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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Date of Report May 31, 1996
(Date of earliest event report)
POLLUTION RESEARCH AND CONTROL CORP.
(Exact name of registrant as specified in its charter)
Form 8-K
Current Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
California 0-14266 95-2746949
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(State or other jurisdiction (Commission File No.) (IRS Employer ID No.)
of incorporation or
organization)
506 Paula Avenue, Glendale, California 91201
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(Address of principal executive offices) (Zip Code)
818-247-7601
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(Registrant's telephone number, including area code)
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ITEM 5. OTHER EVENTS
On May 31, 1996, the Board of Directors of the Company approved
retaining the firm, Liviakis Financial Communications, Inc., ("Liviakis") to
act as the Company's investor relations consultant for a period of one year.
In consideration of the services to be provided by Liviakis, the Company
granted Liviakis an option to purchase 2 million shares of the Company's Common
stock. The option expires on May 31, 2000 and is exercisable at the following
prices: (i) 1 million shares at $0.94 per share, the closing bid price of the
Company's Common Stock on May 31, 1996; (ii) 500,000 shares at $1.25 per share;
and (iii) 500,000 shares at $2.00 per share.
ITEM 6. EXHIBITS
10.1 Consulting Agreement with Liviakis
10.2 Option Granted to Liviakis
10.3 Option Robert B. Prag.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
POLLUTION RESEARCH AND CONTROL CORP.
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(Registrant)
Date: June 14, 1996 By: /s/ Albert E. Gosselin, Jr.
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Albert E. Gosselin, Jr.
Chairman of the Board, President and
Chief Executive Officer
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EXHIBIT 10.1
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT (THE "AGREEMENT"), EFFECTIVE AS OF MAY 30, 1996 IS
ENTERED INTO BY AND BETWEEN POLLUTION RESEARCH AND CONTROL CORP., A CALIFORNIA
CORPORATION (HEREIN REFERRED TO AS THE "COMPANY") AND LIVIAKIS FINANCIAL
COMMUNICATIONS, INC., A CALIFORNIA CORPORATION (HEREIN REFERRED TO AS THE
"CONSULTANT").
RECITALS
WHEREAS, COMPANY IS A PUBLICLY HELD CORPORATION WITH ITS COMMON STOCK
TRADED ON THE NASDAQ; AND
WHEREAS, CONSULTANT HAS EXPERIENCE IN THE AREA OF CORPORATE FINANCE,
INVESTOR COMMUNICATIONS AND FINANCIAL AND INVESTOR PUBLIC RELATIONS; AND
WHEREAS, COMPANY DESIRES TO ENGAGE THE SERVICES OF CONSULTANT TO
ASSIST AND CONSULT TO THE COMPANY IN MATTERS CONCERNING CORPORATE FINANCE AND
TO REPRESENT THE COMPANY IN INVESTORS' COMMUNICATIONS AND PUBLIC RELATIONS WITH
EXISTING SHAREHOLDERS AND BROKERS, DEALERS AND OTHER INVESTMENT PROFESSIONALS
AS TO THE COMPANY'S CURRENT AND PROPOSED ACTIVITIES;
NOW THEREFORE, IN CONSIDERATION OF THE PROMISES AND THE MUTUAL
COVENANTS AND AGREEMENTS HEREINAFTER SET FORTH, THE PARTIES HERETO COVENANT AND
AGREE AS FOLLOWS:
1. TERM OF CONSULTANCY. COMPANY HEREBY AGREES TO RETAIN THE CONSULTANT TO ACT
IN A CONSULTING CAPACITY TO THE COMPANY, AND THE CONSULTANT HEREBY AGREES TO
PROVIDE SERVICES TO THE COMPANY, FOR A TERM OF EIGHTEEN (12) MONTHS COMMENCING
ON MAY 30, 1996 AND ENDING ON MAY 29, 1997.
2. DUTIES OF CONSULTANT. THE CONSULTANT AGREES TO PROVIDE THE FOLLOWING
SPECIFIED CONSULTING SERVICES THROUGH IT'S OFFICERS AND EMPLOYEES DURING THE
TERM SPECIFIED IN SECTION 1.:
(A) ADVISE AND ASSIST THE COMPANY IN DEVELOPING AND IMPLEMENTING
APPROPRIATE PLANS AND MATERIALS FOR PRESENTING THE COMPANY AND ITS BUSINESS
PLANS, STRATEGY AND PERSONNEL TO THE FINANCIAL COMMUNITY, ESTABLISHING AN IMAGE
FOR THE COMPANY IN THE FINANCIAL COMMUNITY, AND CREATING THE FOUNDATION FOR
SUBSEQUENT FINANCIAL PUBLIC RELATIONS EFFORTS;
(B) INTRODUCE THE COMPANY TO THE FINANCIAL COMMUNITY;
(C) WITH THE COOPERATION OF THE COMPANY, MAINTAIN AN AWARENESS
DURING THE TERM OF THIS AGREEMENT OF THE COMPANY'S PLANS, STRATEGY AND
PERSONNEL, AS THEY MAY EVOLVE DURING SUCH PERIOD, AND ADVISE AND ASSIST THE
COMPANY IN COMMUNICATING APPROPRIATE INFORMATION REGARDING SUCH PLANS, STRATEGY
AND PERSONNEL TO THE FINANCIAL COMMUNITY;
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(d) Assist and advise the Company with respect to its (i)
corporate finance activities, (ii) stockholder and investor relations, (iii)
relations with brokers, dealers, analysts and other investment professionals,
and (iv) financial public relations generally;
(e) Perform the functions generally assigned to
investor/stockholder relations and public relations departments in major
corporations, including responding to telephone and written inquiries (which
may be referred to the Consultant by the Company); preparing or reviewing press
releases, reports and other communications with or to shareholders, the
investment community and the general public; advising with respect to the
timing, form, distribution and other matters related to such releases, reports
and communications; and consulting with respect to corporate symbols, logos,
names, the presentation of such symbols, logos and names, and other matters
relating to corporate image;
(f) Disseminate information regarding the Company to shareholders,
brokers, dealers, other investment community professionals and the general
investment public;
(g) Conduct meetings, in person or by telephone, with brokers,
dealers, analysts and other investment professionals to advise them of the
Company's plans, goals and activities, and assist the Company in preparing for
press conferences and other forums involving the media, investment community
professionals and the general investment public;
(h) At the Company's request, review business plans, strategies,
mission statements budgets, proposed transactions and other plans for the
purpose of advising the Company of the investment community implications
thereof;
(i) Otherwise perform as the Company's financial relations and public
relations consultant; and,
(j) Make public communications and disclosures regarding the Company
only within the scope of the authorizations conferred by the Company and not
make any such communications or disclosures of information not provided or
authorized by the Company.
3. Allocation of Time and Energies. The Consultant
hereby promises to perform and discharge well and faithfully the
responsibilities which may be assigned to the Consultant from time to time by
the officers and duly authorized representatives of the Company in connection
with the conduct of its financial and investor public relations and
communications activities, so long as such activities are in compliance with
applicable securities laws and regulations. Consultant shall diligently and
thoroughly provide the consulting services required hereunder. Although no
specific hours-per-day requirement will be required, Consultant and the Company
agree that Consultant will perform the duties set forth hereinabove in a
diligent and professional manner. At the request of the Company, the
Consultant will inform the Company of its specific activities concerning the
Company. The parties acknowledge and agree that a disproportionately large
amount of the effort to be expended and the costs to be incurred by the
Consultant and the benefits to be received by the Company are expected to occur
upon and shortly after, and in any event, within four or five months of the
effectiveness of this Agreement.
4. Remuneration. As full and complete compensation for
services described in this Agreement, the Company shall compensate Consultant
as follows:
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4.1 For undertaking this engagement and for other good and valuable
consideration, the Company agrees to issue and deliver to the
Consultant a "Commencement Bonus" payable in the form of 2,000,000
options (the "Options") entitling the Consultant the right to purchase
shares of the Company's Common Stock. The form and content of the
Option Agreements is attached hereto and by reference incorporated
herein as Exhibit "A" and will be acceptable to both the Company and
the Consultant. Among other things, the Options will contain the
following terms and conditions:
1. 1,000,000 of the Options will be exercisable at a price of
ninety-four Cents ($.94); 500,000 of the Options will be
exercisable at a price of One Dollar and twenty five Cents
($1.25); and, 500,000 of the Options will be exercisable at a
price of Two Dollars ($2.00);
2. the Options will be exercisable any time after November 30,
1966 and for the remainder of the four year period;
3. the Options will contain no call and/or redemption
provisions;
4. the shares of common stock issuable upon the exercise of the
Options will be included in the next appropriate registration
done by the Company, which shall be no later than November 30,
1996. All registration costs shall be borne solely by the
Company.
This Commencement Bonus shall be issued to the Consultant promptly
following execution of this Agreement and shall, when issued and
delivered to Consultant, be fully paid and non-assessable. The
Company understands and agrees that Consultant has foregone
significant opportunities to accept this engagement and that the
Company derives substantial benefit from the execution of this
Agreement and the ability to announce its relationship with
Consultant. The 2,000,000 Options issued as a Commencement Bonus,
therefore, constitute payment for Consultant's agreement to represent
the Company and are a nonrefundable, non-apportionable, and
non-ratable retainer; such Options are not a prepayment for future
services. Seventy-five percent (75%) of each of the various Options
issued pursuant to this Agreement shall be evidenced by option
agreements issued in the name of Liviakis Financial Communications,
Inc. and twenty-five percent (25%) of each of the various Options
issued pursuant to this Agreement shall be evidenced by option
agreements issued in the name of Robert B. Prag ("Prag").
4.2 Consultant and Prag (hereinafter referred to as "Consultants")
acknowledges that both the Options and the shares issuable upon the
exercise of the Options to be issued pursuant to this Agreement (the
"Shares") have not been registered under the Securities Act of 1933,
and accordingly are "restricted securities" within the meaning of Rule
144 of the Act. As such, the Options and the Shares may not be resold
or transferred unless the Company has
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received an opinion of counsel reasonably satisfactory to the Company
that such resale or transfer is exempt from the registration
requirements of that Act.
4.3 In connection with the acquisition of Options hereunder, the
Consultants represent and warrants to the Company as follows:
(a) Consultants acknowledge that the Consultants have been
afforded the opportunity to ask questions of and receive answers from
duly authorized officers or other representatives of the Company
concerning an investment in the Shares, and any additional information
which the Consultants have requested.
(b) Consultants' investment in restricted securities is reasonable
in relation to the Consultants' net worth, which is in excess of ten
(10) times the Consultants' cost basis in the Shares. Consultants have
had experience in investments in restricted and publicly traded
securities, and Consultants have had experience in investments in
speculative securities and other investments which involve the risk of
loss of investment. Consultants acknowledges that an investment in the
Warrants is speculative and involves the risk of loss. Consultants have
the requisite knowledge to assess the relative merits and risks of this
investment without the necessity of relying upon other advisors, and
Consultants can afford the risk of loss of his entire investment in the
Options. Consultants are (i) accredited investors, as that term is
defined in Regulation D promulgated under the Securities Act of 1933,
and (ii) a purchaser described in Section 25102 (f) (2) of the
California Corporate Securities Law of 1968, as amended.
(c) Consultants are acquiring the Options for the Consultants' own
account for long-term investment and not with a view toward resale or
distribution thereof except in accordance with applicable securities
laws.
5. Expenses. Consultant agrees to pay for all its expenses (phone,
mailing, labor, etc.), other than extraordinary items (travel required by/or
specifically requested by the Company, luncheons or dinners to large groups of
investment professionals, mass faxing to a sizable percentage of the Company's
constituents, investor conference calls, etc.) approved by the Company prior to
its incurring an obligation for reimbursement.
6. Indemnification. The Company warrants and represents that all oral
communications, written documents or materials, other than those designated by
the Company to the Consultant as "confidential" or "Company private", furnished
to Consultant by the Company with respect to financial affairs, operations,
profitability and strategic planning of the Company are accurate and Consultant
may rely upon the accuracy thereof without independent investigation. The
Company will protect, indemnify and hold harmless Consultant against any claims
or litigation including any damages, liability, cost and reasonable attorney's
fees with respect thereto resulting from Consultant's communication or
dissemination of any said information, documents or materials not designated by
the Company to the Consultant as "confidential" or "Company private", excluding
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any such claims or litigation resulting from Consultant's communication or
dissemination of information not provided or authorized by the Company. To the
extent feasible, the Company agrees to make Consultant an additional insured on
any and all commercial liability and directors and officers liability insurance
policies and to provide Consultant with current Certificates of Insurance
reflecting the same.
7. Representations. Consultant represents that he is not required to
maintain any licenses and registrations under federal or any state regulations
necessary to perform the services set forth herein. Consultant acknowledges
that, to the best of his knowledge, the performance of the services set forth
under this Agreement will not violate any rule or provision of any regulatory
agency having jurisdiction over Consultant. Consultant acknowledges that, to
the best of his knowledge, Consultant is not the subject of any investigation,
claim, decree or judgment involving any violation of the SEC or securities
laws. Consultant further acknowledges that he is not a securities Broker
Dealer or a registered investment advisor.
8. Legal Representation. The Company acknowledges that it has been
represented by independent legal counsel in the preparation of this Agreement.
Consultant represents that he has consulted with independent legal counsel
and/or tax, financial and business advisors, to the extent the Consultant
deemed necessary.
9. Status as Independent Contractor. Consultant's engagement pursuant to
this Agreement shall be as independent contractor, and not as an employee,
officer or other agent of the Company. Neither party to this Agreement shall
represent or hold itself out to be the employer or employee of the other.
Consultant further acknowledges the consideration provided hereinabove is a
gross amount of consideration and that the Company will not withhold from such
consideration any amounts as to income taxes, social security payments or any
other payroll taxes. All such income taxes and other such payment shall be
made or provided for by Consultant and the Company shall have no responsibility
or duties regarding such matters. Neither the Company or the Consultant
possess the authority to bind each other in any agreements without the express
written consent of the entity to be bound.
10. Attorney's Fee. If any legal action or any arbitration or other
proceeding is brought for the enforcement or interpretation of this Agreement,
or because of an alleged dispute, breach, default or misrepresentation in
connection with or related to this Agreement, the successful or prevailing
party shall be entitled to recover reasonable attorneys' fees and other costs
in connection with that action or proceeding, in addition to any other relief
to which it or they may be entitled.
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11. Waiver. The waiver by either party of a breach of any provision of
this Agreement by the other party shall not operate or be construed as a waiver
of any subsequent breach by such other party.
12. Notices. All notices, requests, and other communications hereunder
shall be deemed to be duly given if sent by U.S. mail, postage prepaid,
addressed to the other party at the address as set forth herein below:
To the Company: Mr. Albert E. Gosselin
Chairman & CEO
Pollution Research and Control Corp.
506 Paula Avenue
Glendale, CA 91201
To the Consultant: Liviakis Financial Communications, Inc.
John M. Liviakis, President
2118 "P" Street; Suite C
Sacramento, California 95816
It is understood that either party may change the address to which
notices for it shall be addressed by providing notice of such change to the
other party in the manner set forth in this paragraph.
13. Choice of Law, Jurisdiction and Venue. This Agreement shall be
governed by, construed and enforced in accordance with the laws of the State of
California. The parties agree that Sacramento County, CA. will be the venue of
any dispute and will have jurisdiction over all parties.
14. Arbitration. Any controversy or claim arising out of or relating to
this Agreement, or the alleged breach thereof, or relating to Consultant's
activities or remuneration under this Agreement, shall be settled by binding
arbitration in California, in accordance with the applicable rules of the
American Arbitration Association, and judgment on the award rendered by the
arbitrator(s) shall be binding on the parties and may be entered in any court
having jurisdiction thereof. The provisions of Title 9 of Part 3 of the
California Code of Civil Procedure, including section 1283.05, and successor
statutes, permitting expanded discovery proceedings shall be applicable to all
disputes that are arbitrated under this paragraph.
15. Complete Agreement. This Agreement instrument contains the entire
agreement of the parties relating to the subject matter hereof. This Agreement
and its terms may not be changed
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orally but only by an agreement in writing signed by the party against whom
enforcement of any waiver, change, modification, extension or discharge is
sought.
AGREED TO:
"Company" POLLUTION RESEARCH AND CONTROL CORP.
Date: May 31, 1996 By: /s/ Mr. Albert E. Gosselin
Chairman & CEO
"Consultant" LIVIAKIS FINANCIAL COMMUNICATIONS, INC.
Date: May 31, 1996 By:/s/ John M. Liviakis /s/Robert B. Prag
President Sr. Vice President
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EXHIBIT 10.2
NON-QUALIFIED STOCK OPTION AGREEMENT
AGREEMENT, made as of the 30th day of May 1996, by and between Pollution
Research and Control Corp., a California corporation having its principal
executive offices at 506 Paula Avenue, Glendale, California 91201 (the
"Grantor"), and Liviakis Financial Communications, Inc., a California
corporation having its principal executive offices at 2118 "P" Street, Suite C,
Sacramento, California 95816 (the "Optionee").
WITNESSETH:
WHEREAS, the Optionee has agreed to perform services for the
Grantor; and
WHEREAS, the Grantor is desirous that Optionee exert its utmost
efforts on behalf of the Grantor.
NOW, THEREFORE, in consideration of the Optionee's service to the
Grantor, and for other good and valuable consideration, the Grantor hereby
grants to the Optionee options to purchase common stock of the Grantor, $.001
par value ("Common Stock"), on the following terms and conditions:
1. Option.
The Grantor hereby grants to the Optionee a non-qualified stock option
(not qualified as described in Section 422 of the Internal Revenue Code of
1986, as amended, the "Code") to purchase, prior to 5:00 p.m. Glendale time on
May 29, 2000, as set forth in Paragraph 3 hereof, up to an aggregate of one
million five hundred thousand (1,500,000) fully paid and nonassessable shares
of Common Stock (the "Shares"), subject to the terms and conditions set forth
below.
2. Exercise Prices.
The exercise prices shall be allocated as set forth below:
750,000 options to purchase shares at ninety-four cents ($.94) per
Share;
375,000 options to purchase shares at one dollar and twenty-five cents
($1.25) per Share; and
375,000 options to purchase shares at two dollars ($2.00) per Share;
The Grantor shall pay all original issue or transfer taxes on the exercise of
this option and all other fees and expenses incurred by the Grantor in
connection herewith.
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3. Exercise of Option.
All of the options granted hereby shall first become exercisable on
November 30, 1996. Subject to the provisions of Paragraph 4 hereof, such
options shall be exercisable in whole or in part at any time and from time to
time from the date on which they are first exercisable through 5:00 p.m.
Glendale, CA time on May 29, 2000.
In order to exercise the option granted hereunder in whole or in part,
the Optionee shall deliver to the Grantor a written notice substantially in the
form of Notice of Exercise of Option to Purchase Shares attached hereto,
delivery to be effected by personal delivery, by overnight courier or by
registered or certified mail, return receipt requested, addressed to the
Grantor at its principal office. Such notice shall specify the number of
Shares which Optionee is purchasing under the option herein granted and shall
be accompanied by either:
(i) payment (in the form of cash or certified or bank
cashier's check) for the Shares so being purchased at the exercise price so
specified in the form of Notice of Exercise of Option to Purchase Shares and
therefor as specified in Paragraph 2 above; or
(ii) Optionee's written direction to the Grantor to retain
as consideration for the option exercise that number of Shares (rounded upward
to the next highest full Share) so being purchased which have an aggregate
value equal to the product derived by multiplying (a) the number of Shares so
being purchased by (b) the exercise price so specified in the form of Notice of
Exercise of Option to Purchase Shares and therefor as specified in Paragraph 2
above, such Shares to be valued for such purposes at the mean between the high
and low prices at which Shares trade in the principal market in which Shares
trade on the trading day preceding the date on which such notice is delivered
to the Grantor.
As soon as practicable thereafter but in any event within five (5)
business days after Grantor shall cause to be delivered to the Optionee
certificates issued in the Optionee's name evidencing (x) in the case payment
of the exercise price pursuant to (i) above the full number of Shares as to
which this option was exercised by the Optionee or (y) in the case of payment
of the exercise price pursuant to (ii) above the number of Shares remaining
after subtracting from the full number of Shares as to which this option was
exercised by Optionee that number of Shares which Grantor is to retain pursuant
to (ii) above. Optionee shall be considered to be the holder and owner of the
Shares to be evidenced by such certificates as of the close of business on the
date Grantor received the notice of exercise accompanied by payment, as
contemplated herein, without regard to the date of actual issuance of the
certificate(s) representing such Shares.
4. Divisibility and Non-Assignability of the Option.
(a) The Optionee may exercise the option herein granted in whole
or in part at any time and from time to time, subject to the provisions of
Paragraph 3 above, with respect to any whole number of Shares included therein,
but in no event may an option be exercised as to less than ten thousand
(10,000) Shares at any on time, except for the remaining Shares covered by the
option of less than ten thousand (10,000).
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(b) The Optionee may not give, grant, sell, exchange, transfer
legal title, pledge, assign or otherwise encumber or dispose of the options
herein granted or any interest therein, and the options herein granted, or any
of them, shall be exercisable only by the Optionee or its legal successors.
5. Stock as Investment.
By accepting this option, the Optionee agrees that it is Optionee's
intention to purchase Shares hereunder for investment and without any view
towards the resale or distribution thereof. In the event Shares to be issued
upon exercise of this Option have not been registered at the time of proposed
issuance under the Securities Act of 1933, as amended (the "Securities Act"),
the Optionee shall deliver to the Grantor at the time of such issuance a
written representation that optionee is acquiring such Shares in good faith for
investment purposes only and not for resale or distribution. Grantor may place
a "stop transfer" order with respect to such Shares with its transfer agent and
place an appropriate restrictive legend on the stock certificate(s) evidencing
such Shares, in order to prevent transfers unless such Shares are registered
under the Securities Act or an exemption from the registration requirements of
the Securities Act is applicable.
6. Conditions to Issuance of Shares.
The Grantor shall issue and deliver certificates for Shares purchased
upon the exercise of any option granted hereunder, provided each of the
following conditions is satisfied, which conditions the Grantor hereby
undertakes and agrees to satisfy or cause to be satisfied: (a) the issuance of
such Shares shall have been registered with the Securities and Exchange
Commission under the Securities Act of 1933, as amended, or counsel to the
Grantor shall have given an opinion that such issuance is exempt from the
registration requirements of such Act; (b) approval, to the extent required,
shall have been obtained from any state regulatory body having jurisdiction
thereof; and (c) permission for the listing of such Shares, if required, shall
have been given by NASDAQ or any national securities exchange on which Shares
are at the time of issuance listed.
7. Registration Rights.
(a) If, at any time during the exercise period hereof and the
three (3) years following any exercise hereunder, the Grantor proposes to file
a registration statement with respect to any class of securities (other than
pursuant to a registration statement on Forms S-4 or S-8 or any successor form)
under the Securities Act, the Grantor shall notify the Optionee at least twenty
(20) days prior to the filing of such registration statement and will offer to
include in such registration statement all or any portion of the Shares. In a
written notice to be delivered to the Grantor within twenty (20) days after
receipt of any such notice from Grantor, the Optionee shall state the number of
Shares that it wishes to register for resale and distribution publicly under
the proposed registration statement. The Grantor will use its best efforts,
through its officers, directors, auditors and counsel in all matters necessary
or advisable, to file at least one (1) such registration statement by January
31, 1997. The Grantor will also use its best efforts, through its officers,
directors, auditors and counsel in all matters necessary or advisable, to
include within the coverage of each such registration statement (except as
hereinafter provided) the Shares that Optionee has advised grantor that
Optionee wishes to register pursuant to such registration
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statement for resale and distribution, to prosecute each such registration
statement diligently to effectiveness, and to cause such registration statement
to become effective as promptly as practicable. In that regard, the grantor
makes no representation or warranties as to its ability to have any
registration statement declared effective.
All registrations requested pursuant to this Paragraph 7(a) are
referred to herein as "Piggyback Registrations." In the event the Grantor is
advised by the staff of the SEC, NASDAQ or any self-regulatory or state
securities agency that the inclusion of the Shares will prevent, preclude or
materially delay the effectiveness of a registration statement filed, the
Grantor, in good faith, may amend such registration statement to exclude the
Shares without otherwise affecting the Optionee's rights to any other
registration statement herein.
(i) Primary Registrations. If a Piggyback Registration
is an underwritten primary registration on behalf of the Grantor, and if the
underwriter thereof advises the Grantor in writing that in its opinion the
number of Shares requested to be included in such registration statement
exceeds the number that can be sold in such offering without materially
adversely affecting the distribution of such securities by the grantor, then
the Grantor will include in such registration statement first, the securities
that the Grantor proposes to sell and second, the securities requested to be
included in such registration statement by selling securityholders, such right
to inclusion being apportioned pro rata among the Optionee and the other
holders of any other securities requesting registration according to the market
value of Shares and other securities requested to be registered.
Notwithstanding the above, if any such underwriter shall advise the
Grantor in writing that the distribution of the Shares being included in the
registration statement concurrently with the securities being registered by the
Grantor would materially adversely affect the distribution of such securities
by the Grantor, then the Optionee shall delay its offering and sale for such
period ending on the earliest of (a) 180 days following the effective date of
the Grantor's registration statement, (b) the earliest date that, in the
opinion of such underwriter, such adverse effect would no longer be caused, or
(c) such date as the Grantor, managing underwriter and Optionee shall otherwise
agree. In the event of such delay, the Grantor shall file such supplements and
post-effective amendments and take any such other actions as may be necessary
or appropriate to permit such Optionee to make its proposed offering and sale
for a period of at least ninety (90) days commencing immediately following the
end of such period of delay. If any party disapproves of the terms of any such
underwriting, it may elect to withdraw therefrom by written notice to the
Grantor, the underwriter and the Optionee. Notwithstanding the foregoing, the
Grantor shall not be required to include Shares within the coverage of a
registration statement being filed pursuant to this Paragraph 7(a)(i) if, in
the opinion of counsel for both the Grantor and Optionee, all of the Shares
proposed to be registered may be immediately transferred pursuant to the
provisions of Rule 144 under the Securities Act.
(ii) Priority on Secondary Registrations. If a Piggyback
Registration is an underwritten secondary registration on behalf of holders of
securities of the Grantor, and the underwriter thereof advises the Grantor in
writing that it its opinion the number of Shares requested to be included in
such registration statement exceeds the number which can be sold in such
offering without materially adversely affecting the distribution of such
securities, then the
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Grantor will include in such registration statement the securities requested to
be included in such registration statement by selling securityholders on a pro
rata basis, with such rights to inclusion being apportioned among the Optionee
and the other holders of any other securities requesting registration according
to the market value of Shares and other securities requested by them,
respectively, to be registered. Notwithstanding the foregoing, the Grantor
shall not be required to include Shares within the coverage of a registration
statement being filed pursuant to this Paragraph 9(a)(ii) if, in the opinion
of counsel for both the Grantor and Optionee, all of the Shares proposed to be
registered may be immediately transferred pursuant to the provisions of Rule
144 under the Securities Act.
(b) If at any time after November 30, 1996 and prior to the third
(3rd) anniversary of the earlier of the expiration of the option herein granted
and the purchase of the final Shares remaining subject to such option Shares
issued or issuable upon exercise of the option herein granted are not then
registered under one or more Piggyback Registrations and then covered by a
prospectus complying with the requirements of the Securities Act, the Optionee
may by written notice to the Grantor require Grantor to file a registration
statement under the Securities Act covering such Shares as Optionee may specify
in such notice. Optionee shall be entitled so to require Grantor to file a
registration statement pursuant to this Paragraph 7(b) on only one (1)
occasion. The Grantor will file such a registration statement within ninety
(90) days of receipt of such notice; and thereafter will prosecute such
registration statement diligently to effectiveness; will cause such
registration statement to become effective as promptly as practicable; will
promptly file all such supplements and post-effective amendments to such
registration statement and take any such other actions as may be necessary or
appropriate to make available to Optionee on as continuous a basis as is
practicable a prospectus meeting the requirements of the Securities Act through
the earliest of (a) the date on which the final Shares have been sold and
distributed by Optionee, (b) the date on which, in the opinion of counsel for
both the Grantor and Optionee, all of the Shares which Optionee then holds may
be immediately transferred pursuant to the provisions of Rule 144 under the
Securities Act, and (c) May 29, 2003. In that regard, the Grantor makes no
representations or warranties as to its ability to have any registration
statement or post-effective amendment thereto declared effective.
(c) In the event of any registration of a security pursuant to
this Paragraph 7, the Grantor shall indemnify the Optionee and its officers and
directors against all losses, claims, damages and liabilities caused by any
untrue statement or alleged untrue statement of a material fact contained in
any registration statement or prospectus (and as amended or supplemented)
relating to such registration, or caused by any omission or alleged omission to
state a material fact required to be stated therein or necessary to make the
statement therein not misleading in light of the circumstances under which they
are made unless such statement or omission was made in reliance upon and in
conformity with information furnished to the Grantor by the Optionee with
expressly for use therein. The Optionee shall also indemnify the Grantor, its
officers and directors and each underwriter of the Shares so registered with
respect to losses, claims damages and Shares so registered with respect to
losses, claims damages and liabilities caused by an untrue statement or
omission made in reliance upon and in conformity with information furnished by
the Optionee to the Grantor in writing expressly for use in such registration
statement or prospectus.
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<PAGE> 6
(d) All expenses of any registration referred to in this Paragraph
7, except the fees and disbursement of counsel to the Optionee, underwriting
commissions or discounts and any transfer or other taxes applicable to the
transfer of Shares by the Optionee, shall be borne by the Grantor.
(e) Following the exercise of options hereunder, the Optionee
shall promptly advise the Grantor when Optionee no longer holds any shares
acquired through the exercise of options granted hereunder, and upon the
request of the Grantor, the Optionee shall advise the Grantor from time to time
of the number of Shares then held by Optionee which were acquired through the
exercise of options granted hereunder.
8. Adjustments Upon Changes in Capitalization.
(a) In the event of changes in the outstanding Common Stock of the
Grantor by reason of stock dividends, stock splits, reverse stock splits,
recapitalization's, consolidations, combinations, exchanges of shares,
separations, reorganizations, liquidation's or any similar events or events
having similar consequences, the number and class of Shares as to which the
option may be exercised shall be correspondingly adjusted so that for the same
aggregate exercise price the Optionee shall be entitled to acquire the
securities and other property Optionee would have held if Optionee had
exercised the option granted hereunder for the number of Shares under
consideration prior to the first of such events to occur and continued to hold
such Shares and all other securities and other property issued with respect
thereto in connection with such events. No adjustment shall be made with
respect to cash dividends or non-liquidating dividends payable in property
other than cas, so long as Grantor provides Optionee with written notice of any
such proposed dividend at least fifteen (15) days prior to the record date for
such dividend. Grantor shall also give Optionee prompt written notice of any
event resulting in an adjustment under this Paragraph 8(a), including a
detailed computation of such adjustment.
(b) Any adjustment in the number and kind of Shares and other
securities shall apply proportionately to only the unexercised portion of the
option granted hereunder at the time of the event given rise to the adjustment.
If fractions of a Share would result from any such adjustment, the adjustment
shall be revised to the next higher whole number of Shares so long as such
increase does not result in the holder of the option being deemed to own more
than 5% of the total combined voting power or value of all classes of stock of
the Grantor or its subsidiaries, in which case the adjustment shall be revised
to the next lower whole number of Shares.
9. Effect of Mergers, consolidations or Sales of Assets.
In the event Grantor should propose to merge or consolidate with, or
engage in some other form of business combination with, any other corporation
or entity on a basis in which Grantor is not to be the surviving entity, then
as a condition precedent to proceeding with such merger, consolidation or other
business entity to assume and perform all of Grantor's obligations under the
right to acquire the same securities and property for the option exercise price
specified herein as Optionee would have received if Optionee had exercised the
option granted herein immediately prior to such merger, consolidation or other
business combination. To the extent the
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<PAGE> 7
above may be inconsistent with Sections 424(a)(1) and (2) of the Code, the
above shall be deemed interpreted so as to comply therewith.
10. No Rights in Option Stock.
Optionee shall have no rights as a shareholder in respect of Shares as
to which the option granted hereunder shall not have been exercised and payment
made as herein provided.
11. Effect Upon Employment.
This Agreement does not give the Optionee any right to employment by,
or any other relationship with, the Grantor.
12. Binding Effect.
Except as herein otherwise expressly provided, this Agreement shall be
binding upon and inure to the benefit of the parties hereto, their successors,
legal representatives and assigns.
13. Miscellaneous.
This Agreement shall be construed under the laws of the State of
California applied to agreements made and to be performed entirely within such
State. Headings have been included herein for convenience of reference only
and shall not be deemed a part of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
Pollution Research and Control Corp.
By: /s/ Albert E. Gosselin, Jr.
President & CEO
ACCEPTED AND AGREED TO:
LIVIAKIS FINANCIAL COMMUNICATIONS, INC.
By: /s/ John M. Liviakis, President
7
<PAGE> 8
NOTICE OF EXERCISE OF OPTION TO PURCHASE SHARES
TO: POLLUTION RESEARCH AND CONTROL CORP.
The undersigned hereby exercises the option for the purchase of
_______________________________________ (_____________) shares with an exercise
price of _______________________ ($_________________) according to the terms
and conditions of that certain Non-Qualified Stock Option Agreement, dated as
of May 30, 1996, between Pollution Research and Control Corp. and the
undersigned (the "Agreement") and herewith makes payment of the exercise price
in full in accordance with the terms of said Agreement by (check one):
[ ] (i) payment in the form of cash or certified or bank
cashier's check for the Shares so being purchased at the exercise price of
____________________________ ($_______________) therefor as specified in
Paragraph 2 of the Agreement; or
[ ] (ii) these written direction to the Grantor to retain as
consideration for the option exercise that number of the Shares (rounded upward
to the next highest full Share) so being purchased which have an aggregate
value (valued for such purpose at the mean between the high and low prices at
which Shares traded in the principal market in which Shares trade on the
trading day preceding the date on which this Notice is delivered to the
Pollution Research and Control Corp.) equal to the product derived by
multiplying (a) the number of Shares so being purchased by (b) the exercise
price _______________________________________ ($_____________) therefor as
specified in Paragraph 2 of the Agreement;
The undersigned is purchasing such shares for investment purposes only and not
with a view to the sale or distribution thereof. Kindly issue the certificate
for such shares in accordance with the instructions given below.
---------------------------------------
Signature
Social Security or Taxpayer I.D. Number:
---------------------------------------
Instructions for issuance of stock:
- --------------------------------------------------------------------------------
Name
- --------------------------------------------------------------------------------
Street Address
- --------------------------------------------------------------------------------
City State Zip Code
8
<PAGE> 1
EXHIBIT 10.3
NON-QUALIFIED STOCK OPTION AGREEMENT
AGREEMENT, made as of the 30th day of May 1996, by and between Pollution
Research and Control Corp., a California corporation having its principal
executive offices at 506 Paula Avenue, Glendale, California 91201 (the
"Grantor"), and Robert B. Prag, whose business address is 2118 "P" Street, Suite
C, Sacramento, California 95816 (the "Optionee").
WITNESSETH:
WHEREAS, the Optionee has agreed to perform services for the Grantor;
and
WHEREAS, the Grantor is desirous that Optionee exert its utmost
efforts on behalf of the Grantor.
NOW, THEREFORE, in consideration of the Optionee's service to the
Grantor, and for other good and valuable consideration, the Grantor hereby
grants to the Optionee options to purchase common stock of the Grantor, $.001
par value ("Common Stock"), on the following terms and conditions:
1. Option.
The Grantor hereby grants to the Optionee a non-qualified stock option
(not qualified as described in Section 422 of the Internal Revenue Code of
1986, as amended, the "Code") to purchase, prior to 5:00 p.m. Glendale time on
May 29, 2000, as set forth in Paragraph 3 hereof, up to an aggregate of five
hundred thousand (500,000) fully paid and nonassessable shares of Common Stock
(the "Shares"), subject to the terms and conditions set forth below.
2. Exercise Prices.
The exercise prices shall be allocated as set forth below:
250,000 options to purchase shares at ninety-four cents ($.94) per
Share;
125,000 options to purchase shares at one dollar and twenty-five cents
($1.25) per Share; and
175,000 options to purchase shares at two dollars ($2.00) per Share;
The Grantor shall pay all original issue or transfer taxes on the exercise of
this option and all other fees and expenses incurred by the Grantor in
connection herewith.
3. Exercise of Option.
All of the options granted hereby shall first become exercisable on
November 30, 1996. Subject to the provisions of Paragraph 4 hereof, such
options shall be exercisable in whole or in
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<PAGE> 2
part at any time and from time to time from the date on which they are first
exercisable through 5:00 p.m. Glendale, CA time on May 29, 2000.
In order to exercise the option granted hereunder in whole or in part,
the Optionee shall deliver to the Grantor a written notice substantially in the
form of Notice of Exercise of Option to Purchase Shares attached hereto,
delivery to be effected by personal delivery, by overnight courier or by
registered or certified mail, return receipt requested, addressed to the
Grantor at its principal office. Such notice shall specify the number of
Shares which Optionee is purchasing under the option herein granted and shall
be accompanied by either:
(i) payment (in the form of cash or certified or bank
cashier's check) for the Shares so being purchased at the exercise price so
specified in the form of Notice of Exercise of Option to Purchase Shares and
therefor as specified in Paragraph 2 above; or
(ii) Optionee's written direction to the Grantor to retain
as consideration for the option exercise that number of Shares (rounded upward
to the next highest full Share) so being purchased which have an aggregate
value equal to the product derived by multiplying (a) the number of Shares so
being purchased by (b) the exercise price so specified in the form of Notice of
Exercise of Option to Purchase Shares and therefor as specified in Paragraph 2
above, such Shares to be valued for such purposes at the mean between the high
and low prices at which Shares trade in the principal market in which Shares
trade on the trading day preceding the date on which such notice is delivered
to the Grantor.
As soon as practicable thereafter but in any event within five (5)
business days after Grantor shall cause to be delivered to the Optionee
certificates issued in the Optionee's name evidencing (x) in the case payment
of the exercise price pursuant to (i) above the full number of Shares as to
which this option was exercised by the Optionee or (y) in the case of payment
of the exercise price pursuant to (ii) above the number of Shares remaining
after subtracting from the full number of Shares as to which this option was
exercised by Optionee that number of Shares which Grantor is to retain pursuant
to (ii) above. Optionee shall be considered to be the holder and owner of the
Shares to be evidenced by such certificates as of the close of business on the
date Grantor received the notice of exercise accompanied by payment, as
contemplated herein, without regard to the date of actual issuance of the
certificate (s) representing such Shares.
4. Divisibility and Non-Assignability of the Option.
(a) The Optionee may exercise the option herein granted in whole
or in part at any time and from time to time, subject to the provisions of
Paragraph 3 above, with respect to any whole number of Shares included therein,
but in no event may an option be exercised as to less than ten thousand
(10,000) Shares at any on time, except for the remaining Shares covered by the
option of less than ten thousand (10,000).
(b) The Optionee may not give, grant, sell, exchange, transfer
legal title, pledge, assign or otherwise encumber or dispose of the options
herein granted or any interest therein, and the
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<PAGE> 3
options herein granted, or any of them, shall be exercisable only by the
Optionee or its legal successors.
5. Stock as Investment.
By accepting this option, the Optionee agrees that it is Optionee's
intention to purchase Shares hereunder for investment and without any view
towards the resale or distribution thereof. In the event Shares to be issued
upon exercise of this Option have not been registered at the time of proposed
issuance under the Securities Act of 1933, as amended (the "Securities Act"),
the Optionee shall deliver to the Grantor at the time of such issuance a
written representation that optionee is acquiring such Shares in good faith for
investment purposes only and not for resale or distribution. Grantor may place
a "stop transfer" order with respect to such Shares with its transfer agent and
place an appropriate restrictive legend on the stock certificate(s) evidencing
such Shares, in order to prevent transfers unless such Shares are registered
under the Securities Act or an exemption from the registration requirements of
the Securities Act is applicable.
6. Conditions to Issuance of Shares.
The Grantor shall issue and deliver certificates for Shares purchased
upon the exercise of any option granted hereunder, provided each of the
following conditions is satisfied, which conditions the Grantor hereby
undertakes and agrees to satisfy or cause to be satisfied: (a) the issuance of
such Shares shall have been registered with the Securities and Exchange
Commission under the Securities Act of 1933, as amended, or counsel to the
Grantor shall have given an opinion that such issuance is exempt from the
registration requirements of such Act; (b) approval, to the extent required,
shall have been obtained from any state regulatory body having jurisdiction
thereof, and (c) permission for the listing of such Shares, if required, shall
have been given by NASDAQ or any national securities exchange on which Shares
are at the time of issuance listed.
7. Registration Rights.
(a) If, at any time during the exercise period hereof and the
three (3) years following any exercise hereunder, the Grantor proposes to file
a registration statement with respect to any class of securities (other than
pursuant to a registration statement on Forms S-4 or S-8 or any successor form)
under the Securities Act, the Grantor shall notify the Optionee at least twenty
(20) days prior to the filing of such registration statement and will offer to
include in such registration statement all or any portion of the Shares. In a
written notice to be delivered to the Grantor within twenty (20) days after
receipt of any such notice from Grantor, the Optionee shall state the number of
Shares that it wishes to register for resale and distribution publicly under
the proposed registration statement. The Grantor will use its best efforts,
through its officers, directors, auditors and counsel in all matters necessary
or advisable, to file at least one (1) such registration statement by January
31, 1997. The Grantor will also use its best efforts, through its officers,
directors, auditors and counsel in all matters necessary or advisable, to
include within the coverage of each such registration statement (except as
hereinafter provided) the Shares that Optionee has advised grantor that
Optionee wishes to register pursuant to such registration
3
<PAGE> 4
statement for resale and distribution, to prosecute each such registration
statement diligently to effectiveness, and to cause such registration statement
to become effective as promptly as practicable. In that regard, the grantor
makes no representation or warranties as to its ability to have any
registration statement declared effective.
All registrations requested pursuant to this Paragraph 7 (a) are
referred to herein as "Piggyback Registrations." In the event the Grantor is
advised by the staff of the SEC, NASDAQ or any self-regulatory or state
securities agency that the inclusion of the Shares will prevent, preclude or
materially delay the effectiveness of a registration statement filed, the
Grantor, in good faith, may amend such registration statement to exclude the
Shares without otherwise affecting the Optionee's rights to any other
registration statement herein.
(i) Primary Registrations. If a Piggyback Registration is an
underwritten primary registration on behalf of the Grantor, and if the
underwriter thereof advises the Grantor in writing that in its opinion the
number of Shares requested to be included in such registration statement
exceeds the number that can be sold in such offering without materially
adversely affecting the distribution of such securities by the grantor, then
the Grantor will include in such registration statement first, the securities
that the Grantor proposes to sell and second, the securities requested to be
included in such registration statement by selling securityholders, such fight
to inclusion being apportioned pro rata among the Optionee and the other
holders of any other securities requesting registration according to the market
value of Shares and other securities requested to be registered.
Notwithstanding the above, if any such underwriter shall advise the
Grantor in writing that the distribution of the Shares being included in the
registration statement concurrently with the securities being registered by the
Grantor would materially adversely affect the distribution of such securities
by the Grantor, then the Optionee shall delay its offering and sale for such
period ending on the earliest of (a) 180 days following the effective date of
the Grantor's registration statement, (b) the earliest date that, in the
opinion of such underwriter, such adverse effect would no longer be caused, or
(c) such date as the Grantor, managing underwriter and Optionee shall otherwise
agree. In the event of such delay, the Grantor shall file such supplements and
post-effective amendments and take any such other actions as may be necessary
or appropriate to permit such Optionee to make its proposed offering and sale
for a period of at least ninety (90) days commencing immediately following the
end of such period of delay. If any party disapproves of the terms of any such
underwriting, it may elect to withdraw therefrom by written notice to the
Grantor, the underwriter and the Optionee. Notwithstanding the foregoing, the
Grantor shall not be required to include Shares within the coverage of a
registration statement being filed pursuant to this Paragraph 7 (a) (i) if, in
the opinion of counsel for both the Grantor and Optionee, all of the Shares
proposed to be registered may be immediately transferred pursuant to the
provisions of Rule 144 under the Securities Act.
(ii) Priority on Secondary Registrations. If a Piggyback
Registration is an underwritten secondary registration on behalf of holders of
securities of the Grantor, and the underwriter thereof advises the Grantor in
writing that it its opinion the number of Shares requested to be included in
such registration statement exceeds the number which can be sold in
4
<PAGE> 5
such offering without materially adversely affecting the distribution of such
securities, then the Grantor will include in such registration statement the
securities requested to be included in such registration statement by selling
securityholders on a pro rata basis, with such rights to inclusion being
apportioned among the Optionee and the other holders of any other securities
requesting registration according to the market value of Shares and other
securities requested by them, respectively, to be registered. Notwithstanding
the foregoing, the Grantor shall not be required to include Shares within the
coverage of a registration statement being filed pursuant to this Paragraph 9
(a) (ii) if, in the opinion of counsel for both the Grantor and Optionee, all
of the Shares proposed to be registered may be immediately transferred pursuant
to the provisions of Rule 144 under the Securities Act.
(b) If at any time after November 30, 1996 and prior to the third
(3rd) anniversary of the earlier of the expiration of the option herein granted
and the purchase of the final Shares remaining subject to such option Shares
issued or issuable upon exercise of the option herein granted are not then
registered under one or more Piggyback Registrations and then covered by a
prospectus complying with the requirements of the Securities Act, the Optionee
may by written notice to the Grantor require Grantor to file a registration
statement under the Securities Act covering such Shares as Optionee may specify
in such notice. Optionee shall be entitled so to require Grantor to file a
registration statement pursuant to this Paragraph 7 (b) on only one (1)
occasion. The Grantor will file such a registration statement within ninety
(90) days of receipt of such notice; and thereafter will prosecute such
registration statement diligently to effectiveness; will cause such
registration statement to become effective as promptly as practicable; will
promptly file all such supplements and post-effective amendments to such
registration statement and take any such other actions as may be necessary or
appropriate to make available to Optionee on as continuous a basis as is
practicable a prospectus meeting the requirements of the Securities Act through
the earliest of (a) the date on which the final Shares have been sold and
distributed by Optionee, (b) the date on which, in the opinion of counsel for
both the Grantor and Optionee, all of the Shares which Optionee then holds may
be immediately transferred pursuant to the provisions of Rule 144 under the
Securities Act, and (c) May 29, 2003. In that regard, the Grantor makes no
representations or warranties as to its ability to have any registration
statement or post-effective amendment thereto declared effective.
(c) In the event of any registration of a security pursuant to
this Paragraph 7, the Grantor shall indemnify the Optionee and its officers and
directors against all losses, claims, damages and liabilities caused by any
untrue statement or alleged untrue statement of a material fact contained in
any registration statement or prospectus (and as amended or supplemented)
relating to such registration, or caused by any omission or alleged omission to
state a material fact required to be stated therein or necessary to make the
statement therein not misleading in light of the circumstances under which they
are made unless such statement or omission was made in reliance upon and in
conformity with information furnished to the Grantor by the Optionee with
expressly for use therein. The Optionee shall also indemnify the Grantor, its
officers and directors and each underwriter of the Shares so registered with
respect to losses, claims damages and Shares so registered with respect to
losses, claims damages and liabilities caused by an untrue statement or
omission made in reliance upon and in conformity with information furnished by
the Optionee to the Grantor in writing expressly for use in such registration
statement or prospectus.
5
<PAGE> 6
(d) All expenses of any registration referred to in this Paragraph
7, except the fees and disbursement of counsel to the Optionee, underwriting
commissions or discounts and any transfer or other taxes applicable to the
transfer of Shares by the Optionee, shall be borne by the Grantor.
(e) Following the exercise of options hereunder, the Optionee
shall promptly advise the Grantor when Optionee no longer holds any shares
acquired through the exercise of options granted hereunder, and upon the
request of the Grantor, the Optionee shall advise the Grantor from time to time
of the number of Shares then held by Optionee which were acquired through the
exercise of options granted hereunder.
8. Adjustments Upon Changes in Capitalization.
(a) In the event of changes in the outstanding Common Stock of the
Grantor by reason of stock dividends, stock splits, reverse stock splits,
recapitalization's, consolidations, combinations, exchanges of shares,
separations, reorganizations, liquidation's or any similar events or events
having similar consequences, the number and class of Shares as to which the
option may be exercised shall be correspondingly adjusted so that for the same
aggregate exercise price the Optionee shall be entitled to acquire the
securities and other property Optionee would have held if Optionee had
exercised the option granted hereunder for the number of Shares under
consideration prior to the first of such events to occur and continued to hold
such Shares and all other securities and other property issued with respect
thereto in connection with such events. No adjustment shall be made with
respect to cash dividends or non-liquidating dividends payable in property
other than cash, so long as Grantor provides Optionee with written notice of any
such proposed dividend at least fifteen (15) days prior to the record date for
such dividend. Grantor shall also give Optionee prompt written notice of any
event resulting in an adjustment under this Paragraph 8 (a), including a
detailed computation of such adjustment.
(b) Any adjustment in the number and kind of Shares and other
securities shall apply proportionately to only the unexercised portion of the
option granted hereunder at the time of the event given rise to the adjustment.
If fractions of a Share would result from any such adjustment, the adjustment
shall be revised to the next higher whole number of Shares so long as such
increase does not result in the holder of the option being deemed to own more
than 5% of the total combined voting power or value of all classes of stock of
the Grantor or its subsidiaries, in which case the adjustment shall be revised
to the next lower whole number of Shares.
9. Effect of Mergers, consolidations or Sales of Assets.
In the event Grantor should propose to merge or consolidate with, or
engage in some other form of business combination with, any other corporation
or entity on a basis in which Grantor is not to be the surviving entity, then
as a condition precedent to proceeding with such merger, consolidation or other
business entity to assume and perform all of Grantor's obligations under the
right to acquire the same securities and property for the option exercise price
specified herein as Optionee would have received if Optionee had exercised the
option granted herein immediately prior to such merger, consolidation or other
business combination. To the extent the
6
<PAGE> 7
above may be inconsistent with Sections 424 (a)(1) and (2) of the Code, the
above shall be deemed interpreted so as to comply therewith.
10. No Rights in Option Stock.
Optionee shall have no rights as a shareholder in respect of Shares as
to which the option granted hereunder shall not have been exercised and payment
made as herein provided.
11. Effect Upon Employment.
This Agreement does not give the Optionee any right to employment by,
or any other relationship with, the Grantor.
12. Binding Effect.
Except as herein otherwise expressly provided, this Agreement shall be
binding upon and inure to the benefit of the parties hereto, their successors,
legal representatives and assigns.
13. Miscellaneous.
This Agreement shall be construed under the laws of the State of
California applied to agreements made and to be performed entirely within such
State. Headings have been included herein for convenience of reference only
and shall not be deemed a part of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
Pollution Research and Control Corp.
By: /s/ Albert E. Gosselin, Jr.
President & CEO
ACCEPTED AND AGREED TO:
LIVIAKIS FINANCIAL COMMUNICATIONS, INC.
By: /s/ Robert B. Prag
7
<PAGE> 8
NOTICE OF EXERCISE OF OPTION TO PURCHASE SHARES
TO: POLLUTION RESEARCH AND CONTROL CORP.
The undersigned hereby exercises the option for the purchase of
_____________________________ (_________________) shares with an exercise price
of _______________________ ($_____________) according to the terms and
conditions of that certain Non-Qualified Stock Option Agreement, dated as of
May 30, 1996, between Pollution Research and Control Corp. and the undersigned
(the "Agreement") and herewith makes payment of the exercise price in full in
accordance with the terms of said Agreement by (check one):
[ ] (i) payment in the form of cash or certified or bank
cashier's check for the Shares so being purchased at the exercise price of
_______________________ ($_____________) therefor as specified in Paragraph 2
of the Agreement; or
[ ] (ii) these written directions to the Grantor to retain as
consideration for the option exercise that number of the Shares (rounded upward
to the next highest fun Share) so being purchased which have an aggregate value
(valued for such purpose at the mean between the high and low prices at which
Shares traded in the principal market in which Shares trade on the trading day
preceding the date on which this Notice is delivered to the Pollution Research
and Control Corp.) equal to the product derived by multiplying (a) the number
of Shares so being purchased by (b) the exercise price ($ therefor as specified
in Paragraph 2 of the Agreement;
The undersigned is purchasing such shares for investment purposes only and not
with a view to the sale or distribution thereof Kindly issue the certificate
for such shares in accordance with the instructions given below.
---------------------------------------
Signature
Social Security or Taxpayer I.D. Number:
--------------------------------------
Instructions for issuance of stock:
- -------------------------------------------------------------------------------
Name
- -------------------------------------------------------------------------------
Street Address
- -------------------------------------------------------------------------------
City State Zip Code
8
