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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )*
POLLUTION RESEARCH AND CONTROL CORP.
- --------------------------------------------------------------------------------
(Name of Issuer)
Common Stock, $.001 par value
- --------------------------------------------------------------------------------
(Title of Class of Securities)
731547-10-5
- --------------------------------------------------------------------------------
(CUSIP Number)
John M. Liviakis, 2420 "K" St., Suite 220, Sacramento, CA 95816, (916) 448-6084
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
July 5, 1997
- --------------------------------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
Check the following box if a fee is being paid with the statement [ ]. (A fee is
not required only if the reporting person: (1) has a previous statement on file
reporting beneficial ownership of more than five percent of the class of
securities described in Item 1: and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
NOTE: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities,
and for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
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SCHEDULE 13D
CUSIP NO. 731547-10-5 PAGE 2 OF 59 PAGES
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Liviakis Financial Communications, Inc.
68-0311399
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [X]
(b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
WC
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
State of California
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
975,000
NUMBER OF ----------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 0
OWNED BY ----------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 975,000
PERSON ----------------------------------------------------------
WITH 10 SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
975,000
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [X]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
10.1%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
CO
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE> 3
SCHEDULE 13D
CUSIP NO. 731547-10-5 PAGE 3 OF 59 PAGES
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
John M. Liviakis
###-##-####
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [X]
(b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
00
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
66,667
NUMBER OF ----------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 975,000
OWNED BY ----------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 66,667
PERSON ----------------------------------------------------------
WITH 10 SHARED DISPOSITIVE POWER
975,000
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,041,667
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [X]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
10.7%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
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SCHEDULE 13D
CUSIP NO. 731547-10-5 PAGE 4 OF 59 PAGES
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Renee A. Liviakis
###-##-####
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [X]
(b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
00
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
0
NUMBER OF ----------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 975,000
OWNED BY ----------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 0
PERSON ----------------------------------------------------------
WITH 10 SHARED DISPOSITIVE POWER
975,000
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
975,000
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [X]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
10.1%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE> 5
SCHEDULE 13D
CUSIP NO. 731547-10-5 PAGE 5 OF 59 PAGES
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Robert B. Prag
###-##-####
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [X]
(b) [ ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
PF, OO
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
391,667
NUMBER OF ----------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 975,000
OWNED BY ----------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 391,667
PERSON ----------------------------------------------------------
WITH 10 SHARED DISPOSITIVE POWER
975,000
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,366,667
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [X]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13.6%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
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1. SECURITY AND ISSUER.
The title of the class of equity securities to which this statement
relates is common stock, $.001 par value (the "Common Stock"), issued by
Pollution Research and Control Corp., a California corporation (the
"Corporation"). The principal offices of the Corporation are located at 506
Paula Avenue, Glendale, California 91201.
2. IDENTITY AND BACKGROUND.
This statement is filed by Liviakis Financial Communications, Inc., a
California corporation ("LFC"), John M. Liviakis ("JML"), Renee A. Liviakis
("RAL") and Robert B. Prag ("RBP"). LFC's principal business is as a
consultant in the areas of investor communications, financial and investor
public relations and corporate finance. LFC's principal business and principal
office address is 2420 "K" Street, Suite 220, Sacramento, California 95816.
LFC's President is JML, its Senior Vice President is RBP, and its
Treasurer, Chief Financial Officer and Secretary is RAL. JML, RAL and RBP are
the only executive officers of LFC. The activities associated with these
positions constitute the principal occupation and employment of JML, RBP and
RAL. JML, RBP and RAL are LFC's only directors, and JML and RAL are its sole
stockholders. JML, RBP and RAL are citizens of the United States, and their
business address is LFC's principal business address listed above.
During the last five years, none of LFC, JML, RBP and RAL has been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors), and during such period none of them has been a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction, the
result of which was to subject such person to a judgment, decree or final order
enjoining future violations of, or prohibiting or mandating activities subject
to, federal or state securities laws or finding any violation with respect to
such laws.
3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
This Schedule 13D is being filed to report 975,000 shares of the
Corporation's Common Stock which LFC may first acquire on September 2, 1997
pursuant to a Non-Qualified Stock Option Agreement dated as of August 30, 1996
by and between the Corporation and LFC (the "LFC Stock Option"); 325,000 shares
of the Corporation's Common Stock which RBP may first acquire on September 2,
1997 pursuant to a Non-Qualified Stock Option
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Page 7 of 59
Agreement dated as of August 30, 1996 by and between the Corporation and RBP
(the "RBP Stock Option" and collectively with the LFC Stock Option, the "Stock
Options"); 66,667 shares of Common Stock which RBP may acquire pursuant to a
stock purchase warrant (the "RBP Warrant") exercisable at $1.00 per share
through June 14, 1999; and 66,667 shares of Common Stock which JML may acquire
pursuant to a stock purchase warrant (the "JML Warrant" and collectively with
the RBP Warrant, the "Warrants") exercisable at $1.00 per share through June
14, 1999.
The Stock Options represent a restatement and revision of previous
stock option arrangements between the Corporation and LFC and RBP,
respectively. Pursuant to the LFC Stock Option, LFC may purchase up to 750,000
shares of Common Stock at $0.94 per share and up to an additional 225,000
shares of Common Stock at $1.25 per share from September 2, 1997 through May
29, 2000. Pursuant to the RBP Stock Option, RBP may purchase up to 250,000
shares of Common Stock at $0.94 per share and up to an additional 75,000 shares
of Common Stock at $1.25 per share from September 2, 1997 through May 29, 2000.
Copies of the LFC Stock Option and the RBP Stock Option are attached hereto as
Exhibits "A" and "B", respectively.
The Warrants were acquired by JML and RBP from the Corporation in June
1996 in a private placement, in which JML and RBP each acquired for $40,000
66,667 shares of Common Stock and a Warrant to purchase up to 66,667 shares of
Common Stock. Both JML and RBP have since sold the shares of Common Stock so
acquired. JML and RBP, respectively, utilized personal funds for acquiring
such securities in the private placement. Copies of the RBP Warrant and the
JML Warrant are attached hereto as Exhibits "G" and "H", respectively.
To the extent LFC exercises the LFC Stock Option, it presently intends
to utilize its working capital. To the extent RBP exercises the RBP Stock
Option or the RBP Warrant, he presently intends to utilize his personal funds.
To the extent JML exercises the JML Stock Option, he presently intends to
utilize his personal funds.
4. PURPOSE OF TRANSACTION.
The Option Agreements were entered into pursuant to a Consulting
Agreement effective as of May 30, 1996 by and between the Corporation and LFC,
as amended (the "Consulting Agreement"), in consideration of LFC entering into
the Consulting Agreement and for consulting services to be performed by LFC for
the Corporation thereunder. A copy of the Consulting Agreement, as originally
entered into, is attached hereto as Exhibit "C", and
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Page 8 of 59
first and second amendments thereto are attached hereto as Exhibits "D" and
"E", respectively.
To the extent LFC, RBP and JML exercise the Stock Options and
Warrants, each presently intends to acquire and hold the shares of Common Stock
so purchased for investment purposes. LFC, JML, RAL and RBP may also acquire
additional shares of Common Stock for investment purposes from time to time,
although they do not have any present plans to do so.
LFC, JML, RAL and RBP have no plans or proposals which relate to or
would result in: any extraordinary corporate transaction, such as a merger,
reorganization or liquidation involving the Corporation or any subsidiary of
the Corporation; the sale or transfer of a material amount of assets of the
Corporation or any of its subsidiaries; any change in the Corporation's present
Board of Directors or management; any material change in the present
capitalization or dividend policy of the Corporation; any material change in
the Corporation's business or corporate structure; any changes in the
Corporation's charter, bylaws, or instruments corresponding thereto or other
actions which may impede the acquisition of control of the Corporation by any
person; a class of securities of the Corporation being delisted from a national
securities exchange or ceasing to be authorized to be quoted in an inter-dealer
quotation system of a registered national securities association; a class of
equity securities of the Corporation becoming eligible for termination of
registration pursuant to Section 12(g)(4) of the Securities Exchange Act of
1934, as amended; or any similar action.
5. INTEREST IN SECURITIES OF THE ISSUER.
Pursuant to the LFC Stock Option, LFC has the right to purchase up to
750,000 shares of Common Stock from the Corporation from September 2, 1997
through May 29, 2000 at an exercise price of $0.94 per share of Common Stock
and the right to purchase up to an additional 225,000 shares of Common Stock
from the Corporation during the same period at an exercise price of $1.25 per
share of Common Stock. As the directors of LFC, JML, RAL and RBP share the
power to direct the vote or disposition of any shares of the Common Stock of
the Corporation acquired by LFC pursuant to the LFC Stock Option or otherwise.
Pursuant to the RBP Stock Option, RBP has the right to purchase up to
250,000 shares of Common Stock from the Corporation from September 2, 1997
through May 29, 2000 at an exercise price of $0.94 per share of Common Stock
and the right to purchase up to an additional 75,000 shares of Common Stock
from the Corporation during the same period at an exercise price
<PAGE> 9
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of $1.25 per share of Common Stock. Pursuant to the RBP Warrant, RBP has the
right to purchase up to 66,667 shares of Common Stock through June 14, 1999 at
an exercise price of $1.00 per share. RBP has the sole power to direct the
vote or disposition of any shares of the Common Stock of the Corporation
acquired by RBP pursuant to the RBP Stock Option or otherwise.
Pursuant to the JML Warrant, JML has the right to purchase up to
66,667 shares of Common Stock through June 14, 1999 at an exercise price of
$1.00 per share. JML has the sole power to direct the vote or disposition of
any shares of the Common Stock of the Corporation acquired by JML pursuant to
the JML Stock Option or otherwise.
LFC, JML and RAL disclaim any beneficial ownership of any shares of
Common Stock which may be acquired by RBP pursuant to the RBP Stock Option.
LFC and RBP disclaim any beneficial ownership of any shares of Common Stock
which may be acquired by JML pursuant to the JML Stock Option.
The 975,000 shares of Common Stock that LFC has the right to acquire
within sixty days of the date hereof, and as to which JML, RAL and RBP as
officers and directors of LFC would have shared power to direct the vote or
disposition, represents approximately 10.1% of that class of securities. The
391,667 shares of Common Stock that RBP has the right to acquire within sixty
days of the date hereof, and as to which RBP would have the sole power to
direct the vote or disposition, represents approximately 4.3% of that class of
securities. The 66,667 shares of Common Stock that JML has the right to
acquire within sixty days of the date hereof, and as to which JML would have
the sole power to direct the vote or disposition, represents approximately 0.8%
of that class of securities. The 1,433,334 shares of Common Stock as to which,
if acquired through exercise of the Stock Options or Warrants, one or more of
LFC, JML, RAL and RBP would have either sole or shared power to direct the vote
or disposition represent approximately 14.2% of that class of securities. In
each case, the calculation of the percentage of the class of Common Stock is
based on information set forth in the Corporation's most recent quarterly
report filed pursuant to the Securities Exchange Act of 1934 indicating that,
as of a recent date, 8,673,732 shares of Common Stock were outstanding.
During the past sixty days, LFC, JML, RAL and RBP have not engaged in
any transactions in Common Stock.
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6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
The Corporation entered into the Stock Option Agreements with LFC and
RBP pursuant to the Consulting Agreement. In the agreements embodying the
Stock Options, the Corporation grants to LFC and RBP certain rights to have
shares of Common Stock registered under the Securities Act of 1933, as amended.
Except for the Consulting Agreement, the Stock Options and the
Warrants, there are no contracts, arrangements, understandings or relationships
between the persons named in Item 2 above and any person with respect to any
securities of the Corporation.
7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit A - Non-Qualified Stock Option Agreement dated as of August
30, 1996 by and between the Corporation and LFC.
Exhibit B - Non-Qualified Stock Option Agreement dated as of August
30, 1996 by and between the Corporation and RBP.
Exhibit C - Consulting Agreement, dated effective as of May 30, 1996
by and between the Corporation and LFC.
Exhibit D - Amendment to Consulting Agreement dated July 31, 1996 by
and between the Corporation and LFC.
Exhibit E - Second Amendment to Consulting Agreement dated as of
August 28, 1996 by and between the Corporation and LFC.
Exhibit F - Agreement of LFC, JML, RAL and RBP pursuant to Rule
13d-1(f).
Exhibit G - Warrant to Purchase 66,667 shares of Common Stock of the
Corporation issued to Robert B. Prag.
Exhibit H - Warrant to Purchase 66,667 shares of Common Stock of the
Corporation issued to John M. Liviakis.
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After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: July 9, 1997 LIVIAKIS FINANCIAL COMMUNICATIONS, INC.
By: /s/John M. Liviakis
---------------------------------
John M. Liviakis, President
/s/John M. Liviakis
---------------------------------
John M. Liviakis
/s/Renee A. Liviakis
---------------------------------
Renee A. Liviakis
/s/Robert B. Prag
---------------------------------
Robert B. Prag
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EXHIBIT "A"
NON-QUALIFIED STOCK OPTION AGREEMENT
AGREEMENT, made as of the 30th day of August 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, $.001
par value ("Common Stock"), on the following terms and conditions:
1. Option.
The Grantor hereby grants to the Optionee a non-qualified stock option
(not qualified as described in Section 422 of the Internal Revenue Code of
1986, as amended, the "Code") to purchase, prior to 5:00 p.m. Glendale time on
May 29, 2000, as set forth in Paragraph 3 hereof, up to an aggregate of nine
hundred seventy-five thousand (975,000) full paid and nonassessable shares of
Common Stock (the "Shares"), subject to the terms and conditions set forth
below.
2. Exercise Prices.
The exercise prices shall be allocated as set forth below:
750,000 options to purchase shares at ninety-four cents ($.94)
per Share; and,
225,000 options to purchase shares at one dollar and
twenty-five cents ($1.25) 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
August 31, 1997. 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
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Page 14 of 59
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 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
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Page 15 of 59
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,
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 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
<PAGE> 16
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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 Grantor will include 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
<PAGE> 17
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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 August 31, 1997 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
<PAGE> 18
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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 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.
(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
<PAGE> 19
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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 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.
<PAGE> 20
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day year first above written.
Pollution Research and Control Corp.
By /s/ Albert E. Gosselin
---------------------------
ACCEPTED AND AGREED TO:
LIVIAKIS FINANCIAL COMMUNICATIONS, INC.
By /s/ John M. Liviakis
---------------------------
John M. Liviakis, President
<PAGE> 21
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EXHIBIT "B"
NON-QUALIFIED STOCK OPTION AGREEMENT
AGREEMENT, made as of the 30th day of August 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, an individual whose address is at 2828
Grasslands Drive, #1123, Sacramento, California 95833 (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, $.001
par value ("Common Stock"), on the following terms and conditions:
1. Option.
The Grantor hereby grants to the Optionee a non-qualified stock option
(not qualified as described in Section 422 of the Internal Revenue Code of
1986, as amended, the "Code") to purchase, prior to 5:00 p.m. Glendale time on
May 29, 2000, as set forth in Paragraph 3 hereof, up to an aggregate of three
hundred twenty-five thousand (325,000) fully paid and nonassessable shares of
Common Stock (the "Shares"), subject to the terms and conditions set forth
below.
2. Exercise Prices.
The exercise prices shall be allocated as set forth below:
250,000 options to purchase shares at ninety-four cents ($.94)
per Share; and
75,000 options to purchase shares at one dollar and
twenty-five cents ($1.25) per Share.
<PAGE> 22
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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
August 31, 1997. 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 nd 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
<PAGE> 23
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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 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
<PAGE> 24
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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,
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 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
<PAGE> 25
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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 Grantor will include such registration statement the
securities requested to be included in such registration statement by selling
<PAGE> 26
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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 August 31, 1997 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
<PAGE> 27
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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 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.
(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
<PAGE> 28
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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 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.
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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 year first above written.
Pollution Research and Control Corp.
By /s/ Albert E. Gosselin
---------------------------
ACCEPTED AND AGREED TO:
By /s/ Robert B. Prag
---------------------------
Robert B. Prag
<PAGE> 30
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EXHIBIT "C"
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
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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;
(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 is 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
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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:
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,
1996 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
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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")
acknowledge 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 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) Consultant acknowledges that the Consultant has 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
Consultant has requested.
(b) Consultant's investment in restricted securities is reasonable
in relation to the Consultant's net worth, which is in excess of ten
(10) times the Consultant's cost basis in the Shares. Consultant has
had Experience in investments in restricted and publicly traded
securities, and Consultant has had experience in investments in
speculative securities and other investments which involve the risk of
loss of investment. Consultant acknowledges that an investment in the
Shares is speculative and involves the risk of loss. Consultant has
the requisite knowledge to assess the relative merits and risks of
this investment without the
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necessity of relying upon other advisors, and Consultant can afford
the risk of loss of his entire investment in the Shares. Consultant
is (i) an accredited investor, 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 Consultant's
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
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
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Agreement will not violate any rule or provision of any regulatory agency
having jurisdiction over Consultant nor do such services to the Company
represent any conflict with Consultant's other clients or business affairs.
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.
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.
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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
2113 "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
arbitrators 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 discharge is sought.
AGREED TO:
"Company" POLLUTION RESEARCH AND CONTROL CORP.
Date: 5/31/96 By: /s/Albert E. Gosselin
- -------------- ----------------------------
Mr. Albert E. Gosselin
Chairman & CEO
"Consultant" LIVIAKIS FINANCIAL COMMUNICATIONS, INC.
Date: 5/31/96 By: /s/John M. Liviakis
- -------------- ---------------------------
John M. Liviakis
President
By: /s/Robert B. Prag
---------------------------
Robert B. Prag
Sr. Vice President
<PAGE> 38
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EXHIBIT "D"
AMENDMENT TO CONSULTING AGREEMENT DATED 5/30/96
This Amendment, dated July 31, 1996 and effective as of July 31, 1996,
to the Consulting Agreement dated May 30, 1996 entered into by and between
POLLUTION RESEARCH & 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 and Consultant entered in a Consulting Agreement
dated May 30, 1996, (the "Agreement"); and
WHEREAS, Company and Consultant desire to amend such Consulting
Agreement;
NOW THEREFORE, in consideration of the promises and mutual covenants
and agreements hereinafter set forth, the parties hereto covenant and agree as
follows:
Item (2.) of Paragraph 4.1 of the Agreement is hereby amended to read as
follows:
2. The Options will be exercisable any time after January 30, 1997
and for the remainder of the four year period.
The first paragraph of Item 3. of Exhibit "A" of the Agreement titled
"NON-QUALIFIED STOCK OPTION AGREEMENT" is hereby amended as follows:
All of the options granted hereby shall first become
exercisable on January 30, 1997. Subject to the provisions of
Paragraph 4 hereof, such options shall be exercisable in whole or in
part at any time 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.
AGREED TO:
"Company": POLLUTION RESEARCH & CONTROL CORP.
Date: 7/31/96 By:/s/ Albert E. Gosselin
----------- ------------------------
Albert E. Gosselin
Chairman and CEO
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"Consultant": LIVIAKIS FINANCIAL COMMUNICATIONS, INC.
Date: 7/31/96 By:/s/John M. Liviakis
----------- -------------------------
John M. Liviakis
President
By:/s/Robert B. Prag
-------------------------
Robert B. Prag
Sr. Vice President
<PAGE> 40
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EXHIBIT "E"
SECOND AMENDMENT TO CONSULTING AGREEMENT DATED 5/30/96
This Second Amendment to the Consulting Agreement dated May 30, 1996
entered into as of and effective August 28, 1996 by and between POLLUTION
RESEARCH & 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 and Consultant entered in a Consulting Agreement
dated May 30, 1996 (the "Agreement"); and
WHEREAS, the Company and Consultant amended such Agreement on
effective July 31, 1996; and
WHEREAS, Company and Consultant desire to make a second amendment to
such Agreement;
NOW THEREFORE, in consideration of the promises and mutual covenants
and agreements hereinafter set forth, the parties hereto covenant and agree as
follows:
1. Section 1. of the Agreement, "Term of Consultancy", is hereby
amended to read in full as follows:
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 seven (7) months commencing on May 30, 1996 and
ending on December 31, 1996.
2. Section 2. of the Agreement, "Duties of the Consultant", is
hereby amended by adding subsection (k) to read as follows:
(k) Commencing on October 1, 1996 and for the balance of
the term of the Agreement, it is understood and agreed that Consultant in the
performance of its duties hereunder will only be required to respond to
inquiries regarding the Company, assist the Company in preparing and
disseminating its press releases, and arrange for investor conference call
presentations, and will not be required to make any proactive initiatives to
create sponsorship in the Company's common stock.
3. Subsection 4.1 of the Agreement, "Remuneration", is hereby
amended to read in full 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 1,300,000 options (the
"Options") entitling the Consultant the right to purchase shares of the
Company's Common Stock. The Option Agreements will be amended as promptly as
possible to reflect the terms of this Subsection 4.1 as amended by the Second
Amendment to the Agreement. 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); and 300,000 of the Options
will be exercisable at a price of One Dollar and twenty five
Cents ($1.25);
2. the Options will be exercisable any time after
January 31, 1997 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
January 31, 1997. All registration costs shall be borne
solely by the Company.
4. The 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 has derived substantial benefit
from the execution of this Agreement and the ability to announce its
relationship with Consultant. The 1,300,000 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 Robert B. Prag
("Prag").
5. It is acknowledged by the parties that the proposal to enter
into this Second Amendment was solely that of the Company and not that of the
Consultant, and that the
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Consultant has agreed to the terms of this Second Amendment at the request of
the Company. Moreover, it is agreed and understood that the Consultant is in
good standing with the Company and the Consultant has in no way committed any
breach of the Consulting Agreement.
Except as specifically modified herein, the Agreement as previously
modified by the First Amendment thereto is hereby ratified and confirmed.
"Company" POLLUTION RESEARCH & CONTROL CORP.
Date: 8/30/96 By:/s/Albert E. Gosselin
----------- ------------------------
Albert E. Gosselin,
Chairman and CEO
"Consultant" LIVIAKIS FINANCIAL COMMUNICATIONS, INC.
Date: 8/28/96 By:/s/John M. Liviakis
----------- --------------------------
John M. Liviakis
President
By:/s/Robert B. Prag
--------------------------
Robert B. Prag
Sr. Vice President
<PAGE> 43
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EXHIBIT "F"
JOINT FILING AGREEMENT
Liviakis Financial Communications, Inc., John M. Liviakis, Renee A.
Liviakis and Robert B. Prag (collectively the "Parties" and individually a
"Party") hereby agree that they shall file a single statement on Schedule 13D
(as amended from time to time, the "Statement") with respect to their
beneficial ownership of shares of Common Stock (the "Securities") of Pollution
Research and Control Corp., a California corporation, on behalf of and in
satisfaction of the obligations of all of the Parties and that they shall amend
the Statement from time to time as required by rules promulgated under the
Securities Exchange Act of 1934.
Each of the Parties represents and warrants that such Party is
eligible to use Schedule 13D with respect to information regarding the
Securities and agrees to assume responsibility for the timely filing of the
Statement and any amendments thereto. Each of the Parties hereby assumes
responsibility for the completeness and accuracy of the information concerning
such Party contained in the Statement. No Party shall be responsible for the
completeness and accuracy of the information contained in the Statement
concerning the other Parties, unless such Party knows or has reason to believe
that such information is incomplete or inaccurate. The execution of the
Statement, including any amendment thereto, by one of the Parties shall
constitute a representation by such Party that the information concerning such
Party contained therein is complete and accurate and that such Party neither
knows nor has any reason to believe that the information concerning the other
Parties contained therein is either incomplete or inaccurate.
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original but which together shall constitute one and
the same instrument.
In Witness Whereof, the Parties have executed this Joint Filing
Agreement this 9th day of July, 1997.
LIVIAKIS FINANCIAL COMMUNICATIONS, INC.
By:/s/John M. Liviakis
---------------------------
/s/John M. Liviakis
--------------------------------
John M. Liviakis
/s/Renee A. Liviakis
--------------------------------
Renee A. Liviakis
/s/Robert B. Prag
--------------------------------
Robert B. Prag
<PAGE> 44
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EXHIBIT "G"
THE WARRANT REPRESENTED BY THIS CERTIFICATE AND THE SHARES OF COMMON STOCK
ISSUABLE UPON THE EXERCISE OF THE WARRANT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR REGISTERED OR QUALIFIED
UNDER THE SECURITIES LAWS OF ANY STATE AND THUS MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED UNLESS REGISTERED UNDER THAT ACT AND REGISTERED OR
QUALIFIED UNDER APPLICABLE SECURITIES LAW OR UNLESS AN EXEMPTION FROM SUCH
REGISTRATION OR QUALIFICATION IS AVAILABLE.
WARRANT TO PURCHASE 66,667 SHARES OF COMMON STOCK OF
POLLUTION RESEARCH AND CONTROL CORP.
FROM JUNE 15, 1996
VOID AFTER 5:00 P.M., LOS ANGELES TIME, ON JUNE 14, 1999
This certifies that, Robert B. Prag or registered assigns, is
entitled, subject to the terms set forth below, to purchase from Pollution
Research and Control Corp., a California corporation (the "Company"), the above
number of fully paid nonassessable shares of Common Stock of the Company
("Common Stock") at a purchase price of One Dollar ($1.00) per share ("Purchase
Price"). The Purchase Price and number of shares of Common Stock issuable upon
exercise hereof shall be subject to adjustment as provided in this Warrant.
This Warrant is exercisable at any time, or from time to time, to and
including 5:00 p.m., Los Angeles time, on June 14, 1999, unless sooner exercise
is required pursuant to the terms of this Warrant.
DEFINITIONS.
As used in this Warrant, the following terms, unless the context
otherwise requires, have the following meanings:
1.1 "Company" includes any corporation which shall succeed to or
assume the obligations of the Company under this Warrant.
1.2 "Common Stock," when used with reference to stock of the
Company, means all shares, now or hereafter authorized, of the class of the
Common Stock of the Company presently authorized and stock of any other class
into which those shares may hereafter be changed.
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1.3 The terms "Warrant holder," "holder of this Warrant,"
"holder," or similar terms when the context refers to a holder of the Warrant,
refers to any person who shall at the time be the registered holder of the
Warrant.
2. EXERCISE.
The holder of this Warrant may exercise it in full by surrender of
this Warrant, with the form of subscription at the end of this warrant duly
executed by the holder, to the Company at its principal office, accompanied by
payment in the amount obtained by multiplying the Purchase Price by the number
of shares of Common Stock specified on the face of this warrant as may be
adjusted pursuant to the terms of this Warrant. Payment shall be made in cash,
cashier's or certified check payable to the Company, by the surrender of any
notes of the Company having an unpaid principal and interest balance at least
equal to such payment (designating the portion of such balance to be applied),
or by any combination of such methods.
The holder of this Warrant may exercise it in part by surrendering it,
accompanied by payment as provided above, except that the amount payable by the
holder on such partial exercise shall be the amount obtained by multiplying the
Purchase Price by the number of shares of Common Stock (without giving effect
to any adjustment of that number) designated by the holder in a written
statement accompanying this Warrant. On partial exercise, the Company shall,
unless this Warrant has expired, promptly issue and deliver to the holder of
this Warrant a new Warrant or Warrants of like tenor an dated the date hereof
in the name of that holder providing for the right to purchase that number of
shares or Common Stock (without giving effect to any adjustment of that number)
for which this Warrant has not been exercised.
In the event the Common Stock issuable upon exercise of this Warrant
is not then registered under the Securities Act of 1933, as amended, the holder
of this Warrant shall, upon exercise of this Warrant, deliver to the Company an
investor's certificate with respect to such shares to the effect that such
shares are being acquired for investment purposes only and for its own account,
and not as a nominee or agent for any other person and not with a view to, or
for resale in connection with, any distribution thereof within the meaning of
the Securities Act of 1933, as amended.
3. ISSUANCE OF CERTIFICATES.
As soon as possible after full or partial exercise of this Warrant,
the Company, at its expense, will cause to be issued in
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the name of and delivered to the holder of this Warrant, a certificate, or
certificates, for the number of fully paid and nonassessable shares of Common
Stock to which that holder shall be entitled on such exercise, together with
any other securities and property to which that holder is entitled on such
exercise under the terms of this Warrant. The person in whose name any
certificate for shares of Common Stock is issued upon exercise of this Warrant
shall for all purposes be deemed to have become the holder of record of such
shares on the date on which this Warrant was surrendered and payment of the
Purchase Price and any applicable taxes was made, irrespective of the date of
delivery of such certificate, except that, if the date of such surrender and
payment is a date when the stock transfer books of the Company are closed, such
person shall be deemed to have become the holder of such shares at the close of
business on the next succeeding date on which the stock transfer books are
open. No fractional share will be issued on exercise of rights to purchase
under this Warrant. If on any exercise of this Warrant, a fraction of a share
results, the Company will pay the cash value of that fractional share,
calculated on the basis of the Purchase Price.
4. SUBDIVISIONS OR COMBINATIONS.
If, at any time during the term hereof, the number of shares of Common
Stock outstanding is increased by a stock dividend payable in shares of Common
Stock or by a subdivision or split-up, then, immediately following the record
date fixed for the determination of holders of Common Stock entitled to receive
such stock dividend, subdivision or split-up, the number of shares of Common
Stock issuable upon exercise of this Warrant shall be increased and the
Purchase Price shall be decreased in proportion to such increase in outstanding
shares. If at any time during the term hereof the number of shares of Common
Stock outstanding is decreased by a combination of the outstanding shares of
Common Stock, immediately following the record date for such combination, the
number of shares of Common Stock issuable upon exercise of this Warrant shall
be decreased and the Purchase Price shall be increased in proportion to such
decrease in outstanding shares.
If the Company shall, at any time, subdivide or combine its
outstanding shares of Common Stock, pay a dividend of other securities to the
holders of such shares, or pay a dividend of shares of Common Stock to holders
of any such stock of the Company of any class, this Warrant shall, after that
subdivision, combination, or dividend, evidence the right to purchase the
number of shares of Common Stock or other securities that would have been
issuable to the holder of this Warrant as a result of that subdivision,
combination or dividend with respect to the shares of Common Stock which were
purchased under this Warrant
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immediately before that subdivision, combination, or dividend or any record
date thereafter. If the Company shall at any time subdivide the outstanding
shares of Common Stock, the Purchase Price then in effect immediately before
that subdivision shall be proportionately decreased, and, if the Company shall
at any time combine the outstanding shares of Common Stock, the Purchase Price
then in effect immediately before that combination shall be proportionately
increased. Any judgment under this Section 4 shall become effective at the
close of business on the date the subdivision, combination or dividend becomes
effective retroactive to the record date therefor, if any.
5. REORGANIZATION, RECLASSIFICATION.
If the Common Stock issuable on exercise of this Warrant shall be
changed into the same or a different number of shares of any other class or
classes of stock, whether by capital reorganization, reclassification, or
otherwise (other than a subdivision or combination of shares provided for
above, the holder of this Warrant shall, on its exercise, be entitled to
purchase, in lieu of the Common Stock which that holder would have become
entitled to purchase but for such change a number of shares of such other class
or classes of stock which the holder of this Warrant would have owned or have
been entitled to receive after such change, had this Warrant been exercised
immediately before that change or any record date therefor.
6. CONSOLIDATION, MERGERS.
If at any time there shall be a capital reorganization of the Common
Stock issuable upon exercise of this Warrant (other than a combination,
reclassification, exchange or subdivision of shares provided for elsewhere in
this Warrant) or a merger or consolidation of the Company with or into another
corporation, or the sale of the Company's properties and assets as, or
substantially as, an entirety to any other person, then, as a part of such
reorganization, merger, consolidation, or sale, lawful provision shall be made
so that the holder of this Warrant shall thereafter be entitled to receive on
exercise of this Warrant, during the period specified in this Warrant and on
payment of the Purchase Price then in effect, the number of shares of stock or
other securities or property of the Company, or of the successor corporation
resulting from such merger or consolidation, to which a holder of the Common
Stock deliverable on exercise of this Warrant would have been entitled on such
capital reorganization, merger, consolidation, or sale. In any such case,
appropriate adjustment (as determined in good faith by the Company's Board of
Directors) shall be made in the application of the provisions of this Warrant
with respect to the rights and interests of the holder of this Warrant after
the reorganization, merger, consolidation, or sale such that the
<PAGE> 48
Page 48 of 59
provisions of this Warrant (including adjustments of the Purchase Price then in
effect and number of shares purchasable on exercise of this Warrant) shall be
applicable after that event, as near as reasonably may be, in relation to any
shares or other property deliverable after that event on exercise of this
Warrant.
7. NOTICE.
The Company shall promptly give written notice of each adjustment of
the Purchase Price or the number of shares of Common Stock or other securities
issuable on exercise of this Warrant, by certified mail, return receipt
requested, postage prepaid, to the registered holder of this Warrant at that
holder's address as shown on the Company's books. The notice shall state the
adjustment and show in reasonable detail the facts on which that adjustment is
based.
If (i) the Company shall pay any dividend payable in stock on its
Common Stock or make any other distributions to the holders of its Common Stock
(other than a dividend in Common Stock exempt from the adjustment provisions of
this Warrant), or (ii) the Company shall offer for subscription pro rata to the
holders of its Common Stock any additional shares of stock of any class or any
other rights, or (iii) there shall be any capital reorganization or
reclassification of the Company's Common Stock or consolidation or merger of
the Company with or into another corporation, or (iv) there shall be any sale
of all or substantially all of the Company's properties and assets, or (v)
there shall be a voluntary of involuntary dissolution, liquidation, or winding
up of the Company, or (vi) the Company shall have received an offer approved by
the Board of Directors to purchase all or substantially of its assets; then, in
each case, the Company shall give at least 15 calendar days prior written
notice (by certified mail, return receipt requested) to the registered holder
of this Warrant at the address of that holder shown on the books of the
Company, of the date as of which the books of the Company shall close or a
record shall be taken for such dividend, distribution, or subscription rights,
or the date as of which the reorganization, reclassification, consolidation,
merger, sale, dissolution, liquidation, or winding up shall take place. That
notice shall also specify the date as of which the holders of the Common Stock
of record shall participate in that dividend, distribution, or subscription
rights, or shall be entitled to exchange their Common Stock for securities or
other property deliverable on such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation, or winding up (on which
date, in the event of voluntary or involuntary dissolution, liquidation, or
winding up of the Company, or consolidation or merger in which the Company is
not a surviving entity or becomes a wholly-owned subsidiary, the right to
exercise this Warrant shall cease).
<PAGE> 49
Page 49 of 59
8. COVENANTS.
The Company covenants that it will not, by amendment of its articles
of incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities, or any other
voluntary action avoid, or seek to avoid, the observance or performance of any
of the terms of this Warrant, but will, at all times and in good faith, assist
in carrying out all those terms and in taking all action necessary or
appropriate to protect the rights of the holder of this Warrant against other
impairment. Without limiting the generality of the above provision, the
Company:
(i) will take all necessary or appropriate action in order
that the Company may validly and legally issue fully paid
and nonassessable shares of Common Stock on exercise of
this Warrant;
(ii) will not increase the par value of the shares of Common
Stock receivable on the exercise of this Warrant above
the amount payable for those shares on such exercise; and
(iii) will at all times reserve and keep available, solely for
issuance upon exercise of this Warrant, all shares of Common
Stock or other securities from time to time issuable upon
exercise of this Warrant.
9. CHANGES IN WARRANT.
The form of this Warrant need not be changed because of any adjustment
in the Purchase Price or in the number of shares of Common Stock purchasable
upon its exercise. A Warrant issued after any such adjustment or any partial
exercise or in replacement may continue to express the same Purchase Price and
the same number of shares of Common Stock (appropriately reduced in the case of
partial exercise) as are stated on the face of this Warrant as initially
issued, and that Purchase Price and the number of shares shall be considered to
have been so changed as of the close of business on the date of adjustment.
10. LOST CERTIFICATES.
Upon receipt of evidence reasonably satisfactory to the Company of the
loss, theft, destruction, or mutilation of this Warrant, upon delivery of any
indemnity agreement or bond reasonably satisfactory in form and amount to the
Company or, in the case of mutilation, on surrender and cancellation of this
Warrant, the Company, at its expense, will execute and deliver, in lieu of this
Warrant, a new Warrant of like tenor.
<PAGE> 50
Page 50 of 59
11. TRANSFERABILITY.
This Warrant shall not be transferred or assigned unless the Company
receives an opinion of counsel reasonably acceptable to the Company (which
counsel may be counsel for the Company), stating that such transfer is exempt
from the registration requirements of the Securities Act of 1933, as amended,
and the registration and qualification requirements under applicable state law.
12. GOVERNING LAW.
This Warrant shall be governed by and construed and enforced in
accordance with the laws of California.
13. TAXES.
The Company shall pay all documentary, stamp or other transactional
taxes attributable to the issuance or delivery of shares of Common Stock of the
Company upon exercise of all or any part of this Warrant; provided, however,
that the Company shall not be required to pay any taxes which may be payable in
respect of any transfer involved in the issuance or delivery of any certificate
for such shares in a name other than that of the holder of this Warrant.
14. RIGHTS OF WARRANT HOLDER.
No holder of this Warrant, as such, shall be entitled to vote or
receive dividends or be considered a shareholder of the Company for any
purpose, nor shall anything in this Warrant be construed to confer on any
holder of this Warrant, as such, any rights of a shareholder of the Company or
any right to vote, give or withhold consent to any corporate action, to receive
notice of meetings of shareholders, to receive dividends or subscription rights
or otherwise.
15. AMENDMENT.
This Warrant and any of its terms may be changed only by a written
instrument signed by the Company and the holder of this Warrant.
DATED: June 15, 1996 The Company:
POLLUTION RESEARCH AND CONTROL
CORP., a California corporation
By: /s/Albert E. Gosselin, Jr.
----------------------------
Albert E. Gosselin, Jr.,
President and Chief
Operating Officer
<PAGE> 51
Page 51 of 59
SUBSCRIPTION FORM
TO: POLLUTION RESEARCH AND CONTROL CORP.
The undersigned, the holder of the attached Warrant, hereby
irrevocably elects to exercise the purchase right represented by that Warrant
for, and to purchase under that Warrant, __________ shares of Common Stock of
POLLUTION RESEARCH AND CONTROL CORP., and herewith makes payment of and
requests that the certificates for those shares be issued in the name of, and
delivered to ________________________________________________________________
whose address is _______________________________________________ and if said
number of shares shall not be all the shares now purchasable under the attached
Warrant, the undersigned hereby requests that a new certificate be registered
in the name of and delivered to the undersigned for the balance of the shares
purchasable under the attached Warrant.
DATED:________________ _________________________________
(Signature)
_____________________________
_____________________________
Note: The above signature must
correspond with the name
written upon the fact of the
attached Warrant Certificate
unless the Warrant has been
properly and lawfully
assigned.
<PAGE> 52
Page 52 of 59
EXHIBIT "H"
THE WARRANT REPRESENTED BY THIS CERTIFICATE AND THE SHARES OF COMMON STOCK
ISSUABLE UPON THE EXERCISE OF THE WARRANT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR REGISTERED OR QUALIFIED
UNDER THE SECURITIES LAWS OF ANY STATE AND THUS MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED UNLESS REGISTERED UNDER THAT ACT AND REGISTERED OR
QUALIFIED UNDER APPLICABLE SECURITIES LAW OR UNLESS AN EXEMPTION FROM SUCH
REGISTRATION OR QUALIFICATION IS AVAILABLE.
WARRANT TO PURCHASE 66,667 SHARES OF COMMON STOCK OF
POLLUTION RESEARCH AND CONTROL CORP.
FROM JUNE 15, 1996
VOID AFTER 5:00 P.M., LOS ANGELES TIME, ON JUNE 14, 1999
This certifies that, John M. Liviakis or registered assigns, is
entitled, subject to the terms set forth below, to purchase from Pollution
Research and Control Corp., a California corporation (the "Company"), the above
number of fully paid nonassessable shares of Common Stock of the Company
("Common Stock") at a purchase price of One Dollar ($1.00) per share ("Purchase
Price"). The Purchase Price and number of shares of Common Stock issuable upon
exercise hereof shall be subject to adjustment as provided in this Warrant.
This Warrant is exercisable at any time, or from time to time, to and
including 5:00 p.m., Los Angeles time, on June 14, 1999, unless sooner exercise
is required pursuant to the terms of this Warrant.
DEFINITIONS.
As used in this Warrant, the following terms, unless the context
otherwise requires, have the following meanings:
1.1 "Company" includes any corporation which shall succeed to or
assume the obligations of the Company under this Warrant.
1.2 "Common Stock," when used with reference to stock of the
Company, means all shares, now or hereafter authorized, of the class of the
Common Stock of the Company presently authorized and stock of any other class
into which those shares may hereafter be changed.
<PAGE> 53
Page 53 of 59
1.3 The terms "Warrant holder," "holder of this Warrant,"
"holder," or similar terms when the context refers to a holder of the Warrant,
refers to any person who shall at the time be the registered holder of the
Warrant.
2. EXERCISE.
The holder of this Warrant may exercise it in full by surrender of
this Warrant, with the form of subscription at the end of this warrant duly
executed by the holder, to the Company at its principal office, accompanied by
payment in the amount obtained by multiplying the Purchase Price by the number
of shares of Common Stock specified on the face of this warrant as may be
adjusted pursuant to the terms of this Warrant. Payment shall be made in cash,
cashier's or certified check payable to the Company, by the surrender of any
notes of the Company having an unpaid principal and interest balance at least
equal to such payment (designating the portion of such balance to be applied),
or by any combination of such methods.
The holder of this Warrant may exercise it in part by surrendering it,
accompanied by payment as provided above, except that the amount payable by the
holder on such partial exercise shall be the amount obtained by multiplying the
Purchase Price by the number of shares of Common Stock (without giving effect
to any adjustment of that number) designated by the holder in a written
statement accompanying this Warrant. On partial exercise, the Company shall,
unless this Warrant has expired, promptly issue and deliver to the holder of
this Warrant a new Warrant or Warrants of like tenor an dated the date hereof
in the name of that holder providing for the right to purchase that number of
shares or Common Stock (without giving effect to any adjustment of that number)
for which this Warrant has not been exercised.
In the event the Common Stock issuable upon exercise of this Warrant
is not then registered under the Securities Act of 1933, as amended, the holder
of this Warrant shall, upon exercise of this Warrant, deliver to the Company an
investor's certificate with respect to such shares to the effect that such
shares are being acquired for investment purposes only and for its own account,
and not as a nominee or agent for any other person and not with a view to, or
for resale in connection with, any distribution thereof within the meaning of
the Securities Act of 1933, as amended.
3. ISSUANCE OF CERTIFICATES.
As soon as possible after full or partial exercise of this Warrant,
the Company, at its expense, will cause to be issued in
<PAGE> 54
Page 54 of 59
the name of and delivered to the holder of this Warrant, a certificate, or
certificates, for the number of fully paid and nonassessable shares of Common
Stock to which that holder shall be entitled on such exercise, together with
any other securities and property to which that holder is entitled on such
exercise under the terms of this Warrant. The person in whose name any
certificate for shares of Common Stock is issued upon exercise of this Warrant
shall for all purposes be deemed to have become the holder of record of such
shares on the date on which this Warrant was surrendered and payment of the
Purchase Price and any applicable taxes was made, irrespective of the date of
delivery of such certificate, except that, if the date of such surrender and
payment is a date when the stock transfer books of the Company are closed, such
person shall be deemed to have become the holder of such shares at the close of
business on the next succeeding date on which the stock transfer books are
open. No fractional share will be issued on exercise of rights to purchase
under this Warrant. If on any exercise of this Warrant, a fraction of a share
results, the Company will pay the cash value of that fractional share,
calculated on the basis of the Purchase Price.
4. SUBDIVISIONS OR COMBINATIONS.
If, at any time during the term hereof, the number of shares of Common
Stock outstanding is increased by a stock dividend payable in shares of Common
Stock or by a subdivision or split-up, then, immediately following the record
date fixed for the determination of holders of Common Stock entitled to receive
such stock dividend, subdivision or split-up, the number of shares of Common
Stock issuable upon exercise of this Warrant shall be increased and the
Purchase Price shall be decreased in proportion to such increase in outstanding
shares. If at any time during the term hereof the number of shares of Common
Stock outstanding is decreased by a combination of the outstanding shares of
Common Stock, immediately following the record date for such combination, the
number of shares of Common Stock issuable upon exercise of this Warrant shall
be decreased and the Purchase Price shall be increased in proportion to such
decrease in outstanding shares.
If the Company shall, at any time, subdivide or combine its
outstanding shares of Common Stock, pay a dividend of other securities to the
holders of such shares, or pay a dividend of shares of Common Stock to holders
of any such stock of the Company of any class, this Warrant shall, after that
subdivision, combination, or dividend, evidence the right to purchase the
number of shares of Common Stock or other securities that would have been
issuable to the holder of this Warrant as a result of that subdivision,
combination or dividend with respect to the shares of Common Stock which were
purchased under this Warrant
<PAGE> 55
Page 55 of 59
immediately before that subdivision, combination, or dividend or any record
date thereafter. If the Company shall at any time subdivide the outstanding
shares of Common Stock, the Purchase Price then in effect immediately before
that subdivision shall be proportionately decreased, and, if the Company shall
at any time combine the outstanding shares of Common Stock, the Purchase Price
then in effect immediately before that combination shall be proportionately
increased. Any judgment under this Section 4 shall become effective at the
close of business on the date the subdivision, combination or dividend becomes
effective retroactive to the record date therefor, if any.
5. REORGANIZATION, RECLASSIFICATION.
If the Common Stock issuable on exercise of this Warrant shall be
changed into the same or a different number of shares of any other class or
classes of stock, whether by capital reorganization, reclassification, or
otherwise (other than a subdivision or combination of shares provided for
above, the holder of this Warrant shall, on its exercise, be entitled to
purchase, in lieu of the Common Stock which that holder would have become
entitled to purchase but for such change a number of shares of such other class
or classes of stock which the holder of this Warrant would have owned or have
been entitled to receive after such change, had this Warrant been exercised
immediately before that change or any record date therefor.
6. CONSOLIDATION, MERGERS.
If at any time there shall be a capital reorganization of the Common
Stock issuable upon exercise of this Warrant (other than a combination,
reclassification, exchange or subdivision of shares provided for elsewhere in
this Warrant) or a merger or consolidation of the Company with or into another
corporation, or the sale of the Company's properties and assets as, or
substantially as, an entirety to any other person, then, as a part of such
reorganization, merger, consolidation, or sale, lawful provision shall be made
so that the holder of this Warrant shall thereafter be entitled to receive on
exercise of this Warrant, during the period specified in this Warrant and on
payment of the Purchase Price then in effect, the number of shares of stock or
other securities or property of the Company, or of the successor corporation
resulting from such merger or consolidation, to which a holder of the Common
Stock deliverable on exercise of this Warrant would have been entitled on such
capital reorganization, merger, consolidation, or sale. In any such case,
appropriate adjustment (as determined in good faith by the Company's Board of
Directors) shall be made in the application of the provisions of this Warrant
with respect to the rights and interests of the holder of this Warrant after
the reorganization, merger, consolidation, or sale such that the
<PAGE> 56
Page 56 of 59
provisions of this Warrant (including adjustments of the Purchase Price then in
effect and number of shares purchasable on exercise of this Warrant) shall be
applicable after that event, as near as reasonably may be, in relation to any
shares or other property deliverable after that event on exercise of this
Warrant.
7. NOTICE.
The Company shall promptly give written notice of each adjustment of
the Purchase Price or the number of shares of Common Stock or other securities
issuable on exercise of this Warrant, by certified mail, return receipt
requested, postage prepaid, to the registered holder of this Warrant at that
holder's address as shown on the Company's books. The notice shall state the
adjustment and show in reasonable detail the facts on which that adjustment is
based.
If (i) the Company shall pay any dividend payable in stock on its
Common Stock or make any other distributions to the holders of its Common Stock
(other than a dividend in Common Stock exempt from the adjustment provisions of
this Warrant), or (ii) the Company shall offer for subscription pro rata to the
holders of its Common Stock any additional shares of stock of any class or any
other rights, or (iii) there shall be any capital reorganization or
reclassification of the Company's Common Stock or consolidation or merger of
the Company with or into another corporation, or (iv) there shall be any sale
of all or substantially all of the Company's properties and assets, or (v)
there shall be a voluntary of involuntary dissolution, liquidation, or winding
up of the Company, or (vi) the Company shall have received an offer approved by
the Board of Directors to purchase all or substantially of its assets; then, in
each case, the Company shall give at least 15 calendar days prior written
notice (by certified mail, return receipt requested) to the registered holder
of this Warrant at the address of that holder shown on the books of the
Company, of the date as of which the books of the Company shall close or a
record shall be taken for such dividend, distribution, or subscription rights,
or the date as of which the reorganization, reclassification, consolidation,
merger, sale, dissolution, liquidation, or winding up shall take place. That
notice shall also specify the date as of which the holders of the Common Stock
of record shall participate in that dividend, distribution, or subscription
rights, or shall be entitled to exchange their Common Stock for securities or
other property deliverable on such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation, or winding up (on which
date, in the event of voluntary or involuntary dissolution, liquidation, or
winding up of the Company, or consolidation or merger in which the Company is
not a surviving entity or becomes a wholly-owned subsidiary, the right to
exercise this Warrant shall cease).
<PAGE> 57
Page 57 of 59
8. COVENANTS.
The Company covenants that it will not, by amendment of its articles
of incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities, or any other
voluntary action avoid, or seek to avoid, the observance or performance of any
of the terms of this Warrant, but will, at all times and in good faith, assist
in carrying out all those terms and in taking all action necessary or
appropriate to protect the rights of the holder of this Warrant against other
impairment. Without limiting the generality of the above provision, the
Company:
(i) will take all necessary or appropriate action in order that
the Company may validly and legally issue fully paid and
nonassessable shares of Common Stock on exercise of this
Warrant;
(ii) will not increase the par value of the shares of Common
Stock receivable on the exercise of this Warrant above the
amount payable for those shares on such exercise; and
(iii) will at all times reserve and keep available, solely for
issuance upon exercise of this Warrant, all shares of Common
Stock or other securities from time to time issuable upon
exercise of this Warrant.
9. CHANGES IN WARRANT.
The form of this Warrant need not be changed because of any adjustment
in the Purchase Price or in the number of shares of Common Stock purchasable
upon its exercise. A Warrant issued after any such adjustment or any partial
exercise or in replacement may continue to express the same Purchase Price and
the same number of shares of Common Stock (appropriately reduced in the case of
partial exercise) as are stated on the face of this Warrant as initially
issued, and that Purchase Price and the number of shares shall be considered to
have been so changed as of the close of business on the date of adjustment.
10. LOST CERTIFICATES.
Upon receipt of evidence reasonably satisfactory to the Company of the
loss, theft, destruction, or mutilation of this Warrant, upon delivery of any
indemnity agreement or bond reasonably satisfactory in form and amount to the
Company or, in the case of mutilation, on surrender and cancellation of this
Warrant, the Company, at its expense, will execute and deliver, in lieu of this
Warrant, a new Warrant of like tenor.
<PAGE> 58
Page 58 of 59
11. TRANSFERABILITY.
This Warrant shall not be transferred or assigned unless the Company
receives an opinion of counsel reasonably acceptable to the Company (which
counsel may be counsel for the Company), stating that such transfer is exempt
from the registration requirements of the Securities Act of 1933, as amended,
and the registration and qualification requirements under applicable state law.
12. GOVERNING LAW.
This Warrant shall be governed by and construed and enforced in
accordance with the laws of California.
13. TAXES.
The Company shall pay all documentary, stamp or other transactional
taxes attributable to the issuance or delivery of shares of Common Stock of the
Company upon exercise of all or any part of this Warrant; provided, however,
that the Company shall not be required to pay any taxes which may be payable in
respect of any transfer involved in the issuance or delivery of any certificate
for such shares in a name other than that of the holder of this Warrant.
14. RIGHTS OF WARRANT HOLDER.
No holder of this Warrant, as such, shall be entitled to vote or
receive dividends or be considered a shareholder of the Company for any
purpose, nor shall anything in this Warrant be construed to confer on any
holder of this Warrant, as such, any rights of a shareholder of the Company or
any right to vote, give or withhold consent to any corporate action, to receive
notice of meetings of shareholders, to receive dividends or subscription rights
or otherwise.
15. AMENDMENT.
This Warrant and any of its terms may be changed only by a written
instrument signed by the Company and the holder of this Warrant.
DATED: June 15, 1996 The Company:
POLLUTION RESEARCH AND CONTROL
CORP., a California corporation
By: /s/Albert E. Gosselin, Jr.
----------------------------
Albert E. Gosselin, Jr.,
President and Chief
Operating Officer
<PAGE> 59
Page 59 of 59
SUBSCRIPTION FORM
TO: POLLUTION RESEARCH AND CONTROL CORP.
The undersigned, the holder of the attached Warrant, hereby
irrevocably elects to exercise the purchase right represented by that Warrant
for, and to purchase under that Warrant, __________ shares of Common Stock of
POLLUTION RESEARCH AND CONTROL CORP., and herewith makes payment of and
requests that the certificates for those shares be issued in the name of, and
delivered to ________________________________________________________________
whose address is _______________________________________________ and if said
number of shares shall not be all the shares now purchasable under the attached
Warrant, the undersigned hereby requests that a new certificate be registered
in the name of and delivered to the undersigned for the balance of the shares
purchasable under the attached Warrant.
DATED:________________ _________________________________
(Signature)
_____________________________
_____________________________
Note: The above signature must
correspond with the name
written upon the fact of the
attached Warrant Certificate
unless the Warrant has been
properly and lawfully
assigned.
