EXHIBIT 10.55


 


AMENDED AND RESTATED LOAN AND SUPPLY
AGREEMENT


 


THIS AMENDED
AND RESTATED LOAN AND SUPPLY AGREEMENT (the “Agreement”) is entered into as of
this 24th day of April, 2003, by ELECTROPURE, INC., a California corporation,
and ELECTROPURE EDI, INC., a Nevada corporation, both having registered offices
at 23456 South Pointe Drive, Laguna Hills, CA 92653 (collectively, “Borrower”),
and ECOLOCHEM, INC., a Virginia corporation, having its registered office at
4545 Patent Road, Norfolk, VA 23502 (“Lender”). Borrower and Lender are
collectively referred to as “Parties” or individually as a “Party.”


 


RECITALS


 


A.            Borrower wishes to borrow from
Lender, and Lender is willing to lend to Borrower, $200,000.


 


B.            Borrower possesses technical
information and manufacturing skills with respect to an electrodeionization
(“EDI”) product line (“Products”) and Lender wishes to purchase from Borrower,
on a discounted basis, a quantity of the Products on the terms and conditions
set forth below.


 


THE
AGREEMENT


 


1.             Term.  The term of this Agreement will be 10 years
and it will terminate on April 23, 2013.


 


2.             Loan.  On the terms and conditions of this
Agreement, Lender makes a loan of $200,000 to Borrower (the “Loan”).  The Loan is evidenced by the promissory note
issued by Borrower to Lender in the form of Exhibit A.


 


3.             Interest.  Interest shall accrue on the unpaid
principal of the Loan from the date hereof at an annual rate equal to 2% above
the Prime Rate as published in The Wall Street Journal on the first
business day of each month.


 


4.             Repayment of Principal and
Payment of Interest.  Principal on
the Loan, if not sooner prepaid, shall be due and payable in full, plus all
accrued interest, on April 23, 2008. 
Interest shall accrue on the Loan. 
All accrued, but unpaid interest, shall be due and payable on
April 23, 2008.  Interim payments
of interest and principal shall be credited to Borrower as Lender receives the
Discount (as defined below) on the Products purchased by Lender from Borrower
over the first 5 years of the term of this Agreement.  Payment credits on the Loan on account of the Discounts shall be
made when the Products are invoiced by Borrower to Lender and applied first to
interest and then to principal.


 


5.             Pricing; Product Discounts.
Borrower will invoice Lender for Products at pricing no less favorable to
prices quoted other customers of similar size quantity orders; provided,
however, that new or modified Products will be priced based on assumed volumes
and complexity factors employed in the pricing model of the Product.  During the first 3 years of the term of this


 


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Agreement, on all Products
ordered by Lender and supplied by Borrower to Lender, Lender will receive a 15%
discount and, during the remaining 7 years of the term of this Agreement,
Lender will receive a 10% discount (collectively, the “Discount”).  The Discount will be applicable to all
Products purchased by Lender from Borrower over the 10-year term of this
Agreement, regardless when the Loan is repaid by Borrower.  Lender shall have the right, on reasonable
notice, to audit Borrower’s financial records, to the extent necessary, to
verify Borrower’s pricing of the Products.


 


6.             Supply and Delivery.
Borrower will supply Lender a continuing supply of Products for the term of
this Agreement.  After receipt of
Lender’s purchase order, Borrower will deliver the Products within reasonable
shipment times, consistent with shipments of Products to other customers of
Borrower similar size orders.  Products
will be shipped via Ex-Works, Laguna Hills, CA.


 


7.             Warranty.  At the time of delivery, Borrower will
warrant the Products with the same warranties given to other customers of the
Products with similar size quantity orders.


 


8.             Improvements.  Borrower will include improvements and
innovations in the Products supplied to Lender, at the same time it provides
such improvements and innovations to other customers of Borrower.


 


9.             Invoicing.  On shipment of Products, Borrower will
submit to Lender an invoice showing the invoice number and date, remit-to
address, the purchase order number, the description of the Products,
quantities, unit prices, extended totals and the Discount.  Lender will remit to Borrower any and all
amounts due (less the Discount) according to the credit terms provided in
Lender’s purchase order to Borrower.


 


10.           Delivery Forecast.  Lender will provide Borrower with a
non-binding, rolling 12-month forecast on a quarterly basis.  This forecast will include a description of
the Products and the quantity and anticipated dates of delivery.  The forecast will be communicated through
the U.S. mail, by facsimile or by e-mail. 
Lender may make adjustments to its forecast at any time, the purpose of
this requirement being to assist Borrower in scheduling material purchase and
manpower needs.


 


11.           Default.


 


(a)           If (i) Borrower, or
(ii) if there should occur a change-in-control of Borrower, the entity
acquiring control of Borrower or, (iii) if Borrower should sell, lease or
otherwise transfer all or substantially all of its assets, the entity acquiring
such assets defaults in any material respect in supplying Products to Lender as
provided in this Agreement (a “Default”), then, in addition to all other rights
and remedies Lender may have against Borrower or such entity acquiring Borrower
or its assets (the “Acquirer”), the entire outstanding and unpaid principal
amount of the Loan and all interest that would have been payable on the Loan
shall be immediately due and payable to Lender regardless of the Discounts
already received by Lender which Lender shall be entitled to retain.


 


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(b)           In the event of a
Default, Lender shall give Borrower or the Acquirer a notice specifying the
Default at Borrower’s address in Section 17. 
Borrower or the Acquirer shall have a 15-day period in which to cure the
Default.


 


(c)           In the event the
Default is caused by acts of God or other circumstance beyond the control of
Borrower or the Acquirer, then as long as Borrower or the Acquirer uses its
best efforts to remedy the circumstance, Lender may not invoke the right
granted by subsection (a) above.


 


12.           Patents, Trademarks and Copyrights.  Except as otherwise specifically provided
herein, nothing contained in this Agreement shall be construed as transferring
any patent, trademark or copyright on the Products.


 


13.           Nondisclosure.  The parties will use their best efforts to
maintain the confidentiality of the Agreement unless (a) disclosure of the
Agreement is required by applicable rules and regulations, including, but not
limited to, those rules and regulations imposed by the Securities and Exchange
Commission and National Association of Securities Dealers, Inc.; or (b) a
majority of the members of the board of directors of the party intending to
make the disclosure (the “Disclosing Party”) determines, in their sole and
absolute discretion, that it is in the best interests of the Disclosing Party
and its shareholders to disclose the Agreement.  The Disclosing Party will be permitted to make such disclosure,
but only after providing the other party at least 10 days’ prior written notice
of such disclosure.  Such notice shall
specify the content of the intended disclosure.  Neither party shall have the right to control the content of the
disclosure of the other party nor shall either party have the right to require
that the Disclosing Party reveal the identity of the recipient of the
disclosure.


 


14.           Entire Agreement.  This Agreement contains the entire agreement
and understanding between the Parties and supersedes all prior negotiations,
representations, understandings and agreements on any subject matter of this
Agreement.


 


15.           Severability.  If any provision of this Agreement or any
document executed in connection herewith shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions contained herein shall not in any way be affected or impaired.


 


16.           Amendments.  No provision of this Agreement may be
amended, modified, waived or rescinded except by written agreement executed by
the Parties.


 


17.           Independent Contractors.  The relationship between the Parties created
by this Agreement is that of independent contractors.  Nothing in this Agreement shall be construed to constitute either
Party as agent of the other for any purpose whatsoever, and neither Party shall
bind or attempt to bind the other Party to any contract or the performance of
any obligation, nor represent to third parties that it has any right to enter
into any binding obligation on the other’s behalf.


 


18.           Notices.  All notices, requests, permissions, waivers
and other communications hereunder shall be in writing and shall be deemed to
have been duly given (a) 5 business days


 


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following sending by registered
or certified mail, postage prepaid, (b) when sent, if sent by facsimile; provided
that the facsimile transmission is promptly confirmed by telephone,
(c) when delivered, if delivered personally to the intended recipient and
(d) one business day following sending by overnight delivery via a
national courier service and, in each case, addressed to a Party at the
following address for such Party:


 


(i)            if to Borrower,


 


Electropure, Inc.


23456 Southpointe Drive


Laguna Hills, CA  92653


Attention:  Floyd H. Panning,
President


 


with a copy to:


 


Deron M. Colby, Esq.


4100 Newport Place, Suite 660


Newport Beach, CA  92660


Fax:  (949) 250-8656


 


(ii)           if to Lender,


 


Ecolochem, Inc.


4545 Patent Road


Norfolk, VA  23452


Attention: 
Lyman B. Dickerson, President


 


with a copy to:


 


Williams Mullen


One Columbus Center, Suite 900


Virginia Beach, VA  23462


Attention:  Frederick T. Stant,
Esq.


Fax:  (757) 473-0395


 


or to such other address(es) as shall be furnished in writing by any
such Party to each of the other Parties in accordance with the provisions of
this Paragraph 18.


 


19.           Counterparts.  This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement,
and shall become effective when one or more counterparts have been signed by
each of the Parties and delivered to the other Party.


 


20.           Governing Law.  THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE COMMONWEALTH OF VIRGINIA
APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN THE
COMMONWEALTH OF VIRGINIA, WITHOUT


 


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REGARD TO THE CONFLICTS OF LAW
PRINCIPLES OF THE COMMONWEALTH OF VIRGINIA.


 


21.           Consent to Jurisdiction.  Each of the Parties irrevocably submits to
the exclusive jurisdiction of the United States District Court for the Eastern
District of Virginia, for the purposes of any suit, action or other proceeding
arising out of this Agreement, or any transaction contemplated hereby.  Each of the Parties must commence any
action, suit or proceeding relating hereto either in the United States District
Court for the Eastern District of Virginia, or if such suit, action or other
proceeding may not be brought in such court for jurisdictional reasons, in the
Circuit Court of the City of Norfolk, Virginia.  Service of any process, summons, notice or document by
U.S. registered mail to such Party’s respective address set forth above
shall be effective service of process for any action, suit or proceeding in
such court with respect to any matters to which it has submitted to
jurisdiction in this Paragraph 21.  Each
of the Parties irrevocably and unconditionally waives any objection to the
laying of venue of any action, suit or proceeding arising out of this Agreement
or the transactions contemplated hereby in the United States District Court for
the Eastern District of Virginia, and further irrevocably and unconditionally
waives and shall not plead or claim in any such court that any such action,
suit or proceeding brought in any such court has been brought in an
inconvenient forum.


 


22.           Waiver of Jury Trial.  Each Party waives, to the fullest extent
permitted by Applicable Law, any right it may have to a trial by jury in
respect to any litigation directly or indirectly arising out of, under or in
connection with this Agreement or the transactions contemplated hereby or
disputes relating hereto.  Each Party
(a) certifies that no representative, agent or attorney of any other Party
has represented, expressly or otherwise, that such other Party would not, in
the event of litigation, seek to enforce the foregoing waiver and
(b) acknowledges that it and the other Party has been induced to enter
into this Agreement by, among other things, the mutual waivers and
certifications in this Paragraph 22.


 


23.           Binding Effect.  This Agreement shall bind the Parties and
their transferees, successors and assigns. 
Borrower’s obligations and liability under this Agreement shall extend
to any alienee, trustee, lessee and the like or the acquirer of all or
substantially all of the assets of Borrower.


 


IN WITNESS,
Borrower and Lender have each executed this Agreement as of the day and year
first written above.


 


	
   

  	
  BORROWER:

  
	
   

  	
   

  
	
   

  	
  ELECTROPURE, INC.,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   /S/ 
  FLOYD H. PANNING

  
	
   

  	
  Title:

  	
   

  	
   Floyd H. Panning, President

  
					



 


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  ELECTROPURE EDI, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   /S/ 
  FLOYD H. PANNING

  
	
   

  	
  Title:

  	
   

  	
   Floyd H. Panning, President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  LENDER:

  
	
   

  	
   

  
	
   

  	
  ECOLOCHEM, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   /S/ 
  J.R. TAYLOR

  
	
   

  	
  Title:

  	
   

  	
   Vice President and Chief
  Operating Officer

  
					



 


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EXHIBIT
A


 


PROMISSORY
NOTE


 


	
  $200,000

  	
   

  	
   

  	
   

  	
  April 24, 2003

  



 


FOR VALUE
RECEIVED, the undersigned, ELECTROPURE, INC., a California corporation, and
ELECTROPURE EDI, Inc., a Nevada corporation (collectively, the “Borrower”),
promises to pay to the order of ECOLOCHEM, INC., a Virginia corporation (the
“Lender”) the principal amount of TWO HUNDRED THOUSAND DOLLARS ($200,000).  Payment of the outstanding principal sum and
any unpaid interest shall be made on April 23, 2008, or such other date or
dates as provided in that certain Amended and Restated Loan and Supply
Agreement between Borrower and Lender.


 


Both principal
and interest are payable in lawful money of the United States to Lender at 4545
Patent Road, Norfolk, Virginia 23502.


 


Borrower
waives, demand, presentment, protest and notice of nonpayment and protest.


 


THIS
PROMISSORY NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE
WITH, THE LAWS OF THE COMMONWEALTH OF VIRGINIA, WITHOUT REGARD TO THE CONFLICTS
OF LAW PRINCIPLES OF THE COMMONWEALTH OF VIRGINIA.


 


	
   

  	
  ELECTROPURE, INC., a California corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   
  /S/ FLOYD H. PANNING

  
	
   

  	
  Name:

  	
   Floyd H. Panning

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ELECTROPURE EDI, Inc., a Nevada corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   
  /S/ FLOYD H. PANNING

  
	
   

  	
  Name:

  	
   Floyd H. Panning

  
					



 


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