-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SRzAjFBP7qexkp/3XKQKFc3QnRIOAC+zVAEXVpxjoecFpN56+8TA357k3e+4UxcI tHlG+ktsi/0fu7FrEHAOig== 0000892569-97-001833.txt : 19970716 0000892569-97-001833.hdr.sgml : 19970716 ACCESSION NUMBER: 0000892569-97-001833 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 10 FILED AS OF DATE: 19970715 SROS: NONE SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: ELECTROPURE INC CENTRAL INDEX KEY: 0000808015 STANDARD INDUSTRIAL CLASSIFICATION: PATENT OWNERS & LESSORS [6794] IRS NUMBER: 330056212 STATE OF INCORPORATION: CA FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-40223 FILM NUMBER: 97641078 BUSINESS ADDRESS: STREET 1: 23251 VISTA GRANDE SUITE A CITY: LAGUNA HILLS STATE: CA ZIP: 91320 BUSINESS PHONE: 7147709187 MAIL ADDRESS: STREET 1: 25231 VISTA GRANDE STREET 2: SUITE A CITY: LAGUNA HILLS STATE: CA ZIP: 92653 FORMER COMPANY: FORMER CONFORMED NAME: HOH WATER TECHNOLOGY CORP DATE OF NAME CHANGE: 19920703 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: FRANK ANTHONY M CENTRAL INDEX KEY: 0000904422 STANDARD INDUSTRIAL CLASSIFICATION: [] FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 320 MEADOWOOD CT CITY: PLEASANT HILL STATE: CA ZIP: 94523 BUSINESS PHONE: 4159746245 SC 13D/A 1 SCHEDULE 13D/A FOR ANTHONY F. FRANK 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 -------------------------------------- AMENDMENT NO. 1 TO SCHEDULE 13D (RULE 13d-101) UNDER THE SECURITIES EXCHANGE ACT OF 1934 ELECTROPURE, INC. (Name of Issuer) Common Stock, $0.01 par value per share (Title of Class of Securities) 286133 (CUSIP Number) Catherine Patterson Electropure, Inc. 23251 Vista Grande, Suite A Laguna Hills, CA 92653 (714) 770-9347 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) June 2, 1997 (Date of Event Which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1 (b) (3) or (4), check the following box [ ]. (Continued on following pages) (Page 1 of 9 pages) The information required in the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). 2 13D CUSIP NO. 286133 PAGE 2 OF 9 PAGES - ------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON ANTHONY M. FRANK - ------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ] (b) [ ] - ------------------------------------------------------------------------------- 3 SEC USE ONLY - ------------------------------------------------------------------------------- 4 SOURCE OF FUNDS PF - ------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ] - ------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OR ORGANIZATION CALIFORNIA, USA - ------------------------------------------------------------------------------- 7 SOLE VOTING POWER 1,797,124 ---------------------------------------------------- NUMBER OF 8 SHARED VOTING POWER SHARES BENEFICIALLY NONE OWNED BY ---------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING PERSON 1,797,124 WITH ---------------------------------------------------- 10 SHARED DISPOSITIVE POWER NONE - ------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,797,124 - ------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] - ------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 41.8% OF THE COMMON STOCK 36.2% OF VOTING POWER - ------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* IN - 1,717,124 EP - 80,000 - ------------------------------------------------------------------------------- * SEE INSTRUCTIONS BEFORE FILLING OUT! 3 PAGE 3 OF 9 PAGES This Amendment No. 1 amends, in relevant part as follows, the Schedule 13D, filed December 18, 1992, of Anthony M. Frank (the "Reporting Person") with respect to the common stock, $0.01 par value per share ("Common Stock") of Electropure, Inc., a California corporation, formerly HOH Water Technology Corporation. On July 25, 1996, the issuer changed its corporate name to "Electropure, Inc." and effected a one-for-ten reverse stock split. FOR PURPOSES OF THIS REPORT, ALL ISSUANCES OF COMMON STOCK AND WARRANTS TO PURCHASE COMMON STOCK ARE REFLECTED IN POST-REVERSE SPLIT AMOUNTS. ITEM 1. SECURITY AND ISSUER Common Stock, $0.01 par value, of Electropure, Inc., a California corporation ("Electropure"). Electropure's principal executive office is located at 23251 Vista Grande, Suite A, Laguna Hills, California 92653. ITEM 2. IDENTITY AND BACKGROUND (a) Anthony M. Frank (b) 320 Meadowood Court, Pleasant Hill, CA 94523 (c) Retired - former Postmaster General (d) Not applicable (e) Not applicable (f) U.S.A. ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION Of the $1,022,619 used to acquire shares of Common Stock of Electropure, $295,000 was originally loaned to the Company in 1991 and exchanged for equity in December, 1992. An additional $95,000 was loaned to the Company's licensee, EDI Components ("EDI"), and under an agreement with the Company, interest accrued thereon was waived and the principal loan amount (plus $5,000 in added value) was exchanged for equity in February, 1996. A 1996 loan to EDI in the sum of $500,000, plus $38,056 in accrued interest, was also exchanged for the Company's equity in June, 1997. Additionally, a $50,000 investment in the Company's licensee, EDI, resulted in the acquisition by Mr. Frank of 20,000 Warrants to purchase Common Stock. See Item 5. - "Interest in Securities of Issuer." All of the funds utilized to purchase shares of Common Stock from Electropure, including amounts previously loaned to Electropure and EDI or invested in EDI, were from Mr. Frank's personal funds. 4 PAGE 4 OF 9 PAGES ITEM 4. PURPOSE OF THE TRANSACTION Mr. Frank purchased certain of the securities of Electropure pursuant to private placement offerings, as a private investor at the request of Electropure, to help fund working capital requirements of the issuer. Electropure is currently negotiating with its licensee, EDI Components, to terminate a July, 1992 license agreement granting EDI exclusive manufacturing and marketing rights to the Company's patented water purification technology. It is anticipated that Electropure will pay EDI up to $2,950,000 to terminate the license relationship in some combination of cash and equity over a period of time. It is also anticipated that Electropure will hire the management and staff of EDI; will grant EDI the right to appoint a Director(s) to the Company's Board; will seek to obtain sufficient working capital through a private and/or public sale of its securities; and that manufacturing and marketing of the water purification technology will then be conducted by Electropure. Mr. Frank may in the future acquire, hold and dispose of shares of Common Stock or warrants or options for such Common Stock or other securities of Electropure and such transactions may be in the open market, privately or directly from Electropure. Except as set forth above, Mr. Frank does not have any plans or proposals which may have, which related to or which would result in: (a) The acquisition by any person of additional securities of Electropure, or the disposition of securities of Electropure; (b) An extraordinary corporate transaction, such as a merger, reorganization or liquidation, involving Electropure or any of its subsidiaries; (c) A sale or transfer of a material amount of assets of Electropure or any of its subsidiaries; (d) Any change in the present Board of Directors or management of Electropure, including any plans or proposals to change the number or term of directors or to fill any existing vacancies on the Board; (e) Any material change in the present capitalization or dividend policy of Electropure; (f) Any other material change in Electropure's business or corporate structure; (g) Changes in Electropure's charter, bylaws or instruments, correspondence thereto or other actions which may impede the acquisition or control of Electropure by any person; 5 (h) Causing a class of securities of Electropure to be delisted from a national securities exchange or to cease to be quoted in an inter-dealer quotation system of a registered national securities association; (i) A class of equity securities of Electropure becoming eligible for termination of registration pursuant to Section 12(g)(4) of the Securities Exchange Act of 1934; or (j) Any action similar to any of those enumerated above. ITEM 5. INTEREST IN SECURITIES OF ISSUER (a) Mr. Frank owns the following shares of Electropure: 1,797,124 shares of Common Stock with one vote per share(1). Mr. Frank owns beneficially 36.2% of the Common Stock; 41.8% if all of the warrants described in Item 6 are exercised. Mr. Frank owns 23.8% of the voting power of all classes of stock of Electropure. (b) Mr. Frank has the sole voting and dispositive power over the shares he owns. (c) Since December 5, 1989, Mr. Frank has entered into the following transactions with regard to Electropure's Common Stock: Between December 5, 1989 and October 10, 1990, Mr. Frank acquired 26,668 shares of Common Stock from the issuer in private placement offerings at $7.50 per share. As additional consideration, Mr. Frank received 8,890 warrants to purchase Common Stock at $15.00 per share. In or around September, 1990, Mr. Frank gifted a total of 6,668 of such shares and 2,224 Warrants, in equal amounts, to his adult children, Randall P. Frank and Tracy F. Frank. In May, 1992, Mr. Frank acquired 20,000 Warrants to purchase Common Stock of Electropure at $0.50 per share as a result of his investment of $50,000 in EDI Components, a privately-held California corporation. The Company entered into various agreements in July, 1992 granting EDI the exclusive manufacturing and marketing rights to the Company's patented water treatment technology. In exchange for cash consideration, certain royalty rights and the right to terminate the license, the Company granted EDI's investors warrants to purchase Common Stock equal to four (4) times such investors' capital investment in EDI. On October 24, 1994, Mr. Frank exercised such Warrants and received 20,000 shares of Common Stock. - ------------------ (1) Includes warrants for 300,000 shares of Common Stock exercisable at $2.25 per share; 50,000 shares exercisable at $1.25 per share; and 4,000 shares exercisable at $0.50 per share. 6 PAGE 6 OF 9 PAGES Between March 3, 1991 and July 25, 1991, Mr. Frank loaned the Company $115,000. In November, 1991, Mr. Frank loaned the Company an additional $200,000 and received, as partial consideration, the right to purchase, for $0.10 each, 80,000 ten-year Warrants at $1.25 per share. On December 17, 1992, Mr. Frank exercised the right to purchase such Warrants and on the same date, gifted 30,000 of such Warrants, in equal amounts of 10,000, to his two adult children and Mr. Floyd Panning, President of EDI Components. The right to exercise the balance of such Warrants (50,000) has been retained by Mr. Frank. On December 18, 1992, Mr. Frank converted an aggregate of $315,000 in outstanding loans to the Company (as disclosed above), into 126,000 shares of Common Stock and 39,375 one-year Warrants to purchase Common Stock at $9.00 per share. Concurently therewith, Mr. Frank gifted 8,000 and 2,500 of such shares and warrants, respectively, to his adult children in equal amounts. On January 4, 1994, pursuant to a private offering conducted by the issuer, Mr. Frank received 36,875 shares of Common Stock upon the exercise of all of such Warrants at a reduced price of $1.50 per share. Also on January 4, 1994, Mr. Frank exercised 6,666 Warrants originally issued in 1990 and 1991 at $15.00, at a reduced exercise price of $1.50 per share. Between June, 1993 and March, 1995, Mr. Frank loaned the Company's licensee, EDI Components, an aggregate of $95,000. Pursuant to the July, 1992 license arrangements between the Company and its licensee, Electropure issued to Mr. Frank a total of 16,500 Warrants to purchase Common Stock at $0.50 per share, plus the right to convert the principal amount of such loans (and $5,000 in added value), to Common Stock at discounts of 25% and 50% of the fair market value of such Common Stock on the date of conversion. On February 22, 1996, Mr. Frank agreed to waive all interest accrued on such loans and elected to convert the $95,000 principal, plus $5,000 added value, to 116,667 and 33,333 shares of Common Stock at $0.60 and $0.90 per share, respectively. On February 15, 1995, Mr. Frank exercised 12,500 of the 16,500 Warrants described in the preceding paragraph at $0.50 per share. On February 23, 1996, the Company and its licensee, entered into a Convertible Loan agreement with Mr. Frank, whereby EDI Components was loaned the sum of $500,000 for a period of two years at 10% interest. As additional consideration for the loan, the Company granted Mr. Frank a first security interest in all of the Company's patents and future patents during the term that the loan remained outstanding. As additional consideration, the Company granted Mr. Frank 300,000 five-year warrants to purchase Common Stock at $2.25 per share. On June 2, 1997, Mr. Frank converted the principal amount of the loan, plus $38,055 in accrued interest, into 1,717,484 shares of the Company's Common Stock at approximately $0.31 per share. On June 3, 1997, Mr. Frank sold, at his cost, 7 PAGE 7 OF 9 PAGES 638,404 of such shares to his adult son, Randall P. Frank (319,202 shares), and to Floyd Panning (319,202 shares), President of EDI Components. The following Warrants are currently exercisable by Mr. Frank:
------------------- ------------------- ----------------- DATE GRANTED PURCHASE PRICE NO. OF SHARES ------------------- ------------------- ----------------- 12/17/92 $ 1.25 50,000 03/27/95 $ .50 4,000 02/22/96 $ 2.25 300,000
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO THE SECURITIES OF THE ISSUER Pursuant to the transactions described in Item 5 above, Mr. Frank has the right, until December 17, 2002 to purchase 50,000 shares of Electropure's Common Stock at $1.25 per share. Additionally, Mr. Frank has the right, until February 22, 2001 to purchase 300,000 shares of Common Stock at $2.25 per share. Finally, Mr. Frank currently holds the right to purchase, at $0.50 each, 4,000 shares of Common Stock until January 31, 1998 or until the Company terminates its license relationship with EDI Components, whichever occurs first. In addition to the 20,000 Warrants described in Item 5 above, as partial consideration for his $50,000 investment in EDI Components in May, 1992, Mr. Frank received the following rights under the license agreement between Electropure and EDI: (a) A Stock Right Agreement providing the right to purchase, in an amount equal to his investment in EDI, additional shares of Electropure Common Stock at a 25% discount from the cash purchase price at which the Company may, in the future, offer such stock to bona fide third party purchasers; (b) A Security interest in the Company's patented water purification technology equal to Mr. Frank's $50,000 investment; and (c) The right to payment by Electropure in the sum of $200,000 upon the termination of the license relationship with EDI. It is anticipated that the Company will negotiate an arrangement with Mr. Frank, and with the other investors of EDI Components, to satisfy such payment in some combination of cash and/or securities of the Company. Between December, 1996 and April, 1997, Mr. Frank loaned EDI Components an additional $150,000 at 10% interest. Mr. Frank has the right to convert said loans into common stock of EDI Components and, upon such conversion, receive 53,775 Warrants to purchase the Common Stock of Electropure at $0.50 per share. If such loans were converted, Mr. Frank would also be entitled to a payment from Electropure in the additional sum of $200,000 upon termination of the license relationship with EDI, although the parties may negotiate to modify the terms of repayment to provide Mr. Frank with the right to convert such loans into Common Stock of the Company. 8 PAGE 8 OF 9 PAGES ITEM 7. EXHIBITS 10.10.A Subscription Agreement, December 6, 1989 * 10.10.B Subscription Agreement, October 10, 1990 * 10.10.C Subscription Agreement, March 1, 1991 * 10.10.D Warrants for 4,444 shares (Warrant No. 219 - 11/17/89) ** 10.10.E Warrants for 2,222 shares (Warrant No. 278 - 10/18/90) ** 10.10.F Warrants for 6,250 shares (Warrant No. 299 - 03/27/91) ** 10.10.G Warrants for 2,500 shares (Warrant No. 324 - 08/06/92) ** 10.10.H Warrants for 3,125 shares (Warrant No. 332 - 08/06/92) ** 10.10.I Warrants for 25,000 shares (Warrant No. 361 - 12/18/92) ** 10.10.J Warrants for 50,000 shares (Warrant No. 360 - 12/17/92) ** 10.10.K Warrants for 20,000 shares (Warrant No. E-1003 - 07/29/92) ** 10.10.L Warrants for 2,500 shares (Warrant No. E-1024 - 06/24/93) *** 10.10.M Warrants for 5,000 shares (Warrant No. E-1029 - 05/25/94) - face sheet only *** 10.10.N Warrants for 5,000 shares (Warrant No. E-1030 - 06/17/94) - face sheet only *** 10.10.O Warrants for 4,000 shares (Warrant No. E-1034 - 03/27/95) - face sheet only*** 10.10.P Warrants for 300,000 shares (Warrant No. 388 - 02/22/96) - face sheet only 10.10.Q Stock Right Agreement No. E-1034 10.10.R 10% Two-Year Convertible Term Note - 12/31/96 10.10.S 10% Two-Year Convertible Term Note - 02/25/97 - face sheet only 10.10.T 10% Two-Year Convertible Term Note - 04/10/97 - face sheet only - ----------------- * Previously filed in connection with Schedule 13D filed on December 18, 1992 by the Reporting Person. ** Previously filed in connection with Schedule 13D filed on December 18, 1992 by the Reporting Person. The number of Warrants reflected have been modified to give effect to the one-for-ten reverse stock split conducted by the Company in July, 1996. *** The number of Warrants reflected have been modified to give effect to the one-for-ten reverse stock split conducted by the Company in July, 1996. 9 PAGE 9 OF 9 PAGES SIGNATURES After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this Amendment No. 1 to Schedule 13D is true, complete and correct. Dated: June 30, 1997 /s/ ANTHONY M. FRANK ------------------------------- Anthony M. Frank 10 AMENDMENT NO. 1 TO SCHEDULE 13D ANTHONY M. FRANK (Name of Reporting Person) INDEX TO EXHIBITS
PAGE SEQUENTIALLY NUMBERED ------------ 10.10.L Warrants for 2,500 shares (Warrant No. E-1024 - 06/24/93) 10.10.M Warrants for 5,000 shares (Warrant No. E-1029 - 05/25/94) 10.10.N Warrants for 5,000 shares (Warrant No. E-1030 - 06/17/94) 10.10.O Warrants for 4,000 shares (Warrant No. E-1034 - 03/27/95) 10.10.P Warrants for 300,000 shares (Warrant No. 388 - 02/22/96) 10.10.Q Stock Right Agreement No. E-1034 10.10.R 10% Two-Year Convertible Term Note - 12/31/96 10.10.S 10% Two-Year Convertible Term Note - 02/25/97 10.10.T 10% Two-Year Convertible Term Note - 04/10/97
EX-10.10.L 2 WARRANTS FOR 2,500 SHARES (WARRANT NO. 1024) 1 EXHIBIT (L); PAGE 1 WARRANT NO. E-1024 THIS WARRANT, AND THE COMMON STOCK ISSUABLE UPON ITS EXERCISE, HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD, PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED, DISPOSED OF OR OFFERED FOR SALE, IN WHOLE OR IN PART, IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THAT ACT COVERING THIS WARRANT AND/OR THE COMMON STOCK ISSUABLE UPON ITS EXERCISE, OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO HOH WATER TECHNOLOGY CORPORATION THAT AN EXEMPTION FROM REGISTRATION IS AVAILABLE. --------------------------------- WARRANT TO PURCHASE COMMON STOCK OF HOH WATER TECHNOLOGY CORPORATION --------------------------------- This is to Certify that, FOR VALUE RECEIVED, ANTHONY M. FRANK, or assigns, ("Holder"), is entitled to purchase, subject to the provisions of this Warrant, from HOH WATER TECHNOLOGY CORPORATION, a California corporation ("Company"), Twenty Five Thousand (25,000) fully paid, validly issued and nonassessable shares of Common Stock, $0.01 par value, of the Company ("Common Stock") at any time or from time to time during the period from the date hereof until the first to occur to (i) the exercise by HOH of Right provided in and defined in Section 3(b) of that certain Master Agreement between HOH and Electropure, Inc., a California corporation, dated July 29, 1992, or (ii) 5:00 P.M. Los Angeles City Time on January 31, 1998 (the "Exercise Period") at an initial exercise price equal to $0.05 per share. The number of shares of Common Stock to be received upon the exercise of this Warrant and the price to be paid for each share of Common Stock may be adjusted from time to time as hereinafter set forth. The shares of Common Stock deliverable upon such exercise, and as adjusted from time to time are hereinafter sometimes referred to as "Warrant Shares" and the exercise price of a share of Common Stock in effect at any time and as adjusted from time to time is hereinafter sometimes referred to as the "Exercise Price." (A) EXERCISE OF WARRANT. This Warrant may be exercised in whole or in part at any time during the Exercise Period, and during the Exercise Period the Holder shall have the right to exercise this Warrant into the kind and amount of shares of stock and other securities and property (including cash) receivable by a holder of the number of shares of Common Stock into which this Warrant might have been exercisable immediately prior thereto. This Warrant may be exercised by presentation and surrender hereof to the Company at its principal office, or at the office of its stock transfer agent, if any, with the Purchase Form annexed hereto duly executed and accompanied by payment of the Exercise Price for the number of Warrant Shares specified in such form. As soon as practicable after each such exercise of the Warrants, but not later than seven (7) days from the date of such exercise, the Company shall issue and deliver to the Holder a certificate or certificates for the Warrant Shares issuable upon such 2 (EXHIBIT (L); PAGE 2 exercise, registered in the name of the Holder or its designee. If this Warrant should be exercised in part only, the Company shall, upon surrender of this Warrant for cancellation, execute and deliver a new Warrant evidencing the rights of the Holder thereof to purchase the balance of the Warrant Shares purchasable thereunder. Upon receipt by the Company of this Warrant at its office, or by the stock transfer agent of the Company at its office, in proper form for exercise, the Holder shall be deemed to be the holder of record of the shares of Common Stock issuable upon such exercise, notwithstanding that the stock transfer books of the Company shall then be closed or that certificates representing such shares of Common Stock shall not then be physically delivered to the Holder. (B) RESERVATION OF SHARES. The Company shall at all times reserve for issuance and/or delivery upon exercise of this Warrant such number of shares of its Common Stock as shall be required for issuance and delivery upon exercise of the Warrants. (C) FRACTIONAL SHARES. No fractional shares or script representing fractional shares shall be issued upon the exercise of this Warrant. With respect to any fraction of a share called for upon any exercise hereof, the Company shall pay to the Holder an amount in cash equal to such fraction multiplied by the current market value of a share, determined as follows: (1) If the Common Stock is listed on a National Securities Exchange or admitted to unlisted trading privileges on such exchange or listed for trading on the NASDAQ system, the current market value shall be the last reported sale price of the Common Stock on such exchange or system on the last business day prior to the date of exercise of this Warrant or if no such sale is made on such day, the average closing bid and asked prices for such day on such exchange or system; or (2) If the Common Stock is not so listed or admitted to unlisted trading privileges, the current market value shall be the mean of the last reported bid and asked prices reported by the National Quotation Bureau, Inc. on the last business day prior to the date of the exercise of this Warrant; or (3) If the Common Stock is not so listed or admitted to unlisted trading privileges and bid and asked prices are not so reported, the current market value shall be an amount, not less than book value thereof as at the end of the most recent fiscal year of the Company ending prior to the date of the exercise of the Warrant, determined in such reasonable manner as may be prescribed by the Board of Directors of the Company or, if higher, $0.01 per share. (D) EXCHANGE, TRANSFER, ASSIGNMENT OR LOSS OF WARRANT. This Warrant is exchangeable, without expense, at the option of the Holder, upon presentation and surrender hereof to the Company or at the office of its stock transfer agent, if any, for other warrants of different denominations entitling the holder thereof to purchase in the aggregate the same number of shares of Common Stock purchasable hereunder. Upon surrender of this Warrant to the Company at its principal office or at the office of its stock transfer agent, if any, with the Assignment Form annexed hereto duly executed and funds sufficient to pay any transfer tax, the Company shall, without charge, execute and deliver a new Warrant I the name of the assignee named in such instrument of assignment and this Warrant shall promptly be canceled. This Warrant may be divided or combined with other warrants which carry the same rights upon presentation hereof at the principal office of the Company or at the office of its stock transfer agent, if any, together with a written notice specifying the names and denominations in which new Warrants are to 3 EXHIBIT (L); PAGE 3 be issued and signed by the Holder hereof. The term "Warrant" as used herein includes any Warrants into which this Warrant may be divided or exchanged. Upon receipt of the Company of evidence satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and (in the case of loss, theft or destruction) of reasonably satisfactory indemnification, and upon surrender and cancellation of this Warrant, if mutilated, the Company will execute and deliver a new Warrant of like tenor and date. Any such new Warrant executed and delivered shall constitute an additional contractual obligation on the part of the Company, whether or not this Warrant so lost, stolen, destroyed, or mutilated shall be at any time enforceable by anyone. (E) RIGHTS OF THE HOLDER. The Holder shall not, by virtue hereof, be entitled to any rights of a shareholder in the Company, either at low or equity, and the rights of the Holder are limited to those expressed in the Warrant and are not enforceable against the Company except to the extent set forth herein. (F) ANTI-DILUTION PROVISIONS. The Exercise Price in effect at any time and the number and kind of securities purchasable upon the exercise of the Warrants shall be subject to adjustment from time to time upon the happening of certain events as follows: (1) In case the Company shall (i) declare a dividend or make a contribution on its outstanding shares of Common Stock in shares of Common Stock, (ii) subdivide or reclassify its outstanding shares of Common Stock into a greater number of shares, or (iii) combine or reclassify its outstanding shares of Common Stock into a smaller number of shares, the Exercise Price in effect at the time of the record date for such dividend or distribution or of the effective date of such subdivisions, combination or reclassification shall be adjusted so that it shall equal the price determined by multiplying the Exercise Price by a fraction, the denominator of which shall be the number of shares of Common Stock outstanding after giving effect to such action, and the numerator of which shall be the number of shares of Common Stock outstanding immediately prior to such action. Such adjustment shall be made successively whenever any event listed above shall occur. (2) Whenever the Exercise Price payable upon exercise of each Warrant is adjusted pursuant to Subsection (1) above, the number of shares purchasable upon exercise of this Warrant shall simultaneously be adjusted by multiplying the number of shares initially issuable upon exercise of this Warrant by the Exercise Price in effect on the date hereof and dividing the product so obtained by the Exercise Price, as adjusted. (3) Whenever the Exercise Price is adjusted, as herein provided, the Company shall promptly cause a notice setting forth the adjusted Exercise Price and adjusted number of shares issuable upon exercise of each Warrant to be mailed to the Holders, at their last addresses appearing in the Warrant Register, and shall cause a certified copy thereof to be mailed to its transfer agent, if any. The Company may retain a firm of independent certificate public accountants selected by the Board of Directors (who may be the regular accountants employed by the Company) to make any computation required by this Section F and a certificate signed by such firms shall be conclusive evidence of the correctness of such adjustment. 4 EXHIBIT (L); PAGE 4 (4) In the event that at any time, as a result of an adjustment made pursuant to Subsection (1) above, the Holder of this Warrant thereafter shall become entitled to receive any shares of the Company, other than Common Stock, thereafter the number of such other shares so receivable upon exercise of this Warrant shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to the Common Stock contained in Subsection (1) above. (5) Irrespective of any adjustments in the Exercise Price or the number or kind of shares purchasable upon exercise of this Warrant, Warrants theretofore or thereafter issued may continue to express the same price and number and kind of shares as are stated in the similar Warrants initially issuable pursuant to this Agreement. (G) OFFICER'S CERTIFICATE. Whenever the Exercise Price shall be adjusted as required by the provisions of the foregoing Section, the Company shall forthwith file in the custody of its Secretary or an Assistant Secretary at its principal office and with its stock transfer agent, if any, an officer's certificate showing the adjusted Exercise Price determined as herein provided, setting forth in reasonable detail the facts requiring such adjustment, including a statement of the number of additional shares of Common Stock, if any, and such other facts as shall be necessary to show the reason for and the manner of computing such adjustment. Each such officer's certificate shall be made available at all reasonable times for inspection by the holder or any holder of a Warrant executed and delivered pursuant to Section A and the Company shall, forthwith after each such adjustment, mail a copy by certified mail of such certificate to the Holder or any such holder. (H) NOTICES TO WARRANT HOLDERS. So long as this Warrant shall be outstanding, (i) if the Company shall pay any dividend or make any distribution upon the Common Stock or (ii) if the Company shall offer to the holders of Common Stock for subscription or purchase by them any share of any class or any other rights or (iii) if the capital reorganization of the Company, reclassification of the capital stock of the Company, consolidation or merger of the Company with or into another corporation, sale, lease or transfer of all or substantially all of the property and assets of the Company to another corporation, or voluntary or involuntary dissolution, liquidation or winding up of the Company shall be effected, then in any such case, the Company shall cause to be mailed by certified mail to the Holder, at least fifteen days prior to the date specified in (x) or (y) below, as the case may be, a notice containing a brief description of the proposed action and stating the date on which (x) a record is to be taken for the purpose of such dividend, distribution or rights, or (y) such reclassification, reorganization, consolidation, merger, conveyance, lease, dissolution, liquidation or winding up is to take place and the date, if any is to be fixed, as of which the holders of Common Stock or other securities shall receive cash or other property deliverable upon such reclassification, reorganization, consolidation, merger, conveyance, dissolution, liquidation or winding up. (I) RECLASSIFICATION, REORGANIZATION OR MERGER. In case of any reclassification, capital reorganization or other change of outstanding shares of Common Stock of the Company, or in case of any consolidation or merger of the Company with or into another corporation (other than a merger with a subsidiary in which merger the Company is the continuing corporation and which does not result in any reclassification, capital reorganization or other change of outstanding shares of Common Stock of the class issuable upon exercise of this Warrant) or in case of any sale, lease or conveyance to another 5 EXHIBIT (L); PAGE 5 corporation of the property of the Company as an entirety, the Company shall, as a condition precedent to such transaction, cause effective provisions to be made so that the Holder shall have the right thereafter by exercising this Warrant at any time prior to the expiration of the Warrant, to purchase the kind and amount of shares of stock and other securities and property receivable upon such reclassification, capital reorganization and other change, consolidation, merger, sale or conveyance by a holder of the number of shares of Common Stock which might have been purchased upon exercise of this Warrant immediately prior to such reclassification, change, consolidation, merger, sale or conveyance. Any such provision shall include provision for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided for in this Warrant. The foregoing provisions of this Section I shall similarly apply to successive reclassifications, capital reorganizations and changes of shares of Common Stock and to successive consolidations, mergers, sales or conveyances. In the event that in connection with any such capital reorganization or reclassification, consolidation, merger, sale or conveyance, additional shares of Common Stock shall be issued in exchange, conversion, substitution or payment, in whole or in part, for a security of the Company other than Common Stock, any such issue shall be treated as an issue of Common Stock covered by the provisions of Subsection (1) of Section F hereof. IN WITNESS THEREOF, the Company has caused this Warrant to be signed and attested by the Undersigned, being duly authorized, as of the date set forth on the first part hereof. HOH WATER TECHNOLOGY CORPORATION By /s/ CATHERINE PATTERSON ----------------------------- Catherine Patterson Corporate Secretary 6 EXHIBIT (L); PAGE 6 PURCHASE FORM NO. E-1024 Dated:____________________, 19___ The undersigned hereby irrevocably elects to exercise the within Warrant to the extent of purchasing _________________ shares of Common Stock and hereby makes payment of $____________________ in payment of the actual exercise price thereof. ===================================================================== INSTRUCTIONS FOR REGISTRATION OF STOCK Name ___________________________________________________________________________ (Please typewrite or print in block letters) Address ________________________________________________________________________ ___________________________ Signature of Warrant Holder 7 EXHIBIT (L); PAGE 7 ASSIGNMENT FORM NO. E-1024 FOR VALUE RECEIVED, ______________________________________________________ (the "Warrant Holder") hereby sells, assigns and transfers unto: Name ________________________________________________________ (Please typewrite or print in block letters) Address _________________________________________________________ the right to purchase Common Stock represented by this Warrant to the extent of ____________ shares as to which such right is exercisable and does hereby irrevocably constitute and appoint ________________________________ Attorney, to transfer the same on the books of the Company with full power of substitution in the premises. Dated: ________________, 19___ ___________________________ Signature of Warrant Holder EX-10.10.M 3 WARRANTS FOR 5,000 SHARES (WARRANT NO. 1029) 1 EXHIBIT (M); PAGE 1 WARRANT NO. E-1029 THIS WARRANT, AND THE COMMON STOCK ISSUABLE UPON ITS EXERCISE, HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD, PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED, DISPOSED OF OR OFFERED FOR SALE, IN WHOLE OR IN PART, IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THAT ACT COVERING THIS WARRANT AND/OR THE COMMON STOCK ISSUABLE UPON ITS EXERCISE, OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO HOH WATER TECHNOLOGY CORPORATION THAT AN EXEMPTION FROM REGISTRATION IS AVAILABLE. _________________________________ WARRANT TO PURCHASE COMMON STOCK OF HOH WATER TECHNOLOGY CORPORATION _________________________________ This is to Certify that, FOR VALUE RECEIVED, ANTHONY M. FRANK, or assigns, ("Holder"), is entitled to purchase, subject to the provisions of this Warrant, from HOH WATER TECHNOLOGY CORPORATION, a California corporation ("Company"), Fifty Thousand (50,000) fully paid, validly issued and nonassessable shares of Common Stock, $0.01 par value, of the Company ("Common Stock") at any time or from time to time during the period from the date hereof until the first to occur to (i) the exercise by HOH of Right provided in and defined in Section 3(b) of that certain Master Agreement between HOH and Electropure, Inc., a California corporation, dated July 29, 1992, or (ii) 5:00 P.M. Los Angeles City Time on January 31, 1998 (the "Exercise Period") at an initial exercise price equal to $0.05 per share. The number of shares of Common Stock to be received upon the exercise of this Warrant and the price to be paid for each share of Common Stock may be adjusted from time to time as hereinafter set forth. The shares of Common Stock deliverable upon such exercise, and as adjusted from time to time are hereinafter sometimes referred to as "Warrant Shares" and the exercise price of a share of Common Stock in effect at any time and as adjusted from time to time is hereinafter sometimes referred to as the "Exercise Price." (A) EXERCISE OF WARRANT. This Warrant may be exercised in whole or in part at any time during the Exercise Period, and during the Exercise Period the Holder shall have the right to exercise this Warrant into the kind and amount of shares of stock and other securities and property (including cash) receivable by a holder of the number of shares of Common Stock into which this Warrant might have been exercisable immediately prior thereto. This Warrant may be exercised by presentation and surrender hereof to the Company at its principal office, or at the office of its stock transfer agent, if any, with the Purchase Form annexed hereto duly executed and accompanied by payment of the Exercise Price for the number of Warrant Shares specified in such form. As soon as practicable after each such exercise of the Warrants, but not later than seven (7) days from the date of such exercise, the Company shall issue and deliver to the Holder a certificate or certificates for the Warrant Shares issuable upon such EX-10.10.N 4 WARRANTS FOR 5,000 SHARES (WARRANT NO. 1030) 1 EXHIBIT (N); PAGE 1 WARRANT NO. E-1030 THIS WARRANT, AND THE COMMON STOCK ISSUABLE UPON ITS EXERCISE, HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD, PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED, DISPOSED OF OR OFFERED FOR SALE, IN WHOLE OR IN PART, IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THAT ACT COVERING THIS WARRANT AND/OR THE COMMON STOCK ISSUABLE UPON ITS EXERCISE, OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO HOH WATER TECHNOLOGY CORPORATION THAT AN EXEMPTION FROM REGISTRATION IS AVAILABLE. _________________________________ WARRANT TO PURCHASE COMMON STOCK OF HOH WATER TECHNOLOGY CORPORATION _________________________________ This is to Certify that, FOR VALUE RECEIVED, ANTHONY M. FRANK, or assigns, ("Holder"), is entitled to purchase, subject to the provisions of this Warrant, from HOH WATER TECHNOLOGY CORPORATION, a California corporation ("Company"), Fifty Thousand (50,000) fully paid, validly issued and nonassessable shares of Common Stock, $0.01 par value, of the Company ("Common Stock") at any time or from time to time during the period from the date hereof until the first to occur to (i) the exercise by HOH of Right provided in and defined in Section 3(b) of that certain Master Agreement between HOH and Electropure, Inc., a California corporation, dated July 29, 1992, or (ii) 5:00 P.M. Los Angeles City Time on January 31, 1998 (the "Exercise Period") at an initial exercise price equal to $0.05 per share. The number of shares of Common Stock to be received upon the exercise of this Warrant and the price to be paid for each share of Common Stock may be adjusted from time to time as hereinafter set forth. The shares of Common Stock deliverable upon such exercise, and as adjusted from time to time are hereinafter sometimes referred to as "Warrant Shares" and the exercise price of a share of Common Stock in effect at any time and as adjusted from time to time is hereinafter sometimes referred to as the "Exercise Price." (A) EXERCISE OF WARRANT. This Warrant may be exercised in whole or in part at any time during the Exercise Period, and during the Exercise Period the Holder shall have the right to exercise this Warrant into the kind and amount of shares of stock and other securities and property (including cash) receivable by a holder of the number of shares of Common Stock into which this Warrant might have been exercisable immediately prior thereto. This Warrant may be exercised by presentation and surrender hereof to the Company at its principal office, or at the office of its stock transfer agent, if any, with the Purchase Form annexed hereto duly executed and accompanied by payment of the Exercise Price for the number of Warrant Shares specified in such form. As soon as practicable after each such exercise of the Warrants, but not later than seven (7) days from the date of such exercise, the Company shall issue and deliver to the Holder a certificate or certificates for the Warrant Shares issuable upon such EX-10.10.O 5 WARRANTS FOR 4,000 SHARES (WARRANT NO. 1034) 1 EXHIBIT (O); PAGE 1 WARRANT NO. E-1034 THIS WARRANT, AND THE COMMON STOCK ISSUABLE UPON ITS EXERCISE, HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD, PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED, DISPOSED OF OR OFFERED FOR SALE, IN WHOLE OR IN PART, IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THAT ACT COVERING THIS WARRANT AND/OR THE COMMON STOCK ISSUABLE UPON ITS EXERCISE, OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO HOH WATER TECHNOLOGY CORPORATION THAT AN EXEMPTION FROM REGISTRATION IS AVAILABLE. _________________________________ WARRANT TO PURCHASE COMMON STOCK OF HOH WATER TECHNOLOGY CORPORATION _________________________________ This is to Certify that, FOR VALUE RECEIVED, ANTHONY M. FRANK, or assigns, ("Holder"), is entitled to purchase, subject to the provisions of this Warrant, from HOH WATER TECHNOLOGY CORPORATION, a California corporation ("Company"), Fourty Thousand (40,000) fully paid, validly issued and nonassessable shares of Common Stock, $0.01 par value, of the Company ("Common Stock") at any time or from time to time during the period from the date hereof until the first to occur to (i) the exercise by HOH of Right provided in and defined in Section 3(b) of that certain Master Agreement between HOH and Electropure, Inc., a California corporation, dated July 29, 1992, or (ii) 5:00 P.M. Los Angeles City Time on January 31, 1998 (the "Exercise Period") at an initial exercise price equal to $0.05 per share. The number of shares of Common Stock to be received upon the exercise of this Warrant and the price to be paid for each share of Common Stock may be adjusted from time to time as hereinafter set forth. The shares of Common Stock deliverable upon such exercise, and as adjusted from time to time are hereinafter sometimes referred to as "Warrant Shares" and the exercise price of a share of Common Stock in effect at any time and as adjusted from time to time is hereinafter sometimes referred to as the "Exercise Price." (A) EXERCISE OF WARRANT. This Warrant may be exercised in whole or in part at any time during the Exercise Period, and during the Exercise Period the Holder shall have the right to exercise this Warrant into the kind and amount of shares of stock and other securities and property (including cash) receivable by a holder of the number of shares of Common Stock into which this Warrant might have been exercisable immediately prior thereto. This Warrant may be exercised by presentation and surrender hereof to the Company at its principal office, or at the office of its stock transfer agent, if any, with the Purchase Form annexed hereto duly executed and accompanied by payment of the Exercise Price for the number of Warrant Shares specified in such form. As soon as practicable after each such exercise of the Warrants, but not later than seven (7) days from the date of such exercise, the Company shall issue and deliver to the Holder a certificate or certificates for the Warrant Shares issuable upon such EX-10.10.P 6 WARRANTS FOR 300,000 SHARES (WARRANT NO. 388) 1 EXHIBIT (P); PAGE 1 WARRANT NO. 388 THIS WARRANT, AND THE COMMON STOCK ISSUABLE UPON ITS EXERCISE, HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD, PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED, DISPOSED OF OR OFFERED FOR SALE, IN WHOLE OR IN PART, IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THAT ACT COVERING THIS WARRANT AND/OR THE COMMON STOCK ISSUABLE UPON ITS EXERCISE, OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO HOH WATER TECHNOLOGY CORPORATION THAT AN EXEMPTION FROM REGISTRATION IS AVAILABLE. ________________________________ WARRANT TO PURCHASE COMMON STOCK OF HOH WATER TECHNOLOGY CORPORATION ________________________________ This is to Certify that, FOR VALUE RECEIVED, ANTHONY M. FRANK, or assigns, ("Holder"), is entitled to purchase, subject to the provisions of this Warrant, from HOH WATER TECHNOLOGY CORPORATION, a California corporation ("Company"), Three Hundred Thousand (300,000) fully paid, validly issued and nonassessable shares of Common Stock, $0.01 par value, of the Company ("Common Stock") at any time or from time to time during the period from the date hereof, through and including February 22, 2001, but not later than 5:00 P.M. Los Angeles City Time on said date (the "Exercise Period") at an initial exercise price equal to $2.25 per share. The number of shares of Common Stock to be received upon the exercise of this Warrant and the price to be paid for each share of Common Stock may be adjusted from time to time as hereinafter set forth. The shares of Common Stock deliverable upon such exercise, and as adjusted from time to time are hereinafter sometimes referred to as "Warrant Shares" and the exercise price of a share of Common Stock in effect at any time and as adjusted from time to time is hereinafter sometimes referred to as the "Exercise Price." (A) EXERCISE OF WARRANT. This Warrant may be exercised in whole or in part at any time during the Exercise Period, and during the Exercise Period the Holder shall have the right to exercise this Warrant into the kind and amount of shares of stock and other securities and property (including cash) receivable by a holder of the number of shares of Common Stock into which this Warrant might have been exercisable immediately prior thereto. This Warrant may be exercised by presentation and surrender hereof to the Company at its principal office, or at the office of its stock transfer agent, if any, with the Purchase Form annexed hereto duly executed and accompanied by payment of the Exercise Price for the number of Warrant Shares specified in such form. As soon as practicable after each such exercise of the Warrants, but not later than seven (7) days from the date of such exercise, the Company shall issue and deliver to the Holder a certificate or certificates for the Warrant Shares issuable upon such EX-10.10.Q 7 STOCK RIGHT AGREEMENT NO. E-1034 1 EXHIBIT (Q); PAGE 1 STOCK RIGHT AGREEMENT NO. E-1034 THIS STOCK RIGHT AGREEMENT (the "Agreement") is made and entered into as of July 29, 1992, by and between ANTHONY M. FRANK ("Investor") and HOH WATER TECHNOLOGY CORPORATION, a California Corporation ("HOH"), with respect to the following factsd: A. HOH has entered into a Master Agreement dated July 29, 1992 and Amendments to such Master Agreement, with ELECTROPURE, INC., a California corporation ("Electropure"). B. Investor is an investor in Electropure. C. The Master Agreement provides for HOH to enter into this Agreement with Investor. NOW, THEREFORE, in consideration of the foregoing facts and the mutual covenants and agreements contained herein, the parties hereby agree as follows: 1. RIGHT TO PURCHASE SHARES. HOH hereby grants to Investor the right (the "Preferential Right") to purchase shares of HOH Common Stock or Preferred Stock (the "Shares") as set forth herein. Investor shall have the Preferential Right to purchase any Shares HOH offers to any bona fide third party for cash and/or cancellation of indebtedness, provided, however, Investor shall have the right and priority to purchase only that percentage of the Shares offered as his investment in Electropure bears to the total investments in Electropure by all other investors of Electropure who have entered into substantially similar Stock Right Agreements and desire to purchase Shares, unless cuh other Investor does not or cannot purchase his full allocated share of the Shares, in which case, the balance of the Shares not being purchased shall be allocated again based on the investments in Electropure. Notwithstanding the above, Investor shall not be able to purchase Shares under this Agreement with an aggregate Purchase Price (as defined in Section 2 hereof) of more than Fifty Thousand ($50,000.00) Dollars. 2. PURCHASE PRICE. The total purchase price per Share shall be seventy-five percent (75%) of the price the third party investor has agreed in writing to purchase all the Shares for. 3. MECHANICS. Before HOH can enter into a valid sale or transfer of any Shares which the Investor has a Preferential Right to purchase herein, HOH shall first offer such Shares to the Investor and the other investors in Electropure in the manner set forth below: 3.1. HOH shall deliver written notice to the Investor and the other investors in Electropure stating the name and address of each prospective bona fide third party purchasers, the bona fide price, terms and conditions of such proposed sale or transfer, and written evidence of the intentioned purchasers' agreement to purchase and ability to purchase such Shares. 3.2. Upon receipt of the notice from HOH, the Investor shall have the Preferential Right to purchase certain of the Shares specified in the notice by delivery to HOH, by certified or registered mail or by hand, a written offer to purchase a specific number of the Shares or the Investors' percentage subject to the notice, upon the terms enclosed in HOH's notice (subject to the Purchase Price 2 EXHIBIT (Q); PAGE 2 set forth in Section 2 hereof). Such offer must be delivered to HOH within fourteen (14) days after mailing or delivery of the notice to the Investor. 3.3. If the Investor and all other investors in Electropure fail to agree to purchase ALL Shares set forth in the HOH notice in accordance with the provisions of this Agreement and substantially similar Stock Right Agreements, HOH shall at the end of such fourteen (14) day period, inform Investor of the failure of Investor and the other investors in Electropure to agree to purchase all the Shares and unless within five (5) days after receipt by Investor of such second notice, HOH receives the written agreement to purchase ALL Shares in the first notice from the Investor and/or the other investors in Electropure, ALL Shares identified in the notice of intention to sell or transfer may be sold or transferred at any time within ninety (90) days after the date of such first notice by HOH, and Investor and all other investors in Electropure shall not have the right to purchase the Shares. If the proposed transferee fails to purchase such Shares according to these terms, within ninety (90) days after the date of HOH's first notice, then the Investor must again be given the option to purchase such Shares in the manner set forth in this Section 3. 4. TRANSFERS AND DELIVERY OF PURCHASE PRICE. The Shares shall be purchased by Investor within ten (10) days after HOH notifies Investor that Investor and other investors in Electropure have elected to purchase all the Shares offered in accordance with the terms, conditions and procedures set forth herein. By the close of business on such tenth day, HOH shall deliver to Investor, Stock Certificates for the Shares to be purchased by Investor upon delivery of the Purchase Price for such Shares being purchased by Investor. Payment shall be made by Investor by cash or a certified check payable to HOH. 5. REPRESENTATIONS AND WARRANTIES BY HOH. 5.1. The Company is a corporation duly incorporated, validly existing and in good standing under the laws of the State of California, has the corporate power and authority to own or lease its properties and to carry on its business as now being conducted. 5.2. The Company has the power to enter into this Agreement, and this Agreement has been duly executed and delivered and constitutes a valid and binding obligation of the Company. 5.3. The Shares, when issued, will be duly and validly authorized, fully paid and nonassessable. 6. REPRESENTATIONS AND WARRANTIES OF INVESTOR. Investor represents and warrants to HOH that: 6.1. The Shares will be acquired by Investor for investment for an indefinite period, for Investor's own account, not as a nominee or agent, and not with a view to the sale or distribution of any part thereof, and the Investor will not have at the time of the purchase of any Shares a then present intention of selling, granting participation in, or otherwise distributing the same. 3 EXHIBIT (Q); PAGE 3 6.2. Investor understands that the Shares will not have been registered under the Securities Act of 1933, as amended (the "Act"), in reliance upon the exemptions from the registration provisions of the Act contained in Section 4(2) thereof. 6.3. At the time of purchase of any of the Shares, Investors will (i) have adequate means of providing for his current needs and possible personal contingencies, (ii) have no need for liquidity in the investment in the Shares, (iii) be able to bear the substantial economic risks of an investment in the Shares for an indefinite period, (iv) be able to afford a complete loss of such investment, and (v) will not have an overall commitment to investments which are not readily marketable that is disproportionate to Investor's net worth, and the Investor's investment in the Shares will not cause such overall commitment to become excessive. 6.4. At the time of any purchase of the Shares, Investor will be an "accredited investor" (as set forth in Regulation D promulgated under the Act) and the undersigned's total investment in the Shares will not then exceed 10% of the Investor's net worth or joint net worth with the Investor's spouse. 6.5. Investor understands that the Shares must be held indefinitely unless the sale or other transfer thereof is subsequently registered under the Act, or an exemption from such registration is available. Investor further understands that HOH is under no obligation to register the Shares on his behalf or to assist him in complying with any exemption from registration except as otherwise provided herein. 6.6. Investor agrees not to transfer the Shares without registering them under applicable federal or state securities laws unless the transfer is exempt from registration. Investor realizes that HOH may not allow a transfer of Shares unless the transferee is also an "accredited investor". Investor understands that legends will be placed on certificates representing the Shares, with respect to the above restrictions on resale or other disposition of the Shares and that stop transfer instructions have or will be placed with respect to the Shares so as to restrict the assignment, resale or other disposition thereof. 6.7. HOH will direct its transfer agent to place such a stop transfer order in its books respecting transfer of the Shares, and the certificate or certificates representing the Shares will bear the following legend or a legend substantially similar thereto: "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD OR OFFERED FOR SALE IN THE ABSENCE OF: (1) AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER THAT ACT, OR (2) AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED." 6.8. Investor understands that Rule 144, promulgated by the Securities and Exchange Commission under the Act, is not currently available for sale of the Shares, and there is no assurance that it will be available at any particular time in the future. If and when Rule 144 is available for sale of the Shares, such sales in reliance upon Rule 144 may only be (i) in limited quantities after the securities have been held for two years after being sold by HOH or an affiliate of HOH, or (ii) in unlimited quantities by non-affiliates after the securities have been held for three years after being sold by HOH or an affiliate of HOH, in each case in accordance with the conditions of the Rule, all of which must be met (including the 4 EXHIBIT (Q); PAGE 4 requirement, if applicable, that adequate information concerning HOH is then available to the public). HOH has no obligation to supply the information required for sales under Rule 144. 6.9. Any notice to HOH provided under Section 5 hereof to purchase any Shares shall contain a current reaffirmation of the representations and warrants contained in this Section 6 as a condition to the purchase of any Shares. 7. EXCEPTIONS. The Preferential Right set forth in Section I hereof to purchase Shares shall not apply to any sale of Shares not solely for cash and/or cancellation of indebtedness, to any sales to employees of HOH or any subsidiary, or to any merger, reorganization or acquisition involving HOH or sale of all or substantially all the assets of HOH. 8. REGISTRATION RIGHTS. The Shares issued pursuant to this Agreement shall be subject to the same registration rights as provided for the "Warrant Shares" in Section (i) of the Warrant between the Company and the Investor dated June _, 1992. For purpose thereof, "Warrant Shares" in the Warrant shall refer to the Shares and the parties hereto shall have the same rights and duties regarding the Shares as provided in Section (j) as to the Warrant Shares. 9. ENTIRE AGREEMENT. This Agreement and the Warrant Agreement embodies the entire agreement and understanding between the parties hereto with respect to the subject matter hereof and supersedes all prior and contemporaneous agreements and understandings relating to such subject matter. 10. AMENDMENT. This Agreement may not be amended except by written document executed by the parties. 11. SUBJECT HEADINGS. Subject headings are included for convenience only and shall not be deemed part of this Agreement. 12. SEVERABILITY. If any provision of this Agreement shall be held unenforceable as applied to any circumstance, the remainder of this Agreement and the application of such provision to other circumstances shall be interpreted so as best to effect the intent of the parties. The parties further agree to replace any such unenforceable provision with an enforceable provision (and to take such other action) which will achieve, to the extent possible, the purposes of the unenforceable provision. 13. CHOICE OF LAW AND VENUE. This Agreement shall be governed by and construed under the laws of the State of California in force from time to time. Any proceeding arising out of this Agreement shall be brought in orange County, California. 14. ATTORNEYS' FEES. In any action to enforce this Agreement, the prevailing party shall be entitled to recover from the non-prevailing party all reasonable costs, including, without limitation, attorneys' fees. 15. ADDITIONAL DOCUMENTS. The parties agree to execute such additional documents and perform such other acts as may be necessary or appropriate to achieve the purposes of this Agreement. 5 EXHIBIT (Q); PAGE 5 16. NON-WAIVER. No waiver by a party of any failure by the other party to keep any provision of this Agreement shall be deemed a waiver of any preceding or succeeding breach of the same or any other provision. 17. PARTIES BOUND. This Agreement is binding on and shall inure to the benefit of the parties and their respective successors, assigns, heirs, and legal representatives. 18. NUMBER AND GENDER. Wherever required by the context hereof, the singular shall include the plural and vice versa, and the neuter gender shall include the masculine and feminine genders, and vice versa; the word "person" shall include a natural person and a corporation, partnership, firm or other form of association; the word "or" is not exclusive; and the words "herein," "hereof" and "hereunder" refer to this Agreement as a whole and not merely to a subdivision in which such words appear unless the context expressly requires otherwise. 19. EXPENSES. HOH and Investor shall each be responsibl e for the payment of their own expenses incurred in connection with this Agreement and the transactions contemplated hereunder. 20. JOINT PREPARATION. This Agreement shall be interpreted as if prepared jointly by the parties. 21. SURVIVAL. The representations, warranties, covenants, and agreements contained in this Agreement shall survive the consummation of the transactions contemplated hereby. 22. COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. HOH: HOH WATER TECHNOLOGY CORPORATION By: /s/ CATHERINE PATTERSON --------------------------- Catherine Patterson Chief Financial Officer Address: P.O. Box 3613 Laguna Hills, California 92654-3613 Investor: /s/ ANTHONY M. FRANK ---------------------- Anthony M. Frank Address: 320 Meadowood Court Pleasant Hill, CA 94523-3176 ###-##-#### EX-10.10.R 8 10% TWO-YEAR CONVERTIBLE TERM NOTE 1 EXHIBIT (R); PAGE 1 10% TWO-YEAR CONVERTIBLE TERM NOTE $50,000 DECEMBER 31, 1996 EDI COMPONENTS, a California corporation formerly known as Electropure, Inc., (the "COMPANY"), for the value received, hereby unconditionally and absolutely promises to pay to the order of ANTHONY M. FRANK IRA ROLLOVER DATED 06/24/92, UTA CHARLES SCHWAB & COMPANY, INC., or holder (collectively, the "HOLDER"), upon presentation and surrender of this Note at its office at 23251 Vista Grande, Suite A, Laguna Hills, California 92653, or such other place as the Company may, from time to time, designate, the sum of FIFTY THOUSAND DOLLARS ($50,000), in lawful money of the United States, on December 31, 1998, or if such day is not a regular business day, then on the next business day thereafter (the "Maturity Date"). Accrued interest shall be paid annually in accordance with the terms set forth in Section 2 hereof. 1. CONVERSION. (a) The Holder of this Note shall have the right, at its option, at any time up until 5:00 P.M. Los Angeles time on the fifth (5th) day immediately before January 31, 1998 (except that, with respect to any portion of this Note which shall be called for prepayment, such right shall as to such portion terminate at 5:00 P.M. Los Angeles time on the fifth (5th) day immediately prior to the Prepayment Date (as defined in Section 2 hereof)), to convert all or any portion of the principal amount of this Note, including interest accrued thereon, subject to the terms and provisions of this Section 1, into Class A Common Stock of EDI Components (the "Conversion Shares") at and having a value equal to Two Dollars ($2.00) per share (the "Conversion Price"). The Conversion Shares shall have the rights, preferences and privileges set forth in APPENDIX ONE hereto. (b) As promptly as practicable after the surrender, as herein provided, of this Note for conversion, the Company shall deliver or cause to be delivered, to or upon the written order of the Holder of this Note so surrendered, certificates representing the number of full shares into which this Note or any portion thereof may be converted in accordance with the provisions of this Section 1, together with any check in payment for fractional shares. Such conversion shall be deemed to have been made at the close of business on the date that this Note shall have been received by the Company for conversion, with a written Notice of Conversion duly executed, in satisfactory form for conversion, so that the rights of the Holder of this Note as a Noteholder, to the extent of that portion of the Note so 2 EXHIBIT (R); PAGE 2 converted, shall cease at such time and, subject to the following provisions of this Section 1(b). If this Note shall be converted in part only, the Company. shall, upon surrender of this Note for cancellation, execute and deliver a new Note evidencing the rights of the Holder thereof with regard to that portion of the Note not converted. The person or persons entitled to receive the Conversion Shares of Common Stock upon conversion of this Note shall be treated for all purposes as having become the record holder or holders of such Shares of Common Stock at such time and such conversion shall be at the Conversion Price in effect at such time; provided, however, that no such surrender upon voluntary conversion on any date when the stock transfer books of the Company shall be closed shall be effective to constitute the person or persons entitled to receive the Shares of Common Stock upon such conversion as the record holder or holders of such Shares of Common Stock on such date, but such surrender shall be effective to constitute the person or persons entitled to receive such Shares of Common Stock as the record holder or holders thereof for all purposes at the close of business on the next succeeding day on which such stock transfer books are open; and such conversion shall be at the Conversion Price in effect on the date that this Note shall have been surrendered for conversion in satisfactory form for conversion, as if the stock transfer books of the Company had not be closed. (c) No adjustment in respect of declared but unpaid cash dividends on the Common Stock shall be made upon the conversion of this Note. 2. PAYMENTS AND PREPAYMENTS. (a) All payment and prepayments of principal and interest shall be made in immediately available funds to the Holder at its office at 101 Montgomery, 18th Floor, San Francisco, California 94104. (b) The unpaid principal amount of the Note from time to time outstanding shall bear interest from the date of this Note at the rate of Ten Percent (10%) per annum until paid. Accrued interest shall be paid on the last day of February each year, beginning on March 31, 1998. Interest shall be computed for the actual number of days elapsed on the basis of a year consisting of 360 days. (c) The Company may prepay at any time all or any part of this Note by notifying the Holder in writing at least fifteen (15) days in advance of the proposed date for prepayment (the "Repayment Date"). The notice shall state: (1) the Repayment Date; (2) that the portion of the Note to be repaid may be converted at any time before 5:00 P.M. Los Angeles time on the fifth (5th) day immediately prior to the Repayment Date; 3 EXHIBIT (R); PAGE 3 (3) that Holders who want to convert any portion of this Note must satisfy the requirements of Section (1) hereof; (4) the Note called for repayment must be surrendered to the Company to collect the amount being prepaid, and if less than the entire principal amount is being repaid, to receive a new Note for the remaining balance; and (5) that interest on the portion of the Note called for repayment ceases to accrue on and after the Repayment Date. (d) Once notice of prepayment is mailed, the part of this Note called for prepayment, unless converted, becomes due and payable on the Repayment Date. Upon surrender to the Company, such part of this Note shall be paid at the Repayment Date, plus accrued interest on the portion of the principal being prepaid to the Prepayment Date. (e) Upon surrender of this Note to be prepaid in part, the Company shall issue to the Holder a new Note equal in principal amount to the nonprepaid portion of this Note surrendered. 3. NOTICES TO NOTEHOLDER. So long as this Note shall be outstanding, if the Company (i) shall pay any dividend or make any distribution upon the Company Stock or (ii) shall offer to the holders of Common Stock for subscription or purchase by them any share of any class or any other rights or (iii) shall effect a capital reorganization, reclassification of capital stock, consolidation or merger with or into another corporation, sale, lease or transfer of all or substantially all of the property and assets of the Company to another corporation, or voluntary or involuntary dissolution, liquidation or winding up of the Company, then in any such case, the Company shall cause to be mailed by certified mail to the Holder, at least fifteen days prior to the date specified in (x) or (y) below, as the case may be, a notice containing a brief description of the proposed action and stating the date on which (x) a record is to be taken for the purpose of such dividend, distribution or rights, or (y) such reclassification, reorganization, consolidation, merger, conveyance, lease, dissolution, liquidation or winding up is to take place and the date, if any is to be fixed, as of which the holders of Common Stock or other securities shall receive cash or other property deliverable upon such reclassification, reorganization, consolidation, merger, conveyance, dissolution, liquidation or winding up. 4. RECLASSIFICATION, REORGANIZATION OR MERGER. In case of any reclassification, capital reorganization or other change of outstanding shares of Common Stock of the Company, or in case of any consolidation or merger of the Company with or 4 EXHIBIT (R); PAGE 4 into another corporation (other than a merger with a subsidiary in which merger the Company is the continuing corporation and which does not result in any reclassification, capital reorganization or other change of outstanding shares of Common Stock of the class issuable upon conversion of this Note) or in case of any sale, lease or conveyance to another corporation of the property of the Company as an entirety, the Company shall, as a condition precedent to such transaction, cause effective provisions to be made so that the Holder shall have the right thereafter by converting this Note at any time prior to the payment in full or conversion of the Note, whichever shall first occur, to acquire the kind and amount of shares of stock and other securities and property receivable upon such reclassification, capital reorganization and other change, consolidation, merger, sale or conveyance by a holder of the number of shares of Common Stock which might have been acquired upon conversion of this Note immediately prior to such reclassification, change, consolidation, merger, sale or conveyance. Any such provisions shall include provisions for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided for in this Note. The foregoing provisions of this Section 4 shall similarly apply to successive reclassifications, capital reorganizations and changes of shares of Common Stock and to successive consolidations, mergers, sales or conveyances. 5. REGISTRATION UNDER THE SECURITIES ACT OF 1933. Holder recognizes and acknowledges that the Securities (as defined below) of the Company, if and when issued, have not been registered under the Federal Securities Act of 1933, as amended, in reliance upon the private placement exemption set forth in Section 4(2) thereunder, and have not been registered under the California Corporate Securities Law of 1968, as amended, in reliance upon the private placement exemption set forth in Section 25102(f) thereunder. The Holder, being fully aware of the exemptions under which the Securities were sold, understands that his ability to sell, pledge, hypothecate or otherwise dispose of the Securities may be restricted and that the Holder may not sell, pledge, hypothecate or otherwise dispose of the Securities, except in compliance with the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, the California Corporate Securities Law of 1968, as amended, or any other applicable securities law or applicable exemptions thereunder. Accordingly, the sale, pledge, hypothecation or other disposition of the Securities, or of any portion thereof, may not be accomplished except pursuant to an opinion of legal counsel acceptable to the Company. 5 EXHIBIT (R); PAGE 5 6. INVESTMENT. (a) By acceptance of this Note, the Holder agrees that this Note and the Conversion Shares (collectively, the "Securities") are acquired for the purpose of investment and not with a present view to the sale or distribution thereof and that, with respect to the Securities the Holder agrees to the following representations and covenants: (1) The Securities are being acquired for the purpose of investment and not with a present view to the sale or distribution thereof. (2) The recipient is familiar with the affairs and financial condition of the Company and is financially capable of holding this Note for investment. (3) No sale, transfer, assignment, hypothecation or other disposition of the Securities will be made except (i) in a transaction in compliance with the registration requirements of the Act, or (ii) in a transaction pursuant to an exemption from the registration requirements of the Act, or (iii) in a transaction or under circumstances to which the registration requirements of the Act are not applicable. (b) The Securities and all agreements or certificates with respect to any Securities shall be subject to the following legend: "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 ("ACT"). THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER THE ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED. FURTHER, THE SHARES ARE SUBJECT TO AN OPTION BY THE COMPANY." 7. RIGHT OF FIRST REFUSAL. If Holder proposes to engage in a bona fide Sale of any of the Conversion Shares, directly or indirectly, to an unaffiliated, bona fide third party, then prior to taking any such action, the Holder shall deliver to the Company a statement in writing (the "Statement") setting forth (i) the date of the Statement (the "Statement Date"); (ii) the manner in which the Sale is proposed to occur; (iii) the consideration for the Sale; (iv) the purchaser's name, address and telephone number; (v) the purchaser's willingness to supply any additional information about himself or itself as may be reasonably requested by the Company; and (vi) a copy of the related legally binding offer (the "Offer") of purchase. The Company shall 6 EXHIBIT (R); PAGE 6 thereupon have the irrevocable and exclusive option, but not the obligation (the "Option"), to purchase all of the Conversion Shares subject to the Option upon the same terms and conditions set forth in the Statement. The Option shall be exercised by the Company by giving notice (the "Option Notice") to the Holder, within 15 days following the date of the Statement, that the Company elects to exercise the Option. Upon exercise of the Option, the Holder shall have the obligation to consummate the Sale or and subject to the terms and conditions set forth in the Statement. Failure by the Company to exercise the Option to give an Option Notice shall be deemed an election by it not to exercise the Option. A Sale shall mean any sale of the Conversion Shares. 8. EVENTS OF DEFAULT. If one or more of the following described events shall occur (each an "Event of Default"): (a) The Company shall fail to pay the principal of, or interest on, this Note within five (5) days after the Holder has given written notice to the Company that the same has become due; or (b) The Company shall fail to perform or observe any of the provisions contained in any Section of this Note and such failure shall continue for more than thirty (30) days after the Holder has given written notice to the Company; or (c) Any material representation or warranty made in writing by or on behalf of the Company in this Note shall prove to have been false or incorrect in any material respect, or omits to state a material fact required to be stated therein in order to make the statements contained therein, in the light of the circumstances under which made, not misleading, on the date as of which made, and the Company shall have failed to cure such false or incorrect statement within thirty (30) days after the Holder has given written notice to Borrower; or (d) The Company shall be adjudicated a bankrupt or insolvent, or admit in writing its inability to pay its debts as they mature, or make an assignment for the benefit of creditors; or the Company shall apply for or consent to the appointment of a receiver, trustee, or similar officer for it or for all or any substantial part of its property; or such receiver, trustee or similar officer shall be appointed without the application or consent of the Company and such appointment shall continue undischarged for a period of thirty (30) days; or the Company shall institute (by petition, application, answer, consent or otherwise) any bankruptcy, insolvency, reorganization, arrangement, readjustment of debt, dissolution, liquidation or similar proceeding relating to it under the laws of any jurisdiction; or any such proceeding shall be instituted (by petition, application or otherwise) against the Company and shall remain undismissed for a period of ninety (90) days; or any judgment, writ, warrant of attachment or execution 7 EXHIBIT (R); PAGE 7 or similar process shall be issued or levied against a substantial part of the property of the Company and such judgment, writ, or similar process shall not be released, vacated or fully bonded within ninety (90) days after its issue or levy; or (e) The Company shall be enjoined, restrained or in any way prevented by a court order from continuing to conduct all or any material part of its business affairs; (f) Any suit, action or other proceeding (judicial or administrative) commenced against the Company, or with respect to any assets of the Company, shall threaten to have a material adverse effect on their future operations, including, without limitation a final judgment or settlement in excess of $25,000 in excess of insurance shall be entered in, or agreed to in respect of any such suit, action or proceeding. THEN, or at any time thereafter, and in each and every case: (1) Where the Company is in default under the provisions of Section 8(d) hereof, the entire unpaid principal amount of the Note, all interest accrued and unpaid thereon, and all other amounts payable to the Holder hereunder shall automatically become and be forthwith due and payable without offset or counterclaim of any kind and without presentment, demand, protest or notice of any kind, and without regard to the running of the statute of limitations, all of which are hereby expressly waived by the Company; and (2) In any other case referred to in this Section 8, the Holder may, by written notice to the Company, as the case may be, declare the entire unpaid principal amount of this Note, all interest accrued and unpaid hereon, and all other amounts payable hereunder to be forthwith due and payable, whereupon the same shall become immediately due and payable, without offset or counterclaim of any kind and without presentment, demand, or protest, and without regard to the running of any statutes of limitation, all of which are hereby expressly waived by the Company. Any declaration made pursuant to Section 8(2) hereof is subject to the condition that, if at any time after the principal of this Note shall have become due and payable, and before any judgment or decree for the payment of the moneys so due, or any thereof, shall have been entered, all arrears of principal and interest upon this Note (except that principal of this Note which by such declaration shall have become payable) shall have been duly paid, and every Event of Default shall have been made good, waived or cured, then and in every such case the Holder shall be deemed to have rescinded and annulled such declaration and its consequences; but no such rescission or annulment shall extend to or affect any subsequent Event of Default or impair any right consequent thereon. 8 EXHIBIT (R); PAGE 8 9. CORPORATE OBLIGATION. It is expressly understood that this Note is solely a corporate obligation of the Company and that any and all personal liability, either at common law or in equity, or by constitution or statute, of, and any and all rights and claims against, every stockholder, officer, or director, as such, past, present or future, are expressly waived and released by the Holder as a part of the consideration for the issuance hereof. 10. AUTHORIZATION; NO CONFLICT. The borrowings hereunder, the execution and delivery of the Note and the performance by the Company of its obligations under this Agreement and the Note are within the corporate powers of the Company, have been authorized by all necessary corporate action, have received all necessary governmental approval (if any shall be required) and do not and will not contravene or conflict with any provision of law or of the charter or by-laws of the Company or of any agreement binding upon the Company. 11. TRANSFER. Subject to the appropriate provisions of the Act and of Section 7 hereof, this Note or any portion of the principal amount hereof in $50,000 increments thereof (or any remaining balance if any pre-payments have occurred pursuant to Section 2 hereof) is transferable on the records of the Company upon presentation of this Note, properly endorsed, at its principal office; upon such presentation and transfer a new Note or Notes will be issued. For the purposes of payment and all other purposes, the Company shall deem and treat the person in whose name this Note is registered as the absolute owner hereof and the Company shall not be affected by any notice to the contrary. 12. MISCELLANEOUS. (a) Notwithstanding the foregoing, the Company promises to pay interest after maturity (whether by acceleration or otherwise, and before as well as after judgment) at the same rate as above provided prior to maturity on balances, if any, then outstanding. (b) Interest under this Note shall be computed on the basis of a thirty (30) day month and a year of 360 days for the actual number of days elapsed. IN WITNESS WHEREOF, the Company has caused this Note to be executed in Laguna Hills, California as of the day and year first above written. EDI COMPONENTS HOLDER: ANTHONY M. FRANK IRA ROLLOVER DATED 06/24/92, UTA CHARLES SCHWAB & CO., INC. By /s/ FLOYD PANNING By /s/ ANTHONY M. FRANK ---------------------------- ------------------------------------ Floyd Panning, President Anthony M. Frank 9 EXHIBIT (R); PAGE 9 APPENDIX ONE EDI COMPONENTS (FORMERLY, ELECTROPURE, INC.) COMMON STOCK RIGHTS, PREFERENCES AND PRIVILEGES Holders of Common Stock are entitled to one vote per share on all matters to be voted upon by the shareholders and except as may otherwise be required by law will vote with the holders of the Class B Common Stock (which are entitled to six votes per share) as one class. Under California law, separate class voting is required for mergers or sales of substantially all the Company's assets. If, prior to the election of directors, any shareholder has given notice that he intends to cumulate his votes, then for the election of directors each shareholder may cumulate votes for any nominee, if the nominee's name was placed in nomination prior to the voting. In cumulative voting, each shareholder is entitled in the election of directors to vote one vote for each vote held by him, multiplied by the number of directors to be elected and may cast all such votes for a single nominee for director or may distribute them among any two or more nominees as he sees fit. The shares of Common Stock have no preemptive, subscription, conversion or redemption rights. Upon liquidation, dissolution or winding up of the Company, the holders of Common Stock are entitled to receive pro rata the assets of the Company which are legally available for distribution to shareholders, subject to the liquidation rights held by the Class B Common Stock, and prior rights, if any, which may be established in the future for the Preferred Stock. Holders of Common Stock are entitled to dividends when, as and if declared by the Board of Directors out of funds legally available therefor along with the holders of the Class B Common Stock, subject to any prior rights which may be granted in the future to holders of Preferred Stock. Upon issuance of the Common Stock, Holder shall be entitled to: A. The right to payment in the sum of $66,667 in the event Electropure, Inc. (formerly HOH Water Technology Corporation) shall exercise its right to terminate the Exclusive License Agreement dated July 29, 1992 between Electropure, Inc. and EDI Components; B. The right to 17,925 Warrants to purchase Class A Common Stock of Electropure, Inc. at the rate of $0.50 per share. Such Warrants will be exercisable, at the discretion of Holder, at any time prior to January 31, 1998; C. The right, until January 31, 1998, to purchase $50,000 in shares of Common Stock or Preferred Stock of Electropure, Inc. at 75% of the purchase price at which any bona fide third party purchaser has agreed in writing to purchase any such shares offered by Electropure, Inc; and D. A $50,000 security interest in the EDI patents held by Electropure, Inc. EX-10.10.S 9 10% TWO-YEAR CONVERTIBLE TERM NOTE 1 EXHIBIT (S); PAGE 1 10% TWO-YEAR CONVERTIBLE TERM NOTE $50,000 FEBRUARY 25, 1997 EDI COMPONENTS, a California corporation formerly known as Electropure, Inc., (the "COMPANY"), for the value received, hereby unconditionally and absolutely promises to pay to the order of ANTHONY M. FRANK IRA ROLLOVER DATED 06/24/92, UTA CHARLES SCHWAB & COMPANY, INC., or holder (collectively, the "HOLDER"), upon presentation and surrender of this Note at its office at 23251 Vista Grande, Suite A, Laguna Hills, California 92653, or such other place as the Company may, from time to time, designate, the sum of FIFTY THOUSAND DOLLARS ($50,000), in lawful money of the United States, on February 25, 1999, or if such day is not a regular business day, then on the next business day thereafter (the "Maturity Date"). Accrued interest shall be paid annually in accordance with the terms set forth in Section 2 hereof. 1. CONVERSION. (a) The Holder of this Note shall have the right, at its option, at any time up until 5:00 P.M. Los Angeles time on the fifth (5th) day immediately before January 31, 1998 (except that, with respect to any portion of this Note which shall be called for prepayment, such right shall as to such portion terminate at 5:00 P.M. Los Angeles time on the fifth (5th) day immediately prior to the Prepayment Date (as defined in Section 2 hereof)), to convert all or any portion of the principal amount of this Note, including interest accrued thereon, subject to the terms and provisions of this Section 1, into Class A Common Stock of EDI Components (the "Conversion Shares") at and having a value equal to Two Dollars ($2.00) per share (the "Conversion Price"). The Conversion Shares shall have the rights, preferences and privileges set forth in APPENDIX ONE hereto. (b) As promptly as practicable after the surrender, as herein provided, of this Note for conversion, the Company shall deliver or cause to be delivered, to or upon the written order of the Holder of this Note so surrendered, certificates representing the number of full shares into which this Note or any portion thereof may be converted in accordance with the provisions of this Section 1, together with any check in payment for fractional shares. Such conversion shall be deemed to have been made at the close of business on the date that this Note shall have been received by the Company for conversion, with a written Notice of Conversion duly executed, in satisfactory form for conversion, so that the rights of the Holder of this Note as a Noteholder, to the extent of that portion of the Note so EX-10.10.T 10 10% TWO-YEAR CONVERTIBLE TERM NOTE 1 EXHIBIT (T); PAGE 1 10% TWO-YEAR CONVERTIBLE TERM NOTE $50,000 APRIL 10, 1997 EDI COMPONENTS, a California corporation formerly known as Electropure, Inc., (the "COMPANY"), for the value received, hereby unconditionally and absolutely promises to pay to the order of ANTHONY M. FRANK IRA ROLLOVER DATED 06/24/92, UTA CHARLES SCHWAB & COMPANY, INC., or holder (collectively, the "HOLDER"), upon presentation and surrender of this Note at its office at 23251 Vista Grande, Suite A, Laguna Hills, California 92653, or such other place as the Company may, from time to time, designate, the sum of FIFTY THOUSAND DOLLARS ($50,000), in lawful money of the United States, on [OBJECT OMITTED]1999, or if such day is not a regular business day, then on the next business day thereafter (the "Maturity Date"). Accrued interest shall be paid annually in accordance with the terms set forth in Section 2 hereof. 1. CONVERSION. (a) The Holder of this Note shall have the right, at its option, at any time up until 5:00 P.M. Los Angeles time on the fifth (5th) day immediately before January 31, 1998 (except that, with respect to any portion of this Note which shall be called for prepayment, such right shall as to such portion terminate at 5:00 P.M. Los Angeles time on the fifth (5th) day immediately prior to the Prepayment Date (as defined in Section 2 hereof)), to convert all or any portion of the principal amount of this Note, including interest accrued thereon, subject to the terms and provisions of this Section 1, into Class A Common Stock of EDI Components (the "Conversion Shares") at and having a value equal to Two Dollars ($2.00) per share (the "Conversion Price"). The Conversion Shares shall have the rights, preferences and privileges set forth in APPENDIX ONE hereto. (b) As promptly as practicable after the surrender, as herein provided, of this Note for conversion, the Company shall deliver or cause to be delivered, to or upon the written order of the Holder of this Note so surrendered, certificates representing the number of full shares into which this Note or any portion thereof may be converted in accordance with the provisions of this Section 1, together with any check in payment for fractional shares. Such conversion shall be deemed to have been made at the close of business on the date that this Note shall have been received by the Company for conversion, with a written Notice of Conversion duly executed, in satisfactory form for conversion, so that the rights of the Holder of this Note as a Noteholder, to the extent of that portion of the Note so -----END PRIVACY-ENHANCED MESSAGE-----