
(g) The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision of this
Agreement.
<PAGE>
(h) The waiver by either the undersigned or the Company of a breach of any
provision of this Agreement shall not operate, or be construed, as a waiver of
any subsequent breach of any provision of this Agreement.
(i) The undersigned and the Company agree to execute and deliver all
further documents, agreements and instruments and to take such further action as
may be necessary or appropriate to carry out the purposes and intent of this
Agreement.
(j) This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which shall together constitute
one and the same instrument.
(k) References in this Agreement to the pronouns "him", "he", and "his" are
not intended to convey the masculine gender and are employed in a generic sense
and apply equally to the male and female genders or to an entity.
[Signature Page Follows]
<PAGE>
The undersigned has executed this Subscription Agreement as of the date
indicated below.
Dated: September 4, 1996
<TABLE>
<C> <C>
/s/ CHAPEL HILL
- ---------------------------------- ---------------------------------------
Signature of subscriber Signature of spouse, joint tenant,
tenant in common or other signature,
if required.
CHAPEL HILL
- ----------------------------------
Type or print name of subscriber
(212) 406-3400
- ---------------------------------- ---------------------------------------
Telephone number of subscriber Type or print name of spouse, joint
tenant, tenant in common or other
subscriber
200 Rector Place Suite 41C
- ----------------------------------
Address of subscriber
New York NY 10280
- ---------------------------------- ---------------------------------------
City State Zip Code Address of spouse, joint tenant,
tenant in common or other signer
- ---------------------------------- ---------------------------------------
Social security/taxpayer identi- Social security/taxpayer identification
fication number of subscriber number of spouse, joint tenant, tenant
in common or other signer
100,000 One Hundred Thousand
- ----------------------------------
Number of Options subscribed for
</TABLE>
Subscription Accepted:
NEROX ENERGY CORPORATION
By:/s/ NICHOLAS E. ROSS President
-------------------------------
Title
Dated: September 4, 1996
---------------------------
<PAGE>
EXHIBIT 5
NEROX ENERGY CORPORATION
Incorporated Under the Laws of the State of California
No. O - 00001 100,000 O Common Stock
----- -------
Purchase Options
CERTIFICATE FOR COMMON STOCK PURCHASE OPTIONS
This Option Certificate certifies that CHAPEL HILL PARTNERS, INC. or
--------------------------
registered assigns ("Option Holder") is the registered owner of the above
indicated number of Options (hereinafter referred to as the "Option" or
"Options"), expiring on December 31, 1996 ("Expiration Date"). One (1) Option
entitles the Option Holder to purchase one (1) share of common stock, $0.02 par
value ("Share"), from NEROX ENERGY CORPORATION, a California corporation
("Company"), at a purchase price as set forth in the Option Agreement ("Option
Agreement") dated September 4, 1996 ("Exercise Price"), commencing on September
4, 1996 and terminating on the Expiration Date ("Exercise Period"), upon
surrender of this Option Certificate with the exercise form hereon duly
completed and executed with payment of the Exercise Price at the office of the
Company being 846 West Foothill Boulevard, Suite Y, Upland, California 91786-
3770, subject only to the conditions set forth herein and in the Option
Agreement between the Company and the Option Holder. The Option Holder may
exercise all or any number of Options. Reference hereby is made to the
provisions on the following pages of this Option Certificate and to the
provisions of the Option Agreement, all of which are incorporated by reference
in and made a part of this Option Certificate and shall for all purposes have
the same effect as though fully set forth at this place.
Upon due presentment for transfer of this Option Certificate at the
office of the Company, a new Option Certificate or Option Certificates of like
tenor and evidencing in the aggregate a like number of Options, subject to any
adjustments made in accordance with the provisions of the Option Agreement,
shall be issued to the transferee in exchange for this Option Certificate,
subject to the limitations provided in the Option Agreement, upon payment to he
Company of any tax or governmental charge imposed in connection with such
transfer.
The Option Holder of the Options evidenced by this Option Certificate may
exercise all or any whole number of such Options during the period and in the
manner stated hereon. The Exercise Price shall be payable in lawful money of the
United States of America and in cash or by certified or bank cashier's check
payable to the order of the Company. If, upon exercise of any Options evidenced
by this Option Certificate, the number of Options exercised shall be less than
the total number of Options so evidenced, there shall be issued to the Option
Holder a new Option Certificate evidencing the number of Options not so
exercised. No Option may be exercised after 5:00 P.M. Pacific Standard Time on
the Expiration Dale, and any Option not exercised by such time shall become
void, unless extended by the Company.
The securities represented by this certificate have been acquired for
investment and have not been registered under the Securities Act of 1933, as
amended (the "Act"). The securities may not be sold, assigned, pledged,
hypothecated or otherwise transferred except pursuant to an effective
registration statement under the Act and in compliance with applicable state
securities laws, or the Company receives an opinion of counsel, satisfactory to
the Company and Company counsel, that such registration is not required and that
the sale, assignment, pledge, hypothecation or transfer is in compliance with
applicable state securities laws.
IN WITNESS WHEREOF, the Company has caused this Option to be signed by its
Chief Executive Officer or President and by its Secretary or Assistant
Secretary, each by an original of his signature, and has caused an original
impression of its corporate seal to be imprinted hereon.
Dated: September 4, 1996
-----------------
/s/ NICHOLAS E. ROSS /s/ [Illegible Signature] Utter
------------------------- --------------------------
Signature Signature
(Seal)
President Secretary
------------------------- --------------------------
Title Title
<PAGE>
FOR VALUE RECEIVED, HEREBY SELL, ASSIGN AND
-------------------------------
TRANSFER UNTO:
- ------------------------------------ ---------------------------------------
(Print Name above and Address below) (social security or tax identification
number)
- ------------------------------------
- ------------------------------------
If said number of Options shall not be all the Options evidenced by the
within Option Certificate, the undersigned requests that a new Option
Certificate evidencing the Options not so transferred be issued in the name of
and delivered to:
- ------------------------------------ --------------------------------------
(Print Name above and Address below) (social security or tax identification
number)
- ------------------------------------
- ------------------------------------
Dated:
- ------------------------------------ --------------------------------
Signature
NOTICE: The above signature must correspond with the name as written upon the
face of the within Option Certificate in every particular, without alteration or
enlargement or any change whatsoever, or if signed by any other person, the Form
of Assignment thereon must be duly executed and if the certificate representing
the shares or any Option Certificate representing Options not exercised is to be
registered in a name other than that in which the within Option Certificate is
registered, the signature of the holder hereof must be guaranteed.
Signature Guaranteed:
-----------------------------------------------------------
SIGNATURE MUST BE GUARANTEED BY A COMMERCIAL BANK OR MEMBER FIRM OF ONE OF THE
FOLLOWING STOCK EXCHANGES: NEW YORK STOCK EXCHANGE, PACIFIC COAST STOCK
EXCHANGE, AMERICAN STOCK EXCHANGE, OR MIDWEST STOCK EXCHANGE.
<PAGE>
EXHIBIT 6
SERVICES AGREEMENT
This Agreement, effective this 4th day of September, 1996, is entered into
by and between NEROX ENERGY CORPORATION ("Client"), with the mailing address of
846 West Foothill Boulevard, Suite Y, Upland, California 91786-3770, and GRIFFIN
FINANCIAL CORP. ("Consultant"), with the mailing address of 200 Rector Place,
New York, NY 10280.
1. SERVICES.
Consultant is hereby retained by Client for the purpose of providing services of
the nature and type requested by Client in the areas of Consultant's expertise,
as more fully described on Exhibit A attached hereto, during the term described
below (all such past and future services hereinafter referred to as the
"Services"). Upon the reasonable request of Client, Consultant shall provide
Client with future Services pursuant to the terms and conditions of this
Agreement.
2. STANDARDS.
Consultant will provide Services in accordance with all applicable laws and
regulations, including but not limited to, the rules and ethical standards of
the Securities and Exchange Commission and National Association of Security
Dealers, Inc.
3. INDEPENDENT CONTRACTOR.
Individuals who perform Services for or on behalf of Consultant to Client shall
be considered the agents, consultants, contractors or employees of Consultant.
The relationship between Consultant and Client is solely one of independent
contractor. Consultant is entitled to perform the Services required herein
through the use of its own personnel. Nothing herein shall be construed or
interpreted to deem the relationship between Client and Consultant to be that of
an employer/employee. Consultant shall be responsible for all contract
obligations it may have with its personnel, for the payment of all wages and
salaries payable to its personnel, and the cost of providing its personnel with
any fringe benefits to which they may be entitled by reason of being personnel
of Consultant. Consultant shall also be responsible for withholding payroll
taxes from the wages and salaries paid to its personnel and the payment of all
payroll taxes relating to their employment to
<PAGE>
government agencies and shall provide workman's compensation insurance,
unemployment insurance and any other insurance required by statute.
4. CHARGES FOR SERVICES.
In consideration for the Services, Client agrees to sell to Consultant the sum
of One Hundred Thousand (100,000) shares of the common stock of Client, upon the
terms and conditions set forth in the Option Agreement attached hereto as
Exhibit B.
5. INABILITY TO PERFORM.
Consultant and Client shall not be required to perform their respective
obligations under this Agreement, or be liable for their failure to perform or
for delay in performance of their obligations hereunder, if such performance is
prevented, hindered, or delayed by reason of any cause beyond the reasonable
control of the other party, including, without limitation, any labor dispute,
personal illness or injury, act of God, or regulation or order of any government
authority. If performance is not possible for thirty (30) consecutive days,
either party may terminate this Agreement upon written notice to the other.
6. TERM AND TERMINATION.
This Agreement shall be effective upon the date first written above and shall
continue in effect for six (6) months thereafter or until terminated by either
party upon giving the other party not less than thirty (30) days prior written
notice of termination; provided, however, Services being provided at the time of
termination shall continue pursuant to the terms of this Agreement until
completed. This Agreement may be terminated by either party in the event of the
refusal or inability of the other party to perform hereunder as provided in
Section 6, or in the event of the breach of any obligation under this Agreement
by the other party. Such termination upon breach shall be made by written
notice to the other party and shall become effective ten (10) days after
delivery of such notice, provided the defaulting party has not cured any such
default to the satisfaction of the other party within said ten (10) day period.
7. INDEMNIFICATION.
Consultant and Client mutually agree that they will indemnify and hold harmless
each other and each other's respective directors, officers, employees and each
person, if any, who controls such other entity within the meaning of Section 15
of the Securities Act of 1933, as amended, or Section 20 of the Securities Act
of 1934, as
<PAGE>
amended, (each such person being indemnified hereinafter referred to as the
"Indemnified Party") from and against any and all losses, claims, damages and
liabilities, joint or several (including all legal and other expenses reasonably
incurred by any Indemnified Party in connection with the preparation for or
defense of any claim, action or proceeding, whether or not resulting in
liability), to which such Indemnified Party may become subject under any
applicable federal or state law or otherwise caused by or arising out of, or
allegedly caused by or arising out of, this Agreement or any transaction covered
by this Agreement or the performance of the services provided for herein;
provided, however, that such party will not be liable hereunder to the extent
that any loss, claim, damage or liability is found in a final nonappealable
judgment by a court of competent jurisdiction to have resulted from gross
negligence or bad faith in performing the services described herein. This
provision shall survive the termination of this Agreement.
8. CONFIDENTIALITY.
Client and Consultant will not, unless otherwise required by law, either during
or subsequent to the term of this Agreement, directly or indirectly disclose or
publish to any unauthorized person any information designated in writing as
secret or confidential by Client or by Consultant without the written consent of
the other party; nor will either party disclose to anyone other than personnel
of one of the parties, or use in any way other than in the course of the
performance of this Agreement, any information not known to the general public
or recognized as standard practice, whether acquired or developed during
performance of this Agreement obtained from either party or obtained prior to
contract.
Neither party shall be obligated by this Section 7 with respect to any
information which is published or becomes publicly available through no fault of
the party receiving such information under this Agreement or rightfully received
from third parties, is developed independently, or is in their possession one
(1) year after the termination of this Agreement. Each party is likely to be
exposed to certain business information of the other party not related to the
Services, which is considered by the other party to be proprietary and
confidential, including but not limited to customer, product and financial
information. The parties hereto agree to avoid the unauthorized dissemination
or publication of such proprietary information by using the same degree of care
with regard to such information and the same methods to prevent the publication
thereof as each employs with respect to its own proprietary information of a
similar nature.
<PAGE>
The confidentiality obligation imposed hereunder shall survive the termination
of this Agreement.
9. MISCELLANEOUS.
(a) Unless otherwise stated, all notices, demands, payments and other
communications required or permitted to be given hereunder shall be in writing
and shall be deemed to have been given on the date delivery is acknowledged, and
shall be made only by recognized courier service, or by U.S. Mail, registered or
certified, postage prepaid, return receipt requested, to the address of each
party set forth in the heading of the Agreement, or to such other address as
either party may substitute by written notice to the other party.
(b) This Agreement shall be binding on, and inure to the benefit of, the parties
hereto and their respective heirs, legal representatives, successors or assigns.
Neither party shall assign its obligations hereunder without the express written
consent of the other party.
(c) The captions used in this Agreement are for purposes of identification only
and are not to be used to construe any of the terms of the Agreement.
(d) The following Exhibits, annexed hereto, or incorporated herein and are
hereby made a part of this Agreement:
Exhibit A: Description of Services
Exhibit B: Option Agreement
(e) This Agreement may be executed as a single document bearing all necessary
signatures or may be executed simultaneously in two (2) or more counterparts,
each of which shall be deemed an original and all of which together shall
constitute one and the same instrument.
(f) This Agreement constitutes the entire Agreement and understanding between
the parties hereto and integrates all prior negotiations, discussions and
agreements between them. No modifications of the terms of this Agreement shall
be valid unless in writing and signed by an authorized representative of each
party hereto (or their successors).
<PAGE>
(g) If any provisions or provisions of this Agreement shall be held to be
invalid, illegal or unenforceable, the validity, legality, and enforceability of
the remaining provision shall not in any way be affected or impaired thereby.
(h) This Agreement shall be governed by and interpreted under the laws of the
State of California.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day
and year first above written.
CLIENT:
NEROX ENERGY CORPORATION
By: /s/ Nicholas E. Ross
--------------------------
Its: President
--------------------------
CONSULTANT:
GRIFFIN FINANCIAL CORP.
By: /s/ [Illegible Signature]
--------------------------
Its: President & CEO
--------------------------
<PAGE>
EXHIBIT A
DESCRIPTION OF SERVICES
Pursuant to the terms of the Services Agreement dated September 4, 1996,
Consultant hereby agrees to provide the following Services to Client:
1. Produce a corporate profile or tear sheet of Client, and set up on an
existing financial-based Internet site;
2. Design and produce a corporate Web site for Client, and hyperlink same to
an existing financial based Internet directory; provided, however, that if
Client remains on an Internet site hereunder more than six (6) months, then
Client shall pay Consultant a maintenance fee of Three Hundred Dollars ($300.00)
per month after the sixth month; and
3. Provide such other and further financial advisory consulting services as
may be mutually agreed upon between Client and Consultant from time to time.
<PAGE>
EXHIBIT 7
THE REGISTERED HOLDER OF THIS OPTION BY ITS ACCEPTANCE HEREOF, AGREES THAT IT
WILL NOT SELL, ASSIGN, PLEDGE, HYPOTHECATE OR OTHERWISE TRANSFER THIS OPTION
EXCEPT AS HEREIN PROVIDED. THIS OPTION HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT) OR UNDER THE SECURITIES LAWS OF
ANY STATE.
VOID AFTER 5:00 P.M., PACIFIC STANDARD TIME, DECEMBER 31, 1996
OPTION AGREEMENT
This Option Agreement (the "Agreement") is dated as of September 4, 1996,
between NEROX ENERGY CORPORATION (the "Company"), and GRIFFIN FINANCIAL CORP.
(the "Registered Holder").
WHEREAS, the Company and the Registered Holder are parties to a Services
Agreement, dated September 4, 1996, between the Company and the Registered
Holder, which Services Agreement provides for the issuance of options to
purchase common stock of the Company on terms and conditions as more fully set
forth herein; and
WHEREAS, the Company desires to provide for issuance of option certificates (the
"Option Certificates") representing One Hundred Thousand (100,000) Options as
compensation under the aforementioned Services Agreement on such terms and
conditions as are more fully set forth herein; and
NOW, THEREFORE, in consideration of the promises and mutual agreements
hereinafter set forth, it is agreed that:
1. OPTIONS/OPTION CERTIFICATES. Each Option shall entitle the holder thereof
---------------------------
(the "Registered Holder"), in whose name the Option Certificate shall be
registered on the books maintained by the Company, to purchase one (1) share of
the Company's $0.02 par value Common Stock (the "Option Shares") upon exercise
thereof at the Option Exercise Price (set forth in Section 3 hereof), subject to
modification and adjustment as provided in Sections 7 and 8 hereof. The Option
Certificate representing the right to purchase Option Shares shall be executed
as provided in Section 2 hereof and delivered to the Registered Holder upon
execution of this Agreement.
Subject to the provisions hereof, the Company shall deliver Option Certificates
in required whole number denominations to Registered Holders in connection with
any transfer or exchange permitted under this Agreement. No Option Certificates
shall be issued except: (i) Option Certificates initially issued hereunder; (ii)
Option Certificates issued on or after the initial issuance date, upon the
exercise of any Options, to evidence the unexercised Options held by the
exercising Registered
<PAGE>
Holder; or (iii) Option Certificates issued after the initial issuance date upon
any transfer or exchange of Option Certificates or replacement of lost or
mutilated Option Certificates.
2. FORM AND EXECUTION OF OPTION CERTIFICATES. The Option Certificates shall be
-----------------------------------------
substantially in the form attached hereto as Exhibit A (the "Option
Certificate"). The Option Certificates shall be dated as of the date of their
issuance, whether on initial issuance, transfer or exchange, or in lieu of
mutilated, lost, stolen or destroyed Option Certificates. The Option
Certificates shall be signed by the Company's Chief Executive Officer or
President and attested to by the Company's Secretary or Assistant Secretary, and
embossed with the Company's seal, and shall not be valid for any purpose unless
so originally signed and embossed.
3. EXERCISE. Subject to the provisions of Sections 7 and 8 hereof, each Option
--------
may be exercised at a price of One and 25/100 Dollars ($1.25) (the "Option
Exercise Price") per Option. The Options represented by an Option Certificate
may be exercised in whole or in part at any time during the period commencing
with the date of this Agreement (the "Initial Exercise Date") and terminating at
5:00 p.m. Pacific Standard Time on December 31, 1996 (the "Termination Date").
Each Option shall be deemed to have been exercised immediately prior to the
close of business on the date (the "Exercise Date") of the surrender for
exercise of the Option Certificate. The exercise form, attached hereto as
Exhibit B shall be executed by the Registered Holder, or by his duly authorized
attorney, in writing and shall be delivered to the Company at its corporate
office together with payment to the order of the Company in cash or by official
bank or certified check, of an amount equal to the aggregate Exercise Price, in
lawful money of the United States of America.
Unless Option Shares may not be issued as provided herein, the person entitled
to receive the number of Option Shares deliverable on such exercise shall be
treated for all purposes as the holder of such Option Shares as of the close of
business on the Exercise Date. In addition, the Company shall also, at such
time, verify that all of the conditions precedent to the issuance of Option
Shares, set forth in Section 4, have been satisfied as of the Exercise Date. If
any one of the conditions precedent set forth in Section 4 are not satisfied as
of the Exercise Date, the Company may, at its option, return the Option
Certificate and pertinent Exercise Price payment to the exercising Registered
Holder or may hold the same until all such conditions have been satisfied. The
Company shall not be obligated to issue any fractional share interests in Option
Shares issuable or deliverable on the exercise of any Option or scrip or cash
therefor, and such fractional shares shall be of no value whatsoever and shall
be canceled on the Company's books of record. If more than one Option shall be
exercised at one time by the same Registered Holder, the number of full Option
Shares which shall be issuable on exercise thereof shall be computed on the
basis of the aggregate number of full Option Shares issuable on such exercise.
Once the Company has determined that the funds are or will be collected, the
Company shall notify its Common Stock transfer agent who shall cause a Common
Stock share certificate representing the exercised Options to be issued. The
Company may deem and treat the Registered Holder of the Options at any time as
the absolute owner thereof for all purposes, and the Company shall not be
affected
<PAGE>
by any notice to the contrary, other than notice by the Registered Holder. The
Options shall not entitle the holder thereof to any of the rights of
shareholders or to any dividend declared on the Company's Common Stock or Option
unless the holder shall have exercised the Options and purchased the Option
Shares prior to the record date fixed by the Board of Directors of the Company
for the determination of holders of Common Stock entitled to such dividend or
other right.
4. RESERVATION OF SHARES AND PAYMENT OF TAXES. The Company covenants that it
------------------------------------------
will at all times reserve and have available from its authorized Common Stock
such number of shares as shall then be issuable on the exercise of all
outstanding Options. The Company covenants that all Option Shares which shall be
so issuable shall be duly and validly issued, fully paid and non-assessable and
free from all taxes, liens and charges with respect to such issue.
The Registered Holders shall pay all documentary, stamp or similar taxes and
other governmental charges that may be imposed with respect to the issuance of
the Options, or the issuance, transfer or delivery of the Options or any Option
Shares on exercise of the Options. In the event the Option Shares are to be
delivered in the name other than the name of the Registered Holder of the Option
Certificate, no such delivery shall be made unless the person requesting the
same has paid to the Company the amount of any such taxes or charges incident
thereto.
5. REGISTRATION OF TRANSFER. The Option Certificates may be transferred in
------------------------
whole or in part as provided for herein. Option Certificates to be transferred
shall be surrendered to the Company at its corporate office. The Company shall
execute, issue and deliver in exchange therefor the Option Certificate or
Certificates which the holder making the transfer shall be entitled to receive.
The Company shall keep transfer books at its corporate office which shall
register Option Certificates and the transfer thereof. On due presentment for
registration of transfer of any Option Certificate at such office, the Company
shall execute, and the Company shall issue and deliver to the transferee or
transferees, a new Option Certificate or Certificates representing an equal
aggregate number of Options. All Option Certificates presented for registration
of transfer or exercise shall be duly endorsed or be accompanied by a written
instrument or instruments or transferred in a form satisfactory to the Company
and the Company's counsel. The Company may require payment of a sum sufficient
to cover any tax or other government charge that may be imposed in connection
therewith.
All Option Certificates so surrendered, or surrendered for exercise or for
exchange in case of mutilated Option Certificates, shall be promptly canceled by
the Company. Prior to due presentment for registration of transfer thereof, the
Company may treat the Registered Holder of any Option Certificate as the
absolute owner thereof (notwithstanding any notations of ownership or writing
thereon made by anyone other than the Company), and the parties hereto shall not
be affected by any notice to the contrary.
6. LOSS OR MUTILATION. On receipt by the Company of evidence satisfactory as
------------------
to the ownership of the loss, theft, destruction or mutilation of any Option
Certificate, the Company shall execute and deliver in lieu thereof, a new Option
Certificate
<PAGE>
representing an equal aggregate number of Options. In the case of loss, theft or
destruction of any Option Certificates, the individual requesting issuance of a
new Option Certificate shall be required to indemnify the Company in an amount
satisfactory to the Company. In the event an Option Certificate is mutilated,
such Certificate shall be surrendered and canceled by the Company prior to
delivery of a new Option Certificate. Applicants for a new Option Certificate
shall also comply with such other regulations and pay such other reasonable
charges as the Company may reasonably prescribe.
7. ADJUSTMENT OF EXERCISE PRICE AND SHARES. In the event and upon the
---------------------------------------
occurrence of any of the following events, the Exercise Price and the number of
Option Shares purchasable on the exercise of the Company's Options shall be
subject to adjustment as follows:
(a) Prior to the expiration of the Options by exercise or by their terms, in
the event the Company shall issue any shares of its Common Stock as a share
dividend or shall subdivide the number of outstanding shares of Common Stock
into a greater number of shares, then, in either of such events, the number of
shares of Common Stock purchasable pursuant to the Options in effect at the
time of such action shall be increased proportionately such that there results
in no change in the percentage of the Company's outstanding Common Stock for
which such Options may be exercised, and the Exercise Price per share of
Common Stock purchasable pursuant to the Options in effect at the time of such
action shall be reduced proportionately such that there results in no change
in the total consideration to be paid to the Company upon exercise of the
Options. Conversely, in the event the Company shall reduce the number of
shares of its outstanding Common Stock by combining such shares into a smaller
number of shares, then, in such event, the number of shares of Common Stock
purchasable pursuant to the Options in effect at the time of such action shall
be decreased proportionately such that there results in no change in the
percentage of the Company's outstanding Common Stock for which such Options
may be exercised, and the Exercise Price per share of Common Stock purchasable
pursuant to the Options in effect at the time of such action shall be
increased proportionately such that there results in no change in the total
consideration to be paid to the Company upon exercise of the Options. Any
dividend paid or distributed on the Common Stock in shares of Common Stock of
the Company shall be treated as a share dividend pursuant to the preceding
sentence. However, any dividend paid or distributed on the Common Stock in
securities other than Common Stock of the Company, regardless if exercisable
for or convertible into Common Stock of the Company, shall not be treated as a
share dividend pursuant to the foregoing.
(b) At any time while the Options shall remain unexpired and unexercised, in
the event the Company shall sell all or substantially all of its property, and
thereafter dissolve, liquidate or wind up its affairs, then no provision need
be made as part of the terms of any such sale, dissolution, liquidation or
winding
<PAGE>
up to allow Registered Holders to exercise all or any Options held, in
order to receive the same kind and amount of any share, securities or assets
as may be issuable, distributable or payable on any such sale, dissolution,
liquidation or winding up with respect to each share of Common Stock of the
Company.
(c) Notwithstanding the provisions of this Section 7, no adjustment on the
Exercise Price shall be made whereby such price is adjusted in an amount less
than $0.01 or until the aggregate of such adjustments shall equal or exceed
$1,000.00.
(d) No adjustment of the Exercise Price shall be made as a result of or in
connection with: (i) the issuance of Common Stock of the Company pursuant to
options, warrants and share purchase agreements outstanding or in effect on
the date hereof; (ii) the establishment of additional option plans, common
stock purchase warrants or security offerings of the Company, the
modification, renewal or extension of any such plan, warrants or offerings now
in effect or hereafter created, or the issuance of Common Stock on exercise of
any such options or warrants; or (iii) the issuance of Common Stock in
connection with an acquisition or merger of any type.
Before taking any action which would cause an adjustment reducing the Exercise
Price below the then par value of the shares of Common Stock issuable upon
exercise of the Options, the Company will take any corporate action which may,
in the opinion of its counsel, be necessary in order that the Company may
validly and legally issue fully paid and nonassessable shares of such Common
Stock at such adjusted Exercise Price.
Upon any adjustment of the Exercise Price required to be made pursuant to this
Section 7, the Company shall, within thirty (30) days thereafter, cause to be
mailed to each Registered Holder written notice of such adjustment, setting
forth the new Exercise Price and number of shares of Common Stock which may be
acquired upon exercise of the Options after such adjustment and setting forth in
reasonable detail the method of calculation and the facts upon which such
calculation is based.
8. REDUCTION IN EXERCISE PRICE AT COMPANY'S OPTION. In addition to any
-----------------------------------------------
adjustments made to the Exercise Price pursuant to Section 7, the Company's
Board of Directors may, in its sole discretion, reduce the Exercise Price of the
Options in effect at any time either for the life of the Options or any shorter
period of time as may be determined by the Company's Board of Directors. The
Company shall, within thirty (30) days thereafter, cause to be mailed to each
Registered Holder written notice of any such reduction in the Exercise Price.
9. LEGEND. Each Option Certificate and each certificate for Option Shares
------
purchased under this Option shall bear a legend as follows, unless such Option
or Option Shares have been registered under the Act and the issuance complies
with applicable state securities laws:
<PAGE>
"The securities represented by this certificate have been acquired for
investment and have not been registered under the Securities Act of 1933,
as amended (the "Act"). The securities represented by this certificate may
not be sold, assigned, pledged, hypothecated or otherwise transferred
except pursuant to an effective registration statement under the Act and in
compliance with applicable state securities laws, or the Company receives
an opinion of counsel, satisfactory to the Company and Company counsel,
that such registration is not required and that the sale, assignment,
pledge, hypothecation or transfer is in compliance with applicable state
securities laws."
10. TRANSFERS.
---------
(a) Transfers to Successors, Officers and Directors of Registered Holder. This
--------------------------------------------------------------------
Option shall not be transferred sold, assigned or hypothecated except that it
may be transferred to any successors of a Registered Holder, and may be assigned
in whole or in part to any person who is an officer or director of Registered
Holder on the date first written hereinabove (each such transferee and assignee
hereinafter referred to as a "Transferee Holder"). All such transfers, sales,
assignments or hypothecation shall be fully identified to the Company, and the
transferor shall execute and deliver to the Company such certificates,
endorsements and other documents as the Company or Company's counsel may
require.
(b) Transfer of Option Or Option Shares. The Registered Holder, and each
-----------------------------------
Transferee Holder, agrees that he shall not sell, assign, pledge, hypothecate or
otherwise transfer the Option or the Option Shares, in whole or in part, except
(I) pursuant to an effective registration under the Securities Act of 1933, as
amended (the "Act") and in compliance with applicable state securities laws, or
(ii) the Company receives an opinion of counsel, satisfactory to the Company and
Company counsel, that such registration is not required and that the sale,
assignment, pledge, hypothecation or transfer is in compliance with applicable
federal and state securities laws. In order to make any sale, assignment,
pledge or hypothecation, the transferor must deliver to the Company the
assignment form attached hereto duly executed and completed, together with the
applicable certificate and payment of all transfer taxes, if any, payable in
connection therewith. As to the Option, the Company shall transfer the
transferred Option on the books of the Company and shall execute and deliver a
new Option Certificate of like tenor to the appropriate assignee(s) expressly
evidencing the right to purchase the number of Option Shares purchasable
thereunder. As to the Option Shares, the Company shall cause its duly
authorized common stock transfer agent to transfer the common stock being
transferred.
11. REGISTRATION. The Company, upon the one time written demand (the "Demand
------------
Notice") of the Registered Holder, agrees to use its best efforts to register
all or any portion of the Option Shares, as requested by the Registered Holder.
On such occasion, the Company will use its best efforts to file a Form S-8
Registration Statement covering such Option Shares within thirty (30) days after
receipt of the Demand Notice and use its best efforts to have such registration
statement declared
<PAGE>
effective promptly thereafter. The demand for registration may be made at any
time prior to the Termination Date. The Company covenants and agrees to give
written notice of its receipt of any Demand Notice by a Registered Holder to all
other Registered Holders of the Options within thirty (30) days from the date of
the receipt of any such Demand Notice. In the event of registration, the Company
and the Registered Holders whose Option Shares have been registered shall
execute such documents as may be reasonably required by the Company and Company
counsel to carry out such registration.
(a) Terms of Registration. The Company shall bear all fees and expenses
---------------------
attendant to registering the Option Shares under this Section 11, but the
Registered Holders whose Option Shares are being registered shall pay any and
all underwriting and broker-dealer discounts, commissions and non-accountable
expenses of any underwriter or broker-dealer selected to sell the such Option
Shares, together with the expenses of any legal counsel selected by the such
Registered Holders to represent them in connection with the sale of their
Option Shares. The Company shall cause any registration statement filed
pursuant to the demand rights granted hereto to remain effective for a period
of sixteen (16) months from the date of the latest balance sheet of the
audited financial statements contained therein on the initial effective date
of such registration statement.
(b) Restriction on Registration. The Company shall not be obligated to
---------------------------
register any Option Shares if such securities may be sold pursuant to the
exemption from registration as provided by Rule 144 as promulgated under the
Act, nor shall the Company be obligated to register any Option Shares in any
state in which the principal stockholders, officers, directors or employees of
the Company may in any way be obligated to escrow any of their shares of
Common Stock of the Company or in a state in which the Company may be
restricted from conducting its business in any way, including but not limited
to, qualifying to do business, restricted from issuing additional securities
or restricted on compensating officers, directors or employees.
(c) Right To Redeem In Lieu Of Registration. The Company may, in its sole
---------------------------------------
discretion, in lieu of registration hereunder of any Option Shares, pay to a
Registered Holder an amount equal to (i) the amount which would be realized by
the Registered Holder upon sale of the such Option Shares, (ii) reduced by the
Exercise Price, and (iii) reduced further by the expenses, fees and
broker/dealer commissions which would be paid by the Company in the event of
registration and sale of the Option Shares. The Company may elect to make
such payment upon notice to such Registered Holder within thirty (30) days of
receipt of a notice of Demand Registration.
12. MODIFICATION OF AGREEMENT. The Company and the Registered Holder may by
-------------------------
supplemental agreement make any changes or corrections in this Agreement: (i)
that they shall deem appropriate to cure any ambiguity or to correct any
defective or inconsistent provision or mistake or error herein contained; or
(ii) that they may deem necessary or desirable and which shall not adversely
affect the interest of the holders of Option Certificates; provided, however,
this Agreement shall not otherwise be modified, supplemented or altered in any
respect except with the
<PAGE>
consent in writing of the Registered Holders of Option Certificates representing
not less than fifty-one percent (51%) of the Options outstanding. Additionally,
except as provided in Sections 7 and 8 hereof, no change in the number or nature
of the Option Shares purchasable upon exercise of an Option, or increase of the
Exercise Price therefor, shall be made without the consent in writing of the
Registered Holder or Transferee Holder of the Option Certificate representing
such Option, other than such changes as are specifically prescribed or allowed
by this Agreement.
13. NOTICES. All notices, demands, elections options or requests (however
-------
characterized or described) required or authorized hereunder shall be deemed
sufficient if made in writing and sent by registered or certified mail, return
receipt requested and postage prepaid, or by tested telex, telegram or cable, to
the principal office of the addressee, and if to the Registered Holder or
Transferee Holder of an Option Certificate, at the address of such holder as set
forth on the books maintained by the Company.
14. BINDING AGREEMENT. This Agreement shall be binding upon and inure to the
-----------------
benefit of the Company, the Registered Holder, each Transferee Holder and their
respective successors and assigns. Nothing in this Agreement is intended or
shall be construed to confer upon any other person any right, remedy or claim or
to impose on any other person any duty, liability or obligation.
15. FURTHER INSTRUMENTS. The parties hereto shall execute and deliver any and
-------------------
all such other instruments and shall take any and all other actions as may be
reasonably necessary to carry out the intention of this Agreement.
16. SEVERABILITY. If any provision of this Agreement shall be held, declared
------------
or pronounced void, voidable, invalid, unenforceable or inoperative for any
reason by any court of competent jurisdiction, government authority or
otherwise, such holding, declaration or pronouncement shall not affect adversely
any other provision of this Agreement, which shall otherwise remain in full
force and effect and be enforced in accordance with its terms, and the effect of
such holding, declaration or pronouncement shall be limited to the territory or
jurisdiction in which made.
17. WAIVER. All the rights and remedies of either party to this Agreement are
------
cumulative and not exclusive of any other rights and remedies as provided by
law. No delay or failure on the part of either party in the exercise of any
right or remedy arising from the breach of this Agreement will constitute a
waiver of any other right or remedy. The consent of any party where required
hereunder to act or occurrence shall not be deemed to be a consent to any other
action or occurrence.
18. GENERAL PROVISIONS. This Agreement shall be construed and enforced in
------------------
accordance with, and governed by, the laws of the State of California. This
Agreement embodies the entire agreement and understanding between the parties
and supersedes all prior agreements and understandings relating to the subject
matter hereof. Other than as provided in Section 12 hereof, this Agreement may
not be modified or amended, nor any term or provision hereof waived or
discharged, except in writing, signed by the party against whom such amendment,
modification, waiver or discharge is sought to be enforced. The headings of
this Agreement are for convenience and references only and shall not limit or
otherwise affect the meaning hereof.
<PAGE>
for convenience and references only and shall not limit or otherwise affect the
meaning hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the date first above written.
NEROX ENERGY CORPORATION
By: /s/ NICHOLAS E. ROSS
------------------------------------
Its: President
----------------------------------
REGISTERED HOLDER
GRIFFIN FINANCIAL CORP.
- ---------------------------------------
GRIFFIN FINANCIAL CORP.
- ---------------------------------------
(print name)
200 Rector Place
- ---------------------------------------
(street address)
New York, NY 10280
- ---------------------------------------
(city) (state) (zip)
13-3727190
- ---------------------------------------
(social security or employer ID number)
<PAGE>
EXERCISE FORM
This Option may be exercised only in its entirety or for a minimum purchase of
at least Five Thousand (5,000) shares of common stock as provided in Section 3
of the Option Agreement, subject to adjustment as provided in Section 7 of the
Option Agreement.
To: NEROX ENERGY CORPORATION
846 West Foothill Boulevard
Suite Y
Upland, California 91786-3770
Date: September 5th, 1996
-------------------
The undersigned hereby irrevocably elects to exercise the within Option and to
purchase One Hundred Thousand (100,000) shares of $0.02 par value common stock
of NEROX ENERGY CORPORATION, and hereby makes payment of $125,000.00 (at the
rate of $1.25 per share) in satisfaction of the Exercise Price pursuant to the
Option Agreement. Please issue the shares of common stock in accordance with the
instructions provided below.
/s/ [Illegible Signature]
- -------------------------------------
Signature
Signature Guaranteed: /s/ [Illegible Signature]
----------------------------------------------------------
SIGNATURE MUST BE GUARANTEED BY A COMMERCIAL BANK OR MEMBER FIRM OF ONE OF THE
FOLLOWING STOCK EXCHANGES: NEW YORK STOCK EXCHANGE, PACIFIC COAST STOCK
EXCHANGE, AMERICAN STOCK EXCHANGE, OR MIDWEST STOCK EXCHANGE.
INSTRUCTIONS FOR REGISTRATION OF SECURITIES
Please issue the shares of common stock underlying the Options exercised hereby
as follows:
Griffin Partners
- --------------------------------------
Print Name
200 Rector Place, New York, NY 10280
- --------------------------------------------------------------------------------
Address
13-3727190
- --------------------------------------------
Social security or tax identification number
<PAGE>
EXHIBIT 8
SUBSCRIPTION AGREEMENT
----------------------
To: NEROX ENERGY CORPORATION
846 West Foothill Boulevard, Suite Y
Upland, California 91786-3770
1. Subject to the terms and conditions hereinafter set forth, the
undersigned hereby subscribes and acquires 100,000 options ("Options") of NEROX
-------
ENERGY CORPORATION (the "Company"), a Nevada corporation, in consideration for
services to be provided by the undersigned pursuant a Services Agreement dated
September 4, 1996. Each Option will entitle the holder thereof to purchase one
(1) share of the Company's common stock (the "Common Stock") for the exercise
price of One and 25/100 Dollars ($1.25) per share.
A purchaser of Options will be unable to resell them unless they are
registered pursuant to a current registration statement and qualified for sale
in jurisdictions in which the holder resides or an exemption from such
registration and/or qualification exists in each jurisdiction. The Company has
agreed to file a registration statement on Form 8 with respect to the Company
Stock underlying the Options.
2. The undersigned hereby represents that he has been furnished by the
Company with the following listed documents of the Company (the "Offering
Documents"), and with all information regarding the Company which he had
requested or desired to know and has inquired of the President of the Company as
to any questions or additional information he has required and that all of such
additional information and Offering Documents are satisfactory to him:
The Offering Documents consist of: (i) this Subscription Agreement; (ii)
Option Agreement with Exhibits dated September 4, 1996.
3. The undersigned hereby understands and agrees that the Company has
undertaken to register the shares of Common Stock underlying the Options on Form
S-8 with the Securities & Exchange Commission, in reliance upon the Company's
and the undersigned's compliance with the rules and regulations relating
thereto. The undersigned represents that to the best of his knowledge, his
acquisition of the Options and the shares of Common Stock underlying the Options
will in all respects comply with the requirements for registration on Form S-8.
4. AN INVESTMENT IN THE SECURITIES OF THE COMPANY OFFERED HEREBY INVOLVES
A HIGH DEGREE OF RISK, RESTRICTED TRANSFERABILITY AND SUBSTANTIAL DILUTION.
ACCORDINGLY, OPTIONS SHOULD BE PURCHASED ONLY BY THOSE PERSONS WHO CAN AFFORD A
LOSS OF THEIR ENTIRE INVESTMENT. PROSPECTIVE INVESTORS, PRIOR TO MAKING AN
INVESTMENT SHOULD CAREFULLY CONSIDER, AMONG OTHERS, THE FOLLOWING RISK FACTORS
IN MAKING AN INVESTMENT IN THE COMPANY.
<PAGE>
The fact that certain risks are discussed herein does not mean there are not
other material risks of which an investor should be aware. The undersigned is
aware that:
(a) NEITHER THE SECURITIES AND EXCHANGE COMMISSION ("SEC") NOR ANY STATE
AGENCY HAS PASSED ON THE ADEQUACY OR ACCURACY OF THIS OFFERING NOR MADE ANY
FINDING OR DETERMINATION AS TO THE FAIRNESS OF THIS INVESTMENT. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
(b) None of the Options have been registered under the Securities Act of
1933, as amended (the "Securities Act") or the securities laws of any state, and
will be offered and sold in reliance on exemptions from the registration
requirements of these laws.
(c) An investment in the Company depends upon the undersigned's particular
circumstances. No information concerning the Company other than that contained
herein or in the Offering Documents has been provided to offerees. The
information presented herein and therein is not complete. Subscribers are
---
cautioned not to construe this Subscription Agreement, the Offering Documents or
any prior or subsequent communications as constituting legal advice. AN INVESTOR
SHOULD CONFER WITH AND RELY ON HIS OWN INVESTMENT AND TAX ADVISORS AS TO THE
SUBSTANTIAL RISKS INHERENT IN AN INVESTMENT HEREIN AND THE TAX CONSEQUENCES TO
HIM AS A RESULT OF HIS INVESTMENT. THE COMPANY AND ITS OFFICERS, DIRECTORS,
EMPLOYEES AND REPRESENTATIVES MAKE NO REPRESENTATIONS OR WARRANTIES WITH RESPECT
TO THE COMPANY EXCEPT AS SPECIFICALLY SET FORTH HEREIN OR IN THE OFFERING
DOCUMENTS.
(d) This Subscription Agreement does not constitute an offer to sell or a
solicitation of an offer to buy any of the Options to anyone in any state or in
any other jurisdiction in which an offer or solicitation is not authorized.
(e) The Company will provide additional information, if such is reasonably
available, which an offeree or his representative may request for the purpose of
evaluating the merits and risks of this Offering including any such information,
if available, as would be included in a registration statement. The Company will
also provide each offeree or his representative with an opportunity to meet and
confer with its principals regarding all aspects of the Company's business.
No offering literature or advertising in any form is being employed in the
Offering of the Options except for this Subscription Agreement and the Offering
Documents. No person is authorized to give any information or to make any
representation not contained in this Subscription Agreement or the Offering
Documents. Any representation not contained herein or therein must not be relied
upon as having been authorized by the Company or its officers. Any distribution
or reproduction of this Subscription Agreement of the Offering Documents, in
whole or part, or the divulgence of any of their contents, without the prior
written consent of the Company, is prohibited.
<PAGE>
(f) An investment in the Company is an illiquid investment. In particular,
the undesigned recognizes that the undersigned must bear the economic risk of
investment in the Company for an indefinite period of time since the Options
have not been registered under the Securities Act, and, therefore, cannot be
sold unless either they are subsequently registered under the Securities Act or
an exemption from such registration is available and a favorable opinion of
counsel for the Company to such effect is obtained.
The Company may place a legend on the certificates evidencing the Options
stating that they have not been registered under the Securities Act and setting
forth or referring to the restriction on the sale, transfer or disposition
thereof. The Subscriber is aware that the Company will make a notation in its
appropriate records with respect to the restrictions on the sale, transfer, or
disposition of the Options.
5. The undersigned represents and warrants to the Company that:
(a) The undersigned has the ability to bear the risks of an investment in
the Company and is suitable as an investor in the Company.
(b) The undersigned has reviewed the Offering Documents, in connection
with deciding to acquire Options of this Offering.
(c) The undersigned has the requisite knowledge and experience in
financial and business matters for properly evaluating the merits and risks of
investment in the Company and of making an informed investment decision. The
undersigned represents that he also has significant prior investment experience,
including investment in non-registered securities and recognizes the highly
speculative nature of this investment.
(d) The undersigned has evaluated the risks of receiving the Options as
consideration for the amount invested in the Company.
(e) The undersigned has sufficient available financial resources to
provide adequately for his current needs, including possible personal
contingencies, and can bear the economic risk of a complete loss of any
investment hereunder without materially affecting his financial condition.
(f) The undersigned understands that the Company's operations are subject
to all the risks inherent in financing the operations of a new business; the
Company is, accordingly, subject to numerous risks; and the Options are,
therefore, a speculative investment which involves a high degree of risk of
loss, including the potential loss of his entire investment in the Company.
(g) The undersigned has been given the opportunity to ask questions of the
Company concerning the financial condition of the Company and its contemplated
acquisition and to obtain additional information necessary to verify the
accuracy of the information as the undesigned desires.
<PAGE>
(h) The undersigned is familiar with the financial condition and prospects
of the Company's business, has been furnished all materials relating to the
Company and its activities, the offering of the Options or anything set forth in
the Subscription Agreement which he has requested and has been afforded the
opportunity to obtain any additional information necessary to verify the
accuracy of any representation or information set forth in the Subscription
Agreement and Offering Documents.
(i) The Company, its officers, directors and employees have answered all
inquiries that the undersigned has asked of them concerning the Company and its
activities and this Offering.
(j) The undersigned has not been furnished any offering literature other
than this Subscription Agreement and the Offering Documents and the undersigned
has relied only on the information contained herein, in the Offering Documents
and the information furnished or made available by the Company as described
above.
Furthermore, as set forth above, no representations or warranties have been
made to the undersigned by the Company, or its officers, directors, employees or
representatives with respect to the business of the Company, the financial
condition of the Company and/or the economic, tax or any other aspects or
consequences of a purchase of the Options and that the undersigned has not
relied upon any information concerning this offering, written or oral, other
than contained in this Agreement and the Offering Documents, or provided by the
Company upon request.
(k) The undersigned is relying upon his, her or its own counsel,
accountant, business advisor(s) and/or others, concerning legal, tax, business
and related aspects of the subscription hereunder and investment in the Company.
(l) The undersigned understands that the Options have not been registered
under the Securities Act or under any applicable Blue Sky law, and agrees that
the Options may not be sold, offered for sale, transferred, pledged,
hypothecated, or otherwise disposed of except in compliance with the Securities
Act and any applicable state securities laws or pursuant to an acceptable and
proper exemption therefrom, and that the Options will bear an appropriate legend
setting forth these restrictions. The undersigned further understands and
acknowledges that the Company has no obligation to cause the Options to be
registered under any other provision of the Securities Act or any other
applicable Blue Sky laws or to comply with any exemption under the Securities
Act or any Blue Sky law that would permit the Options to b sold by the
undersigned. The undersigned understands the legal consequences of the foregoing
to mean that the undersigned must bear the economic risk of an investment in the
Options for an indefinite period of time.
(m) The undersigned understands that the Offering Documents have not been
approved or disapproved by the SEC or any state securities commission, nor has
any such commission passed upon the accuracy or adequacy of the Offering
<PAGE>
Documents or the fairness of the Offering. Any representation to the contrary is
unlawful.
(n) The undersigned is acquiring the Options subscribed for his own
account, as principal, and no other person has a direct or indirect beneficial
interest in the Options. The undersigned agrees that he will not sell, transfer
or otherwise dispose of any of the Options unless they are registered under the
Securities Act or unless an exemption from such registration is available.
(o) All of the information which the undersigned has furnished to the
Company, and all representations provided by the undersigned, are correct and
complete as of the date of this Agreement, and the undersigned covenants that
until the closing on the Options subscribed for, the undersigned shall inform
the Company of any changes in the representations provided by the undersigned
hereunder.
(p) If the undersigned is a corporation, partnership, trust or other
entity, (i) it is authorized and qualified to become a stockholder in, and
authorized to make its investment in, the Company; (ii) in the event all of its
equity owners are not accredited investors, it has not been formed for the
purpose of acquiring any interest in the Company, has been in existence for more
than 90 days prior to the date hereof; and on a consolidated basis, it meets
the net worth requirements for qualifying as an accredited investor, as
indicated by its most recent financial statement; and (iii) the person signing
this Agreement on behalf of such entity has been authorized to do so.
(q) The undersigned hereby acknowledges that the Options have not been
registered under Section 49:3-56 of the New Jersey Blue Sky Laws and are subject
to restrictions on transferability and sale of securities as set forth herein.
The undersigned hereby agrees that the Options will not be transferred or resold
without registration under such Laws or exemption therefrom.
The foregoing representations, warranties, agreements, undertakings, and
ackowledgments are made by the undersigned with the intent that they be relied
upon in determining the undersigned's suitability as a purchaser of Options, and
the undesigned agrees that those representations, warranties, agreements,
undertakings, and acknowledgments shall survive the undersigned's admission as a
Option holder of the Company. In addition, the undersigned undertakes to notify
the Company immediately of any change in any representation, warranty, or other
information relating to the undersigned set forth in this Agreement.
6. The undersigned's representations and warranties in paragraph 6 shall
survive the delivery of this Agreement, the receipt of payment for the Options
by the Company and the issuance and delivery of the Options. The undersigned
agrees to hold the Company and its respective directors, officers, employees,
agents, counsel and controlling persons (and their respective heirs,
representatives, successors and assigns) harmless and to indemnify them against
all liabilities, costs and expenses incurred by them as a result of any breach
by the undersigned of any
<PAGE>
such representations and warranties, or as a result of any sale or distribution
by the undersigned of the Options in violation of any securities laws.
7. Miscellaneous
(a) All notices or other communications given or made hereunder shall be in
writing and shall be delivered by hand, against written receipt, or mailed by
registered or certified mail, return receipt requested, postage prepaid, to the
undersigned at the address set forth below and to the Company at their address
set forth above. Notices shall be deemed given on the date of receipt or, if
mailed, three business days after mailing, except notices of change of address,
which shall be deemed given when received.
(b) Notwithstanding the place where this Agreement may be executed by the
undersigned or the Company, they agree that all the terms and provisions hereof
shall be construed in accordance with and governed by the laws of the State of
Nevada without regard to principles of conflict of laws.
(c) This Agreement constitutes the entire agreement between the undersigned
and the Company with respect to the subject matter hereof and may be amended
only by a writing executed by each of them.
(d) This Agreement shall be binding upon and inure to the benefit of each
of the undersigned and the Company and their respective heirs, legal
representatives, successors and assigns.
(e) The undersigned and the Company each hereby submit to the exclusive
jurisdiction of the courts of the State of California with respect to any action
or legal proceeding commenced by either of them with respect to this Agreement
or to the Securities. Each of them irrevocably waives any objection they now
have or hereinafter may have respecting the venue of any such action or
proceeding brought in such a court or respecting the fact that such court is
an inconvenient forum and consents to the service of process in any such action
or proceeding by means of registered or certified mail, return receipt
requested, in care of the address set forth above or below or at such other
address as either of them shall furnish in writing to the other.
(f) In order to discourage frivolous claims, the undersigned and the
Company agree that, unless the party who is a claimant succeeds in obtaining a
judgment against the other in an action or proceeding, the other shall be
entitled to recover all of their legal costs and expenses relating to such
action or proceeding and/or incurred in the preparation therefor.
(g) The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision of this
Agreement.
<PAGE>
The undersigned has executed this Subscription Agreement as of the date
indicated below.
Dated: September 4, 1996
<TABLE>
<C> <C>
/s/ RICHARD E. BOLTON (Griffin Financial Corp.) N/A
- ---------------------------------------------- ---------------------------------------
Signature of subscriber Signature of spouse, joint tenant,
tenant in common or other signature,
if required.
RICHARD E. BOLTON
- ----------------------------------------------
Type or print name of subscriber
(212) 406-3400 N/A
- ---------------------------------------------- --------------------------------------
Telephone number of subscriber Type or print name of spouse, joint
tenant, tenant in common or other
subscriber
200 Rector Place
- ---------------------------------------------
Address of subscriber
New York NY 10280 N/A
- --------------------------------------------- ---------------------------------------
City State Zip Code Address of spouse, joint tenant,
tenant in common or other signer
13-3727190 N/A
- --------------------------------------------- ---------------------------------------
Social security/taxpayer identi- Social security/taxpayer identification
fication number of subscriber number of spouse, joint tenant, tenant
in common or other signer
One Hundred Thousand (100,000)
- --------------------------------------------
Number of Options subscribed for
</TABLE>
Subscription Accepted:
NEROX ENERGY CORPORATION
By:/s/ NICHOLAS E. ROSS President
-----------------------------------------
Title
Dated: September 4, 1996
-------------------------------------
<PAGE>
EXHIBIT 9
NEROX ENERGY CORPORATION
Incorporated Under the Laws of the State of California
No. O - 00002
-----
100,000 O Common Stock
-------
Purchase Options
CERTIFICATE FOR COMMON STOCK PURCHASE OPTIONS
This Option Certificate certifies that GRIFFIN FINANCIAL CORP. or registered
-----------------------
assigns ("Option Holder") is the registered owner of the above indicated number
of Options (hereinafter referred to as the "Option" or "Options"), expiring on
December 31, 1996 ("Expiration Date"). One (1) Option entitles the Option
Holder to purchase one (1) share of common stock, $0.02 par value ("Share"),
from NEROX ENERGY CORPORATION, a California corporation ("Company"), at a
purchase price as set forth in the Option Agreement ("Option Agreement") dated
September 4, 1996 ("Exercise Price"), commencing on September 4, 1996 and
terminating on the Expiration Date ("Exercise Period"), upon surrender of this
Option Certificate with the exercise form hereon duly completed and executed
with payment of the Exercise Price at the office of the Company being 846 West
Foothill Boulevard, Suite Y, Upland, California 91786-3770, subject only to the
conditions set forth herein and in the Option Agreement between the Company and
the Option Holder. The Option Holder may exercise all or any number of Options.
Reference hereby is made to the provisions on the following pages of this Option
Certificate and to the provisions of the Option Agreement, all of which are
incorporated by reference in and made a part of this Option Certificate and
shall for all purposes have the same effect as though fully set forth at this
place.
Upon due presentment for transfer of this Option Certificate at the office of
the Company, a new Option Certificate or Option Certificates of like tenor and
evidencing in the aggregate a like number of Options, subject to any adjustments
made in accordance with the provisions of the Option Agreement, shall be issued
to the transferee in exchange for this Option Certificate, subject to the
limitations provided in the Option Agreement, upon payment to he Company of any
tax or governmental charge imposed in connection with such transfer.
The Option Holder of the Options evidenced by this Option Certificate may
exercise all or any whole number of such Options during the period and in the
manner stated hereon. The Exercise Price shall be payable in lawful money of the
United States of America and in cash or by certified or bank cashier's check
payable to the order of the Company. If, upon exercise of any Options evidenced
by this Option Certificate, the number of Options exercised shall be less than
the total number of Options so evidenced, there shall be issued to the Option
Holder a new Option Certificate evidencing the number of Options not so
exercised. No Option may be exercised after 5:00 P.M. Pacific Standard Time on
the Expiration Date, and any Option not exercised by such time shall become
void, unless extended by the Company.
The securities represented by this certificate have been acquired for
investment and have not been registered under the Securities Act of 1933, as
amended (the "Act"). The securities may not be sold, assigned, pledged,
hypothecated or otherwise transferred except pursuant to an effective
registration statement under the Act and in compliance with applicable state
securities laws, or the Company receives an opinion of counsel, satisfactory to
the Company and Company counsel, that such registration is not required and that
the sale, assignment, pledge, hypothecation or transfer is in compliance with
applicable state securities laws.
IN WITNESS WHEREOF, the Company has caused this Option to be signed by its
Chief Executive Officer or President and by its Secretary or Assistant
Secretary, each by an original of his signature, and has caused an original
impression of its corporate seal to be imprinted hereon.
Dated: September 11, 1996
------------
/s/ NICHOLAS E. ROSS /s/ [Illegible Signature]
---------------------------------- ------------------------------
Signature Signature
(Seal)
President Secretary
---------------------------------- -------------------------------
Title Title
<PAGE>
FOR VALUE RECEIVED, HEREBY SELL, ASSIGN AND
-------------------------------
TRANSFER UNTO:
- ------------------------------------ --------------------------------------
(Print Name above and Address below) (social security or tax identification
number)
- ------------------------------------
- ------------------------------------
If said number of Options shall not be all the Options evidenced by the within
Option Certificate, the undersigned requests that a new Option Certificate
evidencing the Options not so transferred be issued in the name of and delivered
to:
- ------------------------------------ ----------------------------------------
(Print Name above and Address below) (social security or tax identification
number)
- ------------------------------------
- ------------------------------------
Dated:
- ------------------------------------ --------------------------------
Signature
NOTICE: The above signature must correspond with the name as written upon the
face of the within Option Certificate in every particular, without alteration or
enlargement or any change whatsoever, or if signed by any other person, the Form
of Assignment thereon must be duly executed and if the certificate representing
the shares or any Option Certificate representing Options not exercised is to be
registered in a name other than that in which the within Option Certificate is
registered, the signature of the holder hereof must be guaranteed.
Signature Guaranteed:
---------------------------------------------------------
SIGNATURE MUST BE GUARANTEED BY A COMMERCIAL BANK OR MEMBER FIRM OF ONE OF THE
FOLLOWING STOCK EXCHANGES: NEW YORK STOCK EXCHANGE, PACIFIC COAST STOCK
EXCHANGE, AMERICAN STOCK EXCHANGE, OR MIDWEST STOCK EXCHANGE.
<PAGE>
EXHIBIT 10
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement of
Nerox Energy Corporation and Subsidiary (the "Company") on Form S-8 dated
September 13, 1996, of our report dated May 17, 1996 with respect to the
consolidated financial statements and schedules of the company included in the
Annual Report on Form 10-K for the year ended December 31, 1995.
/s/ SADDINGTON-CACCIAMATTA
- --------------------------
Saddington-Cacciamatta
Irvine, California
September 13, 1996
<PAGE>
EXHIBIT 11
SERVICES AGREEMENT
This Agreement, effective this 1st day of August, 1996, is entered into by and
between NEROX ENERGY CORP. ("Client"), with the mailing address of 846 West
Foothill Boulevard, Suite Y, Upland, California 91786, and CHARLES A. KOENIG
("Attorney"), with the mailing address of 5354 North High Street, Suite 3D,
Columbus, Ohio 43214.
1. SERVICES. Client desires, and Attorney is willing to provide, legal
services of the nature and type requested by Client in the areas of Attorney's
practice and expertise, during the term described below (the "Services"). Upon
the reasonable request of Client, Attorney shall provide Client with future
Services pursuant to the terms and conditions of this Agreement.
2. INDEPENDENT CONTRACTOR. Individuals who perform Services for or on
behalf of Attorney to Client, shall be considered the agents, consultants,
contractors or employees of Attorney. The relationship between Attorney and
Client is solely one of independent contractor. Attorney is entitled to perform
the Services required herein through the use of his own personnel. Nothing
herein shall be construed or interpreted to deem the relationship between Client
and Attorney to be an employer/employee relationship. Attorney shall be
responsible for all contract obligations he may have with his personnel, for the
payment of all wages and salaries payable to his personnel, and the cost of
providing his personnel with any fringe benefits to which they may be entitled
by reason of being personnel of Attorney. Attorney shall also be responsible
for withholding payroll taxes from the wages and salaries paid to his personnel
and the payment of all payroll taxes relating to their employment to government
agencies and shall provide workman's compensation insurance, unemployment
insurance and any other insurance required by statute.
3. CHARGES FOR SERVICES. In consideration for the Services, Client agrees to
pay to Attorney the sum of Ten Thousand (10,000) shares of the common stock of
Client,
<PAGE>
which shall be issued to Attorney as soon as practical following execution
hereof, free and clear of all liens, encumbrances and restrictions as provided
in Section 4 hereof.
4. S-8 REGISTRATION. Client agrees to file a registration statement on Form
S-8 with the Securities & Exchange Commission, registering all shares payable
hereunder to Attorney. Said filing shall occur as soon as practical after the
shares have been issued to Attorney, and Attorney agrees to cooperate in full
with Client in making such filing.
5. INABILITY TO PERFORM. Attorney and Client shall not be required to perform
their respective obligations under this Agreement, or be liable for their
failure to perform or for delay in performance of their obligations hereunder if
such performance is prevented, hindered, or delayed by reason of any cause
beyond the reasonable control of the other party, including, without limitation,
any labor dispute, personal illness or injury, act of God, or regulation or
order of any government authority. If performance is not possible for thirty
(30) consecutive days, either party can terminate.
6. TERM AND TERMINATION. This Agreement shall be effective upon the date
first written above and shall continue in effect for six (6) months thereafter
or until terminated by either party upon giving the other party not less than
thirty (30) days prior written notice of termination; provided, however,
Services being provided at the time of termination shall continue pursuant to
the terms of this Agreement until completed. This Agreement may be terminated
by either party in the event of the refusal or inability of the other party to
perform hereunder as provided in Section 5, or in the event of the breach of any
obligation under this Agreement by the other party. Such termination upon
breach shall be made by written notice to the other party and shall become
effective ten (10) days after delivery of such notice, provided the defaulting
party has not cured any such default to the satisfaction of the other party
within said ten (10) day period.
7. MISCELLANEOUS.
(a) Unless otherwise stated, all notices, demands, payments and other
communications required or permitted to be given hereunder shall be in
writing and shall be deemed to
<PAGE>
have been given on the date delivery is acknowledged, and shall be made only by
recognized courier service, or by U.S. Mail, registered or certified, postage
prepaid, return receipt requested, to the address of each party set forth in the
heading of the Agreement, or to such other address as either party may
substitute by written notice to the other party.
(b) This Agreement shall be binding on, and inure to the benefit of, the parties
hereto and their respective heirs, legal representatives, successors or assigns.
Neither party shall assign its obligations hereunder without the express written
consent of the other party.
(c) The captions used in this Agreement are for purposes of identification only
and are not to be used to construe any of the terms of the Agreement.
(d) This Agreement may be executed as a single document bearing all necessary
signatures or may be executed simultaneously in two (2) or more counterparts,
each of which shall be deemed an original and all of which together shall
constitute one and the same instrument.
(e) This Agreement constitutes the entire Agreement and understanding between
the parties hereto and integrates all prior negotiations, discussions and
agreements between them. No modifications of the terms of this Agreement shall
be valid unless in writing and signed by an authorized representative of each
party hereto (or their successors).
(f) If any provision of this Agreement shall be held to be invalid, illegal or
unenforceable, the validity, legality, and enforceability of the remaining
provision shall not in any way be affected or impaired thereby.
(g) This Agreement shall be governed by and interpreted under the laws of the
State of Nevada.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective on
the day and year first above written.
CLIENT:
NEROX ENERGY CORPORATION
<PAGE>
By:
--------------------------
Its:
-------------------------
ATTORNEY:
- ------------------------------
Charles A. Koenig
