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EXHIBIT (F); PAGE 1
STOCK RIGHT AGREEMENT
NO. E-1005
THIS STOCK RIGHT AGREEMENT (the "Agreement") is made and entered into
as of July 29, 1992, by and between ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ("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 Twenty Five Thousand ($25,000.00)
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'
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percentage subject to the notice, upon the terms enclosed in HOH's notice
(subject to the Purchase Price 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.
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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
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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.
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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/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Chief Financial Officer
Address:
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Investor: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Address:
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
