Document:

QuickLinks
 -- Click here to rapidly navigate through this document

 
 

EXHIBIT 10.10 AM    
  

 
 

DEBT CONVERSION AGREEMENT    
  

        THIS DEBT CONVERSION AGREEMENT (the "Agreement") is made and entered into effective as of the 5th day of July, 2002, by and between ANTHONY M. FRANK
KEOGH PLAN UTA CHARLES SCHWAB & CO., INC. (hereinafter referred to as "Buyer") and ELECTROPURE, INC., a California corporation (hereinafter referred to as "Electropure" or the
"Company"). 

 
 

R E C I T A L S    
  

        WHEREAS,
Buyer loaned the Company One Million Dollars ($1,000,000) under the terms of that certain 8% Three-Year Convertible Term Note dated January 17, 2001 (the
"Term Note"). 

        WHEREAS,
as of June 30, 2002, a total of $20,000.00 in interest accrued under the above Term Note is due and payable to Buyer by the Company. 

        WHEREAS,
Buyer wishes to convert all of the interest accrued on the Term Note through June 30, 2002 into shares of Electropure, Inc. Common Stock and the Company wishes to
issue such shares to extinguish the debt owed Buyer. 

        NOW,
THEREFORE, in consideration of the foregoing and of the mutual obligations herein contained, it is agreed as follows: 

        1.    CONVERSION    

        (a)  On
the effective date set forth above, Buyer hereby converts all of the $20,000.00 in interest accrued on the Term Note into Fifty Seven Thousand One Hundred Forty three
(57,143) Shares of Electropure, Inc. Common Stock, $0.01 par value, at an effective conversation rate of $0.35 per share (the "Shares"). 

        (b)  The
Shares shall have the rights, preferences, privileges, restrictions and other terms set forth in the By-laws of the Company. 

        (c)  Upon
conversion hereby and pursuant to the Debt Conversion Agreements entered into on November 1, 2001, January 2, 2002, and April 3, 2002 whereby a
total of $96,444.44 in interest accrued on said note was converted to an aggregate of 253,334 shares of Common Stock, Buyer acknowledges that all interest accrued and due through June 30, 2002
pursuant to the terms of the 8% Three-Year Convertible Term Note entered into between the parties on January 17, 2001 has been satisfied in full by the Company. Buyer also
acknowledges that pursuant to these Debt Conversion Agreements any default by Electropure for failure to pay of interest due on the Term Note through June 30, 2002 has been cured. 

        2.    REPRESENTATIONS AND WARRANTIES OF BUYER    Buyer represents and warrants to the Company: 

        (a)  The
Shares are being acquired by Buyer for investment for an indefinite period, for Buyer'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 Buyer has no present intention of selling, granting participations in, or otherwise distributing the same except as may be permitted by the Securities Act of
1933, as amended (the "Act"). 

        (b)  Buyer
does not have any contract, undertaking, agreement or arrangement with any person to sell, transfer, or grant participation to such person or to any third person,
with respect to the Shares. 

        (c)  That
Buyer understands that the Shares have not 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, and any continued reliance on such exemption is predicated on the representations of the Buyer set forth herein. 

 

        (d)  Buyer
understands that the Shares must be held indefinitely unless the sale or other transfer thereof is subsequently registered under the Act, as amended, or an
exemption from such registration is available. Buyer further understands that the Company is under no obligation to register the Securities on its behalf or to assist him in complying with any
exemption from registration except as otherwise provided herein. 

        (e)  Buyer
(i) has adequate means of providing for his current needs and possible contingencies, (ii) has no need for liquidity in this investment,
(iii) is able to bear the substantial economic risks of an investment in the Shares for an indefinite period, (iv) at the present time, can afford a complete loss of such investment, and
(v) does not have an overall commitment to investments which are not readily marketable that is disproportionate to Buyer's net worth, and Buyer's investment in the Shares will not cause such
overall commitment to become excessive. 

        (f)    Buyer
is an "accredited investor" (as defined in Regulation D promulgated under the Act) and the undersigned's total investment in the Shares does not exceed 10%
of the Buyer's net worth. 

        (g)  Buyer
recognizes that the Company has had only limited revenues to date and that the Shares as an investment involve significant risks. 

        (h)  Buyer
will not transfer the Shares without registering them under applicable federal and state securities laws unless the transfer is exempt from registration. Buyer
realizes that the Company may not allow a transfer of Shares unless the transferee is also an "accredited investor". Buyer 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. 

        (i)    The
Company will direct its transfer agent to, or will itself, 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 SHARES 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 THE ACT, OR (2) AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED."

        (j)    That
Buyer understands that Rule 144, promulgated by the Securities and Exchange Commission under the Act, may not be 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 Common Stock underlying the Shares, such sales in
reliance upon Rule 144 may only be (i) in limited quantities after the Shares have been held for one (1) year after being sold by the Company, or (ii) in unlimited
quantities by non-affiliates after the Shares have been held for two (2) years after being sold by the Company, in each case in accordance with the conditions of the Rule, all of
which must be met (including the requirement, if applicable, that adequate information concerning the Company is then available to the public). The Company and Buyer acknowledges that the Company has
no obligation to supply the information required for sales under Rule 144. 

        (k)  The
Purchase Price to be paid by Buyer to Company for the Shares has been determined by Buyer as fair and appropriate based solely upon Buyer's independent investigation
and due diligence of the Company, and neither Buyer nor the Company nor any of their agents, including, without limitation, any of their officers, directors, employees, accountants and attorneys, has
made any representations or warranties whatsoever in connection with the sale of the Shares by the 

2

 

Company to Buyer. Buyer has had sufficient opportunity in connection with the sale of the Shares to review the Company's business and affairs (including, without limitation, the Company's financial
statements and other information). The Buyer has had answered to his satisfaction any questions with respect to the Company's business and affairs. Buyer further has had the opportunity to obtain
independent financial, legal, accounting, business, tax and other appropriate advice with respect to the transactions contemplated by this Agreement, and is not relying upon the Company or any of its
agents in any manner in connection with same. 

        3.    REGISTRATION RIGHTS    The Company agrees to include for registration under the Act all of the Shares issued
hereby in the next Registration Statement filed by the Company with the Securities and Exchange Commission. 

        4.    REPRESENTATIONS AND WARRANTIES OF ELECTROPURE    

        (a)  Electropure
is a corporation duly organized and validly existing under the laws of the State of California without limit as to duration of its existence, and is
authorized and in good standing to do business in no other state; Electropure has the corporate power and adequate authority, rights and franchise to own its property and to carry on its business as
now conducted; and, subject to ratification
by its Board of Directors, Electropure has the corporate power and adequate authority to enter into this Agreement. 

        (b)  The
execution and delivery of this Agreement and subject to (1) ratification by the Board of Directors of the Company and (2) filing the Certificate with
the California Secretary of State, the performance of the provisions of this Agreement are not in contravention of or in conflict with any law or regulation or any term or provision of Electropure's
Articles of Incorporation or By-Laws and are duly authorized and do not require the consent or approval of any governmental body or other regulatory authority; and this Agreement is a
valid, binding and legal obligation of Electropure, enforceable in accordance with the terms herein. 

        5.    ENTIRE AGREEMENT    This 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. 

        6.    AMENDMENT    This Agreement may not be amended except by written document executed by the parties. 

        7.    SUBJECT HEADINGS    Subject headings are included for convenience only and shall not be deemed part of this
Agreement. 

        8.    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. 

        9.    GOVERNING LAW    This Agreement shall be governed by and construed under the laws of the State of California in
force from time to time. 

        10.    PARTIES BOUND    This Agreement is binding on and shall inure to the benefit of the parties and their
respective successors, assign, heirs, and legal representatives. 

        11.    SURVIVAL    The representations, warranties, covenants, and agreements contained in this Agreement shall
survive the consummation of the transactions contemplated hereby. 

3

 

        12.    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 effective as of the date first above written. 

	
COMPANY:	
 	

BUYER:
	

ELECTROPURE, INC.	
 	

ANTHONY M. FRANK KEOGH PLAN

UTA CHARLES SCHWAB & CO., INC.
	

/s/  CATHERINE PATTERSON      
 Catherine Patterson, Chief Financial Officer

23456 South Pointe Drive

Laguna Hills, CA 92653-1512	
 	

/s/  ANTHONY M. FRANK      
 Anthony M. Frank, Trustee

101 Montgomery Street

San Francisco, CA 94104

4

QuickLinks

EXHIBIT 10.10 AM

DEBT CONVERSION AGREEMENT

R E C I T A L SQuickLinks
 -- Click here to rapidly navigate through this document

 
 

EXHIBIT 10.10 AN    
  

 
 

8% SIXTY-DAY TERM NOTE    
  

	$150,000	 	May 3, 2002

        ELECTROPURE, INC., a California corporation, (the "Company"), for the value
received, hereby unconditionally and absolutely promises to pay to the order of ANTHONY M. FRANK, TTEE, ANTHONY M. FRANK DEFINED BENEFIT PENSION PLAN, UNDER AGREEMENT DATED
12/01/98, FBO: SHIRLEY M. PEGG, or holder (collectively, the "Holder"), upon presentation and surrender of this Note at its
office at 23456 South Pointe Drive, Laguna Hills, California 92653, or such other place as the Company may, from time to time, designate, the sum of One Hundred Fifty Thousand
($150,000), in lawful money of the United States, on July 3, 2002, or if such day is not a regular business day, then on the next business day thereafter (the "Maturity
Date"). 

        1.    PAYMENTS AND PREPAYMENTS.    

        (a)  All
payments and prepayments of principal and interest shall be made in immediately available funds on or before the Maturity Date to the Holder at 101 Montgomery, San
Francisco, California 94104. 

        (b)  The
unpaid principal amount of the Note from time to time outstanding shall bear interest from the date of this Note at the rate of Eight Percent (8%) per annum until
paid. Interest shall be computed for the actual number of days elapsed on the basis of a year consisting of 360 days. 

        (c)  The
Company may prepay at any time in advance of the Maturity Date all or any part of this Note, plus accrued interest on the portion of the principal being prepaid.
Interest on the portion of the Note prepaid shall cease to accrue on and after the date of such prepayment. 

        2.    NOTICES TO NOTEHOLDER.    

        So
long as this Note shall be outstanding, if the Company (i) shall pay any dividend or make any distribution upon the Company Stock or (ii) shall effect a capital
reorganization, reclassification of capital stock, consolidation or merger with or into another corporation, sale, lease or transfer of all or substantially all of the property and assets of the
Company to another corporation, or voluntary or involuntary dissolution, liquidation or winding up of the Company, then in any such case, the Company shall cause to be mailed by certified mail to the
Holder, at least fifteen days prior to the date specified in (x) or (y) below, as the case may be, a notice containing a brief description of the proposed action and stating the date on
which (x) a record is to be taken for the purpose of such dividend or distribution, 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. 

        3.    EVENTS OF DEFAULT.    If one or more of the following described
events shall occur (each an "Event of Default"): 

        (a)  The
Company shall fail to pay the principal of, or interest on, this Note within five (5) days after the Holder has given written notice to the Company that the
same has become due; or 

        (b)  The
Company shall fail to perform or observe any of the provisions contained in any Section of this Note and such failure shall continue for more than thirty
(30) days after the Holder has given written notice to the Company; or 

        (c)  Any
material representation or warranty made in writing by or on behalf of the Company in this Note shall prove to have been false or incorrect in any material respect,
or omits to state a 

 

material fact required to be stated therein in order to make the statements contained therein, in the light of the circumstances under which made, not misleading, on the date as of which made, and
the Company shall have failed to cure such false or incorrect statement within thirty (30) days after the Holder has given written notice to Borrower; or 

        (d)  The
Company shall be adjudicated a bankrupt or insolvent, or admit in writing its inability to pay its debts as they mature, or make an assignment for the benefit of
creditors; or the Company shall apply for or consent to the appointment of a receiver, trustee, or similar officer for it or for all or any substantial part of its property; or such receiver, trustee
or similar officer shall be appointed without the application or consent of the Company and such appointment shall continue undischarged for a period of thirty (30) days; or the Company shall
institute (by petition, application, answer, consent or otherwise) any bankruptcy, insolvency, reorganization, arrangement, readjustment of debt, dissolution, liquidation or similar proceeding
relating to it under the laws of any jurisdiction; or any such proceeding shall be instituted (by petition, application or otherwise) against the Company and shall remain undismissed for a period of
ninety (90) days; or any judgment, writ, warrant of attachment or execution or similar process shall be issued or levied against a substantial part of the property of the Company and such
judgment, writ, or similar process shall not be released, vacated or fully bonded within ninety (90) days after its issue or levy; or 

        (e)  The
Company shall be enjoined, restrained or in any way prevented by a court order from continuing to conduct all or any material part of its business affairs; 

        (f)    Any
suit, action or other proceeding (judicial or administrative) commenced against the Company, or with respect to any assets of the Company, shall threaten to have a
material adverse effect on their future operations, including, without limitation a final judgment or settlement in excess of $25,000 in excess of insurance shall be entered in, or agreed to in
respect of any such suit, action or proceeding. 

THEN,
or at any time thereafter, and in each and every case: 

        (1)  Where
the Company is in default under the provisions of Section 3(d) hereof, the entire unpaid principal amount of the Note, all interest accrued and unpaid
thereon, and all other amounts payable to the Holder hereunder shall automatically become and be forthwith due and payable without offset or counterclaim of any kind and without presentment, demand,
protest or notice of any kind, and without regard to the running of the statute of limitations, all of which are hereby expressly waived by the Company; and 

        (2)  In
any other case referred to in this Section 3, the Holder may, by written notice to the Company, as the case may be, declare the entire unpaid principal amount
of this Note, all interest accrued and unpaid hereon, and all other amounts payable hereunder to be forthwith due and payable, whereupon the same shall become immediately due and payable, without
offset or counterclaim of any kind and without presentment, demand, or protest, and without regard to the running of any statutes of limitation, all of which are hereby expressly waived by the
Company. 

        Any
declaration made pursuant to Section 3(2) hereof is subject to the condition that, if at any time after the principal of this Note shall have become due and payable, and
before any judgment or decree for the payment of the moneys so due, or any thereof, shall have been entered, all arrears of principal and interest upon this Note (except that principal of this Note
which by such declaration shall have become payable) shall have been duly paid, and every Event of Default shall have been made good, waived or cured, then and in every such case the Holder shall be
deemed to have rescinded and annulled such declaration and its 

2

 

consequences; but no such rescission or annulment shall extend to or affect any subsequent Event of Default or impair any right consequent thereon. 

        4.    CORPORATE OBLIGATION.    It is expressly understood that this
Note is solely a corporate obligation of the Company and that any and all personal liability, either at common law or in equity, or by constitution or statute, of, and any and all rights and claims
against, every stockholder, officer, or director, as such, past, present or future, are expressly waived and released by the Holder as a part of the consideration for the issuance hereof. 

        5.    AUTHORIZATION; NO CONFLICT.    The borrowings hereunder, the
execution and delivery of the Note and the performance by the Company of its obligations under this Agreement and the Note are within the corporate powers of the Company, have been authorized by all
necessary corporate action, have received all necessary governmental approval (if any shall be required) and do not and will not contravene or conflict with any provision of law or of the charter or
by-laws of the Company or of any agreement binding upon the Company. 

        6.    TRANSFER.    Subject to the appropriate provisions hereof, this
Note or any portion of the principal amount hereof (or any remaining balance if any pre-payments have occurred pursuant to Section 1 hereof) is transferable on the records of the
Company upon presentation of this Note, properly endorsed, at its principal office; upon such presentation and transfer a new Note or Notes will be issued. For the purposes of payment and all other
purposes, the Company shall deem and treat the person in whose name this Note is registered as the absolute owner hereof and the Company shall not be affected by any notice to the contrary. 

        7.    MISCELLANEOUS.    

        (a)  Notwithstanding
the foregoing, the Company promises to pay interest after maturity (whether by acceleration or otherwise, and before as well as after judgment) at the
same rate as above provided prior to maturity on balances, if any, then outstanding. 

        (b)  Interest
under this Note shall be computed on the basis of a thirty (30) day month and a year of 360 days for the actual number of days elapsed. 

        IN
WITNESS WHEREOF, the Company has caused this Note to be executed in Laguna Hills, California as of the day and year first above written. 

	
COMPANY:	
 	

HOLDER:
	

ELECTROPURE, INC.	
 	

ANTHONY M. FRANK,TTEE, ANTHONY

M. FRANK DEFINED BENEFIT PENSION

PLAN UNDER AGREEMENT DATED

12-01-98, FBO: SHIRLEY M. PEGG
	
By	
 	

/s/  CATHERINE PATTERSON      
 Catherine Patterson, Secretary

23456 South Pointe Drive

Laguna Hills, CA 92653	
 	
By	
 	

/s/  ANTHONY M. FRANK      
 Anthony M. Frank

101 Montgomery

San Francisco, CA 94104

3

 
 
 

AMENDMENT TO
  8% SIXTY-DAY TERM NOTE    
  

	DATED:	 	May 3, 2002
	By and Between (Company):	 	Electropure, Inc.
	(Holder):	 	Anthony M. Frank, TTEE, Anthony M. Frank Defined

Benefit Pension Plan, Under Agreement Dated 12/01/98,

FBO: Shirley M. Pegg
 

The
above-described parties to the Agreement hereby agree to the following amendments to the Agreement hereinabove referenced: 

	1.
	The
first paragraph of the Agreement shall read as follows: 

ELECTROPURE, INC., a California corporation, (the "Company"), for the value received, hereby
unconditionally and absolutely promises to pay to the order of ANTHONY M. FRANK, TTEE, ANTHONY M. FRANK DEFINED BENEFIT PENSION PLAN, UNDER AGREEMENT DATED 12/01/98, FBO:
SHIRLEY M. PEGG, or holder (collectively, the "Holder"), upon presentation and surrender of this Note at its office at 23456
South Pointe Drive, Laguna Hills, California 92653, or such other place as the Company may, from time to time, designate, the sum of One Hundred Fifty Thousand
($150,000), in lawful money of the United States, on July 3, 2003, or if such day is not a regular business day, then on
the next business day thereafter (the "Maturity Date").

	2.
	The
following paragraph is added as Paragraph 1 (d) of the Agreement to read as follows: 

The Holder of this Note shall have the right, at its option, at any time up until 5:00 P.M. Los Angeles time on the fifth (5th) day immediately before July 3,
2003 (except that, with respect to any portion of this Note which shall be called for prepayment, such right shall as to such portion terminate at 5:00 P.M. Los Angeles time on the fifth (5th)
day immediately prior to the Prepayment Date), to convert all or any portion of the principal amount of this Note, including interest accrued thereon into Class A Common Stock of
Electropure, Inc. (the "Conversion Shares") at and having a value equal to the closing bid price of the Company's common stock as of the date of such conversion (the "Conversion
Price").

IN
WITNESS WHEREOF, the Company has caused this Amendment to be executed on the 19th day of June, 2002. 

	
COMPANY:	
 	

HOLDER:
	

ELECTROPURE, INC.	
 	

ANTHONY M. FRANK,TTEE, ANTHONY

M. FRANK DEFINED BENEFIT PENSION

PLAN UNDER AGREEMENT DATED

12-01-98, FBO: SHIRLEY M. PEGG
	
By	
 	

/s/  CATHERINE PATTERSON      
 Catherine Patterson, Secretary

23456 South Pointe Drive

Laguna Hills, CA 92653	
 	
By	
 	

/s/  ANTHONY M. FRANK      
 Anthony M. Frank

101 Montgomery

San Francisco, CA 94104

4

QuickLinks

EXHIBIT 10.10 AN

8% SIXTY-DAY TERM NOTE

AMENDMENT TO 8% SIXTY-DAY TERM NOTE

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00042-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00042-of-00352.parquet"}]]