-----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, DHCwJo3teKrrfGxOqcKohS1T67UgnG+ZRqfS3ueu/zYhXymdswFXhVIBj7+INvxI oHzh4j6RFPdBaIeDtk+skQ== 0000892569-99-000494.txt : 19990217 0000892569-99-000494.hdr.sgml : 19990217 ACCESSION NUMBER: 0000892569-99-000494 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 19990216 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: SEC FILE NUMBER: 005-40223 FILM NUMBER: 99539505 BUSINESS ADDRESS: STREET 1: 23456 S POINTE DR CITY: LAGUNA HILLS STATE: CA ZIP: 92653-1512 BUSINESS PHONE: 7147709187 MAIL ADDRESS: STREET 1: 23456 S POINTE DR 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: PANNING FLOYD H CENTRAL INDEX KEY: 0001041496 STANDARD INDUSTRIAL CLASSIFICATION: [] FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 317 CALLE CHUECA CITY: SAN CLEMENTE STATE: CA ZIP: 92672 BUSINESS PHONE: 7144987637 MAIL ADDRESS: STREET 1: 317 CALLE CHUECA CITY: SAN CLAMENTE STATE: CA ZIP: 92672 SC 13D/A 1 AMENDMENT NO. 2 TO SCHEDULE 13D 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 -------------------------------------- AMENDMENT NO. 2 TO SCHEDULE 13D (RULE 13d-101) UNDER THE SECURITIES EXCHANGE ACT OF 1934 ELECTROPURE, INC. (Name of Issuer) Common Stock, $0.01 par value per share (Title of Class of Securities) 286133 (CUSIP Number) Catherine Patterson Electropure, Inc. 23456 South Pointe Drive Laguna Hills, CA 92653 (949) 770-9347 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) March 31, 1998 (Date of Event Which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1 (b) (3) or (4), check the following box |_|. (Continued on following pages) (Page 1 of 9 pages) The information required in the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). 2 13D - AMENDMENT NO. 2 CUSIP NO. 286133 PAGE 2 OF 9 PAGES - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON FLOYD H. PANNING - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ] (b) [ ] - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS PF - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OR ORGANIZATION CALIFORNIA, USA - -------------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER SHARES 835,240 ---------------------------------------------------------- BENEFICIALLY 8 SHARED VOTING POWER OWNED BY NONE ---------------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER REPORTING 835,240 ---------------------------------------------------------- PERSON 10 SHARED DISPOSITIVE POWER WITH NONE - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 835,240 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 9.1% OF THE COMMON STOCK 5.1% OF VOTING POWER - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* IN - -------------------------------------------------------------------------------- * SEE INSTRUCTIONS BEFORE FILLING OUT! 3 PAGE 3 OF 9 PAGES This Amendment No. 2 amends, in relevant part as follows, the Schedule 13D, filed September 11, 1997, of Floyd H. Panning (the "Reporting Person") with respect to the common stock, $0.01 par value per share ("Common Stock") of Electropure, Inc., a California corporation. ITEM 1. SECURITY AND ISSUER Common Stock, $0.01 par value, of Electropure, Inc., a California corporation ("Electropure"). Electropure's principal executive office is located at 23456 South Pointe Drive, Laguna Hills, California 92653. ITEM 2. IDENTITY AND BACKGROUND (a) Floyd H. Panning (b) 317 Calle Chueca, San Clemente, CA 92673 (c) President, Electropure, Inc., 23456 South Pointe Drive, Laguna Hills, CA (d) Not applicable (e) Not applicable (f) U.S.A. ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION The funds used to purchase the 100 shares of Common Stock of Electropure which the Reporting Person gifted in November, 1998 were from Mr. Panning's personal funds. The warrants granted to the Reporting Person, as indicated below, were granted to the Reporting Person both as a bonus for services rendered as an employee of the Company and as a stipend for annual service to the Board of Directors. ITEM 4. PURPOSE OF THE TRANSACTION On March 31, 1998, the Board of Directors authorized the granting to Mr. Panning of 250,000 ten-year warrants to purchase Common Stock of the Company at $1.125 per share. Such warrants, which were granted as a bonus for services rendered, are exercisable in annual increments of 50,000, commencing on the grant date, and automatically terminate if Mr. Panning ceases to be employed by the Company On August 14, 1997, the Company's Board of Directors authorized the granting of 10,000 warrants to each Director as annual consideration for service on the Board. Consequently, on August 14, 1998, Mr. Panning (as well as all other Directors) was granted 10,000 ten-year warrants to purchase Common Stock at $1.375 per share. 4 PAGE 4 OF 9 PAGES On November 1, 1998, Mr. Panning gifted 100 shares of Electropure, Inc. common Stock to a non-affiliated third party in a private transaction. The shares in question were originally acquired by Mr. Panning in August, 1997 upon the exercise of warrants to purchase Common Stock at $0.50 per share. The shares gifted continue the legend and stop transfer restrictions contained on the shares acquired by Mr. Panning. Mr. Panning may in the future acquire, hold and dispose of shares of Common Stock or warrants or options for such Common Stock or other securities of Electropure and such transactions may be in the open market, privately or directly from Electropure. Except as set forth above, Mr. Panning does not have any plans or proposals which may have, which related to or which would result in: (a) The acquisition by any person of additional securities of Electropure, or the disposition of securities of Electropure; (b) An extraordinary corporate transaction, such as a merger, reorganization or liquidation, involving Electropure or any of its subsidiaries; (c) A sale or transfer of a material amount of assets of Electropure or any of its subsidiaries; (d) Any change in the present Board of Directors or management of Electropure, including any plans or proposals to change the number or term of directors or to fill any existing vacancies on the Board; (e) Any material change in the present capitalization or dividend policy of Electropure; (f) Any other material change in Electropure's business or corporate structure; (g) Changes in Electropure's charter, bylaws or instruments, correspondence thereto or other actions which may impede the acquisition or control of Electropure by any person; (h) Causing a class of securities of Electropure to be delisted from a national securities exchange or to cease to be quoted in an inter-dealer quotation system of a registered national securities association; (i) A class of equity securities of Electropure becoming eligible for termination of registration pursuant to Section 12(g)(4) of the Securities Exchange Act of 1934; or (j) Any action similar to any of those enumerated above. ITEM 5. INTEREST IN SECURITIES OF ISSUER (a) Mr. Panning owns the following shares of Electropure: 5 PAGE 5 OF 9 PAGES 827,740 shares of Common Stock with one vote per share(1). Mr. Panning owns beneficially 4.6% of the Common Stock; 9.1% if all of the warrants described in Items 5 and 6 are exercised. Mr. Panning owns 5.1% of the voting power of all classes of stock of Electropure. (b) Mr. Panning has the sole voting and dispositive power over the shares he owns. (c) Since September 11, 1997, Mr. Panning has entered into the following transactions with regard to Electropure's Common Stock: On March 31, 1998, Mr. Panning was granted 250,000 ten-year warrants to purchase Common Stock at $1.125 per share as a bonus for services rendered. Such warrants are exercisable in annual increments of 50,000, commencing on the grant date; provided, however, that Mr. Panning is employed by the Company on the exercise date On August 14, 1998, Mr. Panning, along with each of the Company's Directors, was granted 10,000 ten-year warrants to purchase Common Stock at $1.375 per share. On November 1, 1998, Mr. Panning transferred 100 shares of Common Stock to an unaffiliated third party as a gift. Mr. Panning had acquired such shares at $0.50 per share, upon the exercise of certain warrants in August, 1997. The following Warrants are currently exercisable by Mr. Panning:
DATE GRANTED PURCHASE PRICE NO. OF SHARES ------------ -------------- ------------- 12/17/92 $1.25 10,000 08/14/97 $0.375 10,000 08/14/97 $0.28125 125,000 03/31/98 $1.125 250,000 08/14/98 $1.375 10,000
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO THE SECURITIES OF THE ISSUER Pursuant to the transactions described in Item 5 above and the Schedules 13D filed on June 2, 1997 and September 11, 1997, Mr. Panning has the right, until December 17, 2002 to purchase 10,000 shares of Electropure's Common Stock at $1.25 per share; 10,000 shares and - -------- (1) Includes warrants for 125,000 shares of Common Stock exercisable at $0.28125 per share; 10,000 shares exercisable at $1.25 per share; 10,000 shares exercisable at $0.375 per share; 10,000 shares exercisable at $1.375 per share; and 250,000 shares exercisable at $1.125 per share. 6 PAGE 6 OF 9 PAGES 125,000 shares of Common Stock at $0.375 and $0.28125, respectively, until August 14, 2007. Additionally, Mr. Panning has the right to purchase 250,00 shares of Common Stock at $1.125 per share until March 31, 2008, subject to his continued employment. Finally, Mr. Panning currently holds the right to purchase, at $1.375 each, 10,000 shares of Common Stock until August 14, 2008. Pursuant to an August, 1997 License Termination Agreement between the Company and its former licensee, EDI Components, the Company is obligated to issue shares to the investors of EDI Components upon the Common Stock of the Company first having a per share market value for thirty consecutive trading days equal to or in excess each of $3.00, $4.00 and $5.50 per share (each a "Trigger Value"). Of such shares, if and when issued by the Company, Mr. Panning is to receive 33,333, 25,000 and 18,182 shares valued at $99,999, $100,000 and $100,001, respectively, for a total additional value of $300,000. On August 14, 1997, the Company entered into a five-year Employment Agreement (effective 08/05/97) with Mr. Panning engaging him as the Company's President and Chief Executive Officer. Mr. Panning has the unilateral option to extend such employment for a period of two (2) years. The Agreement provides Mr. Panning with five weeks' vacation, the use of a company car2 and cellular telephone and participation in any benefit programs offered by the Company (none at this time). In addition to the 125,000 Warrants granted to Mr. Panning pursuant to the Employment Agreement, as described in Items 4 and 5 above, the terms of such Employment Agreement also provide for the following: (a) A base monthly salary of $6,500 increasing to $8,000 per month once the Company has realized a minimum of $1 million in financing3. Each year thereafter, the base salary shall automatically increase by an amount equal to five (5%) percent. (b) Upon realizing the above minimum financing, the Company has agreed to reimburse Mr. Panning for certain wages deferred while he was employed at EDI Components (a total of $63,700 was deferred). A $25,000 promissory note issued by Mr. Panning, in consideration for his exercise of 50,000 warrants to purchase Common Stock at $0.50 per share, will be satisfied (including accrued interest) with such deferred wages, net of normal federal, state and local income and payroll taxes. Mr. Panning agreed to waive any remaining balance of deferred wages after payment of such promissory note. (c) Mr. Panning has the right to nominate, subject to shareholder approval, one person to the Company's Board of Directors during the term of his employment. In the meantime, Mr. Panning has been named to the Company's Board of Directors. - ---------- (2) On August 1, 1998, the Company entered into a Motor Vehicle Contract and Security Agreement whereby the Company purchased from Mr. Panning a 1994 Cadillac Seville for the total purchase price of $23,000. The Company made a $3,000 down payment on such purchase and will pay 36 installment payments of $636 per month. Such automobile is being utilized by Mr. Panning for business purposes. (3) As of April 9, 1998, such milestone had been met and Mr. Panning's base monthly salary was increased as provided in the employment agreement. 7 PAGE 7 OF 9 PAGES (d) Mr. Panning may, without cause, terminate his employment and retain the right to a the following percentage of his base monthly salary:
YEAR OF PERCENT TERMINATION OF SALARY ----------- --------- 1 60% 2 70% 3 80% 4 90% 5 100% 6 0% 7 0%
(e) Any termination of employment by the Company shall immediately vest all 125,000 warrants granted to Mr. Panning under the employment agreement. In addition, termination by the Company of Mr. Panning's employment without cause, shall automatically accelerate the issuance of Additional Shares due EDI's investors under the License Termination Agreement at the then fair market value; provided, however, Mr. Panning's successor has not been approved by simple majority vote of such EDI investors (excluding Mr. Panning). ITEM 7. EXHIBITS 10.11.A Subscription Agreement - 07/28/88 * 10.11.B Subscription Agreement - 08/18/88 * 10.11.C Warrants for 10,000 shares (Warrant No. 359 - 12/17/92) * 10.11.D Warrants for 10,000 shares (Warrant No. 372 - 02/25/93) * 10.11.E Warrants for 20,000 shares (Warrant No. E-1008 - 04/20/92) * 10.11.F Warrants for 20,000 shares (Warrant No. E-1021 - 04/20/93) * 10.11.G Stock Right Agreement No. E-1008 - 04/20/92 * 10.11.H Stock Right Agreement No. E-1021 - 04/20/93 * 10.11.I Warrants for 10,000 shares (Warrant No. A-3010 - 08/14/97)*** 10.11.J Full Recourse Term Note and Security Agreement - 08/22/97*** 10.11.K Warrants for 250,000 shares (Warrant No. A-3047 - 03/31/98)
8 PAGE 8 OF 9 PAGES 10.11.L Warrants for 10,000 shares (Warrant No. A-3051 - 08/14/98) 10.11.M Motor Vehicle Contract and Security Agreement dated 08/01/98 10.47.8 License Termination Agreement dated August 14, 1997 (effective 08/05/97) ** 10.47.9 Employment Agreement dated August 14, 1997 (effective 08/05/97), including exhibits thereto, particularly Warrant No. A-3001 (08/14/97) to purchase 125,000 shares. **
- -------------- * Previously filed in connection with Schedule 13D filed on June 2, 1997 by the Reporting Person. ** Previously filed in connection with Issuer's Form 10-QSB for the fiscal quarter ended July 31, 1997. *** Previously filed in connection with Schedule 13D filed on September 11, 1997 by the Reporting Person. 9 PAGE 9 OF 9 PAGES SIGNATURES After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this Amendment No. 1 to Schedule 13D is true, complete and correct. Dated: January 30, 1999 /S/ FLOYD H. PANNING --------------------------------------- FLOYD H. PANNING 10 AMENDMENT NO. 2 TO SCHEDULE 13D FLOYD H. PANNING (Name of Reporting Person) INDEX TO EXHIBITS -----------------
PAGE SEQUENTIALLY NUMBERED ------------ 10.11.K. Warrants for 250,000 shares (Warrant No. A-3047 - 03/31/98) 10.11.L. Warrants for 10,000 shares (Warrant No. A-3051 - 08/14/98) 10.11.M Motor Vehicle Contract and Security Agreement dated 08/01/98
EX-10.11.K 2 WARRANTS FOR 250,000 SHARES (WARRANT NO.A-3047) 1 EXHIBIT 10.11.K; PAGE 1 23456 SOUTH POINTE DRIVE Laguna Hills, California 92653-1512 949-770-9347 o Fax 949-770-9209 ELECTROPURE, INC. ================================================================================ WARRANT NO. A-3047 DATED SEPTEMBER 10, 1998 Void after 5:00 P.M. Los Angeles City Time, on March 31, 2008 Warrant to Purchase 250,000 Shares of Common Stock THIS WARRANT, AND THE COMMON STOCK ISSUABLE UPON ITS EXERCISE, HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD, PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED, DISPOSED OF OR OFFERED FOR SALE, IN WHOLE OR IN PART,, IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THAT ACT COVERING THIS WARRANT AND/OR THE COMMON STOCK ISSUABLE UPON ITS EXERCISE, OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO ELECTROPURE, INC. THAT AN EXEMPTION FROM REGISTRATION IS AVAILABLE. - -------------------------------------------------------------------------------- WARRANT TO PURCHASE COMMON STOCK OF ELECTROPURE, INC. - -------------------------------------------------------------------------------- This is to certify that, for value received, FLOYD H. PANNING, or assigns, ("Holder"), is entitled to purchase, subject to the provisions of this Warrant, from ELECTROPURE, INC., a California corporation ("Company"), Two Hundred Fifty Thousand ([OBJECT OMITTED]) fully paid, validly issued and nonassessable shares of Common Stock, $0.01 par value, of the Company ("Common Stock") at any time or from time to time during the period set forth below until the 5:00 P.M. Los Angeles City Time on [OBJECT OMITTED] until the date upon which Holder's employment with the Company shall terminate, whichever shall first occur (the "Exercise Period") at an initial exercise price equal to $1.125 per share. The number of shares of Common Stock to be received upon the exercise of this Warrant and the price to be paid for each share of Common Stock may be adjusted from time to time as hereinafter set forth. The shares of Common Stock deliverable upon such exercise, and as adjusted from time to time are hereinafter sometimes referred to as "Warrant Shares" and the exercise price of a share of Common Stock in effect at any time and as adjusted from time to time is hereinafter sometimes referred to as the "Exercise Price." A. EXERCISE PERIOD. Holder shall have the right to exercise this Warrant into shares of Common Stock in increments of up to but not more than Fifty Thousand (50,000) each year, commencing on the date hereof. Holder shall be entitled to accumulate and exercise in successive years any and all Warrants 2 EXHIBIT 10.11.K; PAGE 2 which have become exercisable hereunder in prior years. This Warrant shall terminate at 5:00 P.M. Los Angeles City Time on[OBJECT OMITTED]008 notwithstanding the fact that the Warrants granted hereunder are exercisable in the increments stated. NOTWITHSTANDING ANY PROVISION HEREIN TO THE CONTRARY, HOLDER MAY EXERCISE THIS WARRANT, IN THE INCREMENTS STATED ABOVE; PROVIDED, HOWEVER, THAT AT SUCH TIME OF ANY EXERCISE, HOLDER MUST THEN BE EMPLOYED BY THE COMPANY. IN THE EVENT HOLDER'S EMPLOYMENT WITH THE COMPANY SHALL TERMINATE, FOR ANY REASON, ALL WARRANTS REMAINING UNEXERCISED UNDER THIS WARRANT AGREEMENT AS OF THE DATE OF SUCH TERMINATION SHALL THEN BECOME NULL AND VOID. B. EXERCISE OF WARRANT. During and subject to the Exercise Period, this Warrant may be exercised in whole or in part at any time and the Holder shall have the right to exercise this Warrant into the kind and amount of shares of stock and other securities and property (including cash) receivable by a holder of the number of shares of Common Stock into which this Warrant might have been exercisable immediately prior thereto. This Warrant may be exercised by presentation and surrender hereof to the Company at its principal office, or at the office of its stock transfer agent, if any, with the Purchase Form annexed hereto duly executed and accompanied by payment of the Exercise Price for the number of Warrant Shares specified in such form. As soon as practicable after each such exercise of the Warrants, but not later than fourteen (14) days from the date of such exercise, the Company shall issue and deliver to the Holder a certificate or certificates for the Warrant Shares issuable upon such exercise, registered in the name of the Holder or its designee. If this Warrant should be exercised in part only, the Company shall, upon surrender of this Warrant for cancellation, execute and deliver a new Warrant evidencing the rights of the Holder thereof to purchase the balance of the Warrant Shares purchasable thereunder. Upon receipt by the Company of this Warrant at its office, or by the stock transfer agent of the Company at its office, in proper form for exercise, the Holder shall be deemed to be the holder of record of the shares of Common Stock issuable upon such exercise, notwithstanding that the stock transfer books of the Company shall then be closed or that certificates representing such shares of Common Stock shall not then be physically delivered to the Holder. C. RESERVATION OF SHARES. The Company shall at all times reserve for issuance and/or delivery upon exercise of this Warrant such number of shares of its Common Stock as shall be required for issuance and delivery upon exercise of the Warrants. D. FRACTIONAL SHARES. No fractional shares or script representing fractional shares shall be issued upon the exercise of this Warrant. With respect to any fraction of a share called for upon any exercise hereof, the Company shall pay to the Holder an amount in cash equal to such fraction multiplied by the current market value of a share, determined as follows: (1) If the Common Stock is listed on a National Securities Exchange or admitted to unlisted trading privileges on such exchange or listed for trading on the NASDAQ system, the current market value shall be the last reported sale price of the Common Stock on such exchange or system on the last business day prior to the date of exercise of this Warrant or if no such sale is made on such day, the average closing bid and asked prices for such day on such exchange or system; or 3 EXHIBIT 10.11.K; PAGE 3 (2) If the Common Stock is not so listed or admitted to unlisted trading privileges, the current market value shall be the mean of the last reported bid and asked prices reported by the National Quotation Bureau, Inc. on the last business day prior to the date of the exercise of this Warrant; or (3) If the Common Stock is not so listed or admitted to unlisted trading privileges and bid and asked prices are not so reported, the current market value shall be an amount, not less than book value thereof as at the end of the most recent fiscal year of the Company ending prior to the date of the exercise of the Warrant, determined in such reasonable manner as may be prescribed by the Board of Directors of the Company or, if higher, $0.01 per share. E. EXCHANGE, TRANSFER, ASSIGNMENT OR LOSS OF WARRANT. This Warrant is exchangeable, without expense to Holder or any assignee or exchangee of Holder, at the option of the Holder, upon presentation and surrender hereof to the Company or at the office of its stock transfer agent, if any, for other warrants of different denominations entitling the holder thereof to purchase in the aggregate the same number of shares of Common Stock purchasable hereunder. Upon surrender of this Warrant to the Company at its principal office or at the office of its stock transfer agent, if any, with the Assignment Form annexed hereto duly executed and funds sufficient to pay any transfer tax, the Company shall, without charge to Holder or any assignee or exchangee of Holder, execute and deliver a new Warrant in the name of the assignee named in such instrument of assignment and this Warrant shall promptly be canceled. This Warrant may be divided or combined with other warrants which carry the same rights upon presentation hereof at the principal office of the Company or at the office of its stock transfer agent, if any, together with a written notice specifying the names and denominations in which new Warrants are to be issued and signed by the Holder hereof. The term "Warrant" as used herein includes any Warrants into which this Warrant may be divided or exchanged. Upon receipt of the Company of evidence satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and (in the case of loss, theft or destruction) of reasonably satisfactory indemnification, and upon surrender and cancellation of this Warrant, if mutilated, the Company will execute and deliver a new Warrant of like tenor and date. Any such new Warrant executed and delivered shall constitute an additional contractual obligation on the part of the Company, whether or not this Warrant so lost, stolen, destroyed, or mutilated shall be at any time enforceable by anyone. F. RIGHTS OF THE HOLDER. The Holder shall not, by virtue hereof, be entitled to any rights of a shareholder in the Company, either at low or equity, and the rights of the Holder are limited to those expressed in the Warrant and are not enforceable against the Company except to the extent set forth herein. G. ANTI-DILUTION PROVISIONS. The Exercise Price in effect at any time and the number and kind of securities purchasable upon the exercise of the Warrants shall be subject to adjustment from time to time upon the happening of certain events as follows: (1) In case the Company shall (i) declare a dividend or make a contribution on its outstanding shares of Common Stock in shares of Common Stock, (ii) subdivide or reclassify its outstanding shares of Common Stock into a greater number of shares, or (iii) combine or reclassify its outstanding shares of Common Stock into a smaller number of shares, the Exercise Price in effect at the time of the record date for such dividend or distribution or of the effective date of such subdivisions, combination or 4 EXHIBIT 10.11.K; PAGE 4 reclassification shall be adjusted so that it shall equal the price determined by multiplying the Exercise Price by a fraction, the denominator of which shall be the number of shares of Common Stock outstanding after giving effect to such action, and the numerator of which shall be the number of shares of Common Stock outstanding immediately prior to such action. Such adjustment shall be made successively whenever any event listed above shall occur. (2) Whenever the Exercise Price payable upon exercise of each Warrant is adjusted pursuant to Subsection (1) above, the number of shares purchasable upon exercise of this Warrant shall simultaneously be adjusted by multiplying the number of shares initially issuable upon exercise of this Warrant by the Exercise Price in effect on the date hereof and dividing the product so obtained by the Exercise Price, as adjusted. (3) Whenever the Exercise Price is adjusted, as herein provided, the Company shall promptly cause a notice setting forth the adjusted Exercise Price and adjusted number of shares issuable upon exercise of each Warrant to be mailed to the Holders, at their last addresses appearing in the Warrant Register, and shall cause a certified copy thereof to be mailed to its transfer agent, if any. The Company may retain a firm of independent certificate public accountants selected by the Board of Directors (who may be the regular accountants employed by the Company) to make any computation required by this Section G and a certificate signed by such firms shall be conclusive evidence of the correctness of such adjustment. (4) In the event that at any time, as a result of an adjustment made pursuant to Subsection (1) above, the Holder of this Warrant thereafter shall become entitled to receive any shares of the Company, other than Common Stock, thereafter the number of such other shares so receivable upon exercise of this Warrant shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to the Common Stock contained in Subsection (1) above. (5) Irrespective of any adjustments in the Exercise Price or the number or kind of shares purchasable upon exercise of this Warrant, Warrants theretofore or thereafter issued may continue to express the same price and number and kind of shares as are stated in the similar Warrants initially issuable pursuant to this Agreement. H. OFFICER'S CERTIFICATE. Whenever the Exercise Price shall be adjusted as required by the provisions of the foregoing Section, the Company shall forthwith file in the custody of its Secretary or an Assistant Secretary at its principal office and with its stock transfer agent, if any, an officer's certificate showing the adjusted Exercise Price determined as herein provided, setting forth in reasonable detail the facts requiring such adjustment, including a statement of the number of additional shares of Common Stock, if any, and such other facts as shall be necessary to show the reason for and the manner of computing such adjustment. Each such officer's certificate shall be made available at all reasonable times for inspection by the holder or any holder of a Warrant executed and delivered pursuant to Section B and the Company shall, forthwith after each such adjustment, mail a copy by certified mail of such certificate to the Holder or any such holder. I. NOTICES TO WARRANT HOLDERS. So long as this Warrant shall be outstanding, (i) if the Company shall pay any dividend or make any distribution upon the Common Stock or (ii) if the Company 5 EXHIBIT 10.11.K; PAGE 5 shall offer to the holders of Common Stock for subscription or purchase by them any share of any class or any other rights or (iii) if the capital reorganization of the Company, reclassification of the capital stock of the Company, consolidation or merger of the Company with or into another corporation, sale, lease or transfer of all or substantially all of the property and assets of the Company to another corporation, or voluntary or involuntary dissolution, liquidation or winding up of the Company shall be effected, then in any such case, the Company shall cause to be mailed by certified mail to the Holder, at least fifteen days prior to the date specified in (x) or (y) below, as the case may be, a notice containing a brief description of the proposed action and stating the date on which (x) a record is to be taken for the purpose of such dividend, distribution or rights, or (y) such reclassification, reorganization, consolidation, merger, conveyance, lease, dissolution, liquidation or winding up is to take place and the date, if any is to be fixed, as of which the holders of Common Stock or other securities shall receive cash or other property deliverable upon such reclassification, reorganization, consolidation, merger, conveyance, dissolution, liquidation or winding up. J. RECLASSIFICATION, REORGANIZATION OR MERGER. In case of any reclassification, capital reorganization or other change of outstanding shares of Common Stock of the Company, or in case of any consolidation or merger of the Company with or into another corporation (other than a merger with a subsidiary in which merger the Company is the continuing corporation and which does not result in any reclassification, capital reorganization or other change of outstanding shares of Common Stock of the class issuable upon exercise of this Warrant) or in case of any sale, lease or conveyance to another corporation of the property of the Company as an entirety, the Company shall, as a condition precedent to such transaction, cause effective provisions to be made so that the Holder shall have the right thereafter by exercising this Warrant at any time prior to the expiration of the Warrant, to purchase the kind and amount of shares of stock and other securities and property receivable upon such reclassification, capital reorganization and other change, consolidation, merger, sale or conveyance by a holder of the number of shares of Common Stock which might have been purchased upon exercise of this Warrant immediately prior to such reclassification, change, consolidation, merger, sale or conveyance. Any such provision shall include provision for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided for in this Warrant. The foregoing provisions of this Section J shall similarly apply to successive reclassifications, capital reorganizations and changes of shares of Common Stock and to successive consolidations, mergers, sales or conveyances. In the event that in connection with any such capital reorganization or reclassification, consolidation, merger, sale or conveyance, additional shares of Common Stock shall be issued in exchange, conversion, substitution or payment, in whole or in part, for a security of the Company other than Common Stock, any such issue shall be treated as an issue of Common Stock covered by the provisions of Subsection (1) of Section G hereof. IN WITNESS THEREOF, the Company has caused this Warrant to be signed and attested by the Undersigned, being duly authorized, as of the date set forth on the first part hereof. ELECTROPURE, INC. BY /S/ CATHERINE PATTERSON ------------------------------------------- CATHERINE PATTERSON CORPORATE SECRETARY 6 EXHIBIT 10.11.K; PAGE 6 23456 South Pointe Drive Laguna Hills, California 92653-1512 949-770-9347 o Fax 949-770-9209 ELECTROPURE, INC. ================================================================================ PURCHASE FORM WARRANT NO. A-3047 MARCH 31, 1998 Dated:____________________, 19___ The undersigned hereby irrevocably elects to exercise the within Warrant to the extent of purchasing _________________ shares of Common Stock and hereby makes payment of $____________________ in payment of the actual exercise price thereof. ===================================================================== INSTRUCTIONS FOR REGISTRATION OF STOCK -------------------------------------- Name ________________________________________________________________________ (Please typewrite or print in block letters) Address ______________________________________________________________________ ____________________________________ Signature of Warrant Holder 7 EXHIBIT 10.11.K; PAGE 7 23456 South Pointe Drive Laguna Hills, California 92653-1512 949-770-9347 o Fax 949-770-9209 ELECTROPURE, INC. ================================================================================ ASSIGNMENT FORM WARRANT NO. A-3047 MARCH 31, 1998 FOR VALUE RECEIVED, the undersigned Warrant Holder hereby sells, assigns and transfers unto: Name _________________________________________________________ (Please typewrite or print in block letters) Address __________________________________________________________ the right to purchase Common Stock represented by this Warrant to the extent of ____________ shares as to which such right is exercisable and does hereby irrevocably constitute and appoint ________________________________ Attorney, to transfer the same on the books of the Company with full power of substitution in the premises. Dated:_________________, 19___ ________________________________ Signature of Warrant Holder EX-10.11.L 3 WARRANTS FOR 10,000 SHARES (WARRANT NO. A-3051) 1 EXHIBIT 10.11.L; PAGE 1 WARRANT NO. A-3051 THIS WARRANT, AND THE COMMON STOCK ISSUABLE UPON ITS EXERCISE, HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD, PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED, DISPOSED OF OR OFFERED FOR SALE, IN WHOLE OR IN PART, IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THAT ACT COVERING THIS WARRANT AND/OR THE COMMON STOCK ISSUABLE UPON ITS EXERCISE, OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO HOH WATER TECHNOLOGY CORPORATION THAT AN EXEMPTION FROM REGISTRATION IS AVAILABLE. ---------------------------------------------------- WARRANT TO PURCHASE COMMON STOCK OF HOH WATER TECHNOLOGY CORPORATION ---------------------------------------------------- This is to Certify that, FOR VALUE RECEIVED, FLOYD H. PANNING, or assigns, ("Holder"), is entitled to purchase, subject to the provisions of this Warrant, from HOH WATER TECHNOLOGY CORPORATION, a California corporation ("Company"), Ten Thousand (10,000) fully paid, validly issued and nonassessable shares of Common Stock, $0.01 par value, of the Company ("Common Stock") at any time or from time to time during the period from the date hereof until 5:00 P.M. Los Angeles City Time on August 14, 2008 (the "Exercise Period") at an initial exercise price equal to $1.375 per share. The number of shares of Common Stock to be received upon the exercise of this Warrant and the price to be paid for each share of Common Stock may be adjusted from time to time as hereinafter set forth. The shares of Common Stock deliverable upon such exercise, and as adjusted from time to time are hereinafter sometimes referred to as "Warrant Shares" and the exercise price of a share of Common Stock in effect at any time and as adjusted from time to time is hereinafter sometimes referred to as the "Exercise Price." (A) EXERCISE OF WARRANT. This Warrant may be exercised in whole or in part at any time during the Exercise Period, and during the Exercise Period the Holder shall have the right to exercise this Warrant into the kind and amount of shares of stock and other securities and property (including cash) receivable by a holder of the number of shares of Common Stock into which this Warrant might have been exercisable immediately prior thereto. This Warrant may be exercised by presentation and surrender hereof to the Company at its principal office, or at the office of its stock transfer agent, if any, with the Purchase Form annexed hereto duly executed and accompanied by payment of the Exercise Price for the number of Warrant Shares specified in such form. As soon as practicable after each such exercise of the Warrants, but not later than seven (7) days from the date of such exercise, the Company shall issue and deliver to the Holder a certificate or certificates for the Warrant Shares issuable upon such exercise, registered in the name of the Holder or its designee. If this Warrant should be exercised in part 2 EXHIBIT 10.11.L; PAGE 2 only, the Company shall, upon surrender of this Warrant for cancellation, execute and deliver a new Warrant evidencing the rights of the Holder thereof to purchase the balance of the Warrant Shares purchasable thereunder. Upon receipt by the Company of this Warrant at its office, or by the stock transfer agent of the Company at its office, in proper form for exercise, the Holder shall be deemed to be the holder of record of the shares of Common Stock issuable upon such exercise, notwithstanding that the stock transfer books of the Company shall then be closed or that certificates representing such shares of Common Stock shall not then be physically delivered to the Holder. (B) RESERVATION OF SHARES. The Company shall at all times reserve for issuance and/or delivery upon exercise of this Warrant such number of shares of its Common Stock as shall be required for issuance and delivery upon exercise of the Warrants. (C) FRACTIONAL SHARES. No fractional shares or script representing fractional shares shall be issued upon the exercise of this Warrant. With respect to any fraction of a share called for upon any exercise hereof, the Company shall pay to the Holder an amount in cash equal to such fraction multiplied by the current market value of a share, determined as follows: (1) If the Common Stock is listed on a National Securities Exchange or admitted to unlisted trading privileges on such exchange or listed for trading on the NASDAQ system, the current market value shall be the last reported sale price of the Common Stock on such exchange or system on the last business day prior to the date of exercise of this Warrant or if no such sale is made on such day, the average closing bid and asked prices for such day on such exchange or system; or (2) If the Common Stock is not so listed or admitted to unlisted trading privileges, the current market value shall be the mean of the last reported bid and asked prices reported by the National Quotation Bureau, Inc. on the last business day prior to the date of the exercise of this Warrant; or (3) If the Common Stock is not so listed or admitted to unlisted trading privileges and bid and asked prices are not so reported, the current market value shall be an amount, not less than book value thereof as at the end of the most recent fiscal year of the Company ending prior to the date of the exercise of the Warrant, determined in such reasonable manner as may be prescribed by the Board of Directors of the Company or, if higher, $0.01 per share. (D) EXCHANGE, TRANSFER, ASSIGNMENT OR LOSS OF WARRANT. This Warrant is exchangeable, without expense, at the option of the Holder, upon presentation and surrender hereof to the Company or at the office of its stock transfer agent, if any, for other warrants of different denominations entitling the holder thereof to purchase in the aggregate the same number of shares of Common Stock purchasable hereunder. Upon surrender of this Warrant to the Company at its principal office or at the office of its stock transfer agent, if any, with the Assignment Form annexed hereto duly executed and funds sufficient to pay any transfer tax, the Company shall, without charge, execute and deliver a new Warrant I the name of the assignee named in such instrument of assignment and this Warrant shall promptly be canceled. This Warrant may be divided or combined with other warrants which carry the same rights upon presentation hereof at the principal office of the Company or at the office of its stock transfer agent, if any, together with a written notice specifying the names and denominations in which new Warrants are to be issued and signed by the Holder hereof. The term "Warrant" as used herein includes any Warrants 3 EXHIBIT 10.11.L; PAGE 3 into which this Warrant may be divided or exchanged. Upon receipt of the Company of evidence satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and (in the case of loss, theft or destruction) of reasonably satisfactory indemnification, and upon surrender and cancellation of this Warrant, if mutilated, the Company will execute and deliver a new Warrant of like tenor and date. Any such new Warrant executed and delivered shall constitute an additional contractual obligation on the part of the Company, whether or not this Warrant so lost, stolen, destroyed, or mutilated shall be at any time enforceable by anyone. (E) RIGHTS OF THE HOLDER. The Holder shall not, by virtue hereof, be entitled to any rights of a shareholder in the Company, either at low or equity, and the rights of the Holder are limited to those expressed in the Warrant and are not enforceable against the Company except to the extent set forth herein. (F) ANTI-DILUTION PROVISIONS. The Exercise Price in effect at any time and the number and kind of securities purchasable upon the exercise of the Warrants shall be subject to adjustment from time to time upon the happening of certain events as follows: (1) In case the Company shall (i) declare a dividend or make a contribution on its outstanding shares of Common Stock in shares of Common Stock, (ii) subdivide or reclassify its outstanding shares of Common Stock into a greater number of shares, or (iii) combine or reclassify its outstanding shares of Common Stock into a smaller number of shares, the Exercise Price in effect at the time of the record date for such dividend or distribution or of the effective date of such subdivisions, combination or reclassification shall be adjusted so that it shall equal the price determined by multiplying the Exercise Price by a fraction, the denominator of which shall be the number of shares of Common Stock outstanding after giving effect to such action, and the numerator of which shall be the number of shares of Common Stock outstanding immediately prior to such action. Such adjustment shall be made successively whenever any event listed above shall occur. (2) Whenever the Exercise Price payable upon exercise of each Warrant is adjusted pursuant to Subsection (1) above, the number of shares purchasable upon exercise of this Warrant shall simultaneously be adjusted by multiplying the number of shares initially issuable upon exercise of this Warrant by the Exercise Price in effect on the date hereof and dividing the product so obtained by the Exercise Price, as adjusted. (3) Whenever the Exercise Price is adjusted, as herein provided, the Company shall promptly cause a notice setting forth the adjusted Exercise Price and adjusted number of shares issuable upon exercise of each Warrant to be mailed to the Holders, at their last addresses appearing in the Warrant Register, and shall cause a certified copy thereof to be mailed to its transfer agent, if any. The Company may retain a firm of independent certificate public accountants selected by the Board of Directors (who may be the regular accountants employed by the Company) to make any computation required by this Section F and a certificate signed by such firms shall be conclusive evidence of the correctness of such adjustment. (4) In the event that at any time, as a result of an adjustment made pursuant to Subsection (1) above, the Holder of this Warrant thereafter shall become entitled to receive any shares of 4 EXHIBIT 10.11.L; PAGE 4 the Company, other than Common Stock, thereafter the number of such other shares so receivable upon exercise of this Warrant shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to the Common Stock contained in Subsection (1) above. (5) Irrespective of any adjustments in the Exercise Price or the number or kind of shares purchasable upon exercise of this Warrant, Warrants theretofore or thereafter issued may continue to express the same price and number and kind of shares as are stated in the similar Warrants initially issuable pursuant to this Agreement. (G) OFFICER'S CERTIFICATE. Whenever the Exercise Price shall be adjusted as required by the provisions of the foregoing Section, the Company shall forthwith file in the custody of its Secretary or an Assistant Secretary at its principal office and with its stock transfer agent, if any, an officer's certificate showing the adjusted Exercise Price determined as herein provided, setting forth in reasonable detail the facts requiring such adjustment, including a statement of the number of additional shares of Common Stock, if any, and such other facts as shall be necessary to show the reason for and the manner of computing such adjustment. Each such officer's certificate shall be made available at all reasonable times for inspection by the holder or any holder of a Warrant executed and delivered pursuant to Section A and the Company shall, forthwith after each such adjustment, mail a copy by certified mail of such certificate to the Holder or any such holder. (H) NOTICES TO WARRANT HOLDERS. So long as this Warrant shall be outstanding, (i) if the Company shall pay any dividend or make any distribution upon the Common Stock or (ii) if the Company shall offer to the holders of Common Stock for subscription or purchase by them any share of any class or any other rights or (iii) if the capital reorganization of the Company, reclassification of the capital stock of the Company, consolidation or merger of the Company with or into another corporation, sale, lease or transfer of all or substantially all of the property and assets of the Company to another corporation, or voluntary or involuntary dissolution, liquidation or winding up of the Company shall be effected, then in any such case, the Company shall cause to be mailed by certified mail to the Holder, at least fifteen days prior to the date specified in (x) or (y) below, as the case may be, a notice containing a brief description of the proposed action and stating the date on which (x) a record is to be taken for the purpose of such dividend, distribution or rights, or (y) such reclassification, reorganization, consolidation, merger, conveyance, lease, dissolution, liquidation or winding up is to take place and the date, if any is to be fixed, as of which the holders of Common Stock or other securities shall receive cash or other property deliverable upon such reclassification, reorganization, consolidation, merger, conveyance, dissolution, liquidation or winding up. (I) RECLASSIFICATION, REORGANIZATION OR MERGER. In case of any reclassification, capital reorganization or other change of outstanding shares of Common Stock of the Company, or in case of any consolidation or merger of the Company with or into another corporation (other than a merger with a subsidiary in which merger the Company is the continuing corporation and which does not result in any reclassification, capital reorganization or other change of outstanding shares of Common Stock of the class issuable upon exercise of this Warrant) or in case of any sale, lease or conveyance to another corporation of the property of the Company as an entirety, the Company shall, as a condition precedent to such transaction, cause effective provisions to be made so that the Holder shall have the right 5 EXHIBIT 10.11.L; PAGE 5 thereafter by exercising this Warrant at any time prior to the expiration of the Warrant, to purchase the kind and amount of shares of stock and other securities and property receivable upon such reclassification, capital reorganization and other change, consolidation, merger, sale or conveyance by a holder of the number of shares of Common Stock which might have been purchased upon exercise of this Warrant immediately prior to such reclassification, change, consolidation, merger, sale or conveyance. Any such provision shall include provision for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided for in this Warrant. The foregoing provisions of this Section I shall similarly apply to successive reclassifications, capital reorganizations and changes of shares of Common Stock and to successive consolidations, mergers, sales or conveyances. In the event that in connection with any such capital reorganization or reclassification, consolidation, merger, sale or conveyance, additional shares of Common Stock shall be issued in exchange, conversion, substitution or payment, in whole or in part, for a security of the Company other than Common Stock, any such issue shall be treated as an issue of Common Stock covered by the provisions of Subsection (1) of Section F hereof. IN WITNESS THEREOF, the Company has caused this Warrant to be signed and attested by the Undersigned, being duly authorized, as of the date set forth on the first part hereof. HOH WATER TECHNOLOGY CORPORATION By /S/ CATHERINE PATTERSON ------------------------------------ Catherine Patterson Corporate Secretary 6 EXHIBIT 10.11.L; PAGE 6 PURCHASE FORM NO. A-3051 ------------------------ Dated:____________________, 19___ The undersigned hereby irrevocably elects to exercise the within Warrant to the extent of purchasing _________________ shares of Common Stock and hereby makes payment of $____________________ in payment of the actual exercise price thereof. ===================================================================== INSTRUCTIONS FOR REGISTRATION OF STOCK -------------------------------------- Name ________________________________________________________________________ (Please typewrite or print in block letters) Address ______________________________________________________________________ ___________________________________ Signature of Warrant Holder 7 EXHIBIT 10.11.L; PAGE 7 ASSIGNMENT FORM NO. A-3051 -------------------------- FOR VALUE RECEIVED, _______________________________________________ (the "Warrant Holder") hereby sells, assigns and transfers unto: Name ______________________________________________________________ (Please typewrite or print in block letters) Address______________________________________________________________ the right to purchase Common Stock represented by this Warrant to the extent of ____________ shares as to which such right is exercisable and does hereby irrevocably constitute and appoint ________________________________ Attorney, to transfer the same on the books of the Company with full power of substitution in the premises. Dated:_________________, 19___ ___________________________ Signature of Warrant Holder EX-10.11.M 4 MOTOR VEHICLE CONTRACT & SECURITY AGREEMENT 1 EXHIBIT 10.11.M; PAGE 1 MOTOR VEHICLE CONTRACT AND SECURITY AGREEMENT This Motor Vehicle Contract and Security Agreement (the "Agreement") is made effective as of August 1, 1998, by and between Floyd Panning and Lorraine Panning, JTWROS (collectively, the "Seller"), 317 Calle Chueca, San Clemente, CA 92673, and Electropure, Inc. (the "Buyer"), 23456 South Pointe Drive, Laguna Hills, CA 92653, and states the agreement of the parties as follows: MOTOR VEHICLE DESCRIPTION NEW/USED USED ODOMETER READING 40,010 YEAR 1994 VEHICLE ID NO. 1G6KS52Y3RU831536 MAKE CADILLAC COLOR FOREST GREEN BODY STYLE 4 DOOR SEDAN LICENSE NO. 3HNX906 MODEL SEVILLE (SLS)
DISCLOSURES PURSUANT TO THE TRUTH-IN-LENDING ACT
ANNUAL PERCENTAGE RATE FINANCE CHARGE AMOUNT FINANCED TOTAL OF PAYMENTS TOTAL SALE PRICE The cost of your The dollar amount the The amount of credit The amount you will The total cost of credit as a yearly credit will cost you. provided to you or on have paid after you your purchase on rate. your behalf. have made all credit, including payments as scheduled. your down payment of $3,000. 9.00% $2,296.00 20,000.00 $22,896.00 $25,896.00
PAYMENT SCHEDULE
NUMBER OF PAYMENTS AMOUNT OF PAYMENTS WHEN PAYMENTS ARE DUE One Payment 3,000.00 August 1, 1998 35 Payments 636.00 August 15, 1998 One Payment 636.00 July 15, 2001
ADDITIONAL TERMS AND AGREEMENTS A. PROMISE TO PAY: Buyer promises to pay the down payment and the Amount Financed, plus the finance charges on the Amount Financed, as shown in the Payment Schedule. The Finance charges are to be computed daily on a simple interest basis by applying the Annual Percentage Rate to the unpaid portion of the Amount Financed until all sums due under this contract are fully paid. Payments will be applied first to any unpaid deferred downpayment, then to the finance charges and then to repay the Amount Financed. B. SIMPLE INTEREST CONTRACT: This is a simple interest contract. The Finance Charge, Total of Payments and Payment Schedule shown may differ from the amount Buyer will 1 2 EXHIBIT 10.11.M; PAGE 2 ultimately have to pay if payments are not received on their exact due dates or the Seller adds amounts to the amount Buyer owes for any of the reasons stated below. C. SECURITY INTEREST: Buyer hereby grants Seller a security interest under the California Uniform Commercial Code in the vehicle and all parts or accessories put on the vehicle and in all insurance premiums financed for you or rebates from insurance premiums, service contracts, and in the proceeds of any insurance policies covering the vehicle or credit or disability insurance policies financed hereunder, which security interest secures all sums which may become due under this contract, as well as any modifications, extensions, renewals, amendments, or re-financing of it. D. USE OF VEHICLE: Buyer agrees to keep the vehicle free of all taxes and liens, except in favor of Seller, and not to use the vehicle, or permit the vehicle to be used, illegally, improperly, or for hire, or to expose the vehicle to misuse, seizure, or confiscation, or other involuntary transfer, even if the vehicle was not the subject of judicial or administrative action. Buyer agrees not to make any material change in the vehicle or allow any material change in it to be made, or to remove the vehicle, or allow it to be removed from this State for a period in excess of 30 days or transfer any interest in the vehicle. Buyer agrees to keep the vehicle in good working condition and make all necessary repairs. Buyer agrees not to remove the vehicle, or to permit its removal, from this country. Although Seller is not obligated to do so, if Seller elects to pay any liens, fees or taxes in connection with the vehicle, or to expend any other amount to protect Seller's interest in the vehicle, Buyer will reimburse Seller, at Seller's options: (i) within 5 days of Seller's demand upon Buyer to do so, or (ii) Seller may add the dollar amount of any such liens, fees, taxes or other charges Seller pays to the balance of this contract, accruing interest, from the time Seller pays such amounts until the time Buyer pays them to Seller, at the annual percentage rate shown on the face of this contract, with such dollar amount and interest due at maturity of this contract or in monthly installments due on the remaining payment dates shown on the face of this contract, as Seller might choose. E. INSURANCE: Buyer agrees to keep the vehicle insured in favor of Seller with a policy satisfactory to Seller, with comprehensive, fire, theft and collision coverage, insuring the vehicle in an amount sufficient to cover the value of the vehicle. Buyer agrees to deliver the policies to Seller, and Buyer agrees that Seller may (i) contact Buyer's insurance agent to verify coverage or to add Seller as a loss payee or lienholder, (ii) make any claim under Buyer's insurance policy, (iii) cancel the insurance on Buyer's default, and (iv) receive any payment of loss or return premium, and apply the amounts received, at Seller's option, to replacement of the property or to Buyer's indebtedness under this Agreement, including indebtedness not yet due. If Buyer fails to maintain such insurance, Seller may, at Seller's option, procure such insurance to protect Seller's interest in the property, and Buyer agrees to pay for such insurance and finance charges on the premiums on demand at the annual percentage rate shown on the reverse, according to the notice Seller sends Buyer. Buyer agrees that any insurance Seller purchases may be for the protection of only Seller's interest in the property, and may be for the remaining term of the contract or any shorter period as Seller may determine. Buyer understands that the insurance premiums may be higher if Seller must purchase insurance than if Buyer had purchased the insurance itself. Buyer agrees that Seller can use any proceeds from insurance to either repair or replace the vehicle or to reduce Buyer's debt under this contract as Seller may decide. Whether or not the vehicle is insurance, Buyer must pay for it if it is lost, damaged or destroyed. 2 3 EXHIBIT 10.11.M; PAGE 3 F. PREPAYMENT OF AMOUNT OWED: Buyer may prepay all amounts due under this contract at any time without penalty. In addition, if Buyer fails to make any payment when due or perform any other agreement provided for in this contract, Seller may, in addition to other remedies, declare all sums immediately due and payable. If Buyer prepays a portion of the balance, the payment will be credited first to interest and the balance to the unpaid Amount Financed. The next payment will be due on the next regular installment date. G. DEFAULT: If Buyer breaches any warranty or defaults in the performance in any promise Buyer makes in this agreement, including, but not limited to, making of any payment when due, or becomes insolvent, or files any proceeding under the U.S. Bankruptcy Code, or upon Buyer's dissolution, or if the vehicle is damages, destroyed, or impounded, Seller may at the Seller's option and without notice or demand (1) declare all unpaid sums immediately due and payable (2) file suit against Buyer for all unpaid sums (3) take immediate possession of the motor vehicle (4) exercise any other legal or equitable remedy. Upon taking possession of the motor vehicle and giving notice as provided by law, if Buyer does not redeem the vehicle, Seller will sell it, at public or private sale. Seller may purchase the vehicle at any public sale. The proceeds of the sale will be applied first to the expenses of retaking, reconditioning, storing and selling the property, and the remainder will be applied to unpaid sums owing under this contract, including collection costs and attorney fees. If there is any money left over (surplus) it will be paid to Seller. If a balance still remains owning, Buyer promises to pay the same upon demand. If Buyer defaults or breaches this agreement, Buyer agrees to pay finance charges at the annual percentage rate shown on the first paid until all sums owing Seller are paid in full or judgment is entered. Seller's remedies are cumulative and taking of any action shall not be a waiver or prohibit Seller from pursuing any other remedy. Buyer agrees that upon Buyer's default, Seller shall be entitled to recover from Buyer all reasonable collection costs, including, but not limited to, an attorney's fee. In addition, if Seller repossesses the vehicle, Buyer grants to Seller and Seller's agents permission to enter upon any premises owned by Buyer. Buyer agrees that Seller is entitled to recover from Buyer all reasonable costs and expenses arising out of that repossession, including, but not limited to, any sums Seller pays third party agents. With respect to any sums Seller is entitled to recover pursuant to the previous two sentences, Buyer will reimburse Seller, at Seller's option (i) within 5 days of demand upon Buyer to do so or (ii) Seller may add the dollar amount of any such sums, costs and expenses to the balance of this contract, accruing interest, from the time Seller pays such amounts until the time Buyer pays them to Seller, at the annual percentage rate shown on the face of this contract. H. EXCELLERATION OF CONTRACT: In the event that the employment of Floyd H. Panning ("Panning") by Buyer shall terminate for any reason which is not a voluntary act by Panning prior to the final payment shown in the Payment Schedule, Seller may at Seller's option and without notice or demand (1) declare all unpaid sums immediately due and payable, or (2) take immediate possession of the motor vehicle. Buyer agrees that if Seller repossesses the vehicle pursuant to the preceding sentence, Buyer's obligations under the Payment Schedule shown in this contract shall terminate. However, Buyer agrees that Seller shall be entitled to collect from Buyer any reasonable costs, expenses and attorneys fees incurred by Seller resulting from the excelleration of the contract. 3 4 EXHIBIT 10.11.M; PAGE 4 I. WARRANTIES OF SELLER: Seller agrees to take all necessary steps to transfer to Buyer all of Seller's rights in the Limited Warranty on the vehicle described in Exhibit "A" attached hereto and made a part hereof and except for the warranty provided thereby, Buyer agrees that there are no express or implied warranties with respect to the merchantability, suitability, fitness for purpose, or otherwise concerning the vehicle, parts or accessories described herein. Seller disclaims any warranty or representation as to the accuracy of the mileage on the odometer. Seller does not warrant the correctness of the year of manufacture or model of said vehicle. Buyer agrees that it has verified the description of the vehicle to its satisfaction and there is no warranty as to the correctness of the description of the vehicle. J. AMENDMENT: This Agreement may not be amended except by written document executed by all parties. K. SUBJECT HEADINGS: Subject headings are included for convenience only and shall not be deemed part of this Agreement. L. SEVERABILITY: If any provision of this Agreement shall be held unenforceable as applied to any circumstance, the remainder of this Agreement and the application of such provision to other circumstances shall be interpreted so as best to effect the intent of the parties. The parties further agree to replace any such unenforceable provision with an enforceable provision (and to take such other action) which will achieve, to the extent possible, the purposes of the unenforceable provision. M. CHOICE OF LAW AND VENUE: This Agreement shall be governed by and construed under the laws of the State of California in force from time to time. N. PARTIES BOUND: This Agreement is binding on and shall inure to the benefit of the parties and their respective successors, assigns, heirs, and legal representatives. O. SURVIVAL: The representations, warranties, covenants, and agreements contained in this Agreement shall survive the consummation of the transactions contemplated hereby. IN WITNESS WHEREOF, the parties have executed this Motor Vehicle Contract and Security Agreement as of the date first above written. SELLER: BUYER: ELECTROPURE, INC. BY /S/ FLOYD H. PANNING BY /S/ CATHERINE PATTERSON --------------------------- --------------------------- FLOYD H. PANNING CATHERINE PATTERSON CHIEF FINANCIAL OFFICER BY /S/ LORRAINE PANNING --------------------------- LORRAINE PANNING 317 Calle Chueca 23456 South Pointe Drive San Clemente, CA 92673 Laguna Hills, CA 92653 4 -----END PRIVACY-ENHANCED MESSAGE-----