As filed with the Securities and Exchange Commission on September 28, 1999
Registration No. 33-_____
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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Pollution Research and Control Corp.
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(Exact name of registrant as specified in its charter)
California
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(State or other jurisdiction of incorporation or organization)
95-2746949
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(I.R.S. Employer Identification No.)
506 Paula Avenue, Glendale, California 91201
(818) 247-7601
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(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
Albert E. Gosselin, Jr.
506 Paula Avenue, Glendale, California 91201
(818) 247-7601
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(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Please send copies of all correspondence to:
PATRICIA CUDD, ESQ.
Cudd & Associates
1120 Lincoln Street, Suite #1310
Denver, Colorado 80203
Telephone: (303) 861-7273
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
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<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
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Proposed Proposed Maximum
Title of Each Maximum Aggregate Amount of
Class of Securities Amount to Offering Price Offering Registration
To be Registered Be Registered Per Share (1) Price (1) Fee
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<S> <C> <C> <C> <C>
Common Stock, no par value 742,673 $2.50 $1,856,682 $371.33
Common Stock, no par value,
underlying units (2) 288,331 $2.50 $720,828 $144.17
Common Stock, no par value,
underlying debenture 222,222 $2.50 $555,555 $111.11
Common Stock, no par value,
underlying units (4) 150,000 $2.50 $375,000 $ 75.00
Common Stock, no par value,
underlying debenture 133,334 $2.50 $333,335 $ 66.67
Common Stock, no par value,
underlying units (6) 110,000 $2.50 $275,000 $ 55.00
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TOTAL 1,646,560 $2.50 $4,116,400 $823.28
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</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457. Pursuant to Rule 457 (c), based upon 355,556 shares
of Common Stock underlying debentures and 1,291,004 shares of Common Stock
being offered by Selling Shareholders and the average of the high and low
sales prices of the Common Stock on the NASDAQ SmallCap Market System on
September 14, 1999, of $2.50.
(2) Each unit consists of one share of Common Stock and one warrant exercisable
to purchase one share of Common Stock at an exercise price of $.75 per
share on or prior to February 25, 2002.
(3) Outstanding 18%-$500,000 face amount subordinated convertible debenture due
December 1, 1999. Pursuant to Rule 416, the number of shares of Common
Stock issuable upon conversion of the debenture is subject to adjustment in
accordance with the anti-dilution provisions of such Debenture.
(4) Each unit consists of one share of Common Stock and one warrant exercisable
to purchase one share of Common Stock at an exercise price of $2.40 per
share on or prior to September 13, 2002.
(5) Outstanding 12%-$300,000 face amount subordinated convertible debenture due
June 1, 2000. Pursuant to Rule 416, the number of shares of Common Stock
issuable upon conversion of the debenture is subject to adjustment in
accordance with the anti-dilution provisions of such Debentures.
(6) Each unit consists of one share of Common Stock and one warrant exercisable
to purchase .682 share of Common Stock at an exercise price of $.75 per
share on or prior to July 16, 2002.
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The registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933, as amended, or until the Registration Statement shall
become effective on such date as the Commission, acting pursuant to said Section
8(a), may determine.
DOCUMENTS INCORPORATED BY REFERENCE:
Certain exhibits to this Registration Statement on Form S-3 as set forth in the
Exhibit Index located at page 31.
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SUBJECT TO COMPLETION
PROSPECTUS
1,646,560 Shares of Common Stock, no par value
POLLUTION RESEARCH AND CONTROL CORP.
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This Prospectus relates to an aggregate of 1,646,560 shares of common
stock, no par value per share (the "Common Stock"), of Pollution Research and
Control Corp. (the "Company" or "PRCC"), including (i) 288,331 shares of Common
Stock underlying outstanding units, each unit consisting of one share of Common
Stock and one warrant exercisable to purchase one share of Common Stock at an
exercise price of $.75 per share on or prior to February 25, 2002; (ii) 222,222
shares of Common Stock underlying an outstanding 18%-$500,000 face amount
subordinated convertible debenture due December 1, 1999; (iii) 150,000 shares of
Common Stock underlying outstanding units, each unit consisting of one share of
Common Stock and one warrant exercisable to purchase one share of Common Stock
at an exercise price of $2.40 per share on or prior to September 13, 2002; (iv)
133,334 shares of Common Stock underlying outstanding 12%-$300,000 face amount
subordinated convertible debenture due June 1, 2000; and (v) 110,000 shares of
Common Stock underlying outstanding units, each unit consisting of one share of
Common Stock and one warrant exercisable to purchase .682 share of Common Stock
at an exercise price of $.75 per share on or prior to July 16, 2002. The
outstanding units, including a total of 398,331 shares of Common Stock and
warrants, a total of 363,331 shares of Common Stock underlying which warrants
are not covered by the Registration Statement of which this Prospectus forms a
part, are hereinafter referred to, collectively, as the "Units" and the
outstanding debentures are, collectively, hereinafter referred to as the
"Debentures." The shareholders of 1,291,004 shares of Common Stock, including
548,331 shares of Common Stock underlying Units, and the holders of Debentures
who convert such Debentures into 355,556 shares of Common Stock (based upon a
conversion price of $2.25), are hereinafter collectively referred to as the
"Selling Shareholders." Information regarding the Selling Shareholders is set
forth in this Prospectus under "Selling Security Holders." Information regarding
the holders of the Debentures and the circumstances under which they may convert
their respective Debentures into the underlying shares of Common Stock, are set
forth herein under "Description of Securities."
The shares of Common Stock, including the shares underlying the Units, were
issued by the Company on various dates commencing on June 19, 1998, through
September 13, 1999. The 18%-$500,000 face amount subordinated convertible
debenture due December 1, 1999, and the 12%-$300,000 face amount subordinated
convertible debenture due June 1, 2000, were issued by the Company on May and
September 1, 1999, respectively. The Debentures are convertible in denominations
of $50,000 at the conversion price per each share of Common Stock of the lesser
of $2.25 or 80% of the market price of the Common Stock on the conversion date.
Upon the conversion of the Debentures and with respect to the shares of Common
Stock included in the Units and otherwise, said shares of Common Stock may be
offered and sold to the public from time to time by the Selling Shareholders, or
by pledgees, donees, transferees or other successors to the Selling
Shareholders, in each case in open market transactions, in private or negotiated
transactions or in a combination of such methods of sale, at fixed prices, at
prices then prevailing on the NASDAQ SmallCap Market System at the time of sale,
at prices related to such prevailing market prices or at negotiated prices. To
the extent required at the time of a particular offer of Common Stock by the
Selling Shareholders, a supplement to this Prospectus will be distributed which
will set forth the number of shares of Common Stock being offered and the terms
of the offering, including the name or names of any underwriters, dealers,
brokers or agents, the purchase price paid by any underwriter for shares of
Common Stock purchased from the Selling Shareholders, any discounts, commissions
and other items constituting compensation from the Selling Shareholders and any
discounts, commissions or concessions allowed or re-allowed to dealers,
including the proposed selling price to the public.
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The Selling Shareholders reserve the sole right to accept and, together
with any agent of the Selling Shareholders, to reject in whole or in part any
proposed purchase of the shares of Common Stock. The Selling Shareholders will
pay any sales commissions or other seller's compensation applicable to such
transactions. The Selling Shareholders and agents who execute orders on their
behalf may be deemed to be underwriters as that term is defined in Section 2(11)
of the Securities Act of 1933, as amended (the "Securities Act"), and a portion
of any proceeds of sales and discounts, commissions or other seller's
compensation may be deemed to be underwriting compensation for purposes of the
Securities Act. (See "Plan of Distribution.") This Prospectus also covers such
additional shares of Common Stock as may be issuable to the Selling Shareholders
in the event of a stock dividend, stock split, recapitalization or other similar
change in the Common Stock.
The Company will not receive any of the proceeds from the sale of the
shares of Common Stock by the Selling Shareholders. The Company has agreed to
pay all costs of the registration of the shares of Common Stock underlying the
Units and the Debentures and otherwise being offered by the Selling
Shareholders. Such costs, fees and disbursements are estimated to be
approximately $34,323.
SEE "RISK FACTORS" FOR CERTAIN CONSIDERATIONS RELEVANT TO AN INVESTMENT IN
THE SHARES OF COMMON STOCK.
The Company's Common Stock is traded over-the-counter and is quoted on the
NASDAQ National Market System under the symbol "PRCC." On September 14, 1999,
the last sale price of the Common Stock on the NASDAQ National Market System was
$2.50.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION, NOR HAS THE COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
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The date of this Prospectus is September __, 1999.
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TABLE OF CONTENTS
Page
Available Information........................................... 6
Incorporation of Certain Documents by Reference................. 6
The Company..................................................... 7
The Offering.................................................... 8
Risk Factors.................................................... 8
Plan of Distribution............................................ 13
Market Information.............................................. 14
Selling Security Holders........................................ 15
Description of Securities....................................... 20
Legal Matters................................................... 24
Experts......................................................... 24
AVAILABLE INFORMATION
The Company is subject to the informational and reporting requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed with the Commission by the Company may be
inspected and copied at the public reference facilities maintained by the
Commission at its principal offices at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the Commission's regional offices located at
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511, and 7 World Trade Center, Suite 1300, New York, New York 10048, and
on the Commission's website at www.sec.gov. Copies of these materials can also
be obtained at prescribed rates from the Public Reference Section of the
Commission at its principal offices in Washington, D.C., set forth above.
Additional information with respect to this offering may be provided in the
future by means of supplements or "stickers" to the Prospectus.
The Company has filed a Registration Statement on Form S-3 (including all
amendments and supplements thereto, the "Registration Statement") with the
Commission under the Securities Act with respect to the shares of Common Stock
offered hereby. This Prospectus, which forms a part of the Registration
Statement, does not contain all of the information set forth in the Registration
Statement and the Exhibits filed therewith, certain parts of which have been
omitted in accordance with the rules and regulations of the Commission.
Statements contained herein concerning the provisions of such documents are not
necessarily complete and, in each instance, reference is made to the
Registration Statement or to the copy of such document filed as an Exhibit to
the Registration Statement or otherwise filed with the Commission. Each such
statement is qualified in its entirety by such reference. Copies of the
Registration Statement and the Exhibits thereto can be obtained upon payment of
a fee prescribed by the Commission or may be inspected free of charge at the
public reference facilities and regional offices referred to above.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Annual Report on Form 10-KSB for the fiscal year ended
December 31, 1998, and the Company's Quarterly Reports on Form 10-QSB for the
quarters ended March 31 and June 30, 1999, which were previously filed with the
Commission (File No. 0-14266), are incorporated by reference in this Prospectus
and the Registration Statement of which it is a part.
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All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the offering of the shares of Common Stock, shall be deemed to be
incorporated by reference herein and to be part hereof from the respective dates
of the filing of such documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus and the Registration Statement of which it is a
part to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein, modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus or the Registration Statement of which
it is a part.
The Company will furnish without charge to each person, including any
beneficial owner, to whom this Prospectus is delivered, upon the written or
verbal request of such person, a copy of any or all of the documents
incorporated herein by reference, other than exhibits to such documents.
Requests should be addressed to: Secretary, Pollution Research and Control
Corp., 506 Paula Avenue, Glendale, California 91201; telephone number (818)
247-7601.
THE COMPANY
The Company has been engaged in the business of, primarily, designing,
manufacturing and marketing electronic analytical instruments used to detect and
measure various types of air pollution, such as "acid rain," "ozone depletion"
and "smog episodes" through its wholly-owned subsidiary, Dasibi Environmental
Corp. ("Dasibi"), for the past approximately twenty-eight years. Although it is
the smallest competitor in the marketplace, management believes that the Company
has the most complete "in-hous line of instrumentation. The Company's products
are generally used to measure air pollution levels in geographic areas that
range in size from small industrial sites to entire states or countries. The
Company also supplies computer-controlled calibration systems that verify the
accuracy of its instruments, data loggers to collect and manage pollutant
information and final reporting software for remote centralized applications. At
the core of this instrumentation are three software systems, including a data
logger system which permits the analysis of air samples at remote locations, a
central station system which allows the compilation of data at a central site
and a predictive pollutant monitoring model, which is currently under
development and which management believes is useful for predicting future levels
of pollutants across a geographic area and which is currently under development.
The Company's instruments have been sold to over 300 customers worldwide,
including industrial manufacturers; Federal, state, city, local and foreign
governmental agencies; major industrial companies; and educational and research
institutions in over thirty countries. These customers use the Company's
products principally for environmental protection compliance programs. Dasibi
has an installed base of equipment in over thirty countries.
Since 1993, the Company has experienced intense price competition in its
core business of air pollutant monitoring systems which has reduced both sales
and operating margins. In response to these factors, the Company acquired two
companies outside its core business, each of which businesses has been
discontinued. The Company has begun to explore additional markets outside the
United States in which it can sell its pollution monitoring and control devices.
On June 10, 1998, Dasibi was awarded, on a designated vendor basis, an
approximately $5.2 million contract (the "China Contract") to install air
pollution monitoring systems in eleven cities in the People's Republic of China.
Management believes, but cannot assure, that the Company's designated vendor
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status will give the Company a competitive advantage in the award of future
contracts with the Chinese government. The Company has commenced discussions
with these eleven cities regarding additional monitoring stations in addition to
those required by the China Contract.
Performance of the China Contract is expected to be completed in 1999, with
all payments to Dasibi made by letter of credit drawn on China Construction
Bank. In order to finance these payments, Dasibi assisted the People's Republic
of China in obtaining ten-year financing at a 3.9% interest rate from the U.S.
Export-Import Bank, N.A. (the "Ex-Im Bank"). The Ex-Im Bank, in accordance with
its customary practice, guaranteed, and Bank of America provided, 85% of the
financing. Dasibi arranged the balance of the financing through Imperial Bank.
Bank of America's loan application was approved by Ex/Im Bank in March 1999. The
first shipment of instrumentation, with a value of approximately $2,009,568, was
made, and payments totaling $1,622,727 have been received by Dasibi through
August 25, 1999.
The Company's principal executive offices are located at 506 Paula Avenue,
Glendale, California 91201, and its telephone number is (818) 247-7601. The
Company's Common Stock is traded in the over-the-counter market and reported on
the NASDAQ National Market System under the symbol "PRCC."
THE OFFERING
Shares of Common Stock ...................... 742,673 shares of Common Stock
Shares of Common Stock Underlying
Units (1) .................................. 548,331 shares of Common Stock
Shares of Common Stock Underlying
Debentures (2) ............................. 355,556 shares of Common Stock
(1) Includes (i) 288,331 shares of Common Stock underlying outstanding
units, each unit consisting of one share of Common Stock and one warrant
exercisable to purchase one share of Common Stock at an exercise price of $.75
per share on or prior to February 25, 2002; (ii) 150,000 shares of Common Stock
underlying outstanding units, each unit consisting of one share of Common Stock
and one warrant exercisable to purchase one share of Common Stock at an exercise
price of $2.40 per share on or prior to September 13, 2002; and (iii) 110,000
shares of Common Stock underlying outstanding units, each unit consisting of one
share of Common Stock and one warrant exercisable to purchase .682 share of
Common Stock at an exercise price of $.75 per share on or prior to July 16,
2002.
(2) Includes (i) 222,222 shares of Common Stock issuable upon the
conversion of an outstanding 18%-$500,000 face amount subordinated convertible
debenture due December 1, 1999, assuming the conversion price of $2.25 per each
share of Common Stock and (ii) 133,334 shares of Common Stock issuable upon the
conversion of an outstanding 12%-$300,000 face amount subordinated convertible
debenture due June 1, 2000, assuming the conversion price of $2.25 per each
share of Common Stock.
RISK FACTORS
Prospective investors should consider carefully, in addition to the other
information contained in and incorporated into this Prospectus and the
Registration Statement of which it is a part, the following factors before
purchasing the shares of Common Stock offered hereby.
1. Dependence Upon China Contract and Future China Business. The
approximate $5.2 million price of the China Contract awarded, on a designated
vendor basis, to Dasibi on June 10, 1998, to install air pollution monitoring
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systems in eleven cities in the People's Republic of China, represents twice as
much revenue than the Company realized in 1998. The Company has commenced
discussions with these eleven cities regarding monitoring stations in addition
to those required by the China Contract. Management believes, but cannot assure,
that the Company's designated vendor status will give it a competitive advantage
in the award of future contracts with the Chinese government. Failure to
complete the China Contract to the satisfaction of the Chinese Environmental
Protection Agency or failure to achieve significant future business in China for
any reason whatsoever will have a material adverse effect on the Company and its
prospects.
2. Liquidity. The Company has experienced cash shortages from time to time
preventing it from paying its operating expenses on a timely basis and forcing
management to raise funds from private sources for equity or debt financing and
bank loans. However, the Company's bank line of credit was not renewed and the
low market value of the Company's Common Stock combined with its unstable
operating performance has restricted access to capital. During the year ended
December 31, 1998, operations depleted the Company's cash by approximately
$500,000 (partially offset by $362,000 in net proceeds from two private
placements of the Company's securities). During the six months ended June 30,
1999, the Company's "net cash used for operating activities" was $1,294,905,
primarily, because of increased receivables attributable to shipments under the
China Contract. This increase was offset by, among other things, the Company's
borrowing of $300,000 in the first quarter of 1999 (long-term debt) and its
receipt in the six months ended June 30, 1999, of net proceeds from private
placements of Common Stock aggregating $425,625 and the sum of $500,000 pursuant
to a subordinated convertible debenture due December 1, 1999. While the Company
believes that cash flow ($1,622,727 to date) from the China Contract together
with funds received from securities sales (an additional $560,000 during the
period from July 1, 1999, through the date hereof) will be sufficient to allow
it to continue its operations in the foreseeable future, there can be no
assurance that such funds will meet its cash needs and, if the Company requires
additional financing, it will be available on acceptable terms, if at all.
3. Decline in Net Revenues/Substantial Losses. The Company has recognized a
net loss in each of the fiscal years ended 1998, 1997 and 1996. During the last
three fiscal years, revenue has decreased from approximately $8.8 million to
less than $3 million as a result of the discontinued operations of two
subsidiaries and significant competitive price pressure for the Company's
instruments, thus forcing PRCC to lower its domestic and foreign bids, reducing
the number of the Company's bid awards and reducing the profit margin on the
bids awarded to the Company. The Company's gross profit has also steadily
decreased from 46% and 41% of net revenue in fiscal 1996 and 1997, respectively,
to approximately 35% of net revenue in fiscal 1998. As a result, the Company has
suspended major new product development efforts and scaled back its efforts to
improve or modify existing technologies in response to the competitive price
pressures. Any substantial improvement in the results of operations will be
substantially dependent on the Company's ability to complete the China Contract
and generate future business in China and/or other countries which do not have
substantial pollution air monitoring systems. While the Company's net revenues
increased 239% to $2,941,897 during the six months ended June 30, 1999, as
compared to $1,229,918 for the comparable six-month period of 1998 because of
the initial product shipment under the China Contract, income from continuing
operations increased to $211,109 from a loss of $(261,998) for these periods
because of increased operating expenses attributable to the China Contract.
There can be no assurance that the Company will successfully complete the China
Contract; obtain other business in China and/or other countries; or be capable
of sustaining a return to profitability.
4. Losses on Discontinuance of Operations and Disposition of Nutek and LRL.
Nutek Corp. ("Nutek"), a wholly-owned subsidiary of the Company which filed for
protection under Chapter 11 of the U.S. Bankruptcy Act in April 1998, ceased
operations in July 1998 following a ruling that it was insolvent. The revenues
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generated by Nutek accounted for approximately 48% of the Company's consolidated
net revenues for the fiscal year ended December 31, 1997. The assets of Nutek
were auctioned in July 1998 to satisfy amounts owed to a secured lender. The
Company realized losses from the discontinuance ($115,301) and the disposition
($1,072,986) of Nutek during the fiscal year ended December 31, 1998. Further, a
default judgment in the amount of approximately $766,709, which was subsequently
reduced to $449,810, was entered against PRCC in an action by the secured lender
in the U.S. District Court for the Northern District of Texas, Dallas Division,
to recover the deficiency from the auction of Nutek's assets. The parties
entered into that Compromise, Settlement and Release Agreement on August 12,
1999, pursuant to which the Company paid the secured lender $9,000 and agreed to
pay the sum of $450,000, together with interest at the rate of twelve percent,
on or before February 1, 2000. Additionally, the Company issued the secured
lender 100,000 restricted shares of Common Stock which are covered by the
Registration Statement of which this Prospectus forms a part and granted the
lender a warrant exercisable to purchase 20,000 shares of Common Stock at an
exercise price of $.75 per share during the three-year terminating on August 11,
2002. The parties agreed that the proceeds from the sale of the 100,000 shares,
which are resaleable pursuant to an agreement with the Company, despite their
inclusion in this Registration Statement, subject to the volume limitations
described in paragraph (e) of Rule 144 of the General Rules and Regulations
under the Act, would be applied to reduce or satisfy the Company's indebtedness,
and any excess would be payable to the Company. The secured lender has agreed
not to enforce the default judgment in the Texas action so long as the Company
timely performs its obligations under the settlement agreement. There can be no
assurance that PRCC will be successful in timely performing its obligations
under the agreement and obtaining dismissal of the Texas action or setting aside
of the default judgment.
Effective February 28, 1998, Logan Medical Devices, Inc. ("LMD"), a
wholly-owned subsidiary of the Company, returned all of the shares of common
stock of Logan Research, Ltd. ("LRL"), a United Kingdom corporation engaged in
the design, manufacture and marketing of medical instrumentation, owned by LMD
and received in exchange all shares of LMD owned by LRL. In addition, the
Company was released from liability on a promissory note payable to LRL in the
principal amount of $300,000 that had accrued interest of $47,250. The Company
had previously advanced funds in the amount of $160,000 to LRL that it is making
no effort to recoup. The Company realized a gain in the amount of $154,575 on
the disposition. The revenue generated by LRL accounted for 7% of the Company's
consolidated net revenues for the 1997 fiscal year.
5. Governmental Approval. The Company is required to obtain approval by the
U.S. Environmental Protection Agency of new air pollution monitoring instruments
it produces before such instruments can be sold in the United States. Currently,
all air pollution monitoring instruments that the Company sells in the United
States have received EPA approval. If the EPA were to change its regulations or
requirements, there could be no assurance that the Company's products would
comply with such standards or that the Company would be able to comply with such
modified requirements. With the exception of Germany, no foreign country
requires governmental approval of air pollution monitoring instruments. There
can be no assurance that additional regulations will not be adopted by other
foreign governments. Failure to meet any future regulation could have a material
adverse effect on the Company and render certain of the Company's products
obsolete.
6. Dependence On Legislation and Regulation. The products developed and
manufactured by the Company monitor air pollutants in accordance with standards
established generally by Federal, state, local and foreign governmental
agencies. Changes in legislation or regulations or a relaxation of standards
determined by such agencies could adversely affect the market for the Company's
products or render certain of the Company's products obsolete.
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7. Competition. The Company is the smallest competitor in the ambient air
pollution instrumentation market. There are other established firms in the same
field, both in the United States and in foreign countries, which have
substantially greater experience and financial and personnel resources than the
Company. Therefore, the Company is subject to the effects of better-financed
competitors and their research and development efforts and price competition.
Although the Company is not aware of any other company that competes with it in
all of its product lines, all of its competitors have resources substantially
greater than those of the Company. There are also smaller companies that
specialize in a limited number of the types of products manufactured by the
Company. The Company's primary competitors in the domestic market are Thermo
Instrument Systems, Inc. and Monitor Labs, Inc. In the foreign market, the
Company's primary competitors are Thermo Instrument Systems, Monitor Labs,
Environment S.A. of France and Horiba Instruments. All of the Company's
competitors also offer a wider range of equipment, monitoring additional
pollutants, than does PRCC.
8. Technological Obsolescence; Limited Research and Development. The
Company's future success will depend on its ability to enhance its current
products, reduce product costs and develop and introduce new products that keep
pace with technological developments in response to evolving customer
requirements and governmental regulations. Failure of the Company to anticipate
or respond adequately to technological development or introduction could result
in a loss of future revenue and impair the Company's competitiveness. The
Company, since early 1994, has sharply limited its product development efforts.
For the foreseeable future, management expects to limit research and development
to software development and efforts to refine and improve its present products.
9. Risks of Foreign Sales. During the last three fiscal years, foreign
sales have represented approximately 55% to 70% of the Company's total revenue
and are expected to represent at least such amounts of the Company's future
sales. Foreign sales are subject to numerous risks, including political and
economic instability in foreign markets, restrictive trade policies of foreign
governments, inconsistent product regulation by foreign agencies or governments,
the imposition of product tariffs and other trade barriers and the burdens of
complying with a wide variety of international and U.S. export laws and
differing regulatory requirements. To the extent that foreign sales are
transacted in a foreign currency, PRCC would be subject to the risk of losses
due to foreign currency fluctuations and difficulties associated with accounts
receivable collection. Because the Company is required to provide financing in
connection with the China Contract, it bears the risk of realizing reduced
margins from the China Contract if the financing is below market at closing.
Further, PRCC may experience difficulties in managing or overseeing the
technical and training operations required to be conducted in China.
10. Reliance on Certain Suppliers. While PRCC manufactures many components
and subsystems used in its products, other components, including packaging
materials, integrated circuits, microprocessors and minicomputers, are purchased
on a non-contractual basis from unaffiliated suppliers. The Company is not
dependent upon any one supplier for any raw material or component that it
purchases, and the Company believes there are available alternative sources for
such raw materials and components. The Company is currently dependent, however,
on a limited number of vendors with respect to the availability and quality of
certain key instrument components, such as printed circuit board designs and
lamps. A vendor's inability to supply these components to PRCC in a timely
fashion, or to the Company's satisfaction, would affect the Company's ability to
deliver its instruments on time and could damage the Company's reputation.
11. Limited Marketing Capability and other Resources. The Company's success
depends in large part upon its ability to identify and adequately penetrate the
markets for its products. Most of the Company's competitors have much larger
11
<PAGE>
budgets for marketing, advertising and promotion. The Company has historically
lacked the financial, personnel and other resources required to compete with its
larger, better-financed competitors in marketing products. In recent years, the
Company's revenue has shrunk and the Company has reduced its staff and operated
without a bank line of credit. There can be no assurance that the Company's
declining net revenue and gross profit will be reversed.
12. Dependence on Key Personnel. The Company's success depends in part upon
its ability to attract and/or retain highly skilled management, technical and
marketing personnel. Loss of the services of Mr. Albert E. Gosselin, Jr.,
President and Chairman of the Board of Directors of PRCC, could adversely affect
the development of the Company's business and its ability to realize or sustain
profitable operations. The Company does not maintain key-man life insurance on
any of its personnel and has no present plans to obtain such insurance.
13. Limited Protection of Intellectual Property and Proprietary Rights. The
Company regards all or portions of the designs and technologies incorporated
into its products as proprietary and attempts to protect them with a combination
of trademark and trade secret laws. It has generally been the Company's policy
to proceed without patent protection. It may be possible for unauthorized third
parties to copy certain portions of the Company's products or to "reverse
engineer" or otherwise obtain and use to the Company's detriment information
which the Company regards as proprietary. Moreover, the laws of some foreign
countries do not afford the same protection to the Company's proprietary rights
as do U.S. laws. There can be no assurance that any of the Company's efforts to
protect its proprietary technology will be adequate or that the Company's
competitors will not independently develop technologies that are substantially
equivalent or superior to the Company's technologies.
14. Absence of Products Liability Insurance. The Company does not maintain
products liability insurance. In the event that PRCC experiences a material
liability as a result of a products liability claim, such a liability could have
a material adverse effect on the Company.
15. No Dividends. The Company has never paid dividends on the shares of its
Common Stock and does not intend to pay any dividends in the foreseeable future.
16. Possible Volatility of Stock Price. The trading price of the Company's
Common Stock has from time to time fluctuated widely and in the future may be
subject to similar fluctuations in response to quarter-to-quarter variations in
the Company's operating results, announcements of technological innovations or
new products by the Company or its competitors, general conditions in the air
pollution monitoring industry in which the Company competes and other events or
factors. In addition, in recent years broad stock market indices, in general,
and the securities of technology companies, in particular, have experienced
substantial price fluctuations. Such broad market fluctuations also may
adversely affect the future trading price of the Common Stock. In addition,
sales of substantial amounts of shares of Common Stock in the public market
following this offering could adversely affect the future trading price of the
Common Stock. (See "MARKET INFORMATION.")
17. Possible Dilutive Effect and Other Disadvantages of Outstanding
Warrants, Options and Debentures. As of the date hereof, there are an aggregate
of 3,378,168 shares of Common Stock reserved for issuance upon the exercise of
outstanding options and warrants currently exercisable at prices in a range from
$.75 to $6.00. Additionally, the outstanding Debentures are convertible, based
upon a conversion price per share of $2.25, into 355,556 shares of Common Stock.
To the extent that the trading price of the Common Stock at the time of the
exercise of any such options or warrants or the conversion of the Debentures
exceeds the exercise or conversion price, such exercise or conversion will have
a dilutive effect on the Company's shareholders.
12
<PAGE>
18. Potential Anti-Takeover and Other Effects of Issuance of Preferred
Stock Rights May Be Detrimental to Common Shareholders. The Company is
authorized to issue up to 20,000,000 shares of preferred stock, $.01 par value
per share (the "Preferred Stock"); of which none are currently issued and
outstanding. The issuance of Preferred Stock does not require approval by the
shareholders of the Company's Common Stock. The Board of Directors, in its sole
discretion, has the power to issue Preferred Stock in one or more series and
establish the dividend rates and preferences, liquidation preferences, voting
rights, redemption and conversion terms and conditions and any other relative
rights and preferences with respect to any series of Preferred Stock. Holders of
Preferred Stock may have the right to receive dividends, certain preferences in
liquidation and conversion and other rights, any of which rights and preferences
may operate to the detriment of the shareholders of the Company's Common Stock.
Further, the issuance of any Preferred Stock having rights superior to those of
the Company's Common Stock may result in a decrease in the value or market price
of the Common Stock and, additionally, could be used by the Board of Directors
as an anti-takeover measure or device to prevent a change in control of the
Company. (See "DESCRIPTION OF SECURITIES - Preferred Stock.")
PLAN OF DISTRIBUTION
The shares of Common Stock may be offered and sold from time to time by the
Selling Shareholders or by pledgees, donees, transferees or other successors in
interest. The Selling Shareholders will act independently of the Company in
making determinations with respect to the timing, manner and size of each offer
or sale. Such sales may be made on the over-the-counter market or otherwise at
prices and at terms then prevailing or at prices related to the then current
market prices, or in negotiated transactions.
The Selling Shareholders may sell shares of Common Stock in any of the
following ways: (i) through dealers; (ii) through agents; or (iii) directly to
one or more purchasers. The distribution of the shares of Common Stock may be
effected from time to time in one or more transactions (which may involve
crosses or block transactions) in the over-the-counter market. Any such
transaction may be effected at market prices prevailing at the time of sale, at
prices related to such prevailing market prices, at negotiated prices or at
fixed prices. The Selling Shareholders may effect such transactions by selling
shares of Common Stock to or through broker-dealers, and such broker-dealers may
receive compensation in the form of discounts, concessions or commissions from
Selling Shareholders and/or commissions from purchasers of shares of Common
Stock for whom they may act as agent. The Selling Shareholders and any
broker-dealers or agents which participate in the distribution of Common Stock
by them might be deemed to be underwriters and any discounts, commissions or
concessions received by any such broker-dealers or agents might be deemed to be
underwriting discounts and commissions under the Securities Act.
In offering the shares of Common Stock, the Selling Shareholders and any
broker-dealers and any other participating broker-dealers which execute sales
for the Selling Shareholders may be deemed to be "underwriters" within the
meaning of the Securities Act in connection with such sales, and any profits
realized by the Selling Shareholders and the compensation of such broker-dealers
may be deemed to be underwriting discounts and commissions. In addition, any
shares of Common Stock covered by this Prospectus which qualify for sale
pursuant to Rule 144 may be sold under Rule 144 rather than pursuant to this
Prospectus.
Rule 10b-2 under the Exchange Act prohibits persons who are participating
in or financially interested in a distribution of securities from making
payments to another person for the solicitation of a third party to purchase the
securities that are the subject of the distribution, except that Rule 10b-2 does
not apply, among other exceptions, to brokerage transactions not involving the
solicitation of customer orders. Rule 10b-6 under the Exchange Act prohibits
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<PAGE>
participants in a distribution from bidding for or purchasing, for an account in
which the participant has a beneficial interest, any of the securities that are
the subject of the distribution. Rule 10b-7 governs bids and purchases made in
order to stabilize the price of a security in connection with a distribution of
the security.
The public offering of the Common Stock by the Selling Shareholders will
terminate on the date on which all shares of Common Stock offered hereby have
been sold by the Selling Shareholders, or on such earlier date on which the
Company files a post-effective amendment which de-registers all shares of Common
Stock then remaining unsold.
The Company will pay certain expenses incidental to the offering and sale
of the shares of Common Stock to the public estimated to be approximately
$34,356. The Company will not pay for, among other expenses, selling expenses,
underwriting discounts or fees and expenses of counsel for the Selling
Shareholders.
To the extent required at the time a particular offer of Common Stock by
the Selling Shareholders is made, a supplement to this Prospectus will be
distributed which will set forth the number of shares of Common Stock being
offered and the terms of the offering, including the name or names of any
underwriters, dealers, brokers or agents, the purchase price paid by any
underwriter for shares of Common Stock purchased from the Selling Shareholders,
any discounts, commissions and other items constituting compensation from the
Selling Shareholders and any discounts, commissions or concessions allowed or
re-allowed to dealers, including the proposed selling price to the public.
The Company will not receive any of the proceeds from the sale of shares of
Common Stock by the Selling Shareholders.
MARKET INFORMATION
The Company's Common Stock is traded over-the-counter and reported on the
NASDAQ National Market System under the symbol "PRCC." Set forth below are the
high and low closing bid quotations in the over-the-counter market for the
Common Stock as reported by the relevant market makers for fiscal years l998 and
1997 and the quarters ended March 31 and June 30, 1999. The high and low closing
bid quotations in the over-the-counter market reported by the relevant market
makers on September 14, 1999, were $2.50 and $2.375 for the Common Stock.
Quotations represent inter-dealer quotations, without adjustment for retail
mark-ups, mark-downs or commissions, and may not necessarily represent actual
transactions.
<TABLE>
<CAPTION>
Fiscal 1999 Fiscal 1998 Fiscal 1997
Quarter Ended High Bid Low Bid High Bid Low Bid High Bid Low Bid
- ------------- ------------------- ------------------- -------------------
<S> <C> <C> <C> <C> <C> <C>
Common Stock:
March 31 $2.00 $ .88 $4.52 $2.52 $5.12 $2.76
June 30 $2.38 $1.06 3.13 2.48 3.24 1.88
September 30 N/A N/A 2.25 .26 2.76 1.35
December 31 N/A N/A 1.25 .56 1.88 .64
</TABLE>
As of September 14, 1999, the approximate number of shareholders of record
of the Company's Common Stock was 1,100. The Company has never paid or declared
any dividends on its Common Stock and does not anticipate paying dividends in
the foreseeable future.
The Company cannot predict the market price for the Common Stock upon the
commencement or the completion of this offering. Since the market for the
Company's Common Stock is thinly traded, sales of the shares of Common Stock
could cause the Common Stock to trade at levels lower than would otherwise be
anticipated.
14
<PAGE>
SELLING SECURITY HOLDERS
Of the 1,646,560 shares of Common Stock being offered hereby, 288,331
shares of Common Stock underlying outstanding units are being offered
collectively by seven individuals, including Messrs. Ronald E. Patterson,
Phillip T. Huss, William T. Richey and Alan Talesnick and Mesdames Maria
Molinsky, Jennifer S. Jauregui and Cynthia L. Gosselin, who purchased units,
each unit consisting of one share of Common Stock and one warrant exercisable to
purchase one share of Common Stock at an exercise price of $.75 per share on or
prior to February 25, 2002; 110,000 shares of Common Stock underlying
outstanding units are being offered by two individuals, Messrs. Patterson and
Huss, who purchased units, each unit consisting of one share of Common Stock and
one warrant exercisable to purchase .682 share of Common Stock at an exercise
price of $.75 per share on or prior to July 16, 2002; and 150,000 shares of
Common Stock underlying outstanding units are being offered collectively by
three individuals, including Messrs. Lee N. and Steven Sion and Ms. Maria
Molinsky, who purchased units, each unit consisting of one share of Common Stock
and one warrant exercisable to purchase one share of Common Stock at an exercise
price of $2.40 per share on or prior to September 13, 2002. A total of 438,331
shares of Common Stock underlying warrants included in the Units are not covered
by the Registration Statement of which this Prospectus is a part.
Of the balance of 1,098,299 shares, 742,673 shares of Common Stock are
being offered collectively by eleven persons, including Mr. Patterson, The
Investor Resource Services, Inc., Fidelity Funding, Inc., Mr. Blagoja Samakoski,
Patricia Cudd, Esq., Trautman Wasserman & Company, Inc., Premier Equities, Inc.,
Mr. Richey, Mr. Talesnick, Mr. Gary L. Dudley and Mr. Frank T. Anaya. Mr. Dudley
is a director of the Company and Ms. Cudd is the sole proprietor of Cudd &
Associates, the law firm that passed upon certain legal matters in connection
with the validity of the issuance of the shares of Common Stock being offered
hereby. Ms Cudd owns, in addition to 100,000 shares of the Company's Common
Stock, options exercisable to purchase a total of 10,000 shares of the Common
Stock at an exercise price of $.75 per share through January 6, 2002. The shares
of Common Stock underlying Ms. Cudd's options are not included in the shares of
Common Stock covered by the Registration Statement of which this Prospectus
forms a part.
A total of 355,556 shares of Common Stock which may be issued upon the
conversion of outstanding Debentures may be offered by the Venezuela Recovery
Fund N.V. (the "Venezuela Fund") and Spiga Limited ("Spiga"). Of these shares,
222,222 shares of Common Stock are issuable upon the conversion by the Venezuela
Fund of an outstanding 18%-$500,000 face amount subordinated convertible
debenture due December 1, 1999, assuming the conversion price of $2.25 per each
share of Common Stock, and a total of 133,334 shares of Common Stock are
issuable upon the conversion by Spiga of two outstanding 12%-$150,000 face
amount subordinated convertible debentures due June 1, 2000, assuming the
conversion price per each share of Common Stock of $2.25.
The table below indicates the name of Selling Shareholder, any material
relationship he, she or it has had to the Company within the last three years,
the number and percentage of shares of Common Stock owned by the Selling
Shareholder prior to this offering, the number of shares being offered for sale
by the shareholder and the number of shares of Common Stock and the percentage
of the total shares of Common Stock outstanding that will be held if all shares
offered are sold. (See "Description of Securities - Common Stock Offered by the
Selling Shareholders" and "- Common Stock That May Be Offered by the Debenture
Holders.")
15
<PAGE>
<TABLE>
<CAPTION>
Shares Shares Shares
Owned Owned Owned
Selling Relationship Prior to Being After
Shareholders to Company Offering Percent Offered Offering Percent
- ------------------------ ----------- -------- ------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
Ronald E. Patterson 11.61% 491,191(1) 11.61 303,333(2) 187,858(3) 4.44
shareholder
The Investor Resource N/A 133,333(4) 3.30 133,333(4) -0- 0.00
Services, Inc.
Phillip T. Huss 5.31% 219,307(5) 5.31 132,166(6) 87,141(7) 2.11
shareholder
Fidelity Funding, Inc. N/A 120,000(8) 2.95 100,000(9) 20,000(10) *
Blagoja Samakoski N/A 100,000(4) 2.47 100,000(4) -0- 0.00
Patricia Cudd N/A 110,000(11) 2.71 100,000(11) 10,000 *
Trautman Wasserman N/A 66,667(4) 1.64 66,667(4) -0- 0.00
& Company, Inc.
Lee N. Sion 5.85% 239,125(12) 5.85 50,000(13) 189,125(14) 4.62
shareholder
Premier Equities, Inc. N/A 150,000(15) 3.62 50,000(16) 100,000(17) 2.41
Steven Sion N/A 75,000(18) 1.84 50,000(19) 25,000(20) .61
William T. Richey N/A 70,000(21) 1.72 45,000(22) 25,000(23) *
Maria Molinsky N/A 141,666(24) 3.45 83,333(25) 58,333(26) 1.42
Alan Talesnick N/A 46,000(27) 1.13 32,000(28) 14,000(29) *
Gary L. Dudley Director 20,000(11) * 20,000(11) -0- 0.00
Jennifer S. Jauregui N/A 18,666(30) * 9,333(31) 9,333(32) 0.00
Frank T. Anaya N/A 9,174(33) * 9,174(33) -0- 0.00
Cynthia L. Gosselin Operations 36,574(34) * 6,666(35) 29,908(36) *
Manager of
Dasibi
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
Shares Shares Shares
Owned Owned Owned
Debenture Relationship Prior to Being After
Holders to Company Offering Percent Offered Offering Percent
- --------------------------- ------------ -------- ------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
The Venezuela
Recovery Fund N.V. 5.26% 222,222(37) 5.26 222,222(37) -0- 0.00
shareholder
Spiga Limited N/A 178,334(38) 4.22 133,334(39) 45,000(40) 1.07
- ------------------
</TABLE>
* Less than one percent.
(1) Includes 90,000 shares of Common Stock purchased for cash in June 1998;
133,333 shares of Common Stock and 133,333 shares of Common Stock underlying
warrants exercisable to purchase one share of Common Stock each through February
25, 2002, at an exercise price of $.75 per share; which shares and warrants were
included in units purchased for cash in February 1999; and 80,000 shares of
Common Stock and 54,525 shares of Common Stock underlying warrants exercisable
to purchase .682 share of Common Stock each at an exercise price of $.75 per
share through July 16, 2002; which shares and warrants were included in units
purchased for cash in July 1999.
(2) Includes 90,000 shares of Common Stock purchased for cash in June 1998
and 133,333 shares and 80,000 shares of Common Stock included in units purchased
for cash in February and July 1999, respectively.
(3) Includes 133,333 shares of Common Stock underlying warrants exercisable
at an exercise price of $.75 per share through February 25, 2002, to purchase
one share of Common Stock each and 54,525 shares of Common Stock underlying
warrants exercisable through July 16, 2002, at an exercise price of $.75 per
share to purchase .682 share of Common Stock each.
(4) Includes shares of Common Stock purchased for cash in May 1999.
(5) Includes 66,666 shares of Common Stock and 66,666 shares of Common
Stock underlying warrants exercisable to purchase one share of Common Stock each
through February 25, 2002, at an exercise price of $.75 per share; which shares
and warrants were included in units purchased for cash in February 1999; 30,000
shares of Common Stock and 20,475 shares of Common Stock underlying warrants
exercisable to purchase .682 share of Common Stock each at an exercise price of
$.75 per share through July 16, 2002; which shares and warrants were included in
units purchased for cash in July 1999; and options exercisable through May 15,
2001, to purchase 12,500 shares of Common Stock at an exercise price of $2.20
per share; and 23,000 shares of Common Stock acquired from Fred Zalokar which
were purchased by him for cash in June 1998.
(6) Includes 66,666 shares and 30,000 shares of Common Stock included in
units purchased for cash in February and July 1999, respectively; 23,000 shares
of Common Stock acquired from Fred Zalokar which were purchased by him for cash
in June 1998; and options exercisable through May 15, 2001, to purchase 12,500
shares of Common Stock at an exercise price of $2.20 per share.
(7) Includes 66,666 shares of Common Stock underlying warrants exercisable
to purchase one share of Common Stock each at an exercise price of $.75 per
share through February 25, 2002, included in units purchased for cash in
February 1999 and 20,475 shares of Common Stock underlying warrants exercisable
through July 16, 2002, to purchase .682 share of Common Stock each at an
exercise price of $.75 per share included in units purchased for cash in July
1999.
17
<PAGE>
(8) Includes 100,000 shares of Common Stock and 20,000 shares of Common
Stock underlying warrants exercisable through August 12, 2002, at an exercise
price of $.75 per share; which shares and warrants were received pursuant to the
Compromise, Settlement and Release Agreement dated August 12, 1999.
(9) Includes 100,000 shares of Common Stock received pursuant to the
Compromise, Settlement and Release Agreement dated August 12, 1999.
(10) Includes 20,000 shares of Common Stock underlying warrants exercisable
through August 12, 2002, at an exercise price of $.75 received pursuant to the
Compromise, Settlement and Release Agreement dated August 12, 1999.
(11) Includes shares of Common Stock received upon the conversion on June
8, 1999, of Series "A" Preferred Stock on the basis of one share of Common Stock
for share of Series "A" Preferred Stock.
(12) Includes 50,000 shares of Common Stock and 25,000 shares of Common
Stock underlying warrants exercisable to purchase one share of Common Stock each
through September 13, 1999, at an exercise price of $2.40 per share; which
shares and warrants were included in units purchased for cash in September 1999;
12,500 shares of Common Stock underlying options exercisable to purchase one
share of Common Stock each at an exercise price of $.75 per share through June
8, 2001, and 9,375 shares of Common Stock underlying warrants exercisable to
purchase one share of Common Stock each through January 7, 2002, at an exercise
price of $.75 per share.
(13) Includes shares of Common Stock included in units purchased for cash
in September 1999.
(14) Includes 25,000 shares of Common Stock underlying warrants exercisable
to purchase one share of Common Stock each through September 13, 1999, at an
exercise price of $2.40 per share; which warrants were included in units
purchased for cash in September 1999; 12,500 shares of Common Stock underlying
options exercisable to purchase one share of Common Stock each at an exercise
price of $.75 per share through June 8, 2001, and 9,375 shares of Common Stock
underlying warrants exercisable to purchase one share of Common Stock each
through January 7, 2002, at an exercise price of $.75 per share.
(15) Includes 50,000 shares of Common Stock and 100,000 shares of Common
Stock underlying warrants exercisable at an exercise price of $.75 through July
12, 2002; which shares and warrants were received for services performed
pursuant to the Financial Consulting and Services Agreement dated May 20, 1999.
(16) Includes 50,000 shares of Common Stock received for services performed
pursuant to the Financial Consulting and Services Agreement dated May 20, 1999.
(17) Includes 100,000 shares of Common Stock underlying warrants
exercisable through July 12, 2002, at an exercise price of $.75 received for
services performed pursuant to the Financial Consulting and Services Agreement
dated May 20, 1999.
(18) Includes 50,000 shares of Common Stock and 25,000 shares of Common
Stock underlying warrants exercisable to purchase one share of Common Stock each
through September 13, 1999, at an exercise price of $2.40 per share; which
shares and warrants were included in units purchased for cash in September 1999.
18
<PAGE>
(19) Includes shares of Common Stock included in units purchased for cash
in September 1999.
(20) Includes 25,000 shares of Common Stock underlying warrants exercisable
to purchase one share of Common Stock each through September 13, 1999, at an
exercise price of $2.40 per share; which warrants were included in units
purchased for cash in September 1999.
(21) Includes 20,000 shares of Common Stock purchased for cash in June 1998
and 25,000 shares of Common Stock and 25,000 shares of Common Stock underlying
warrants exercisable to purchase one share of Common Stock each at an exercise
price of $.75 per share through February 25, 2002; which shares and warrants
were included in units purchased for cash in February 1999.
(22) Includes 20,000 shares of Common Stock purchased for cash in June 1998
and 25,000 shares of Common Stock included in units purchased for cash in
February 1999.
(23) Includes 25,000 shares of Common Stock underlying warrants exercisable
at an exercise price of $.75 per share to purchase one share of Common Stock
each through February 25, 2002, included in units purchased for cash in February
1999.
(24) Includes 50,000 shares of Common Stock and 25,000 shares of Common
Stock underlying warrants exercisable to purchase one share of Common Stock each
through September 13, 1999, at an exercise price of $2.40 per share; which
shares and warrants were included in units purchased for cash in September 1999;
33,000 shares of Common Stock and 33,000 shares of Common Stock underlying
warrants exercisable at an exercise price of $.75 per share through February 25,
2002; which shares and warrants were included in units purchased for cash in
March 1999.
(25) Includes 50,000 shares of Common Stock included in units purchased for
cash in September 1999 and 33,000 shares of Common Stock included in units
purchased for cash in March 1999.
(26) Includes 25,000 shares of Common Stock underlying warrants exercisable
to purchase one share of Common Stock each through September 13, 1999, at an
exercise price of $2.40 per share included in units purchased for cash in
September 1999; and 33,000 shares of Common Stock underlying warrants
exercisable at an exercise price of $.75 per share through February 25, 2002,
included in units purchased for cash in March 1999.
(27) Includes 18,000 shares of Common Stock purchased for cash in June 1998
and 14,000 shares of Common Stock and 14,000 shares of Common Stock underlying
warrants exercisable to purchase one share of Common Stock each through February
25, 2002, at an exercise price of $.75 per share; which shares and warrants were
included in units purchased for cash in February 1999.
(28) Includes 18,000 shares of Common Stock purchased for cash in June 1998
and 14,000 shares of Common Stock included in units purchased for cash in
February 1999.
(29) Includes 14,000 shares of Common Stock underlying warrants exercisable
to purchase one share of Common Stock each through February 25, 2002, at an
exercise price of $.75 per share included in units purchased for cash in
February 1999.
19
<PAGE>
(30) Includes 9,333 shares of Common Stock and 9,333 shares of Common Stock
underlying warrants exercisable at an exercise price of $.75 per share through
February 25, 2002; which shares and warrants were included in units purchased
for cash in March 1999.
(31) Includes 9,333 shares of Common Stock included in units purchased for
cash in March 1999.
(32) Includes 9,333 shares of Common Stock underlying warrants exercisable
at an exercise price of $.75 per share through February 25, 2002, included in
units purchased for cash in March 1999.
(33) Includes shares of Common Stock purchased for cash in June 1998.
(34) Includes 6,666 shares of Common Stock and 6,666 shares of Common Stock
underlying warrants exercisable through February 25, 2002, at an exercise price
of $.75 per share; which shares and warrants were included in units purchased
for cash in February 1999; and 10,000 shares and 5,000 shares of Common Stock
underlying options exercisable at an exercise price of $.75 per share through
May 31, 2000, and January 6, 2002, respectively.
(35) Includes 6,666 shares of Common Stock included in units purchased for
cash in February 1999.
(36) Includes 6,666 shares of Common Stock underlying warrants exercisable
at an exercise price of $.75 per share through February 25, 2002, included in
units purchased for cash in February 1999 and 10,000 shares and 5,000 shares of
Common Stock underlying options exercisable through May 31, 2000, and January 6,
2002, respectively, at an exercise price of $.75 per share.
(37) Includes shares of Common Stock issuable upon the conversion of an
18%-$500,000 face amount subordinated convertible debenture due December 1,
1999.
(38) Includes a total of 133,334 shares of Common Stock issuable upon the
conversion of two 12%-$150,000 face amount subordinated convertible debentures
due June 1, 2000, and 45,000 shares of Common Stock underlying warrants
exercisable at an exercise price of $2.25 per share through September 1, 2002.
(39) Includes a total of 133,334 shares of Common Stock issuable upon the
conversion of two 12%-$150,000 face amount subordinated convertible debentures
due June 1, 2000.
(40) Includes 45,000 shares of Common Stock underlying warrants exercisable
at an exercise price of $2.25 per share through September 1, 2002.
DESCRIPTION OF SECURITIES
Capital Stock
- -------------
The Company's authorized capital stock consists of 30,000,000 shares of
Common Stock, no par value per share (the "Common Stock") and 20,000,000 shares
of preferred stock, $.01 par value per share (the "Preferred Stock").
Common Stock. All shares of Common Stock have equal voting rights and, when
validly issued and outstanding, are entitled to one vote per share in all
matters to be voted upon by shareholders. The shares of Common Stock have no
preemptive, subscription, conversion or redemption rights and may be issued only
20
<PAGE>
as fully-paid and nonassessable shares of Common Stock. Cumulative voting in the
election of directors is permitted; however, cumulative voting may occur only if
a shareholder announces his intention to cumulate his votes prior to the voting,
in which case all shareholders may cumulate their votes. In the event of
liquidation of the Company, each shareholder is entitled to receive a
proportionate share of the Company's assets available for distribution to
shareholders after the payment of liabilities. All shares of the Company's
Common Stock issued and outstanding are fully-paid and nonassessable. Holders of
the shares of Common Stock are entitled to share pro rata in dividends and
distributions with respect to the Common Stock, as may be declared by the Board
of Directors out of funds legally available therefor. As of September 7, 1999,
there were 3,894,487 shares of Common Stock issued and outstanding held of
record by approximately 1,100 shareholders. The Common Stock is traded
over-the-counter and reported on the NASDAQ National Market System under the
symbol "PRCC."
Holders of shares of Common Stock are entitled to share pro rata in
dividends and distributions with respect to the Common Stock when, as and if
declared by the Board of Directors out of funds legally available therefor. The
Company has not paid any dividends on its Common Stock and currently intends to
retain earnings, if any, to finance the development and expansion of its
business. Future dividend policy is subject to the discretion of the Board of
Directors and will depend upon a number of factors, including future earnings,
capital requirements and the financial condition of the Company.
Preferred Stock. Shares of Preferred Stock may be issued from time to time
in one or more series as may be determined by the Board of Directors. The voting
powers and preferences, the relative rights of each such series and the
qualifications, limitations and restrictions thereof shall be established by the
Board of Directors, except that no holder of Preferred Stock shall have
preemptive rights. The Company has no outstanding Preferred Stock, and the Board
of Directors does not plan to issue any for the foreseeable future unless the
issuance thereof shall be in the best interests of the Company.
Common Stock Offered by the Selling Shareholders
- ------------------------------------------------
On May 8, 1998, the Company issued an aggregate of 20,000 shares and
100,000 shares of Series "A" Convertible Preferred Stock to Gary L. Dudley, a
director of the Company, and Patricia Cudd, Esq., the sole proprietor of the law
firm that passed upon certain legal matters in connection with the validity of
the issuance of the shares of Common Stock being offered hereby, in
consideration for cash. Each share of Series "A" Convertible Preferred Stock
(the "Series "A" Preferred Stock) was converted on June 8, 1999, into one share
of Common Stock. The terms of the transactions involving the sale of the Series
A Preferred Stock are more fully described in the Investment Letters and
Memorandum of Subscription/Purchase Agreements dated May 9, 1998, with Mr.
Dudley and Ms. Cudd, copies of which are incorporated herein by reference to
Exhibits 10.156 and 10.155, respectively, to the Company's Annual Report on Form
10-KSB for the fiscal year ended December 31, 1998. In addition to 100,000
shares of the Company's Common Stock, Ms. Cudd owns options exercisable to
purchase a total of 10,000 shares of the Common Stock at an exercise price of
$.75 per share through January 6, 2002. The shares of Common Stock underlying
Ms. Cudd's options are not included in the shares of Common Stock covered by the
Registration Statement of which this Prospectus is a part.
On June 19, 1998, PRCC issued a total of 20,000 shares, 18,000 shares and
9,174 shares of Common Stock to William T. Richey, Alan L. Talesnick and Frank
T. Anaya, respectively, in consideration for cash. The terms of the transactions
are more fully described in the Investment Letters and Memorandum of
Subscription/Purchase Agreements dated June 19, 1998, with Messrs. Richey,
Talesnick and Anaya, copies of which are incorporated herein by reference to
Exhibits 10.157, 10.164 and 10.162, respectively, to the Company's Annual Report
on Form 10-KSB for the fiscal year ended December 31, 1998.
21
<PAGE>
During the period from February 25 through March 24, 1999, the Company
completed a private placement to a total of seven purchasers of an aggregate of
288,331 units, each unit consisting of one share of Common Stock and one warrant
exercisable to purchase one share of Common Stock at an exercise price of $.75
per share during the approximate three-year period terminating on February 25,
2002. The seven holders of the units, together with the number of shares of the
Company's Common Stock included in each unit, include the following: (i) Ronald
E. Patterson - 133,333 shares; (ii) Phillip T. Huss - 66,666 shares; (iii) Maria
Molinsky - 33,333 shares; (iv) William T. Richey - 25,000 shares; (v) Alan
Talesnick - 14,000 shares; (vi) Jennifer S. Jauregui - 9,333 shares; and (vii)
Cynthia L. Gosselin - 6,666 shares. A total of 288,331 shares of Common Stock
underlying warrants included in the units are not covered by the Registration
Statement of which this Prospectus is a part. The terms of the transactions
involving the purchases of units by Messrs. Patterson, Huss and Richey are more
fully described in the Investment Letters and Memorandum of
Subscription/Purchase Agreements dated February 25, 1999, with Messrs.
Patterson, Huss and Richey, copies of which are incorporated herein by reference
to Exhibits 10.174, 10.175 and 10.173, respectively, to the Annual Report on
Form 10-KSB of PRCC for the fiscal year ended December 31, 1998. The terms of
the transactions involving the sales of units to Mesdames Molinsky, Jauregui and
Gosselin and Mr. Talesnick are described in more detail in Exhibits 4.11, 4.14,
4.15 and 4.13, respectively, to the Company's Registration Statement on Form S-3
of which this Prospectus forms a part.
On May 19, 1999, PRCC issued a total of 133,333 shares, 100,000 shares and
66,667 shares of Common Stock to The Investor Resource Services, Inc. ("Investor
Services"), Blagoja Samakoski and Trautman Wasserman & Company, Inc. ("Trautman
Wasserman"), respectively, in consideration for cash. The terms of the sales are
more fully described in the Investment Letters and Memorandum of
Subscription/Purchase Agreements dated May 19, 27 and 19, 1999, respectively,
with Investor Services, Mr. Samakoski and Trautman Wasserman, copies of which
are incorporated herein by reference to Exhibits 4.16, 4.21 and 4.18,
respectively, to the Form S-3 Registration Statement of PRCC of which this
Prospectus is a part.
The Company, on May 20, 1999, entered into that certain Financial
Consulting and Services Agreement (the "Consulting Agreement") with Premier
Equities, Inc. ("Premier"), pursuant to which the Company issued Premier 50,000
shares of its Common Stock and granted warrants dated July 12, 1999, to Premier
exercisable to purchase 100,000 shares of Common Stock at an exercise price of
$.75 per share during the three-year period terminating on July 12, 2002. In
addition to the foregoing compensation, the Company agreed to pay Premier a fee
in the amount of $75,000 in cash per annum during the three-year term of the
Consulting Agreement in consideration for the performance by Premier of certain
consulting services for the Company, including advice regarding short- and
long-term business plans and assistance with shareholder relations. The
Consulting Agreement is terminable by either party upon sixty days' prior
written notice. The provisions of the Consulting Agreement are set forth in
their entirety in the Financial Consulting and Services Agreement dated July 12,
1999, a copy of which is incorporated herein by reference to Exhibit 4.20 to the
Form S-3 Registration Statement of which this Prospectus forms a part. The
foregoing brief description of the Consulting Agreement is qualified in its
entirety by the more detailed provisions thereof.
On July 16, 1999, the Company issued and sold 80,000 and 30,000 units, each
unit consisting of one share of Common Stock and one warrant exercisable to
purchase approximately .68 share of Common Stock at an exercise price of $.75
per share on or prior to the expiration date thereof on July 16, 2002, to Ronald
E. Patterson and Phillip T. Huss, respectively. A total of 75,000 shares of
Common Stock underlying warrants included in the Units are not covered by the
Registration Statement on Form S-3 of which this Prospectus is a part. The terms
22
<PAGE>
of the transactions with Messrs. Patterson and Huss are described in more detail
in Exhibits 4.22 and 4.23, respectively, to the Company's Registration Statement
on Form S-3 of which this Prospectus is a part.
The Company, on August 12, 1999, issued 100,000 shares of Common Stock and
granted a warrant exercisable to purchase 20,000 shares of Common Stock at an
exercise price of $.75 per share during the three-year period terminating on
August 12, 2002, to Fidelity Funding, Inc. ("Fidelity"), pursuant to the
Compromise, Settlement and Release Agreement dated August 12, 1999 (the
"Settlement Agreement"). The Settlement Agreement obligates the Company to pay
Fidelity the amount of $450,000 on or before February 1, 2000, together with
interest monthly on the unpaid portion of said sum at the rate of twelve percent
per annum in satisfaction of a default judgment in the amount of $449,810,
together with attorneys' fees in the amount of approximately $10,323,
prejudgment interest after June 9, 1998, at a per diem rate of approximately
$362 and costs and post-judgment interest at the rate of fifteen percent per
annum, entered in favor of Fidelity in that certain civil action styled Fidelity
Funding, Inc. v. Pollution Research and Control Corporation, No. 98-02820-B,
filed on or about April 7, 1998, in the 44th District Court, Dallas County,
Texas. The Settlement Agreement provides for the proceeds of the sale of
Fidelity's 100,000 shares of Common Stock in an amount up to $450,000, together
with the amount of any accrued and unpaid interest thereon, to be paid to
Fidelity and any sale proceeds in excess thereof to be paid to the Company. Any
amount realized by Fidelity as a result of the exercise of the warrants is in
addition to the amount of the Company's indebtedness to Fidelity as provided in
the Settlement Agreement. The terms and conditions of the Settlement Agreement
are set forth in their entirety in the Compromise, Settlement and Release
Agreement dated August 12, 1999, a copy of which is incorporated herein by
reference to Exhibit 4.25 to the Company's Form S-3 Registration Statement of
which this Prospectus forms a part. The foregoing brief description of certain
provisions of the Settlement Agreement is qualified in its entirety by the more
detailed provisions thereof.
On September 13, 1999, the Company issued and sold, in consideration for
cash, 50,000 units, each unit consisting of one share of Common Stock and one
warrant exercisable to purchase .5 share of Common Stock at an exercise price of
$2.40 per share on or prior to the expiration date thereof on September 13,
2002, to Messrs. Lee N. and Steven Sion and Ms. Maria Molinsky, respectively. A
total of 75,000 shares of Common Stock underlying warrants included in the Units
are not covered by the Registration Statement on Form S-3 of which this
Prospectus is a part. The terms of the unit sales are more fully described in
the Investment Letters and Memorandum of Subscription/Purchase Agreements dated
September 13, 1998, with Messrs. Lee N. and Steven Sion and Ms. Molinsky, copies
of which are attached hereto as Exhibits 4.29, 4.30 and 4.28, respectively, to
the Company's Annual Report on Form 10-KSB for the fiscal year ended December
31, 1998.
Common Stock That May Be Offered by the Debenture Holders
- ---------------------------------------------------------
On May 19, 1999, the Company issued a $500,000 face amount subordinated
convertible debenture, bearing interest at the rate of 18% per annum commencing
June 1, 1999, due December 1, 1999, to The Venezuela Recovery Fund N.V. The
debenture is convertible in denominations of $50,000 at the conversion price per
each share of Common Stock of the lesser of $2.25 (115% of the market price of
the Common Stock on May 28, 1999) or 80% of the market price of the Common Stock
on the conversion date. The provisions of the debenture are set forth in their
entirety in the 18% Subordinated Convertible Debenture Due December 1, 1999,
dated May 19, 1999, a copy of which is incorporated herein by reference to
Exhibit 4.19 to the Company's Form S-3 Registration Statement of which this
Prospectus forms a part. The more detailed provisions of the debenture qualify
this brief description thereof in its entirety.
23
<PAGE>
The Company issued, on September 1, 1999, two $150,000 face amount
subordinated convertible debentures, bearing interest at the rate of 12% per
annum, due June 1, 2000, to Spiga Limited. The Debentures are convertible in
denominations of $50,000 at the conversion price per each share of Common Stock
of the lesser of $2.25 or 80% of the market price of the Common Stock on the
conversion date. The provisions of the debentures are set forth in their
entirety in each of the 12% Subordinated Convertible Debentures Due June 1,
2000, dated September 1, 1999, copies of which are incorporated herein by
reference to Exhibits 4.26 and 4.27 to the Company's Form S-3 Registration
Statement of which this Prospectus forms a part. The foregoing brief description
of certain provisions of the debenture is qualified in its entirety by the more
detailed provisions thereof. On September 1, 1999, PRCC also issued Spiga
warrants exercisable through September 1, 2002, to purchase an aggregate of
45,000 shares of Common Stock at an exercise price of $2.25 per share. The
shares of Common Stock underlying Spiga's warrants are not included in the
shares of Common Stock covered by the Form S-3 Registration Statement of which
this Prospectus forms a part.
Transfer Agent and Registrar
- ----------------------------
OTR, Inc., 1130 Southwest Morrison, Suite #250, Portland, Oregon 97205, is
the Transfer Agent and Registrar for the Common Stock.
LEGAL MATTERS
Certain legal matters in connection with the validity of the issuance of
the shares of Common Stock being offered hereby will be passed upon for the
Company by Cudd & Associates, 1120 Lincoln Street, Suite #1310, Denver, Colorado
80203. Patricia Cudd, Esq., the sole proprietor of Cudd & Associates, owns of
record and beneficially 100,000 shares of the Company's Common Stock and options
exercisable to purchase a total of 10,000 shares of the Common Stock at an
exercise price of $.75 per share during the period of four years from January 7,
1998, through January 6, 2002. The shares of Common Stock underlying Ms. Cudd's
options are not included in the shares of Common Stock covered by the
Registration Statement of which this Prospectus forms a part. The shares of
Common Stock, including the shares underlying the options, owned of record and
beneficially by Ms. Cudd represent approximately 2.8% of the issued and
outstanding shares of the Company's Common Stock.
EXPERTS
The financial statements of the Company are incorporated herein by
reference to the Company's Annual Report on Form 10-KSB for the fiscal year
ended December 31, 1998. Such financial statements have been audited by A.J.
Robbins, P.C., Certified Public Accountants and Consultants, independent
auditors, as stated in their report that is incorporated herein by reference.
24
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
--------------------------------------------
The following is an itemized statement of the expenses incurred in
connection with this Registration Statement and the issuance and distribution of
the shares of Common Stock being registered hereby. All such expenses will be
paid by the Company.
Securities and Exchange Commission registration fee ............ $ 823
Legal fees and expenses ........................................ 20,000
Accounting fees and expenses.................................... 1,500
Blue sky fees and expenses ..................................... 4,000
Transfer agent fees and expenses................................ 3,000
Printing, electronic filing and engraving expenses.............. 3,000
Miscellaneous expenses.......................................... 2,000
-------
TOTAL........................................................... $34,323
All of the above items except the Securities and Exchange Commission
registration and NASD fees are estimates.
Item 15. Indemnification of Directors and Officers.
------------------------------------------
The Company's Articles of Incorporation, as amended, provide for (i) the
elimination of directors' liability for monetary damages for certain breaches of
their fiduciary duties to the Company and its shareholders as permitted by
California law; and (ii) permit the indemnification by the Company to the
fullest extent under California law. At present, there is no pending litigation
or proceeding involving a director or officer of the Company as to which
indemnification is being sought. Section 317 of the California Corporations
Code, as amended, provides for the indemnification of the officers, directors
and controlling persons of a corporation as follows:
"(a) For the purposes of this section, "agent" means any person who is or
was a director officer, employee or other agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee, or
agent of another foreign or domestic corporation, partnership, joint venture,
trust, or other enterprise, or was a director, officer, employee, or agent of a
foreign or domestic corporation which was a predecessor corporation of the
corporation or of another enterprise at the request of such predecessor
corporation; "proceeding" means any threatened, pending or completed action or
proceeding, whether civil, criminal, administrative or investigative; and
"expenses" includes without limitation attorneys' fees and any expenses of
establishing a right to indemnification under subdivision (d) or paragraph (3)
of subdivision (e).
(b) A corporation shall have the power to indemnify any person who was or
is a party or is threatened to be made a party to any proceeding (other than an
action by or in the right of the corporation to procure a judgment in its favor,
an action brought under Section 9243, or an action brought by the Attorney
General pursuant to Section 9230) by reason of the fact that such person is or
was an agent of the corporation, against expenses, judgments, fines, settlements
and other amounts actually and reasonably incurred in connection with such
proceeding if such person acted in good faith and in a manner such person
believed to be in the best interests of the corporation and, in the case of a
criminal proceeding, had no reasonable cause to believe the conduct of such
25
<PAGE>
person was unlawful. The termination of any proceeding by judgment, order,
settlement, conviction or upon a plea of nolo contendere or its equivalent shall
not, of itself, create a presumption that the person did not act in good faith
and in a manner which the person believed to be in the best interests of the
corporation or that the person had reasonable cause to believe that the person's
conduct was unlawful.
(c) A corporation shall have power to indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action by or in the right of the corporation, or brought under Section
9243, or brought by the Attorney General pursuant to Section 9230, to procure a
judgment in its favor by reason of the fact that such person is or was an agent
of the corporation, against expenses actually and reasonably incurred by such
person in connection with the defense or settlement of such action if the person
acted in good faith, in a manner in which such person believed to be in the best
interests of the corporation and with such care, including reasonable inquiry,
as an ordinary prudent person in a like position would use under similar
circumstances. No indemnification shall be made under this subdivision:
(1) In respect of any claim, issue or matter as to which such person shall
have been adjudged to be liable to the corporation in the performance of such
person's duty to the corporation, unless and only to the extent that the court
in which such proceeding is or was pending shall determine upon application
that, in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for the expenses which such court shall
determine;
(2) Of amounts paid in settling or otherwise disposing of a threatened or
pending action, with or without court approval; or
(3) Of expenses incurred in defending a threatened or pending action which
is settled or otherwise disposed of without court approval unless it is settled
with the approval of the Attorney General.
(d) To the extent that an agent of a corporation has been successful on the
merits in defense or any proceeding referred to in subdivision (b) or (c) or in
defense of any claim, issue or matter therein, the agent shall be indemnified
against expenses actually and reasonably incurred by the agent in connection
therewith.
(e) Except as provided in subdivision (d), any indemnification under this
section shall be made by the corporation only if authorized in the specific
case, upon a determination that indemnification of the agent is proper in the
circumstances because the agent has met the applicable standard of conduct set
forth in either subdivision (b) or (c) by:
(l) A majority vote of a quorum consisting of directors who are not
parties to such proceedings;
(2) Approval of the members (Section 5034), with the persons to be
indemnified not being entitled to vote thereon; or
(3) The court in which such proceeding is or was pending upon
application made by the corporation or the agent or the attorney or other person
rendering services in connection with the defense, whether or not such
application by the agent, attorney or other person is approved by the
corporation.
26
<PAGE>
(f) Expenses incurred in defending any proceeding may be advanced by the
corporation prior to the final disposition of such proceeding upon receipt of an
undertaking by or on behalf of the agent to repay such amount unless it shall be
determined ultimately that the agent is entitled to be indemnified as authorized
in this section.
(g) No provision made by a corporation to indemnify its or its subsidiary's
directors or officers for the defense of any proceeding, whether contained in
the articles, bylaws, a resolution of members or directors, an agreement or
otherwise, shall be valid unless consistent with this section. Nothing contained
in this section shall affect any right to indemnification to which persons other
than such directors and officers may be entitled by contract or otherwise.
(h) No indemnification or advance shall be made under this section, except
as provided in subdivision (d) or paragraph (3) of subdivision (e), in any
circumstances where it appears that:
(1) It would be inconsistent with a provision of the articles, bylaws,
a resolution or the members or an agreement in effect at the time of the accrual
of the alleged cause of action asserted in the proceeding in which the expenses
were incurred or other amounts were paid, which prohibits or otherwise limits
indemnification; or
(2) It would be inconsistent with any condition expressly imposed by a
court in approving a settlement.
(i) A corporation shall have power to purchase and maintain insurance on
behalf of any agent of the corporation against any liability asserted against or
incurred by the agent in such capacity or arising out of the agent's status as
such whether or not the corporation would have the power to indemnify the agent
against such liability under the provisions of this section; provided, however,
that a corporation shall have no power to purchase and maintain such insurance
to indemnify any agent of the corporation for a violation of Section 9243.
(j) This section does not apply to any proceeding against any trustee,
investment manager or other fiduciary of an employee benefit plan in such
person's capacity as such, even though such person may also be an agent as
defined in subdivision (a) of the employer corporation. A corporation shall have
power to indemnify such trustee, investment manager or other fiduciary to the
extent permitted by subdivision (f) or Section 207."
Item 16. Exhibits.
---------
The Exhibit Index commences on page 31.
Item 17. Undertakings.
-------------
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement;
27
<PAGE>
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement;
provided, however, that the undertakings set forth in paragraphs
(a)(1)(i) and (a)(1)(ii) do not apply if the information required to be included
in a post-effective amendment by those paragraphs is contained in periodic
reports filed by the registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
28
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of Glendale, State of California, on September 23, 1999.
Date: September 23, 1999 POLLUTION RESEARCH AND CONTROL CORP.
(Registrant)
By: /s/ Albert E. Gosselin, Jr.
------------------------------------------
Albert E. Gosselin, Jr., President,
Chief Executive Officer and Chairman of
the Board Directors
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Albert E. Gosselin, Jr., and Marcia A. Smith, or
either one of them, his or her true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him or her and in his or
her name, place and stead, in any and all capacities, to sign any and all pre-
or post-effective amendments to this Registration Statement, and to file the
same with all exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite or necessary to be done in
and about the premises, as fully to all intents and purposes as he or she might
or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or either of them, or their or his or her
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
Date: September 23, 1999 /s/ Albert E. Gosselin, Jr.
------------------------------------
Albert E. Gosselin, Jr., President,
Chief Executive Officer and Chairman
of the Board Directors (Principal
Executive Officer)
Date: September 23, 1999 /s/ Gary L. Dudley
-------------------------------------
Gary L. Dudley, Director
Date: September 23, 1999 /s/ Marcia A. Smith
------------------------------------
Marcia A. Smith, Director
29
<PAGE>
Date: September 23, 1999 /s/ Craig E. Gosselin
------------------------------------
Craig E. Gosselin, Director
Date: September 23, 1999 /s/ Barry Soltani
------------------------------------
Barry Soltani, Director
30
<PAGE>
EXHIBIT INDEX
The following Exhibits are filed as part of this Registration Statement on
Form S-3 or are incorporated herein by reference.
<TABLE>
<CAPTION>
Item
Number Description
- ------ -----------
<S> <C>
4.1 Investment Letter and Memorandum of Subscription/Purchase Agreement to
Purchase 40,000 shares of Class "A" Convertible Preferred Stock, dated
May 8, 1998, between Pollution Research and Control Corp. and Gary L.
Dudley. (Incorporated herein by reference to Exhibit 10.156 to the
Annual Report on Form 10-KSB for fiscal year ended December 31, 1998.)
4.2 Investment Letter and Memorandum of Subscription/Purchase Agreement to
Purchase 400,000 shares of Class "A" Convertible Preferred Stock,
dated May 8, 1998, between Pollution Research and Control Corp. and
Patricia Cudd. (Incorporated herein by reference to Exhibit 10.155 to
the Annual Report on Form 10-KSB for fiscal year ended December 31,
1998.)
4.3 Investment Letter and Memorandum of Subscription/Purchase Agreement to
purchase 68,810 shares of Common Stock, dated as of June 19, 1998,
between Pollution Research and Control Corp. and Ronald E. Patterson.
(Incorporated herein by reference to Exhibit 10.159 to the Annual
Report on Form 10-KSB for fiscal year ended December 31, 1998.)
4.4 Investment Letter and Memorandum of Subscription/Purchase Agreement to
purchase 23,190 shares of Common Stock, dated as of June 19, 1998,
between Pollution Research and Control Corp. and Ronald E. Patterson.
(Incorporated herein by reference to Exhibit 10.158 to the Annual
Report on Form 10-KSB for fiscal year ended December 31, 1998.)
4.5 Investment Letter and Memorandum of Subscription/Purchase Agreement to
purchase 23,000 shares of Common Stock, dated as of June 19, 1998,
between Pollution Research and Control Corp. and Fred J. Zalokar.
(Incorporated herein by reference to Exhibit 10.161 to the Annual
Report on Form 10-KSB for fiscal year ended December 31, 1998.)
4.6 Investment Letter and Memorandum of Subscription/Purchase Agreement to
purchase 20,000 shares of Common Stock, dated June 19, 1998, between
Pollution Research and Control Corp. and William T. Richey.
(Incorporated herein by reference to Exhibit 10.157 to the Annual
Report on Form 10-KSB for fiscal year ended December 31, 1998.)
4.7 Investment Letter and Memorandum of Subscription/Purchase Agreement to
purchase 18,000 shares of Common Stock, dated June 19, 1998, between
Pollution Research and Control Corp. and Alan L. Talesnick.
(Incorporated herein by reference to Exhibit 10.164 to the Annual
Report on Form 10-KSB for fiscal year ended December 31, 1998.)
31
<PAGE>
Item
Number Description
- ------ -----------
4.8
Investment Letter and Memorandum of Subscription/Purchase Agreement to
purchase 9,174 shares of Common Stock, dated June 19, 1998, between
Pollution Research and Control Corp. and Frank T. Anaya. (Incorporated
herein by reference to Exhibit 10.162 to the Annual Report on Form
10-KSB for fiscal year ended December 31, 1998.)
4.9 Investment Letter and Memorandum of Subscription/Purchase Agreement to
purchase 133,333 units consisting of 133,333 shares of Common Stock
and 133,333 warrants to purchase Common Stock, dated as of February
25, 1999, between Pollution Research and Control Corp. and Ronald E.
Patterson. (Incorporated herein by reference to Exhibit 10.174 to the
Annual Report on Form 10-KSB for fiscal year ended December 31, 1998.)
4.10 Investment Letter and Memorandum of Subscription/Purchase Agreement to
purchase 66,666 units consisting of 66,666 shares of Common Stock and
66,666 warrants to purchase Common Stock, dated as of February 25,
1999, between Pollution Research and Control Corp. and Phillip T.
Huss. (Incorporated herein by reference to Exhibit 10.175 to the
Annual Report on Form 10-KSB for fiscal year ended December 31, 1998.)
4.11 Investment Letter and Memorandum of Subscription/Purchase Agreement to
purchase 33,333 units consisting of 33,333 shares of Common Stock and
33,333 warrants to purchase Common Stock, dated as of February 25,
1999, between Pollution Research and Control Corp. and Maria Molinsky.
4.12 Investment Letter and Memorandum of Subscription/Purchase Agreement to
purchase 25,000 units consisting of 25,000 shares of Common Stock and
25,000 warrants to purchase Common Stock, dated as of February 25,
1999, between Pollution Research and Control Corp. and William T.
Richey. (Incorporated herein by reference to Exhibit 10.173 to the
Annual Report on Form 10-KSB for fiscal year ended December 31, 1998.)
4.13 Investment Letter and Memorandum of Subscription/Purchase Agreement to
purchase 14,000 units consisting of 14,000 shares of Common Stock and
14,000 warrants to purchase Common Stock, dated as of February 25,
1999, between Pollution Research and Control Corp. and Alan L.
Talesnick.
4.14 Investment Letter and Memorandum of Subscription/Purchase Agreement to
purchase 9,333 units consisting of 9,333 shares of Common Stock and
9,333 warrants to purchase Common Stock, dated as of February 25,
1999, between Pollution Research and Control Corp. and Jennifer S.
Jauregui.
32
<PAGE>
4.15 Investment Letter and Memorandum of Subscription/Purchase Agreement to
purchase 6,666 units consisting of 6,666 shares of Common Stock and
6,666 warrants to purchase Common Stock, dated as of February 25,
1999, between Pollution Research and Control Corp. and Cynthia L.
Gosselin.
4.16 Investment Letter and Memorandum of Subscription/Purchase Agreement to
purchase 133,333 shares of Common Stock, dated May 19, 1999, between
Pollution Research and Control Corp. and The Investor Resource
Services, Inc.
4.17 Investment Letter and Memorandum of Subscription/Purchase Agreement to
purchase 66,667 shares of Common Stock, dated May 19, 1999, between
Pollution Research and Control Corp. and Trautman Wasserman & Company,
Inc.
4.18 18% Subordinated Convertible Debenture Due December 1, 1999, dated May
19, 1999, between Pollution Research and Control Corp. and The
Venezuela Recovery Fund, N.V.
4.19 Financial Consulting and Services Agreement dated May 20, 1999,
between Pollution Research and Control Corp. and Premiere Equities,
Inc.
4.20 Investment Letter and Memorandum of Subscription/Purchase Agreement to
purchase 100,000 shares of Common Stock, dated May 27, 1999, between
Pollution Research and Control Corp. and Blagoja Samakoski.
4.21 Investment Letter and Memorandum of Subscription/Purchase Agreement to
purchase 80,000 shares of Common Stock, dated July 16, 1999, between
Pollution Research and Control Corp. and Ronald E. Patterson.
4.22 Investment Letter and Memorandum of Subscription/Purchase Agreement to
purchase 30,000 shares of Common Stock, dated July 16, 1999, between
Pollution Research and Control Corp. and Phillip T. Huss.
4.23 Lock-up Agreement, dated August 12, 1999, between Pollution Research
and Control Corp. and Mr. Albert E. Gosselin, Jr.
4.24 Compromise, Settlement and Release Agreement dated August 12, 1999,
between Pollution Research and Control Corp. and Fidelity Funding,
Inc.
4.25 Escrow Agreement dated August 12, 1999, among Pollution Research and
Control Corp., Fidelity Funding, Inc., and American Escrow Company.
33
<PAGE>
4.26 12% Subordinated Convertible Debenture Due June 1, 2000, dated
September 1, 1999, between Pollution Research and Control Corp. and
Spiga Limited.
4.27 12% Subordinated Convertible Debenture Due June 1, 2000, dated
September 1, 1999, between Pollution Research and Control Corp. and
Spiga Limited.
4.28 Investment Letter and Memorandum of Subscription/Purchase Agreement to
purchase 50,000 shares of Common Stock, dated September 13, 1999,
between Pollution Research and Control Corp. and Maria Molinsky.
4.29 Investment Letter and Memorandum of Subscription/Purchase Agreement to
purchase 50,000 shares of Common Stock, dated September 13, 1999,
between Pollution Research and Control Corp. and Lee Sion.
4.30 Investment Letter and Memorandum of Subscription/Purchase Agreement to
purchase 50,000 shares of Common Stock, dated September 13, 1999,
between Pollution Research and Control Corp. and Steven Sion.
5.0* Opinion and Consent of Cudd & Associates.
23.1* Consent of Cudd & Associates (included in Exhibit 5.0 hereto).
23.2 Consent of A.J. Robbins, P.C., Certified Public Accountants and
Consultants, independent auditors.
25.0 Power of Attorney (included on the signature page hereto).
- ------------------
* To be filed by amendment.
</TABLE>
34
Exhibit 4.11
INVESTMENT LETTER
AND
MEMORANDUM OF SUBSCRIPTION/PURCHASE AGREEMENT
February 25, 1999
Pollution Research and Control Corp.
506 Paula Avenue
Glendale, California 91201
Gentlemen:
In connection with the acquisition by the undersigned of 33,333 units
consisting of 33,333 shares of common stock, no par value per share (the "Common
Stock"), and 33,333 common stock purchase warrants ("Warrants") exercisable at
$0.75 per share, at a combined per unit price of $0.75 (75% of the bid price per
share of Common Stock as of February 25, 1999), of Pollution Research and
Control Corp. (the "Company"), in consideration for the sum of $25,000 in cash,
the undersigned wishes to advise you of his understanding of, agreement with
and/or representation of, the following:
These securities are not being registered under the Securities Act of 1933,
as amended (the "Act"), on the ground that this sale is exempt from registration
under ss.4(1) or ss. 4(2) of the Act and the Rules and Regulations promulgated
thereunder as not involving any public offering. The Company's reliance on such
exemption is predicated in part on the representation of the undersigned that he
is acquiring such securities for investment for his own account, with no present
intention of dividing his participation with others or reselling or otherwise
distributing the same. These securities which the undersigned is acquiring are
"restricted securities" as that term is defined in Rule 144 of the General Rules
and Regulations under the Act. The undersigned acknowledges that he understands
that the securities covered hereby are unregistered and must be held
indefinitely, unless they are subsequently registered under the Act or an
exemption from such registration is available.
The undersigned agrees that any and all certificates, which may be issued
representing the securities acquired hereunder, shall contain substantially the
following legend, which the undersigned has read and understands:
The shares represented by this certificate have not been registered under
the Securities Act of 1933 (the "Act"), and are "restricted securities" as
the term is defined in Rule 144 under the Act. The shares may not be
offered for sale, sold or otherwise transferred except pursuant to an
<PAGE>
Pollution Research and Control Corp.
February 25, 1999
Page 2
effective registration statement under the Act, or pursuant to an exemption
from registration under the Act, the availability of which is to be
established to the satisfaction of the Company.
The undersigned understands that the above legend on the certificates would
limit their value, including their value as collateral.
The undersigned further acknowledges that he understands that, if the
securities have been held for a period of at least one year and if Rule 144
adopted under the Act is applicable (there being no representation by the
Company that this Rule will be applicable), then he may make only routine sales
of the securities in limited amounts in a specified manner in accordance with
the terms and conditions of the Rule. The undersigned further acknowledges that
he understands that, if Rule 144 is applicable (no assurance of which can be
made), he may sell the securities without quantity limitation in sales not
involving a market maker or through brokerage transactions only if he has held
the securities for at least two years. In case the Rule is not applicable, any
sales made by the undersigned may be made only pursuant to other available
exemption from registration under the Act, or an effective registration
statement.
The undersigned further acknowledges that he is aware that only the Company
can file a registration statement or an offering statement pursuant to
Regulation A under the Act and that the Company has no obligation to do so,
other than via the registration rights referred to in the following paragraphs.
The undersigned also has been advised and acknowledges that he understands that,
in the event Rule 144 is not available, the circumstances under which he can
sell the securities, absent registration or compliance with Regulation A, are
extremely limited.
In the event, during the period commencing on the date hereof and expiring
three years from the date hereof (February 25, 2002), the Company shall register
any private, primary or secondary offering of any debt or equity security issued
or to be issued by it pursuant to a registration statement under the Securities
Act of 1933, as amended, pursuant to which the common stock and the securities
underlying the common stock purchase warrants can be registered, the Company
shall in each such event notify the undersigned in writing not less than thirty
(30) days prior to filing such registration statement with the Commission, and
the undersigned will have the right to register all of the aforementioned
securities therewith by notifying the Company in writing within fifteen (15)
days of receipt of the Company's notice, requesting registration of the
securities and setting forth the intended method of distribution and such other
data or information as the Company or its counsel reasonably shall require. Any
registration costs shall be borne by the Company, except for sales commissions
and related fees and/or transfer taxes incurred if the securities are
subsequently sold.
Warrants: The purchase rights evidenced by the common stock purchase
warrants may be exercised in whole or in part at any time, and from time to
time, on or after the date hereof but before February 25, 2002, by the
<PAGE>
Pollution Research and Control Corp.
February 25, 1999
Page 3
undersigned through the presentation and surrender of the warrant to the Company
at its principal office or at the office of the Company's stock transfer agent,
if any, accompanied by a duly executed Notice of Exercise, in the form attached
hereto as Exhibit A.
Adjustments: Stock Dividends, Reclassifications, Merger and Anti-Dilution
Provisions.
(a) If the Company increases or decreases the number of its issued and
outstanding shares of Common Stock, or changes in any way the rights
and privileges of such shares, by means of (i) the Common Stock, (ii)
a forward or reverse stock split or other subdivision of shares, (iii)
a consolidation or combination involving its Common Stock, or (iv) a
reclassification or recapitalization involving its Common Stock, then
the Warrant Exercise Price in effect at the time of such action and
the number of Shares shall be proportionately adjusted so that the
numbers, rights, and privileges relating to the Securities shall be
increased, decreased or changed in like manner.
(b) If at any time or from time to time the Company should issue or sell
any shares of Common Stock, including shares held in the Company's
Treasury, without consideration or for a per share consideration less
that the Warrant Exercise price of $0.75 per share, then the Warrant
Exercise price of $0.75 shall be adjusted downward accordingly to
equal the per share consideration received by the Company upon the
issuance or sale of its Common Stock.
The undersigned further acknowledges and represents to the Company that he
is purchasing the securities for his own account and not as a trustee or nominee
for any other person or persons, and that the funds or consideration invested
are his own. The undersigned further acknowledges and represents that there are
no existing legal restrictions applicable to him which would preclude his
acquisition of the securities for investment purposes, as described hereinabove.
The undersigned further represents that he has no present plans to enter into
any contract, undertaking, agreement or arrangement for resale, distribution,
subdivision or fractionalization of the securities purchased hereby.
The undersigned further acknowledges that he understands that an investment
in the Company is extremely speculative and subject to a high degree of risk. In
this connection, the undersigned understands that he may lose his entire
investment in the Company.
The undersigned further acknowledges and represents to the Company that he
is able to bear the economic risk of losing his entire investment. The
undersigned further acknowledges and warrants that his overall commitment to
investments which are not readily marketable is not disproportionate to his net
<PAGE>
Pollution Research and Control Corp.
February 25, 1999
Page 4
worth and his investment in the securities will not cause such overall
commitment to become excessive. The undersigned further represents that he has
adequate means of providing for his current needs and personal contingencies and
that he has no need for liquidity in connection with his investment in the
securities. The undersigned further acknowledges that he fully understands and
agrees that the price of the Company's securities acquired by him was
arbitrarily determined without regard to any value of the securities. The
undersigned understands, additionally, that the price of the securities bears no
relation to the value of the assets or net worth of the Company or any other
criteria of value. The undersigned is aware that no independent evaluation has
been made with respect to the value of the securities. The undersigned further
understands and agrees that shares of the common stock of the Company have been
or may in the future be issued to certain other persons for a consideration
which may be less than the price paid by him for the securities.
The undersigned further acknowledges and represents to the Company that he
is knowledgeable and experienced in venture capital investments in general and,
in particular, with respect to investments similar in nature to an investment in
the Company. The frequency of the undersigned's prior investments in stocks
(including restricted stocks), in general, and in high technology companies, in
particular, and other investments, of whatever kind, is as follows (check one in
each column):
Restricted High Technology
Stocks Stocks Companies Other
------ ------ --------- -----
Frequently x
----- ----- ----- -----
Occasionally x
----- ----- ----- -----
Never
----- ----- ----- -----
The undersigned further acknowledges that he is capable of evaluating the
merits and risks of the Company.
The undersigned further acknowledges that he has such knowledge and
experience in financial and business matters that he is capable of evaluating
the merits and risks of an investment in the Company; that he has been advised
by the Company to consult with counsel regarding this investment; and that he
has relied upon the advice of such counsel, accountants or other consultants as
he deems necessary with regard to tax aspects, risks and other considerations
involved in the investment. The undersigned's educational and occupational
background which renders him capable of evaluating the merits and risks of this
investment is as follows:
<PAGE>
Pollution Research and Control Corp.
February 25, 1999
Page 5
B.S. Degree University of Hartford - graduated 1984
---------------------------------------------------------------------------
---------------------------------------------------------------------------
The undersigned has made, or caused to be made, such investigation of the
Company, its management and its operations as he considers necessary and
appropriate to enable him to make an informed decision regarding his investment.
Prior to making his investment, the undersigned was presented with and
acted upon the opportunity to ask questions of and receive answers from the
Company and its management relating to the Company and to obtain any additional
information necessary to verify the accuracy of the information made available
to him.
Prior to making his investment, the undersigned made arrangements to
conduct such inspection as he deems necessary of the books, records, contracts,
instruments and other data relating to the Company.
Before acquiring these securities, the undersigned was presented with and
understood the Company's business plan, including, among other things, the
nature of the Company, financial reports and management.
The undersigned agrees that, upon the delivery of certificates for his
shares, the undersigned will execute and deliver to and for the benefit of the
Company any instruments the Company may require to evidence that the purchase of
his shares is for investment purposes only.
On the date the undersigned acquired the securities, he had a net worth
(exclusive of home, furnishings and personal automobile) of:
( ) Less than $500,000
( ) $500,000 - $1,000,000
(x) $1,000,000 - $3,000,000
( ) $3,000,000 - $5,000,000
( ) More than $5,000,000
Liquid assets constituted the following percentage of the undersigned's net
worth, or his joint net worth with his spouse, on the date of acquisition of the
securities:
<PAGE>
Pollution Research and Control Corp.
February 25, 1999
Page 6
( ) Less than 1%
( ) 1% - 10%
( ) 10% - 20%
(x) 20% - 50%
( ) More than 50%
The undersigned's approximate net taxable income (after regular deductions)
in each of the two most recent calendar years was:
( ) Less than $100,000
( ) $100,000-$200,000
(x) $200,000-$500,000
( ) $500,000-$1,000,000
( ) More than $1,000,000
The undersigned's approximate net taxable income in the current year is
expected to be:
( ) Less than $100,000
( ) $100,000-$200,000
(x) $200,000-$500,000
( ) $500,000-$1,000,000
( ) More than $1,000,000
Based upon the foregoing, the undersigned hereby acknowledges and
understands the high risk and speculative nature of the shares of common stock
of the Company which he is acquiring and the nature of the management, financial
condition, and all other pertinent factors regarding the Company and this
investment. The undersigned further represents and warrants that he has fully
satisfied himself with respect to the nature of this investment. The undersigned
further warrants and represents that he has received no assurances of any kind
relative to, nor have there been any representations made by the Company or any
of its principals or affiliates regarding, any potential appreciation in value
of the securities being acquired by him. The undersigned hereby represents and
warrants that he has sufficient knowledge and experience in business and
financial matters to evaluate the merits and risks of an investment of this
type. The undersigned further represents and acknowledges that he has made other
investments in speculative businesses and is generally familiar with
"restricted" securities and he is otherwise knowledgeable with respect to the
Company and its proposed operations. Based upon the foregoing understandings,
the undersigned hereby reaffirms his acquisition of the securities described in
this Investment Letter and Memorandum of Subscription/Purchase Agreement.
<PAGE>
Pollution Research and Control Corp.
February 25, 1999
Page 7
The foregoing correctly expresses this intent, understanding and
acknowledgements of the undersigned.
/s/ Maria Molinsky
- -------------------------------------
Maria Molinsky
303 Silver Creek Lane, Norwalk, Connecticut 06850
- --------------------------------------------------------------------------------
Current residence address
###-##-#### (203) 846-8675
- ---------------------------------- -----------------------------------------
Social security number Current residence telephone number
Housewife & mother Al Gosselin
- ---------------------------------- -----------------------------------------
Current occupation and/or business Name of person connected with Pollution
position Research and Control Corp., with whom
conferred concerning this investment
None
- ---------------------------------- -----------------------------------------
Current business telephone number Relationship, if any, with the above-
mentioned Company representative
- ----------------------------------- -----------------------------------------
Current name of business with which Length of relationship, if any, with the
associated above-mentioned Company representative
<PAGE>
Pollution Research and Control Corp.
February 25, 1999
Page 8
Agreed and accepted this 22nd day of March, 1999 on behalf of Pollution Research
and Control Corp.
/s/ Albert E. Gosselin, Jr.
- ------------------------------------------
Albert E. Gosselin, Jr., President and CEO
<PAGE>
NOTICE OF EXERCISE
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 face of
the attached warrant certificate unless
the warrant has been properly and
lawfully assigned.
Exhibit 4.13
INVESTMENT LETTER
AND
MEMORANDUM OF SUBSCRIPTION/PURCHASE AGREEMENT
February 25, 1999
Pollution Research and Control Corp.
506 Paula Avenue
Glendale, California 91201
Gentlemen:
In connection with the acquisition by the undersigned of 14,000 units
consisting of 14,000 shares of common stock, no par value per share (the "Common
Stock") and 14,000 common stock purchase warrants ("Warrants") exercisable at
$0.75 per share, at a combined per unit price of $0.75 (75% of the bid price per
share of Common Stock as of February 25, 1999), of Pollution Research and
Control Corp. (the "Company"), in consideration for the sum of $10,500.00 in
cash, the undersigned wishes to advise you of his understanding of, agreement
with and/or representation of, the following:
These securities are not being registered under the Securities Act of 1933,
as amended (the "Act"), on the ground that this sale is exempt from registration
under ss.4(1) or ss.4(2) of the Act and the Rules and Regulations promulgated
thereunder as not involving any public offering. The Company's reliance on such
exemption is predicated in part on the representation of the undersigned that he
is acquiring such securities for investment for his own account, with no present
intention of dividing his participation with others or reselling or otherwise
distributing the same. These securities which the undersigned is acquiring are
"restricted securities" as that term is defined in Rule 144 of the General Rules
and Regulations under the Act. The undersigned acknowledges that he understands
that the securities covered hereby are unregistered and must be held
indefinitely, unless they are subsequently registered under the Act or an
exemption from such registration is available.
The undersigned agrees that any and all certificates, which may be issued
representing the securities acquired hereunder, shall contain substantially the
following legend, which the undersigned has read and understands:
The shares represented by this certificate have not been registered under
the Securities Act of 1933 (the "Act"), and are "restricted securities" as
the term is defined in Rule 144 under the Act. The shares may not be
offered for sale, sold or otherwise transferred except pursuant to an
effective registration statement under the Act, or pursuant to an exemption
from registration under the Act, the availability of which is to be
established to the satisfaction of the Company.
The undersigned understands that the above legend on the certificates would
limit their value, including their value as collateral.
<PAGE>
Pollution Research and Control Corp.
February 25, 1999
Page 2
The undersigned further acknowledges that he understands that, if the
securities have been held for a period of at least one year and if Rule 144
adopted under the Act is applicable (there being no representation by the
Company that this Rule will be applicable), then he may make only routine sales
of the securities in limited amounts in a specified manner in accordance with
the terms and conditions of the Rule. The undersigned further acknowledges that
he understands that, if Rule 144 is applicable (no assurance of which can be
made), he may sell the securities without quantity limitation in sales not
involving a market maker or through brokerage transactions only if he has held
the securities for at least two years. In case the Rule is not applicable, any
sales made by the undersigned may be made only pursuant to other available
exemption from registration under the Act, or an effective registration
statement.
The undersigned further acknowledges that he is aware that only the Company
can file a registration statement or an offering statement pursuant to
Regulation A under the Act and that the Company has no obligation to do so,
other than via the registration rights referred to in the following paragraphs.
The undersigned also has been advised and acknowledges that he understands that,
in the event Rule 144 is not available, the circumstances under which he can
sell the securities, absent registration or compliance with Regulation A, are
extremely limited.
In the event, during the period commencing on the date hereof and expiring
three years from the date hereof (February 25, 2002), the Company shall register
any private, primary or secondary offering of any debt or equity security issued
or to be issued by it pursuant to a registration statement under the Securities
Act of 1933, as amended, pursuant to which the common stock and the securities
underlying the common stock purchase warrants can be registered, the Company
shall in each such event notify the undersigned in writing not less than thirty
(30) days prior to filing such registration statement with the Commission, and
the undersigned will have the right to register all of the aforementioned
securities therewith by notifying the Company in writing within fifteen (15)
days of receipt of the Company's notice, requesting registration of the
securities and setting forth the intended method of distribution and such other
data or information as the Company or its counsel reasonably shall require. Any
registration costs shall be borne by the Company, except for sales commissions
and related fees and/or transfer taxes incurred if the securities are
subsequently sold.
Warrants: The purchase rights evidenced by the common stock purchase
warrants may be exercised in whole or in part at any time, and from time to
time, on or after the date hereof but before February 25, 2002, by the
undersigned through the presentation and surrender of the warrant to the Company
at its principal office or at the office of the Company's stock transfer agent,
if any, accompanied by a duly executed Notice of Exercise, in the form attached
hereto as Exhibit A.
Adjustments: Stock Dividends, Reclassifications, Merger and Anti-Dilution
Provisions.
(a) If the Company increases or decreases the number of its issued and
outstanding shares of Common Stock, or changes in any way the rights
and privileges of such shares, by means of (i) the Common Stock, (ii)
a forward or reverse stock split or other subdivision of shares, (iii)
a consolidation or combination involving its Common Stock, or (iv) a
reclassification or recapitalization involving its Common Stock, then
the Warrant Exercise Price in effect at the time of such action and
the number of Shares shall be proportionately adjusted so that the
numbers, rights, and privileges relating to the Securities shall be
increased, decreased or changed in like manner.
<PAGE>
Pollution Research and Control Corp.
February 25, 1999
Page 3
(b) If at any time or from time to time the Company should issue
or sell any shares of Common Stock, including shares held in
the Company's Treasury, without consideration or for a per
share consideration less than the Warrant Exercise price of
$0.75 per share, then the Warrant Exercise price of $0.75
shall be adjusted downward accordingly to equal the per share
consideration received by the Company upon the issuance or
sale of its Common Stock.
The undersigned further acknowledges and represents to the Company that he
is purchasing the securities for his own account and not as a trustee or nominee
for any other person or persons, and that the funds or consideration invested
are his own. The undersigned further acknowledges and represents that there are
no existing legal restrictions applicable to him which would preclude his
acquisition of the securities for investment purposes, as described hereinabove.
The undersigned further represents that he has no present plans to enter into
any contract, undertaking, agreement or arrangement for resale, distribution,
subdivision or fractionalization of the securities purchased hereby.
The undersigned further acknowledges that he understands that an investment
in the Company is extremely speculative and subject to a high degree of risk. In
this connection, the undersigned understands that he may lose his entire
investment in the Company.
The undersigned further acknowledges and represents to the Company that he
is able to bear the economic risk of losing his entire investment. The
undersigned further acknowledges and warrants that his overall commitment to
investments which are not readily marketable is not disproportionate to his net
worth and his investment in the securities will not cause such overall
commitment to become excessive. The undersigned further represents that he has
adequate means of providing for his current needs and personal contingencies and
that he has no need for liquidity in connection with his investment in the
securities. The undersigned further acknowledges that he fully understands and
agrees that the price of the Company's securities acquired by him was
arbitrarily determined without regard to any value of the securities. The
undersigned understands, additionally, that the price of the securities bears no
relation to the value of the assets or net worth of the Company or any other
criteria of value. The undersigned is aware that no independent evaluation has
been made with respect to the value of the securities. The undersigned further
understands and agrees that shares of the common stock of the Company have been
or may in the future be issued to certain other persons for a consideration
which may be less than the price paid by him for the securities.
The undersigned further acknowledges and represents to the Company that he
is knowledgeable and experienced in venture capital investments in general and,
in particular, with respect to investments similar in nature to an investment in
the Company. The frequency of the undersigned's prior investments in stocks
(including restricted stocks), in general, and in high technology companies, in
particular, and other investments, of whatever kind, is as follows (check one in
each column):
<PAGE>
Pollution Research and Control Corp.
February 25, 1999
Page 4
Restricted High Technology
Stocks Stocks Companies Other
------ ------ --------- -----
Frequently x x x x
----- ----- ----- -----
Occasionally
----- ----- ----- -----
Never
----- ----- ----- -----
The undersigned further acknowledges that he is capable of evaluating the
merits and risks of the Company.
The undersigned further acknowledges that he has such knowledge and
experience in financial and business matters that he is capable of evaluating
the merits and risks of an investment in the Company; that he has been advised
by the Company to consult with counsel regarding this investment; and that he
has relied upon the advice of such counsel, accountants or other consultants as
he deems necessary with regard to tax aspects, risks and other considerations
involved in the investment. The undersigned's educational and occupational
background which renders him capable of evaluating the merits and risks of this
investment is as follows:
M.B.A. 1972 Harvard Business School
-----------------------------------------------------------------------
J.D. 1972 Harvard Law School
-----------------------------------------------------------------------
Securities and Corporate Attorney 1972 - present
-----------------------------------------------------------------------
The undersigned has made, or caused to be made, such investigation of the
Company, its management and its operations as he considers necessary and
appropriate to enable him to make an informed decision regarding his investment.
Prior to making his investment, the undersigned was presented with and
acted upon the opportunity to ask questions of and receive answers from the
Company and its management relating to the Company and to obtain any additional
information necessary to verify the accuracy of the information made available
to him.
Prior to making his investment, the undersigned made arrangements to
conduct such inspection as he deems necessary of the books, records, contracts,
instruments and other data relating to the Company.
Before acquiring these securities, the undersigned was presented with and
understood the Company's business plan, including, among other things, the
nature of the Company, financial reports and management.
The undersigned agrees that, upon the delivery of certificates for his
shares, the undersigned will execute and deliver to and for the benefit of the
Company any instruments the Company may require to evidence that the purchase of
his shares is for investment purposes only.
<PAGE>
Pollution Research and Control Corp.
February 25, 1999
Page 5
On the date the undersigned acquired the securities, he had a net worth
(exclusive of home, furnishings and personal automobile) of:
( ) Less than $500,000
( ) $500,000 - $1,000,000
(x) $1,000,000 - $3,000,000
( ) $3,000,000 - $5,000,000
( ) More than $5,000,000
Liquid assets constituted the following percentage of the undersigned's net
worth, or his joint net worth with his spouse, on the date of acquisition of the
securities:
( ) Less than 1%
( ) 1% - 10%
( ) 10% - 20%
( ) 20% - 50%
(x) More than 50%
The undersigned's approximate net taxable income (after regular deductions)
in each of the two most recent calendar years was:
( ) Less than $100,000
( ) $100,000 - $200,000
(x) $200,000 - $500,000
( ) $500,000 - $1,000,000
( ) More than $1,000,000
The undersigned's approximate net taxable income in the current year is
expected to be:
( ) Less than $100,000
( ) $100,000 - $200,000
(x) $200,000 - $500,000
( ) $500,000 - $1,000,000
( ) More than $1,000,000
Based upon the foregoing, the undersigned hereby acknowledges and
understands the high risk and speculative nature of the shares of common stock
of the Company which he is acquiring and the nature of the management, financial
condition and all other pertinent factors regarding the Company and this
investment. The undersigned further represents and warrants that he has fully
satisfied himself with respect to the nature of this investment. The undersigned
further warrants and represents that he has received no assurances of any kind
relative to, nor have there been any representations made by the Company or any
of its principals or affiliates regarding, any potential appreciation in value
of the securities being acquired by him. The undersigned hereby represents and
warrants that he has sufficient knowledge and experience in business and
financial matters to evaluate the merits and risks of an investment of this
type. The undersigned further represents and acknowledges that he has made other
investments in speculative businesses and is generally familiar with
"restricted" securities and he is otherwise knowledgeable with respect to the
<PAGE>
Pollution Research and Control Corp.
February 25, 1999
Page 6
Company and its proposed operations. Based upon the foregoing understandings,
the undersigned hereby reaffirms his acquisition of the securities described in
this Investment Letter and Memorandum of Subscription/Purchase Agreement.
The foregoing correctly expresses the intent, understanding and
acknowledgements of the undersigned.
/s/ Alan Talesnick
- ------------------------------------
5030 Bow Mar Drive, Littleton, Colorado 80123
- --------------------------------------------------------------------------------
Current residence address
###-##-#### (303) 795-5990
- ---------------------------------- ----------------------------------------
Social security number Current residence telephone number
Securities Attorney Phillip Huss
- ---------------------------------- ----------------------------------------
Current occupation and/or business Name of person connected with Pollution
position Research and Control Corp., with whom
conferred concerning this investment
(303) 830-1776
- ----------------------------------- ----------------------------------------
Current business telephone number Relationship, if any, with the above-
mentioned Company representative
Patton Boggs LLP 2 years
- ----------------------------------- ----------------------------------------
Current name of business with which Length of relationship, if any, with the
associated above-mentioned Company representative
Agreed and accepted this 18th day of March, 1999 on behalf of Pollution
Research and Control Corp.
/s/ Albert E. Gosselin, Jr.
- -----------------------------------------
Albert E. Gosselin, Jr., President and CEO
<PAGE>
NOTICE OF EXERCISE
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 face of the
attached warrant certificate unless the
warrant has been properly and lawfully
assigned.
Exhibit 4.14
INVESTMENT LETTER
AND
MEMORANDUM OF SUBSCRIPTION/PURCHASE AGREEMENT
February 25, 1999
Pollution Research and Control Corp.
506 Paula Avenue
Glendale, California 91201
Gentlemen:
In connection with the acquisition by the undersigned of 9,333 units
consisting of 9,333 shares of common stock, no par value per share (the "Common
Stock") and 9,333 common stock purchase warrants ("Warrants") exercisable at
$0.75 per share, at a combined per unit price of $0.75 (75% of the bid price per
share of Common Stock as of February 25, 1999), of Pollution Research and
Control Corp. (the "Company"), in consideration for the sum of $7,000.00 in
cash, the undersigned wishes to advise you of his understanding of, agreement
with and/or representation of, the following:
These securities are not being registered under the Securities Act of 1933,
as amended (the "Act"), on the ground that this sale is exempt from registration
under ss.4(1) or ss.4(2) of the Act and the Rules and Regulations promulgated
thereunder as not involving any public offering. The Company's reliance on such
exemption is predicated in part on the representation of the undersigned that he
is acquiring such securities for investment for his own account, with no present
intention of dividing his participation with others or reselling or otherwise
distributing the same. These securities which the undersigned is acquiring are
"restricted securities" as that term is defined in Rule 144 of the General Rules
and Regulations under the Act. The undersigned acknowledges that he understands
that the securities covered hereby are unregistered and must be held
indefinitely, unless they are subsequently registered under the Act or an
exemption from such registration is available.
The undersigned agrees that any and all certificates, which may be issued
representing the securities acquired hereunder, shall contain substantially the
following legend, which the undersigned has read and understands:
The shares represented by this certificate have not been registered under
the Securities Act of 1933 (the "Act"), and are "restricted securities" as
the term is defined in Rule 144 under the Act. The shares may not be
offered for sale, sold or otherwise transferred except pursuant to an
effective registration statement under the Act, or pursuant to an exemption
from registration under the Act, the availability of which is to be
established to the satisfaction of the Company.
The undersigned understands that the above legend on the certificates would
limit their value, including their value as collateral.
<PAGE>
Pollution Research and Control Corp.
February 25, 1999
Page 2
The undersigned further acknowledges that he understands that, if the
securities have been held for a period of at least one year and if Rule 144
adopted under the Act is applicable (there being no representation by the
Company that this Rule will be applicable), then he may make only routine sales
of the securities in limited amounts in a specified manner in accordance with
the terms and conditions of the Rule. The undersigned further acknowledges that
he understands that, if Rule 144 is applicable (no assurance of which can be
made), he may sell the securities without quantity limitation in sales not
involving a market maker or through brokerage transactions only if he has held
the securities for at least two years. In case the Rule is not applicable, any
sales made by the undersigned may be made only pursuant to other available
exemption from registration under the Act, or an effective registration
statement.
The undersigned further acknowledges that he is aware that only the Company
can file a registration statement or an offering statement pursuant to
Regulation A under the Act and that the Company has no obligation to do so,
other than via the registration rights referred to in the following paragraphs.
The undersigned also has been advised and acknowledges that he understands that,
in the event Rule 144 is not available, the circumstances under which he can
sell the securities, absent registration or compliance with Regulation A, are
extremely limited.
In the event, during the period commencing on the date hereof and expiring
three years from the date hereof (February 25, 2002), the Company shall register
any private, primary or secondary offering of any debt or equity security issued
or to be issued by it pursuant to a registration statement under the Securities
Act of 1933, as amended, pursuant to which the common stock and the securities
underlying the common stock purchase warrants can be registered, the Company
shall in each such event notify the undersigned in writing not less than thirty
(30) days prior to filing such registration statement with the Commission, and
the undersigned will have the right to register all of the aforementioned
securities therewith by notifying the Company in writing within fifteen (15)
days of receipt of the Company's notice, requesting registration of the
securities and setting forth the intended method of distribution and such other
data or information as the Company or its counsel reasonably shall require. Any
registration costs shall be borne by the Company, except for sales commissions
and related fees and/or transfer taxes incurred if the securities are
subsequently sold.
Warrants: The purchase rights evidenced by the common stock purchase
warrants may be exercised in whole or in part at any time, and from time to
time, on or after the date hereof but before February 25, 2002, by the
undersigned through the presentation and surrender of the warrant to the Company
at its principal office or at the office of the Company's stock transfer agent,
if any, accompanied by a duly executed Notice of Exercise, in the form attached
hereto as Exhibit A.
Adjustments: Stock Dividends, Reclassifications, Merger and Anti-Dilution
Provisions.
(a) If the Company increases or decreases the number of its issued and
outstanding shares of Common Stock, or changes in any way the rights
and privileges of such shares, by means of (i) the Common Stock, (ii)
a forward or reverse stock split or other subdivision of shares, (iii)
a consolidation or combination involving its Common Stock, or (iv) a
reclassification or recapitalization involving its Common Stock, then
the Warrant Exercise Price in effect at the time of such action and
the number of Shares shall be proportionately adjusted so that the
numbers, rights, and privileges relating to the Securities shall be
increased, decreased or changed in like manner.
<PAGE>
Pollution Research and Control Corp.
February 25, 1999
Page 3
(b) If at any time or from time to time the Company should issue or sell
any shares of Common Stock, including shares held in the Company's
Treasury, without consideration or for a per share consideration less
than the Warrant Exercise price of $0.75 per share, then the Warrant
Exercise price of $0.75 shall be adjusted downward accordingly to
equal the per share consideration received by the Company upon the
issuance or sale of its Common Stock.
The undersigned further acknowledges and represents to the Company that he
is purchasing the securities for his own account and not as a trustee or nominee
for any other person or persons, and that the funds or consideration invested
are his own. The undersigned further acknowledges and represents that there are
no existing legal restrictions applicable to him which would preclude his
acquisition of the securities for investment purposes, as described hereinabove.
The undersigned further represents that he has no present plans to enter into
any contract, undertaking, agreement or arrangement for resale, distribution,
subdivision or fractionalization of the securities purchased hereby.
The undersigned further acknowledges that he understands that an investment
in the Company is extremely speculative and subject to a high degree of risk. In
this connection, the undersigned understands that he may lose his entire
investment in the Company.
The undersigned further acknowledges and represents to the Company that he
is able to bear the economic risk of losing his entire investment. The
undersigned further acknowledges and warrants that his overall commitment to
investments which are not readily marketable is not disproportionate to his net
worth and his investment in the securities will not cause such overall
commitment to become excessive. The undersigned further represents that he has
adequate means of providing for his current needs and personal contingencies and
that he has no need for liquidity in connection with his investment in the
securities. The undersigned further acknowledges that he fully understands and
agrees that the price of the Company's securities acquired by him was
arbitrarily determined without regard to any value of the securities. The
undersigned understands, additionally, that the price of the securities bears no
relation to the value of the assets or net worth of the Company or any other
criteria of value. The undersigned is aware that no independent evaluation has
been made with respect to the value of the securities. The undersigned further
understands and agrees that shares of the common stock of the Company have been
or may in the future be issued to certain other persons for a consideration
which may be less than the price paid by him for the securities.
The undersigned further acknowledges and represents to the Company that he
is knowledgeable and experienced in venture capital investments in general and,
in particular, with respect to investments similar in nature to an investment in
the Company. The frequency of the undersigned's prior investments in stocks
(including restricted stocks), in general, and in high technology companies, in
particular, and other investments, of whatever kind, is as follows (check one in
each column):
<PAGE>
Pollution Research and Control Corp.
February 25, 1999
Page 4
Restricted High Technology
Stocks Stocks Companies Other
------ ------ --------- -----
Frequently
----- ----- ----- -----
Occasionally
----- ----- ----- -----
Never
----- ----- ----- -----
The undersigned further acknowledges that he is capable of evaluating the
merits and risks of the Company.
The undersigned further acknowledges that he has such knowledge and
experience in financial and business matters that he is capable of evaluating
the merits and risks of an investment in the Company; that he has been advised
by the Company to consult with counsel regarding this investment; and that he
has relied upon the advice of such counsel, accountants or other consultants as
he deems necessary with regard to tax aspects, risks and other considerations
involved in the investment. The undersigned's educational and occupational
background which renders him capable of evaluating the merits and risks of this
investment is as follows:
---------------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
The undersigned has made, or caused to be made, such investigation of the
Company, its management and its operations as he considers necessary and
appropriate to enable him to make an informed decision regarding his investment.
Prior to making his investment, the undersigned was presented with and
acted upon the opportunity to ask questions of and receive answers from the
Company and its management relating to the Company and to obtain any additional
information necessary to verify the accuracy of the information made available
to him.
Prior to making his investment, the undersigned made arrangements to
conduct such inspection as he deems necessary of the books, records, contracts,
instruments and other data relating to the Company.
Before acquiring these securities, the undersigned was presented with and
understood the Company's business plan, including, among other things, the
nature of the Company, financial reports and management.
The undersigned agrees that, upon the delivery of certificates for his
shares, the undersigned will execute and deliver to and for the benefit of the
Company any instruments the Company may require to evidence that the purchase of
his shares is for investment purposes only.
<PAGE>
Pollution Research and Control Corp.
February 25, 1999
Page 5
On the date the undersigned acquired the securities, he had a net worth
(exclusive of home, furnishings and personal automobile) of:
(x) Less than $500,000
( ) $500,000 - $1,000,000
( ) $1,000,000 - $3,000,000
( ) $3,000,000 - $5,000,000
( ) More than $5,000,000
Liquid assets constituted the following percentage of the undersigned's net
worth, or his joint net worth with his spouse, on the date of acquisition of the
securities:
(x) Less than 1%
( ) 1% - 10%
( ) 10% - 20%
( ) 20% - 50%
( ) More than 50%
The undersigned's approximate net taxable income (after regular deductions)
in each of the two most recent calendar years was:
(x) Less than $100,000
( ) $100,000 - $200,000
( ) $200,000 - $500,000
( ) $500,000 - $1,000,000
( ) More than $1,000,000
The undersigned's approximate net taxable income in the current year is
expected to be:
(x) Less than $100,000
( ) $100,000 - $200,000
( ) $200,000 - $500,000
( ) $500,000 - $1,000,000
( ) More than $1,000,000
Based upon the foregoing, the undersigned hereby acknowledges and
understands the high risk and speculative nature of the shares of common stock
of the Company which he is acquiring and the nature of the management, financial
condition and all other pertinent factors regarding the Company and this
investment. The undersigned further represents and warrants that he has fully
satisfied himself with respect to the nature of this investment. The undersigned
further warrants and represents that he has received no assurances of any kind
relative to, nor have there been any representations made by the Company or any
of its principals or affiliates regarding, any potential appreciation in value
of the securities being acquired by him. The undersigned hereby represents and
warrants that he has sufficient knowledge and experience in business and
financial matters to evaluate the merits and risks of an investment of this
type. The undersigned further represents and acknowledges that he has made other
investments in speculative businesses and is generally familiar with
"restricted" securities and he is otherwise knowledgeable with respect to the
Company and its proposed operations. Based upon the foregoing understandings,
<PAGE>
Pollution Research and Control Corp.
February 25, 1999
Page 6
the undersigned hereby reaffirms his acquisition of the securities described in
this Investment Letter and Memorandum of Subscription/Purchase Agreement.
The foregoing correctly expresses the intent, understanding and
acknowledgements of the undersigned.
/s/ Jennifer Jauregui
- -----------------------------------
2658 Mayfield Avenue, La Crescenta, California 91214
- --------------------------------------------------------------------------------
Current residence address
###-##-#### (818) 957-1323
- ----------------------------------- ----------------------------------------
Social security number Current residence telephone number
Accountant Phil Huss
- ----------------------------------- ----------------------------------------
Current occupation and/or business Name of person connected with Pollution
position Research and Control Corp., with whom
conferred concerning this investment
(323) 938-6000
- ----------------------------------- ----------------------------------------
Current business telephone number Relationship, if any, with the above-
(currently on maternity leave) mentioned Company representative
Sutton Barth & Vennari
- ----------------------------------- ----------------------------------------
Current name of business with which Length of relationship, if any, with the
associated above-mentioned Company representative
Agreed and accepted this 24th day of March, 1999 on behalf of Pollution Research
and Control Corp.
/s/ Albert E. Gosselin, Jr.
- ------------------------------------------
Albert E. Gosselin, Jr., President and CEO
<PAGE>
NOTICE OF EXERCISE
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 face of the
attached warrant certificate unless the
warrant has been properly and lawfully
assigned.
Exhibit 4.15
INVESTMENT LETTER
AND
MEMORANDUM OF SUBSCRIPTION/PURCHASE AGREEMENT
February 25, 1999
Pollution Research and Control Corp.
506 Paula Avenue
Glendale, California 91201
Gentlemen:
In connection with the acquisition by the undersigned of 6,666 units
consisting of 6,666 shares of common stock, no par value per share (the "Common
Stock") and 6,666 common stock purchase warrants ("Warrants") exercisable at
$0.75 per share, at a combined per unit price of $0.75 (75% of the bid price per
share of Common Stock as of February 25, 1999), of Pollution Research and
Control Corp. (the "Company"), in consideration for the sum of $5,000.00 in
cash, the undersigned wishes to advise you of his understanding of, agreement
with and/or representation of, the following:
These securities are not being registered under the Securities Act of 1933,
as amended (the "Act"), on the ground that this sale is exempt from registration
under ss.4(1) or ss.4(2) of the Act and the Rules and Regulations promulgated
thereunder as not involving any public offering. The Company's reliance on such
exemption is predicated in part on the representation of the undersigned that he
is acquiring such securities for investment for his own account, with no present
intention of dividing his participation with others or reselling or otherwise
distributing the same. These securities which the undersigned is acquiring are
"restricted securities" as that term is defined in Rule 144 of the General Rules
and Regulations under the Act. The undersigned acknowledges that he understands
that the securities covered hereby are unregistered and must be held
indefinitely, unless they are subsequently registered under the Act or an
exemption from such registration is available.
The undersigned agrees that any and all certificates, which may be issued
representing the securities acquired hereunder, shall contain substantially the
following legend, which the undersigned has read and understands:
The shares represented by this certificate have not been registered under
the Securities Act of 1933 (the "Act"), and are "restricted securities" as
the term is defined in Rule 144 under the Act. The shares may not be
offered for sale, sold or otherwise transferred except pursuant to an
effective registration statement under the Act, or pursuant to an exemption
from registration under the Act, the availability of which is to be
established to the satisfaction of the Company.
The undersigned understands that the above legend on the certificates would
limit their value, including their value as collateral.
<PAGE>
Pollution Research and Control Corp.
February 25, 1999
Page 2
The undersigned further acknowledges that he understands that, if the
securities have been held for a period of at least one year and if Rule 144
adopted under the Act is applicable (there being no representation by the
Company that this Rule will be applicable), then he may make only routine sales
of the securities in limited amounts in a specified manner in accordance with
the terms and conditions of the Rule. The undersigned further acknowledges that
he understands that, if Rule 144 is applicable (no assurance of which can be
made), he may sell the securities without quantity limitation in sales not
involving a market maker or through brokerage transactions only if he has held
the securities for at least two years. In case the Rule is not applicable, any
sales made by the undersigned may be made only pursuant to other available
exemption from registration under the Act, or an effective registration
statement.
The undersigned further acknowledges that he is aware that only the Company
can file a registration statement or an offering statement pursuant to
Regulation A under the Act and that the Company has no obligation to do so,
other than via the registration rights referred to in the following paragraphs.
The undersigned also has been advised and acknowledges that he understands that,
in the event Rule 144 is not available, the circumstances under which he can
sell the securities, absent registration or compliance with Regulation A, are
extremely limited.
In the event, during the period commencing on the date hereof and expiring
three years from the date hereof (February 25, 2002), the Company shall register
any private, primary or secondary offering of any debt or equity security issued
or to be issued by it pursuant to a registration statement under the Securities
Act of 1933, as amended, pursuant to which the common stock and the securities
underlying the common stock purchase warrants can be registered, the Company
shall in each such event notify the undersigned in writing not less than thirty
(30) days prior to filing such registration statement with the Commission, and
the undersigned will have the right to register all of the aforementioned
securities therewith by notifying the Company in writing within fifteen (15)
days of receipt of the Company's notice, requesting registration of the
securities and setting forth the intended method of distribution and such other
data or information as the Company or its counsel reasonably shall require. Any
registration costs shall be borne by the Company, except for sales commissions
and related fees and/or transfer taxes incurred if the securities are
subsequently sold.
Warrants: The purchase rights evidenced by the common stock purchase
warrants may be exercised in whole or in part at any time, and from time to
time, on or after the date hereof but before February 25, 2002, by the
undersigned through the presentation and surrender of the warrant to the Company
at its principal office or at the office of the Company's stock transfer agent,
if any, accompanied by a duly executed Notice of Exercise, in the form attached
hereto as Exhibit A.
Adjustments: Stock Dividends, Reclassifications, Merger and Anti-Dilution
Provisions.
(a) If the Company increases or decreases the number of its issued and
outstanding shares of Common Stock, or changes in any way the rights
and privileges of such shares, by means of (i) the Common Stock, (ii)
a forward or reverse stock split or other subdivision of shares, (iii)
a consolidation or combination involving its Common Stock, or (iv) a
reclassification or recapitalization involving its Common Stock, then
the Warrant Exercise Price in effect at the time of such action and
the number of Shares shall be proportionately adjusted so that the
numbers, rights, and privileges relating to the Securities shall be
increased, decreased or changed in like manner.
<PAGE>
Pollution Research and Control Corp.
February 25, 1999
Page 3
(b) If at any time or from time to time the Company should issue or sell
any shares of Common Stock, including shares held in the Company's
Treasury, without consideration or for a per share consideration less
than the Warrant Exercise price of $0.75 per share, then the Warrant
Exercise price of $0.75 shall be adjusted downward accordingly to
equal the per share consideration received by the Company upon the
issuance or sale of its Common Stock.
The undersigned further acknowledges and represents to the Company that he
is purchasing the securities for his own account and not as a trustee or nominee
for any other person or persons, and that the funds or consideration invested
are his own. The undersigned further acknowledges and represents that there are
no existing legal restrictions applicable to him which would preclude his
acquisition of the securities for investment purposes, as described hereinabove.
The undersigned further represents that he has no present plans to enter into
any contract, undertaking, agreement or arrangement for resale, distribution,
subdivision or fractionalization of the securities purchased hereby.
The undersigned further acknowledges that he understands that an investment
in the Company is extremely speculative and subject to a high degree of risk. In
this connection, the undersigned understands that he may lose his entire
investment in the Company.
The undersigned further acknowledges and represents to the Company that he
is able to bear the economic risk of losing his entire investment. The
undersigned further acknowledges and warrants that his overall commitment to
investments which are not readily marketable is not disproportionate to his net
worth and his investment in the securities will not cause such overall
commitment to become excessive. The undersigned further represents that he has
adequate means of providing for his current needs and personal contingencies and
that he has no need for liquidity in connection with his investment in the
securities. The undersigned further acknowledges that he fully understands and
agrees that the price of the Company's securities acquired by him was
arbitrarily determined without regard to any value of the securities. The
undersigned understands, additionally, that the price of the securities bears no
relation to the value of the assets or net worth of the Company or any other
criteria of value. The undersigned is aware that no independent evaluation has
been made with respect to the value of the securities. The undersigned further
understands and agrees that shares of the common stock of the Company have been
or may in the future be issued to certain other persons for a consideration
which may be less than the price paid by him for the securities.
The undersigned further acknowledges and represents to the Company that he
is knowledgeable and experienced in venture capital investments in general and,
in particular, with respect to investments similar in nature to an investment in
the Company. The frequency of the undersigned's prior investments in stocks
(including restricted stocks), in general, and in high technology companies, in
particular, and other investments, of whatever kind, is as follows (check one in
each column):
<PAGE>
Pollution Research and Control Corp.
February 25, 1999
Page 4
Restricted High Technology
Stocks Stocks Companies Other
------ ------ --------- -----
Frequently
----- ----- ----- -----
Occasionally
----- ----- ----- -----
Never
----- ----- ----- -----
The undersigned further acknowledges that he is capable of evaluating the
merits and risks of the Company.
The undersigned further acknowledges that he has such knowledge and
experience in financial and business matters that he is capable of evaluating
the merits and risks of an investment in the Company; that he has been advised
by the Company to consult with counsel regarding this investment; and that he
has relied upon the advice of such counsel, accountants or other consultants as
he deems necessary with regard to tax aspects, risks and other considerations
involved in the investment. The undersigned's educational and occupational
background which renders him capable of evaluating the merits and risks of this
investment is as follows:
---------------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
The undersigned has made, or caused to be made, such investigation of the
Company, its management and its operations as he considers necessary and
appropriate to enable him to make an informed decision regarding his investment.
Prior to making his investment, the undersigned was presented with and
acted upon the opportunity to ask questions of and receive answers from the
Company and its management relating to the Company and to obtain any additional
information necessary to verify the accuracy of the information made available
to him.
Prior to making his investment, the undersigned made arrangements to
conduct such inspection as he deems necessary of the books, records, contracts,
instruments and other data relating to the Company.
Before acquiring these securities, the undersigned was presented with and
understood the Company's business plan, including, among other things, the
nature of the Company, financial reports and management.
The undersigned agrees that, upon the delivery of certificates for his
shares, the undersigned will execute and deliver to and for the benefit of the
Company any instruments the Company may require to evidence that the purchase of
his shares is for investment purposes only.
<PAGE>
Pollution Research and Control Corp.
February 25, 1999
Page 5
On the date the undersigned acquired the securities, he had a net worth
(exclusive of home, furnishings and personal automobile) of:
( ) Less than $500,000
--
( ) $500,000 - $1,000,000
--
( ) $1,000,000 - $3,000,000
--
( ) $3,000,000 - $5,000,000
--
( ) More than $5,000,000
--
Liquid assets constituted the following percentage of the undersigned's net
worth, or his joint net worth with his spouse, on the date of acquisition of the
securities:
( ) Less than 1%
--
( ) 1% - 10%
--
( ) 10% - 20%
--
( ) 20% - 50%
--
( ) More than 50%
--
The undersigned's approximate net taxable income (after regular deductions)
in each of the two most recent calendar years was:
( ) Less than $100,000
--
( ) $100,000 - $200,000
--
( ) $200,000 - $500,000
--
( ) $500,000 - $1,000,000
--
( ) More than $1,000,000
--
The undersigned's approximate net taxable income in the current year is
expected to be:
( ) Less than $100,000
--
( ) $100,000 - $200,000
--
( ) $200,000 - $500,000
--
( ) $500,000 - $1,000,000
--
( ) More than $1,000,000
--
Based upon the foregoing, the undersigned hereby acknowledges and
understands the high risk and speculative nature of the shares of common stock
of the Company which he is acquiring and the nature of the management, financial
condition and all other pertinent factors regarding the Company and this
investment. The undersigned further represents and warrants that he has fully
satisfied himself with respect to the nature of this investment. The undersigned
further warrants and represents that he has received no assurances of any kind
relative to, nor have there been any representations made by the Company or any
of its principals or affiliates regarding, any potential appreciation in value
of the securities being acquired by him. The undersigned hereby represents and
warrants that he has sufficient knowledge and experience in business and
financial matters to evaluate the merits and risks of an investment of this
type. The undersigned further represents and acknowledges that he has made other
investments in speculative businesses and is generally familiar with
"restricted" securities and he is otherwise knowledgeable with respect to the
Company and its proposed operations. Based upon the foregoing understandings,
<PAGE>
Pollution Research and Control Corp.
February 25, 1999
Page 6
the undersigned hereby reaffirms his acquisition of the securities described in
this Investment Letter and Memorandum of Subscription/Purchase Agreement.
The foregoing correctly expresses the intent, understanding and
acknowledgements of the undersigned.
/s/ Cynthia L. Gosselin
- -----------------------------------
5604 Ocean View Boulevard, La Canada, California 91011
- --------------------------------------------------------------------------------
Current residence address
###-##-#### (818) 957-5911
- ----------------------------------- ----------------------------------------
Social security number Current residence telephone number
Controller
- ----------------------------------- ----------------------------------------
Current occupation and/or business Name of person connected with Pollution
position Research and Control Corp., with whom
conferred concerning this investment
(818) 247-7601
- ----------------------------------- ----------------------------------------
Current business telephone number Relationship, if any, with the above-
mentioned Company representative
Dasibi Environmental 7 years
- ----------------------------------- ----------------------------------------
Current name of business with which Length of relationship, if any, with the
associated above-mentioned Company representative
Agreed and accepted this 23rd day of March, 1999 on behalf of Pollution Research
and Control Corp.
/s/ Albert E. Gosselin, Jr.
- ------------------------------------------
Albert E. Gosselin, Jr., President and CEO
<PAGE>
NOTICE OF EXERCISE
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 face of the
attached warrant certificate unless the
warrant has been properly and lawfully
assigned.
Exhibit 4.16
INVESTMENT LETTER
AND
MEMORANDUM OF SUBSCRIPTION/PURCHASE AGREEMENT
May 19, 1999
Pollution Research and Control Corp.
506 Paula Avenue
Glendale, California 91201
Gentlemen:
In connection with the acquisition by the undersigned, The Investor
Resources Services, Inc., of 133,333 shares of common stock, no par value per
share (the "Common Stock"), of Pollution Research and Control Corp. (the
"Company"), in consideration for the sum of $100,000.00 in cash, the undersigned
wishes to advise you of its understanding of, agreement with and/or
representation of, the following:
These securities are not being registered under the Securities Act of 1933,
as amended (the "Act"), on the ground that this sale is exempt from registration
under ss.4(1) or ss.4(2) of the Act and the Rules and Regulations promulgated
thereunder as not involving any public offering. The Company's reliance on such
exemption is predicated in part on the representation of the undersigned that it
is acquiring such securities for investment for its own account, with no present
intention of dividing its participation with others or reselling or otherwise
distributing the same. These securities which the undersigned is acquiring are
"restricted securities" as that term is defined in Rule 144 of the General Rules
and Regulations under the Act. The undersigned acknowledges that it understands
that the securities covered hereby are unregistered and must be held
indefinitely, unless they are subsequently registered under the Act or an
exemption from such registration is available.
The undersigned agrees that any and all certificates, which may be issued
representing the securities acquired hereunder, shall contain substantially the
following legend, which the undersigned has read and understands:
The shares represented by this certificate have not been registered under
the Securities Act of 1933 (the "Act"), and are "restricted securities" as
the term is defined in Rule 144 under the Act. The shares may not be
offered for sale, sold or otherwise transferred except pursuant to an
effective registration statement under the Act, or pursuant to an exemption
from registration under the Act, the availability of which is to be
established to the satisfaction of the Company.
The undersigned understands that the above legend on the certificates would
limit their value, including their value as collateral.
The undersigned further acknowledges that it understands that, if the
securities have been held for a period of at least one year and if Rule 144
adopted under the Act is applicable (there being no representation by the
<PAGE>
Pollution Research and Control Corp.
February 25, 1999
Page 2
Company that this Rule will be applicable), then it may make only routine sales
of the securities in limited amounts in a specified manner in accordance with
the terms and conditions of the Rule. The undersigned further acknowledges that
it understands that, if Rule 144 is applicable (no assurance of which can be
made), it may sell the securities without quantity limitation in sales not
involving a market maker or through brokerage transactions only if it has held
the securities for at least two years. In case the Rule is not applicable, any
sales made by the undersigned may be made only pursuant to other available
exemption from registration under the Act, or an effective registration
statement.
The undersigned further acknowledges that it is aware that only the Company
can file a registration statement or an offering statement pursuant to
Regulation A under the Act and that the Company has no obligation to do so or to
take steps necessary to make Rule 144 available to it. The undersigned also has
been advised and acknowledges that it understands that, in the event Rule 144 is
not available, the circumstances under which it can sell the securities, absent
registration or compliance with Regulation A, are extremely limited.
The undersigned further acknowledges and represents to the Company that it
is purchasing the securities for its own account and not as a trustee or nominee
for any other person or persons, and that the funds or consideration invested
are its own. The undersigned further acknowledges and represents that there are
no existing legal restrictions applicable to it which would preclude its
acquisition of the securities for investment purposes, as described hereinabove.
The undersigned further represents that it has no present plans to enter into
any contract, undertaking, agreement or arrangement for resale, distribution,
subdivision or fractionalization of the securities purchased hereby.
The undersigned further acknowledges that it understands that an investment
in the Company is extremely speculative and subject to a high degree of risk. In
this connection, the undersigned understands that it may lose its entire
investment in the Company.
The undersigned further acknowledges and represents to the Company that it
is able to bear the economic risk of losing its entire investment. The
undersigned further acknowledges and warrants that its overall commitment to
investments which are not readily marketable is not disproportionate to its net
worth and its investment in the securities will not cause such overall
commitment to become excessive. The undersigned further represents that it has
adequate means of providing for its current needs and personal contingencies and
that it has no need for liquidity in connection with its investment in the
securities.
The undersigned further acknowledges that it fully understands and agrees
that the price of the Company's securities acquired by it was arbitrarily
determined without regard to any value of the securities. The undersigned
understands, additionally, that the price of the securities bears no relation to
the value of the assets or net worth of the Company or any other criteria of
value. The undersigned is aware that no independent evaluation has been made
with respect to the value of the securities. The undersigned further understands
and agrees that shares of the common stock of the Company have been or may in
the future be issued to certain other persons for a consideration which may be
less than the price paid by it for the securities.
The undersigned further acknowledges and represents to the Company that it
is knowledgeable and experienced in venture capital investments in general and,
in particular, with respect to investments similar in nature to an investment in
the Company. The frequency of the undersigned's prior investments in stocks
(including restricted stocks), in general, and in high technology companies, in
particular, and other investments, of whatever kind, is as follows (check one in
each column):
<PAGE>
Pollution Research and Control Corp.
February 25, 1999
Page 3
Restricted High Technology
Stocks Stocks Companies Other
------ ------ --------- -----
Frequently x x x
----- ----- ----- -----
Occasionally x
----- ----- ----- -----
Never
----- ----- ----- -----
The undersigned further acknowledges that it is capable of evaluating the
merits and risks of the Company.
The undersigned further acknowledges that it has such knowledge and
experience in financial and business matters that it is capable of evaluating
the merits and risks of an investment in the Company; that it has been advised
by the Company to consult with counsel regarding this investment; and that it
has relied upon the advice of such counsel, accountants or other consultants as
it deems necessary with regard to tax aspects, risks and other considerations
involved in the investment. The undersigned's educational and occupational
background which renders it capable of evaluating the merits and risks of this
investment is as follows:
Partner in accounting & tax practice.
-----------------------------------------------------------------------
President of 4 consulting companies that have stock investments.
-----------------------------------------------------------------------
-----------------------------------------------------------------------
The undersigned has made, or caused to be made, such investigation of the
Company, its management and its operations as it considers necessary and
appropriate to enable it to make an informed decision regarding its investment.
Prior to making its investment, the undersigned was presented with and
acted upon the opportunity to ask questions of and receive answers from the
Company and its management relating to the Company and to obtain any additional
information necessary to verify the accuracy of the information made available
to it.
Prior to making its investment, the undersigned made arrangements to
conduct such inspection as it deems necessary of the books, records, contracts,
instruments and other data relating to the Company.
Before acquiring these securities, the undersigned was presented with and
understood the Company's business plan, including, among other things, the
nature of the Company, financial reports and management.
The undersigned agrees that, upon the delivery of certificates for its
shares, the undersigned will execute and deliver to and for the benefit of the
Company any instruments the Company may require to evidence that the purchase of
its shares is for investment purposes only.
<PAGE>
Pollution Research and Control Corp.
February 25, 1999
Page 4
On the date the undersigned acquired the securities, it had a net worth of:
( ) Less than $500,000
( ) $500,000 - $1,000,000
(x) $1,000,000 - $3,000,000
( ) $3,000,000 - $5,000,000
( ) More than $5,000,000
Liquid assets constituted the following percentage of the undersigned's net
worth on the date of acquisition of the securities:
( ) Less than 1%
(x) 1% - 10%
( ) 10% - 20%
( ) 20% - 50%
( ) More than 50%
The undersigned's approximate net taxable income (after regular deductions)
in each of the two most recent calendar years was:
(x) Less than $100,000
( ) $100,000 - $200,000
( ) $200,000 - $500,000
( ) $500,000 - $1,000,000
( ) More than $1,000,000
The undersigned's approximate net taxable income in the current year is
expected to be:
(x) Less than $100,000
( ) $100,000 - $200,000
( ) $200,000 - $500,000
( ) $500,000 - $1,000,000
( ) More than $1,000,000
Based upon the foregoing, the undersigned hereby acknowledges and
understands the high risk and speculative nature of the shares of common stock
of the Company which it is acquiring and the nature of the management, financial
condition and all other pertinent factors regarding the Company and this
investment. The undersigned further represents and warrants that it has fully
satisfied itself with respect to the nature of this investment. The undersigned
further warrants and represents that it has received no assurances of any kind
relative to, nor have there been any representations made by the Company or any
of its principals or affiliates regarding, any potential appreciation in value
of the securities being acquired by it. The undersigned hereby represents and
warrants that it has sufficient knowledge and experience in business and
financial matters to evaluate the merits and risks of an investment of this
type. The undersigned further represents and acknowledges that it has made other
investments in speculative businesses and is generally familiar with
"restricted" securities and it is otherwise knowledgeable with respect to the
Company and its proposed operations. Based upon the foregoing understandings,
the undersigned hereby reaffirms its acquisition of the securities described in
this Investment Letter and Memorandum of Subscription/Purchase Agreement.
<PAGE>
Pollution Research and Control Corp.
February 25, 1999
Page 5
The foregoing correctly expresses the intent, understanding and
acknowledgements of the undersigned.
THE INVESTOR RESOURCE SERVICES, INC.
By: /s/ Dan Starczewski
----------------------------------------
Dan Starczewski, President
932 Burke Street, Winston-Salem, North Carolina 27101
- --------------------------------------------------------------------------------
Current address
59-3152101 (336) 918-0509
- ----------------------------------- ----------------------------------------
Tax identification number Current business telephone number
President
- ----------------------------------- ----------------------------------------
Current business Name of person connected with Pollution
position Research and Control Corp., with whom
conferred concerning this investment
- ----------------------------------- ----------------------------------------
Length of relationship, if any, Relationship, if any, with the above-
with the Above-mentioned Company mentioned Company representative
representative
<PAGE>
NOTICE OF EXERCISE
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 face of the
attached warrant certificate unless the
warrant has been properly and lawfully
assigned.
Exhibit 4.17
INVESTMENT LETTER
AND
MEMORANDUM OF SUBSCRIPTION/PURCHASE AGREEMENT
May 19, 1999
Pollution Research and Control Corp.
506 Paula Avenue
Glendale, California 91201
Gentlemen:
In connection with the acquisition by the undersigned, Trautman Wasserman &
Company, Inc., of 66,667 shares of common stock, no par value per share (the
"Common Stock"), of Pollution Research and Control Corp. (the "Company"), in
consideration for the sum of $50,000.00 in cash, the undersigned wishes to
advise you of its understanding of, agreement with and/or representation of, the
following:
These securities are not being registered under the Securities Act of 1933,
as amended (the "Act"), on the ground that this sale is exempt from registration
under ss.4(1) or ss.4(2) of the Act and the Rules and Regulations promulgated
thereunder as not involving any public offering. The Company's reliance on such
exemption is predicated in part on the representation of the undersigned that it
is acquiring such securities for investment for its own account, with no present
intention of dividing its participation with others or reselling or otherwise
distributing the same. These securities which the undersigned is acquiring are
"restricted securities" as that term is defined in Rule 144 of the General Rules
and Regulations under the Act. The undersigned acknowledges that it understands
that the securities covered hereby are unregistered and must be held
indefinitely, unless they are subsequently registered under the Act or an
exemption from such registration is available.
The undersigned agrees that any and all certificates, which may be issued
representing the securities acquired hereunder, shall contain substantially the
following legend, which the undersigned has read and understands:
The shares represented by this certificate have not been registered
under the Securities Act of 1933 (the "Act"), and are "restricted
securities" as the term is defined in Rule 144 under the Act. The
shares may not be offered for sale, sold or otherwise transferred
except pursuant to an effective registration statement under the Act,
or pursuant to an exemption from registration under the Act, the
availability of which is to be established to the satisfaction of the
Company.
The undersigned understands that the above legend on the certificates would
limit their value, including their value as collateral.
The undersigned further acknowledges that it understands that, if the
securities have been held for a period of at least one year and if Rule 144
adopted under the Act is applicable (there being no representation by the
<PAGE>
Pollution Research and Control Corp.
May 19, 1999
Page 2
Company that this Rule will be applicable), then it may make only routine sales
of the securities in limited amounts in a specified manner in accordance with
the terms and conditions of the Rule. The undersigned further acknowledges that
it understands that, if Rule 144 is applicable (no assurance of which can be
made), it may sell the securities without quantity limitation in sales not
involving a market maker or through brokerage transactions only if it has held
the securities for at least two years. In case the Rule is not applicable, any
sales made by the undersigned may be made only pursuant to other available
exemption from registration under the Act, or an effective registration
statement.
The undersigned further acknowledges that it is aware that only the Company
can file a registration statement or an offering statement pursuant to
Regulation A under the Act and that the Company has no obligation to do so or to
take steps necessary to make Rule 144 available to it. The undersigned also has
been advised and acknowledges that it understands that, in the event Rule 144 is
not available, the circumstances under which it can sell the securities, absent
registration or compliance with Regulation A, are extremely limited.
The undersigned further acknowledges and represents to the Company that it
is purchasing the securities for its own account and not as a trustee or nominee
for any other person or persons, and that the funds or consideration invested
are its own. The undersigned further acknowledges and represents that there are
no existing legal restrictions applicable to it which would preclude its
acquisition of the securities for investment purposes, as described hereinabove.
The undersigned further represents that it has no present plans to enter into
any contract, undertaking, agreement or arrangement for resale, distribution,
subdivision or fractionalization of the securities purchased hereby.
The undersigned further acknowledges that it understands that an investment
in the Company is extremely speculative and subject to a high degree of risk. In
this connection, the undersigned understands that it may lose its entire
investment in the Company.
The undersigned further acknowledges and represents to the Company that it
is able to bear the economic risk of losing its entire investment. The
undersigned further acknowledges and warrants that its overall commitment to
investments which are not readily marketable is not disproportionate to its net
worth and its investment in the securities will not cause such overall
commitment to become excessive. The undersigned further represents that it has
adequate means of providing for its current needs and personal contingencies and
that it has no need for liquidity in connection with its investment in the
securities.
The undersigned further acknowledges that it fully understands and agrees
that the price of the Company's securities acquired by it was arbitrarily
determined without regard to any value of the securities. The undersigned
understands, additionally, that the price of the securities bears no relation to
the value of the assets or net worth of the Company or any other criteria of
value. The undersigned is aware that no independent evaluation has been made
with respect to the value of the securities. The undersigned further understands
and agrees that shares of the common stock of the Company have been or may in
the future be issued to certain other persons for a consideration which may be
less than the price paid by it for the securities.
The undersigned further acknowledges and represents to the Company that it
is knowledgeable and experienced in venture capital investments in general and,
in particular, with respect to investments similar in nature to an investment in
the Company. The frequency of the undersigned's prior investments in stocks
<PAGE>
Pollution Research and Control Corp.
May 19, 1999
Page 3
(including restricted stocks), in general, and in high technology companies, in
particular, and other investments, of whatever kind, is as follows (check one in
each column):
Restricted High Technology
Stocks Stocks Companies Other
Frequently x x x x
----- ----- ----- -----
Occasionally
----- ----- ----- -----
Never
----- ----- ----- -----
The undersigned further acknowledges that it is capable of evaluating the
merits and risks of the Company.
The undersigned further acknowledges that it has such knowledge and
experience in financial and business matters that it is capable of evaluating
the merits and risks of an investment in the Company; that it has been advised
by the Company to consult with counsel regarding this investment; and that it
has relied upon the advice of such counsel, accountants or other consultants as
it deems necessary with regard to tax aspects, risks and other considerations
involved in the investment. The undersigned's educational and occupational
background which renders it capable of evaluating the merits and risks of this
investment is as follows:
Registered B/D
---------------------------------------------------------------------------
---------------------------------------------------------------------------
---------------------------------------------------------------------------
The undersigned has made, or caused to be made, such investigation of the
Company, its management and its operations as it considers necessary and
appropriate to enable it to make an informed decision regarding its investment.
Prior to making its investment, the undersigned was presented with and
acted upon the opportunity to ask questions of and receive answers from the
Company and its management relating to the Company and to obtain any additional
information necessary to verify the accuracy of the information made available
to it.
Prior to making its investment, the undersigned made arrangements to
conduct such inspection as it deems necessary of the books, records, contracts,
instruments and other data relating to the Company.
Before acquiring these securities, the undersigned was presented with and
understood the Company's business plan, including, among other things, the
nature of the Company, financial reports and management.
The undersigned agrees that, upon the delivery of certificates for its
shares, the undersigned will execute and deliver to and for the benefit of the
Company any instruments the Company may require to evidence that the purchase of
its shares is for investment purposes only.
<PAGE>
Pollution Research and Control Corp.
May 19, 1999
Page 4
On the date the undersigned acquired the securities, it had a net worth of:
( ) Less than $500,000
( ) $500,000 - $1,000,000
( ) $1,000,000 - $3,000,000
(x) $3,000,000 - $5,000,000
( ) More than $5,000,000
Liquid assets constituted the following percentage of the undersigned's net
worth on the date of acquisition of the securities:
( ) Less than 1%
( ) 1% - 10%
( ) 10% - 20%
(x) 20% - 50%
( ) More than 50%
The undersigned's approximate net taxable income (after regular deductions)
in each of the two most recent calendar years was:
( ) Less than $100,000
( ) $100,000 - $200,000
( ) $200,000 - $500,000
( ) $500,000 - $1,000,000
(x) More than $1,000,000
The undersigned's approximate net taxable income in the current year is
expected to be:
( ) Less than $100,000
( ) $100,000 - $200,000
( ) $200,000 - $500,000
( ) $500,000 - $1,000,000
(x) More than $1,000,000
Based upon the foregoing, the undersigned hereby acknowledges and
understands the high risk and speculative nature of the shares of common stock
of the Company which it is acquiring and the nature of the management, financial
condition and all other pertinent factors regarding the Company and this
investment. The undersigned further represent and warrants that it has fully
satisfied itself with respect to the nature of this investment. The undersigned
further warrants and represents that it has received no assurances of any kind
relative to, nor have there been any representations made by the Company or any
of its principals or affiliates regarding, any potential appreciation in value
of the securities being acquired by it. The undersigned hereby represents and
warrants that it has sufficient knowledge and experience in business and
financial matters to evaluate the merits and risks of an investment of this
type. The undersigned further represents and acknowledges that it has made other
investments in speculative businesses and is generally familiar with
"restricted" securities and it is otherwise knowledgeable with respect to the
Company and its proposed operations. Based upon the foregoing understandings,
the undersigned hereby reaffirms its acquisition of the securities described in
this Investment Letter and Memorandum of Subscription/Purchase Agreement.
<PAGE>
The foregoing correctly expresses the intent, understanding and
acknowledgements of the undersigned.
TRAUTMAN WASSERMAN & COMPANY, INC.
By: /s/ Gregory Trautman
------------------------------------
Gregory Trautman, President
500 Fifth Avenue, Suite 1440, New York, New York 10110
- --------------------------------------------------------------------------------
Current address
13-3713783 (212) 575-5500
- ----------------------------------- ----------------------------------------
Tax identification number Current business telephone number
- ----------------------------------- ----------------------------------------
Current business Name of person connected with Pollution
position Research and Control Corp., with whom
conferred concerning this investment
- ----------------------------------- ----------------------------------------
Length of relationship, if any, Relationship, if any, with the above-
with the Above-mentioned Company mentioned Company representative
representative
Exhibit 4.18
DEBENTURE
NEITHER THIS DEBENTURE NOR THE COMMON STOCK ISSUABLE UPON CONVERSION OF THIS
DEBENTURE (COLLECTIVELY, THE "SECURITIES") HAS BEEN REGISTERED WITH THE UNITED
STATES SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE ACT) OR THE SECURITIES COMMISSION OF ANY STATE UNDER ANY STATE
SECURITIES LAW. THE SECURITIES ARE RESTRICTED AND MAY NOT BE OFFERED, RESOLD,
PLEDGED OR TRANSFERRED UNLESS THE SECURITIES ARE REGISTERED UNDER THE ACT AND
APPLICABLE STATE SECURITIES LAWS OR ARE PERMITTED UNDER THE ACT PURSUANT TO AN
AVAILABLE EXEMPTION FROM THE REGISTRATION REQU1REMENTS OF THOSE LAWS.
$500,000
POLLUTION RESEARCH AND CONTROL CORP.
18% SUBORDINATED CONVERTIBLE DEBENTURE
DUE DECEMBER 1, 1999
THIS DEBENTURE is the only one of a duly authorized issue of $500,000
in Debentures of Pollution Research and Control Corp., a corporation duly
organized and existing under the laws of California (the "Company"), designated
as its 18% Subordinated Convertible Debenture Due December 1, 1999 (the
"Debenture").
FOR VALUE RECEIVED, the Company promises to pay to The Venezuela Recovery
Fund N.V., the registered holder hereof (the "Holder"), the principal sum of
Five Hundred Thousand Dollars (US $500,000) Dollars on December 1, 1999 (the
"Maturity Date") and to pay interest on a monthly basis on the principal sum
outstanding, at the rate of 18% per annum commencing June 1, 1999. Subject to
the provisions of Section 4 below, the principal of, and interest on, this
Debenture are payable at the option of the Holder, in shares of Common Stock
$.01 par value per share of the Company ("Common Stock"), or in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts, at the address last appearing on
the Debenture Register of the Company as designated in writing by the Holder
from time to time. The Company will pay the outstanding principal due upon this
Debenture before or on the Maturity Date, less any amounts required by law to be
deducted or withheld, to the Holder of this Debenture by check if paid more than
ten days prior to the Maturity Date or by wire transfer and addressed to such
Holder at the last address appearing on the Debenture Register. The forwarding
of such check or wire transfer shall constitute a payment of outstanding
principal hereunder and shall satisfy and discharge the liability for principal
on this Debenture to the extent of the sum represented by such check or wire
transfer.
453480-2 6/1/99
<PAGE>
This Debenture is subject to the following additional provisions:
1. The Debenture is issuable in denominations of Fifty Thousand Dollars
(US$50,000) and integral multiples thereof. The Debenture is exchangeable for an
equal aggregate principal amount of debentures of different authorized
denominations (the "Debentures"), as requested by the Holder(s) surrendering the
same, but not less than US$50,000. No service charge will be made for such
registration, transfer or exchange, except that the Holder shall pay any tax or
other governmental charges payable in connection therewith.
2. The Company shall be entitled to withhold from all payments of principal
of, and interest on, this Debenture any amounts required to be withheld under
the applicable provisions of the United States income tax laws or other
applicable laws at the time of such payments, and Holder shall execute and
deliver all required documentation in connection therewith.
3. This Debenture may be transferred or exchanged only in compliance with
the Securities Act of 1933, as amended (the "Act"), and applicable state
securities laws. Prior to due presentment for transfer of this Debenture, the
Company and any agent of the Company may treat the person in whose name this
Debenture is duly registered on the Company's Debenture Register as the owner
hereof for all other purposes, whether or not this Debenture be overdue, and
neither the Company nor any such agent shall be affected or bound by notice to
the contrary.
4. The Holder of this Debenture is entitled, at its option, at any time
immediately following execution of this Agreement and delivery of the Debenture,
to convert all or any amount over $50,000 of the principal face amount of this
Debenture then outstanding (provided that the principal amount is at least
US$50,000, unless if at the time of such election to convert the aggregate
principal amount of all Debentures registered to the Holder is less than
US$50,000, then the whole amount thereof) into shares of Common Stock. The
conversion price (the "Conversion Price") for each share of Common Stock shall
be equal to the lesser of (a) 80% of the Market Price of the Common Stock on the
Conversion Date; or (b) 115% of the Market Price of the Common Stock on May 28,
1999. The shares of the Company's Common Stock issued upon conversion of this
Debenture shall hereinafter be referred to as the "Conversion Shares." If the
number of resultant Conversion Shares would as a matter of law or pursuant to
regulatory authority require the Company to seek shareholder approval of such
issuance, the Company shall, as soon as practicable, take the necessary steps to
seek such approval.
For purposes of this Section 4, the Market Price of the Common Stock shall
be the closing bid price of the Common Stock on the Conversion Date as reported
by Nasdaq, or the closing bid price on the over-the-counter market on such date
or, in the event the Common Stock is listed on a stock exchange, the closing bid
price shall be the closing price on the exchange on such date as reported in the
Wall Street Journal. Conversion shall be effectuated by surrendering the
Debentures to be converted to the Company with the form of conversion notice
attached hereto as Exhibit A, executed by the Holder of the Debenture evidencing
such Holder's intention to convert this Debenture or a specified portion (as
above provided) hereof, and accompanied, if required by the Company, by proper
assignment hereof in blank. Interest accrued or accruing from the date of
453480-2 -2- 6/1/99
<PAGE>
issuance to the date of conversion shall, at the option of the Holder, be paid
in cash or Common Stock upon conversion at the Conversion Rate. No fraction of
Shares or scrip representing fractions of shares will be issued on conversion,
but the number of shares issuable shall be rounded to the nearest whole share.
The date on which notice of conversion is given (the "Conversion Date") shall be
deemed to be the date on which the Holder has delivered this Debenture, with the
conversion notice duly executed, to the Company or, the date set forth in such
facsimile delivery of the notice of conversion if the Debenture is received by
the Company within two (2) business days therefrom. Facsimile delivery of the
conversion notice shall be accepted by the Company at (818-247-7614); ATTN:
Albert Gosselin). Certificates representing Common Stock upon conversion will be
delivered within three (3) business days from the date the notice of conversion
with the original Debenture is delivered to the Company.
5. No provision of the Debenture shall alter or impair the obligation of
the Company, which is direct, absolute and unconditional, to pay the principal
of, and interest on, this Debenture at the time, place, and rate, and in the
form, herein prescribed.
6. The Company hereby expressly waives demand and presentment for payment,
notice of non-payment, protest, notice of protest, notice of dishonor, notice of
acceleration or intent to accelerate, and diligence in taking any action to
collect amounts called for hereunder and shall be directly and primarily liable
for the payment of all sums owing and to be owing hereto.
7. The Company agrees to pay all costs and expenses, including reasonable
attorneys' fees, which may be incurred by the Holder in collecting any amount
due under this Debenture.
8. The following shall constitute an "Event of Default":
(a) The Company shall default in the payment of principal or interest
on this Debenture and such default shall remain unremedied for
five (5) business days after the Company has been notified of the
default in writing by a Holder; or
(b) Any of the representations or warranties made by the Company
herein, and in the Registration Rights Agreement or in any
certificate or financial or other written statements furnished by
or on behalf of the Company in connection with the execution and
delivery of this Debenture and the Registration Rights Agreement
shall be false or misleading in any material respect at the time
made; or
(c) The Company fails to issue shares of Common Stock to the Holder
or to cause its Transfer Agent to issue shares of Common Stock
453480-2 -3- 6/1/99
<PAGE>
upon exercise by the Holder of the conversion rights of the
Holder in accordance with the terms of this Debenture, fails to
transfer or to cause its Transfer Agent to transfer any
certificate for shares of Common Stock issued to the Holder upon
conversion of this Debenture and when required by this Debenture
or the Registration Rights Agreement, or fails to remove any
restrictive legend or to cause its Transfer Agent to transfer on
any certificate or any shares of Common Stock issued to the
Holder upon conversion of this Debenture as and when required by
this Debenture, the Securities Purchase Agreement or the
Registration Rights Agreement and any such failure shall continue
uncured for five (5) business days after the Company has been
notified of such failure in writing by Holder.
(d) The Company shall fail to perform or observe, in any material
respect, any other covenant, term, provision, condition,
agreement or obligation of the Company under his Debenture and
such failure shall continue uncured for a period of thirty (30)
days after notice from the Holder or such failure; or
(e) The Company shall (1) become insolvent; (2) admit in writing its
inability to pay its debts generally as they mature; (3) make an
assignment for the benefit of creditors or commence proceedings
for it dissolution; or (4) apply for or consent to the
appointment of a trustee, liquidator or receiver for its or for a
substantial part of its property or business; or
(f) A trustee, liquidator or receiver shall be appointed for the
Company or for a substantial part of its property or business
without its consent and shall not be discharged within thirty
(30) days after such appointment; or
(g) Any governmental agency or any court of competent jurisdiction at
the instance of any governmental agency shall assume custody or
control of the whole or any substantial portion of the properties
or assets of the Company and shall not be dismissed within thirty
(30) days thereafter; or
453480-2 -4- 6/1/99
<PAGE>
(h) Any money judgment, writ warrant of attachment, or similar
process, in excess of One Hundred Thousand ($100,000) Dollars in
the aggregate shall be entered or filed against the Company or
any of its properties or other assets and shall remain unpaid,
unvacated, unbonded or unstayed for a period of fifteen (15) days
or in any event later than five (5) days prior to the date of any
proposed sale thereunder; or
(i) Bankruptcy, reorganization, insolvency or liquidation proceedings
or other proceedings for relief under any bankruptcy law or any
law for the relief of debtors shall be instituted by or against
the Company and, if instituted against the Company, shall not be
dismissed within sixty (30) days after such institution or the
Company shall by any action or answer approve of, consent to, or
acquiesce in any such proceedings or admit the material
allegations of, or default in answering a petition filed in any
such proceeding; or
(j) The Company shall have its Common Stock suspended or delisted
from an exchange or over-the-counter market from trading for in
excess of five trading days.
Then, or at any time thereafter, unless cured, and in each and every such case,
unless such Event of Default shall have been waived in writing by the Holder
(which waiver shall not be deemed to be a waiver of any subsequent default) at
the option of the Holder and in the Holder's sole discretion, the Holder may
consider this Debenture immediately due and payable, without presentment,
demand, protest or (further) notice of any kind (other than notice of
acceleration), all of which are hereby expressly waived, anything herein or in
any note or other instruments contained to the contrary notwithstanding, and the
Holder may immediately, and without expiration of any period of grace, enforce
any and all of the Holder's rights and remedies provided herein and any other
rights or remedies afforded by law.
9. The Holder of the Debenture, by acceptance hereof, agrees that this
Debenture is being acquired for investment and that such Holder will not offer,
sell or otherwise dispose of this Debenture or the shares of Common Stock
issuable upon conversion thereof except under circumstances which will not
result in a violation of the Act or any applicable state Blue Sky or foreign
laws or similar laws relating to the sale of securities.
10. Nothing contained in this Debenture shall be construed as conferring
upon the Holder the right to vote or to receive dividends or to consent or
receive notice as a shareholder in respect of any meeting of shareholders or any
rights whatsoever as a shareholder of the Company, unless and to the extent
converted in accordance with the terms hereof.
453480-2 -5- 6/1/99
<PAGE>
11. This Debenture represents a prioritized obligation of the Company.
However, no recourse shall be had for the payment of the principal of, or the
interest on, this Debenture, or for any claim based hereon, or otherwise in
respect hereof, against any incorporator, shareholder, officer or director, as
such, past, present or future, of the Company or any successor corporation,
whether by virtue of any constitution, statute or rule of law, or by the
enforcement of any assessment or penalty or otherwise, all such liability being,
by the acceptance hereof and as part of the consideration for the issue hereof,
expressly waived and released.
12. If the Company merges or consolidates with another corporation or sells
or transfers all or substantially all of its assets to another person and the
holders of the Common Stock are entitled to receive stock, securities or
property in respect of or in exchange for Common Stock, then as a condition of
such merger, consolidation, sale or transfer, the Company and any such
successor, purchaser or transferee agree that the Debenture may thereafter be
converted on the terms and subject to the conditions set forth above into the
kind and amount of stock, securities or property receivable upon such merger,
consolidation, sale or transfer by a holder of the number of shares of Common
Stock into which this Debenture might have been converted immediately before
such merger, consolidation, sale or transfer, subject to adjustments which shall
be as nearly equivalent as may be practicable. In the event of any proposed
merger, consolidation or sale or transfer of all or substantially all of the
assets of the Company (a "Sale"), the Holder hereof shall have the right to
convert by delivering a Notice of Conversion to the Company within fifteen (15)
days of receipt of notice of such Sale from the Company. In the event the Holder
hereof shall elect not to convert, the Company may prepay all outstanding
principal and accrued interest on this Debenture, less all amounts required by
law to be deducted, upon which tender of payment following such notice, the
right of conversion shall terminate.
13. Concurrently with the execution and delivery of this Debenture, the
parties hereto will execute and deliver a Registration Rights Agreement in which
the Company will undertake to register the Conversion Shares under the
Securities Act of 1933.
14. In case any provision of this Debenture is held by a court of competent
jurisdiction to be excessive in scope or otherwise invalid or unenforceable,
such provision shall be adjusted rather than voided, if possible, so that it is
enforceable to the maximum extent possible, and the validity and enforceability
of the remaining provisions of this Debenture will not in any way be affected or
impaired thereby.
15. This Debenture and the agreements referred to in this Debenture
constitute the full and entire understanding and agreement between the Company
and the Holder with respect to the subject hereof. Neither this Debenture nor
any term hereof may be amended, waived, discharged or terminated other than by a
written instrument signed by the Company and the Holder.
453480-2 -6- 6-1/99
<PAGE>
16. This Debenture shall be governed by and construed in accordance with
the laws of the State of New York. Each of the parties consents to the
jurisdiction of the federal courts whose districts encompass any part of the
City of New York or the state courts of the State of New York sitting in the
City of New York in connection with any dispute arising under this Agreement and
hereby waives, to the maximum extent permitted by law, any objection, including
any objection based on forum non coveniens, to the bringing of any such
proceeding in such jurisdictions. At Holder's election, any dispute between the
parties may be arbitrated rather than litigated in the courts, before the
arbitration board of the American Arbitrators Association in New York City and
pursuant to its rules. Upon demand made by the Holder to the Company, the
Company agrees to submit to and participate in such arbitration. This Agreement
may be executed in counterparts, and the facsimile transmission of an executed
counterpart to this Agreement shall be effective as an original.
IN WITNESS WHEREOF, the Company has caused this instrument to be executed
by an officer thereunto duly authorized.
Dated: May 19, 1999
POLLUTION RESEARCH AND CONTROL CORP.
By: /s/ Albert E. Gosselin, Jr.
----------------------------------------
Albert E. Gosselin, President
453480-2 -7- 6/1/99
<PAGE>
EXHIBIT I
NOTICE OF CONVERSION
(To be Executed by the Registered Holder in order to Convert the Debenture)
The undersigned hereby irrevocably elects to convert $________ of the above
Debenture No. _____________________into shares of Common Stock of Pollution
Research and Control Corp. (the "Company") according, to the conditions set
forth in such Debenture, as of the date written below.
If Shares are to be issued in the name of a person other than the
undersigned, the undersigned will pay all transfer and other Taxes and charges
payable with respect thereto.
Date of Conversion______________________________________________________________
Applicable Conversion Price_____________________________________________________
Signature_______________________________________________________________________
Print Name Holder and Title of Signer___________________________________________
Address_________________________________________________________________________
_________________________________________________________________________
SSN or EIN______________________________________________________________________
Shares are to be registered in the following name:
Name____________________________________________________________________________
Address_________________________________________________________________________
Tel.____________________________________________________________________________
Fax_____________________________________________________________________________
SSN or EIN______________________________________________________________________
Shares are to be sent or delivered to following account:
Account Name____________________________________________________________________
Address_________________________________________________________________________
453480-2 -8- 6/1/99
Exhibit 4.19
FINANCIAL CONSULTING AND SERVICES AGREEMENT
-------------------------------------------
THIS AGREEMENT is dated May 20, 1999, by and between Premiere Equities, Inc., a
Florida corporation of 6278 N. Federal Highway, Suite 385, Ft. Lauderdale
Florida 33308 ("Consultant"), and Pollution Research and Control Corp. having
its principal address at 506 Paula Avenue, Glendale, California.
WITNESSETH:
-----------
Consultant is engaged in the business of, among other things, providing
financial consulting, and business advisory services, and the Company seeks
these services for the Company; and
NOW, THEREFORE, the parties hereto agree as follows:
1. Services. Consultant shall, during the term of this Agreement, provide
the following services to the Company:
a). Consultant shall analyze and provide advice as to both short and
long term business plans and assist with respect to shareholder relations;
b). Consultant shall provide all the consulting services described
herein directly to management of the Company (while the Consultant is authorized
to speak to and consult with others, the Consultant does not have any right or
power to bind the Company to any matter whatsoever or to make any representation
pertaining to the Company whatsoever); and
c). Consultant shall provide such general consulting services as may
be reasonably requested by the Company, from time to time, during the term.
The Consultant is not authorized or empowered to commit the Company to any
recommendations or course of action, or any agreement, promise, or
representation.
Consultant shall be available, included by receiving telephone calls.
Consultants shall also be available to review and receive information concerning
the Company, by fax or telephone during normal business hours. Consultant shall
be fully responsible for complying with all applicable laws and regulations
concerning the activities of the Consultant, including the business and
operations of the Consultant.
2. Consulting compensation. In consideration for the services to be
provided by the Consultant pursuant to Section 1 above, the Consultant shall be
paid by the Company a fee of $75,000 annually, ($40,000 upon execution of
contract, due immediately), monthly payments on the 1st day of each month for
3181.81 (11 monthly payments totaling $35,000 for the first year), 50,000 free
trading, non-legend shares of stock of the Company, and 85,500 free trading
non-legend warrants, to be delivered to Consultant immediately. (All shares
being the "Shares" and "Warrants" herein). Consultant hereby directs the Company
to issue all Shares and Warrants in the name of Premiere Equities, Inc.
1
<PAGE>
3. Indemnification. The Company shall indemnify and hold harmless the
Consultant as to and, against all losses, claims, damages, liabilities, and
expenses (including reasonable attorney's fees) caused by any untrue or alleged
fact required to be stated therein or necessary to make the statements therein
not misleading as to the public filings of the Company; provided, however, that
the Company will not be liable in any such case to the extent that such item
arises out of or is based upon an untrue statement or alleged untrue statement,
prospectus or preliminary prospectus or any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading in reliance upon, and in conformity with,
information furnished to the Company by Consultant, and/or in any case
Consultant is aware of the problem.
4. Term. The term of this Agreement shall be for an initial term (the
"Initial Term") of twelve (12) months commencing on the date first set forth
above. For the second and third years, annual compensation of $75,000 ($40,000
the first month and 11 monthly payments of 3181.81). Either party upon at least
60 days' prior written notice may terminate this Agreement, but no termination
shall eliminate the Consultant's right to the Shares herein.
5. Non-Exclusive. Consultant shall devote such of its time and effort as
Consultant deems necessary or desirable to the discharge of its duties
hereunder. The Company acknowledges that Consultant is engaged in other business
activities and that it will continue such activities during the term of this
Agreement. Consultant shall not be restricted from engaging in other business
activities during the term of this Agreement. This is a non-exclusive Agreement.
6. Confidentiality. Consultant shall, and shall cause officers, directors,
employees and agents of Consultant to, hold confidential and not publish,
disclose or make accessible to any other person not bound by an obligation of
confidentiality, all confidential information, if any, which Consultant or any
of its officers, directors, employees, or agents may, from time-to-time, possess
relating to financial condition, results of operation, business, property,
assets or liabilities of the Company, provided, however, the restrictions of
this sentence shall not apply to information that (I) is publicly available,
(II) already is known to Consultant at the time of disclosure, or (III) is
received from a third party not under any obligation of confidentiality to the
Company.
7. Benefit, Burden, and Assignment. The provisions herein shall enure to
the benefit of, and be binding upon, the parties hereto and their permitted
assigns and successors. This Agreement may be assigned without the prior written
consent of all parties hereto.
8. Severability. If any provision of this Agreement shall be deemed by any
court of competent jurisdiction invalid or unenforceable to any extent, the
remainder of this Agreement, or the application of such provision in any other
circumstance shall not be affected thereby and each provision shall otherwise be
valid and shall be enforced to the fullest extent permitted by applicable law.
9. Governing Law. The laws of the State of Florida, U.S.A. shall govern
this Agreement, and the venue for any action, claim or proceeding in connection
with this Agreement shall be a court of competent jurisdiction in Broward
County, Florida.
2
<PAGE>
10. Entire Agreement. This Agreement sets forth all of the promises,
agreements, conditions, understandings, warranties and representations among the
parties with respect to the subject matter hereof. This Agreement is, and is
intended by the parties to be, an integration of any and all prior agreements
and understandings, oral, written, express or implied with respect to the
subject matter hereof.
11. Captions. Captions in this Agreement are for convenience of reference
only and shall not be used in the interpretation.
12. Independent Legal Counsel. The parties agree and acknowledge that they
have been represented by independent legal counsel, or have had the opportunity
to obtain independent legal counsel, have been advised that it is in their best
interests to do so, and by execution of this Agreement have waived the right.
13. Amendment and Modification. No amendment or modification to this
Agreement shall be valid unless in writing and signed by the parties hereto.
14. Ambiguities. The parties hereby acknowledge that the normal rule of
construction to the effect that ambiguities in an agreement are constructed
against the drafting party shall not apply to this Agreement.
15. Cooperation. Each party hereby agrees to provide such reasonable
cooperation and execute such reasonable documents as shall be reasonably
required or requested by the other party hereto to perform the Agreement.
16. Written Provisions. Hand-written provisions hereto initiated by the
parties hereto shall control to the extent of any conflict with the typed
provisions herein.
17. Execution. This Agreement may be executed via facsimile and in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
PREMIERE EQUITIES, INC. POLLUTION RESEARCH AND CONTROL CORP.
By: /s/ Stephen F. Larkin By: /s/ Albert E. Gosselin, Jr.
------------------------------- ----------------------------------------
PRESIDENT PRESIDENT
3
Exhibit 4.20
INVESTMENT LETTER
AND
MEMORANDUM OF SUBSCRIPTION/PURCHASE AGREEMENT
Pollution Research and Control Corp.
506 Paula Avenue
Glendale, California 91201
Gentlemen:
In connection with the acquisition by the undersigned, 100,000 shares of
common stock, no par value per share (the "Common Stock"), of Pollution Research
and Control Corp. (the "Company"), in consideration for the sum of $105,000 in
cash, the undersigned wishes to advise you of his understanding of, agreement
with and/or representation of, the following:
These securities are not being registered under the Securities Act of 1933,
as amended (the "Act"), on the ground that this sale is exempt from registration
under ss.4(1) or ss.4(2) of the Act and the Rules and Regulations promulgated
thereunder as not involving any public offering. The Company's reliance on such
exemption is predicated in part on the representation of the undersigned that he
is acquiring such securities for investment for his own account, with no present
intention of dividing his participation with others or reselling or otherwise
distributing the same. These securities which the undersigned is acquiring are
"restricted securities" as that term is defined in Rule 144 of the General Rules
and Regulations under the Act. The undersigned acknowledges that he understands
that the securities covered hereby are unregistered and must be held
indefinitely, unless they are subsequently registered under the Act or an
exemption from such registration is available.
The undersigned agrees that any and all certificates, which may be issued
representing the securities acquired hereunder, shall contain substantially the
following legend, which the undersigned has read and understands:
The shares represented by this certificate have not been registered under
the Securities Act of 1933 (the "Act"), and are "restricted securities" as
the term is defined in Rule 144 under the Act. The shares may not be
offered for sale, sold or otherwise transferred except pursuant to an
effective registration statement under the Act, or pursuant to an exemption
from registration under the Act, the availability of which is to be
established to the satisfaction of the Company.
The undersigned understands that the above legend on the certificates would
limit their value, including their value as collateral.
The undersigned further acknowledges that he understands that, if the
securities have been held for a period of at least one year and if Rule 144
adopted under the Act is applicable (there being no representation by the
<PAGE>
Pollution Research and Control Corp.
Page 2
Company that this Rule will be applicable), then he may make only routine sales
of the securities in limited amounts in a specified manner in accordance with
the terms and conditions of the Rule. The undersigned further acknowledges that
he understands that, if Rule 144 is applicable (no assurance of which can be
made), he may sell the securities without quantity limitation in sales not
involving a market maker or through brokerage transactions only if he has held
the securities for at least two years. In case the Rule is not applicable, any
sales made by the undersigned may be made only pursuant to other available
exemption from registration under the Act, or an effective registration
statement.
The undersigned further acknowledges that he is aware that only the Company
can file a registration statement or an offering statement pursuant to
Regulation A under the Act and that the Company has no obligation to do so or to
take steps necessary to make Rule 144 available to him. The undersigned also has
been advised and acknowledges that he understands that, in the event Rule 144 is
not available, the circumstances under which he can sell the securities, absent
registration or compliance with Regulation A, are extremely limited.
The undersigned further acknowledges and represents to the Company that he
is purchasing the securities for his own account and not as a trustee or nominee
for any other person or persons, and that the funds or consideration invested
are his own. The undersigned further acknowledges and represents that there are
no existing legal restrictions applicable to him which would preclude his
acquisition of the securities for investment purposes, as described hereinabove.
The undersigned further represents that he has no present plans to enter into
any contract, undertaking, agreement or arrangement for resale, distribution,
subdivision or fractionalization of the securities purchased hereby.
The undersigned further acknowledges that he understands that an investment
in the Company is extremely speculative and subject to a high degree of risk. In
this connection, the undersigned understands that he may lose his entire
investment in the Company.
The undersigned further acknowledges and represents to the Company that he
is able to bear the economic risk of losing his entire investment. The
undersigned further acknowledges and warrants that his overall commitment to
investments which are not readily marketable is not disproportionate to his net
worth and his investment in the securities will not cause such overall
commitment to become excessive. The undersigned further represents that he has
adequate means of providing for his current needs and personal contingencies and
that he has no need for liquidity in connection with his investment in the
securities.
The undersigned further acknowledges that he fully understands and
agrees that the price of the Company's securities acquired by him was
arbitrarily determined without regard to any value of the securities. The
undersigned understands, additionally, that the price of the securities bears no
relation to the value of the assets or net worth of the Company or any other
criteria of value. The undersigned is aware that no independent evaluation has
been made with respect to the value of the securities. The undersigned further
understands and agrees that shares of the common stock of the Company have been
or may in the future be issued to certain other persons for a consideration
which may be less than the price paid by him for the securities.
The undersigned further acknowledges and represents to the Company that he
is knowledgeable and experienced in venture capital investments in general and,
in particular, with respect to investments similar in nature to an investment in
the Company. The frequency of the undersigned's prior investments in stocks
<PAGE>
Pollution Research and Control Corp.
Page 3
(including restricted stocks), in general, and in high technology companies, in
particular, and other investments, of whatever kind, is as follows (check one in
each column):
Restricted High Technology
Stocks Stocks Companies Other
------ ------ --------- -----
Frequently
----- ----- ----- -----
Occasionally
----- ----- ----- -----
Never x x x x
----- ----- ----- -----
The undersigned further acknowledges that he is capable of evaluating the
merits and risks of the Company.
The undersigned further acknowledges that he has such knowledge and
experience in financial and business matters that he is capable of evaluating
the merits and risks of an investment in the Company; that he has been advised
by the Company to consult with counsel regarding this investment; and that he
has relied upon the advice of such counsel, accountants or other consultants as
he deems necessary with regard to tax aspects, risks and other considerations
involved in the investment. The undersigned's educational and occupational
background which renders him capable of evaluating the merits and risks of this
investment is as follows:
In my career I have been several years a General Manager for a big
------------------------------------------------------------------------
enterprise ($50M turnover), Manager of the company, Mikrosam, Macedonia
-----------------------------------------------------------------------
and a Professor at university.
------------------------------------------------------------------------
The undersigned has made, or caused to be made, such investigation of the
Company, its management and its operations as he considers necessary and
appropriate to enable him to make an informed decision regarding his investment.
Prior to making his investment, the undersigned was presented with and
acted upon the opportunity to ask questions of and receive answers from the
Company and its management relating to the Company and to obtain any additional
information necessary to verify the accuracy of the information made available
to him.
Prior to making his investment, the undersigned made arrangements to
conduct such inspection as he deems necessary of the books, records, contracts,
instruments and other data relating to the Company.
Before acquiring these securities, the undersigned was presented with and
understood the Company's business plan, including, among other things, the
nature of the Company, financial reports and management.
The undersigned agrees that, upon the delivery of certificates for his
shares, the undersigned will execute and deliver to and for the benefit of the
Company any instruments the Company may require to evidence that the purchase of
his shares is for investment purposes only.
<PAGE>
Pollution Research and Control Corp.
Page 4
On the date the undersigned acquired the securities, he had a net worth of:
( ) Less than $500,000
( ) $500,000 - $1,000,000
(x) $1,000,000 - $3,000,000
( ) $3,000,000 - $5,000,000
( ) More than $5,000,000
Liquid assets constituted the following percentage of the undersigned's net
worth on the date of acquisition of the securities:
( ) Less than 1%
( ) 1% - 10%
( ) 10% - 20%
(x) 20% - 50%
( ) More than 50%
The undersigned's approximate net taxable income (after regular deductions)
in each of the two most recent calendar years was:
( ) Less than $100,000
( ) $100,000 - $200,000
(x) $200,000 - $500,000
( ) $500,000 - $1,000,000
( ) More than $1,000,000
The undersigned's approximate net taxable income in the current year is
expected to be:
( ) Less than $100,000
(x) $100,000 - $200,000
( ) $200,000 - $500,000
( ) $500,000 - $1,000,000
( ) More than $1,000,000
Based upon the foregoing, the undersigned hereby acknowledges and
understands the high risk and speculative nature of the shares of common stock
of the Company which he is acquiring and the nature of the management, financial
condition and all other pertinent factors regarding the Company and this
investment. The undersigned further represents and warrants that he has fully
satisfied himself with respect to the nature of this investment. The undersigned
further warrants and represents that he has received no assurances of any kind
relative to, nor have there been any representations made by the Company or any
of its principals or affiliates regarding, any potential appreciation in value
of the securities being acquired by him. The undersigned hereby represents and
warrants that he has sufficient knowledge and experience in business and
financial matters to evaluate the merits and risks of an investment of this
type. The undersigned further represents and acknowledges that he has made other
investments in speculative businesses and is generally familiar with
"restricted" securities and he is otherwise knowledgeable with respect to the
Company and its proposed operations. Based upon the foregoing understandings,
the undersigned hereby reaffirms his acquisition of the securities described in
this Investment Letter and Memorandum of Subscription/Purchase Agreement.
<PAGE>
Pollution Research and Control Corp.
Page 5
The foregoing correctly expresses the intent, understanding and
acknowledgements of the undersigned.
/s/ Blagoja Samakoski
----------------------------------------
Blagoja Samakoski
Henry Budge S7R 65, 60320 Frankfurt, Germany
- --------------------------------------------------------------------------------
Current address
- ----------------------------------- ----------------------------------------
Social security number Current business telephone number
Manager Barry Soltani
- ----------------------------------- ----------------------------------------
Current business Name of person connected with Pollution
position Research and Control Corp., with whom
conferred concerning this investment
389-98-400-100
- ----------------------------------- ----------------------------------------
Current business telephone number Relationship, if any, with the above-
mentioned Company representative
Mikrosam
- ----------------------------------- ----------------------------------------
Current name of business which Length of relationship, if any with the
Associated above-mentioned Company representative
<PAGE>
Exhibit 4.21
INVESTMENT LETTER
AND
MEMORANDUM OF SUBSCRIPTION/PURCHASE AGREEMENT
July 16, 1999
Pollution Research and Control Corp.
506 Paula Avenue
Glendale, California 91201
Gentlemen:
In connection with the acquisition by the undersigned of 80,000 units
consisting of 80,000 shares of common stock, no par value per share (the "Common
Stock") and 54,525 common stock purchase warrants ("Warrants") exercisable at
$0.75 per share, at a combined per unit price of $1.00, of Pollution Research
and Control Corp. (the "Company"), in consideration for the sum of $80,000.00 in
cash, the undersigned wishes to advise you of his understanding of, agreement
with and/or representation of, the following:
These securities are not being registered under the Securities Act of 1933,
as amended (the "Act"), on the ground that this sale is exempt from registration
under ss.4(l) or ss.4(2) of the Act and the Rules and Regulations promulgated
thereunder as not involving any public offering. The Company's reliance on such
exemption is predicated in part on the representation of the undersigned that he
is acquiring such securities for investment for his own account, with no present
intention of dividing his participation with others or reselling or otherwise
distributing the same. These securities which the undersigned is acquiring are
"restricted securities" as that term is defined in Rule 144 of the General Rules
and Regulations under the Act. The undersigned acknowledges that he understands
that the securities covered hereby are unregistered and must be held
indefinitely, unless they are subsequently registered under the Act or an
exemption from such registration is available.
The undersigned agrees that any and all certificates, which may be issued
representing the securities acquired hereunder, shall contain substantially the
following legend, which the undersigned has read and understands:
The shares represented by this certificate have not been registered under
the Securities Act of 1933 (the "Act"), and are "restricted securities" as
the term is defined in Rule 144 under the Act. The shares may not be
offered for sale, sold or otherwise transferred except pursuant to an
effective registration statement under the Act, or pursuant to an exemption
from registration under the Act, the availability of which is to be
established to the satisfaction of the Company.
<PAGE>
Pollution Research and Control Corp.
July 16, 1999
Page 2
The undersigned understands that the above legend on the certificates would
limit their value, including their value as collateral.
The undersigned further acknowledges that he understands that, if the
securities have been held for a period of at least one year and if Rule 144
adopted under the Act is applicable (there being no representation by the
Company that this Rule will be applicable), then he may make only routine sales
of the securities in limited amounts in a specified manner in accordance with
the terms and conditions of the Rule. The undersigned further acknowledges that
he understands that, if Rule 144 is applicable (no assurance of which can be
made), he may sell the securities without quantity limitation in sales not
involving a market maker or through brokerage transactions only if he has held
the securities for at least two years. In case the Rule is not applicable, any
sales made by the undersigned may be made only pursuant to other available
exemption from registration under the Act, or an effective registration
statement.
The undersigned further acknowledges that he is aware that only the Company
can file a registration statement or an offering statement pursuant to
Regulation A under the Act and that the Company has no obligation to do so,
other than via the registration rights referred to in the following paragraphs.
The undersigned also has been advised and acknowledges that he understands that,
in the event Rule 144 is not available, the circumstances under which he can
sell the securities, absent registration or compliance with Regulation A, are
extremely limited.
In the event, during the period commencing on the date hereof and expiring
three years from the date hereof (July 16, 2002), the Company shall register any
private, primary or secondary offering of any debt or equity security issued or
to be issued by it pursuant to a registration statement under the Securities Act
of 1933, as amended, pursuant to which the common stock and the securities
underlying the common stock purchase warrants can be registered, the Company
shall in each such event notify the undersigned in writing not less than thirty
(30) days prior to filing such registration statement with the Commission, and
the undersigned will have the right to register all of the aforementioned
securities therewith by notifying the Company in writing within fifteen (15)
days of receipt of the Company's notice, requesting registration of the
securities and setting forth the intended method of distribution and such other
data or information as the Company or its counsel reasonably shall require. Any
registration costs shall be borne by the Company, except for sales commissions
and related fees and/or transfer taxes incurred if the securities are
subsequently sold.
Warrants: The purchase rights evidenced by the common stock purchase
warrants may be exercised in whole or in part at any time, and from time to
time, on or after the date hereof but before July 16, 2002, by the undersigned
through the presentation and surrender of the warrant to the Company at its
<PAGE>
Pollution Research and Control Corp.
July 16, 1999
Page 3
principal office or at the office of the Company's stock transfer agent, if any,
accompanied by a duly executed Notice of Exercise, in the form attached hereto
as Exhibit A.
Adjustments: Stock Dividends, Reclassifications, Merger and Anti-Dilution
Provisions.
(a) If the Company increases or decreases the number of its issued and
outstanding shares of Common Stock, or changes in any way the rights
and privileges of such shares, by means of (i) the Common Stock, (ii)
a forward or reverse stock split or other subdivision of shares, (iii)
a consolidation or combination involving its Common Stock, or (iv) a
reclassification or recapitalization involving its Common Stock, then
the Warrant Exercise Price in effect at the time of such action and
the number of Shares shall be proportionately adjusted so that the
numbers, rights, and privileges relating to the Securities shall be
increased, decreased or changed in like manner.
(b) If at any time or from time to time the Company should issue or sell
any shares of Common Stock, including shares held in the Company's
Treasury, without consideration or for a per share consideration less
that the Warrant Exercise price of $0.75 per share, then the Warrant
Exercise price of $0.75 shall be adjusted downward accordingly to
equal the per share consideration received by the Company upon the
issuance or sale of its Common Stock.
(c) The Company will not at any time in the future conduct any equity
offering consisting of the sale or issuance of any class of common
stock or any class of stock purchase warrant at a price of $1.00 per
share or below, without first providing the undersigned with first
right of refusal to participate in all or any portion of the offering.
The undersigned further acknowledges and represents to the Company that he
is purchasing the securities for his own account and not as a trustee or nominee
for any other person or persons, and that the funds or consideration invested
are his own. The undersigned further acknowledges and represents that there are
no existing legal restrictions applicable to him which would preclude his
acquisition of the securities for investment purposes, as described hereinabove.
The undersigned further represents that he has no present plans to enter into
any contract, undertaking, agreement or arrangement for resale, distribution,
subdivision or fractionalization of the securities purchased hereby.
<PAGE>
Pollution Research and Control Corp.
July 16, 1999
Page 4
The undersigned further acknowledges that he understands that an investment
in the Company is extremely speculative and subject to a high degree of risk. In
this connection, the undersigned understands that he may lose his entire
investment in the Company.
The undersigned further acknowledges and represents to the Company that he
is able to bear the economic risk of losing his entire investment. The
undersigned further acknowledges and warrants that his overall commitment to
investments which are not readily marketable is not disproportionate to his net
worth and his investment in the securities will not cause such overall
commitment to become excessive. The undersigned further represents that he has
adequate means of providing for his current needs and personal contingencies and
that he has no need for liquidity in connection with his investment in the
securities. The undersigned further acknowledges that he fully understands and
agrees that the price of the Company's securities acquired by him was
arbitrarily determined without regard to any value of the securities. The
undersigned understands, additionally, that the price of the securities bears no
relation to the value of the assets or net worth of the Company or any other
criteria of value. The undersigned is aware that no independent evaluation has
been made with respect to the value of the securities. The undersigned further
understands and agrees that shares of the common stock of the Company have been
or may in the future be issued to certain other persons for a consideration
which may be less than the price paid by him for the securities.
The undersigned further acknowledges and represents to the Company that he
is knowledgeable and experienced in venture capital investments in general and,
in particular, with respect to investments similar in nature to an investment in
the Company. The frequency of the undersigned's prior investments in stocks
(including restricted stocks), in general, and in high technology companies, in
particular, and other investments, of whatever kind, is as follows (check one in
each column):
Restricted High Technology
Stocks Stocks Companies Other
------ ------ --------- -----
Frequently X X X X
----- ----- ----- -----
Occasionally
----- ----- ----- -----
Never
----- ----- ----- -----
The undersigned further acknowledges that he is capable of evaluating the
merits and risks of the Company.
The undersigned further acknowledges that he has such knowledge and
experience in financial and business matters that he is capable of evaluating
the merits and risks of an investment in the Company; that he has been advised
<PAGE>
Pollution Research and Control Corp.
July 16, 1999
Page 5
by the Company to consult with counsel regarding this investment; and that he
has relied upon the advice of such counsel, accountants or other consultants as
he deems necessary with regard to tax aspects, risks and other considerations
involved in the investment. The undersigned's educational and occupational
background which renders him capable of evaluating the merits and risks of this
investment is as follows:
Wharton Graduate U of P - Finance and Investment Major
---------------------------------------------------------------------------
35 years as Venture Capitalist and Active Stock Trader
---------------------------------------------------------------------------
The undersigned has made, or caused to be made, such investigation of the
Company, its management and its operations as he considers necessary and
appropriate to enable him to make an informed decision regarding his investment.
Prior to making his investment, the undersigned was presented with and
acted upon the opportunity to ask questions of and receive answers from the
Company and its management relating to the Company and to obtain any additional
information necessary to verify the accuracy of the information made available
to him.
Prior to making his investment, the undersigned made arrangements to
conduct such inspection as he deems necessary of the books, records, contracts,
instruments and other data relating to the Company.
Before acquiring these securities, the undersigned was presented with and
understood the Company's business plan, including, among other things, the
nature of the Company, financial reports and management.
The undersigned agrees that, upon the delivery of certificates for his
shares, the undersigned will execute and deliver to and for the benefit of the
Company any instruments the Company may require to evidence that the purchase of
his shares is for investment purposes only.
On the date the undersigned acquired the securities, he had a net worth
(exclusive of home, furnishings and personal automobile) of:
( ) Less than $500,000
( ) $500,000 - $1,000,000
( ) $1,000,000 - $3,000,000
( ) $3,000,000 - $5,000,000
(x) More than $5,000,000
<PAGE>
Pollution Research and Control Corp.
July 16, 1999
Page 6
Liquid assets constituted the following percentage of the undersigned's net
worth, or his joint net worth with his spouse, on the date of acquisition of the
securities:
( ) Less than 1%
( ) 1%-10%
( ) 10%-20%
(x) 20%-50%
( ) More than 50%
The undersigned's approximate net taxable income (after regular deductions)
in each of the two most recent calendar years was:
( ) Less than $100,000
( ) $100,000-$200,000
( ) $200,000-$500,000
( ) $500,000-$1,000,000
(x) More than $1,000,000
The undersigned's approximate net taxable income in the current year is
expected to be:
( ) Less than $100,000
( ) $100,000-$200,000
( ) $200,000-$500,000
( ) $500,000-$1,000,000
(x) More than $1,000,000
Based upon the foregoing, the undersigned hereby acknowledges and
understands the high risk and speculative nature of the shares of common stock
of the Company which he is acquiring and the nature of the management, financial
condition and all other pertinent factors regarding the Company and this
investment. The undersigned further represents and warrants that he has fully
satisfied himself with respect to the nature of this investment. The undersigned
further warrants and represents that he has received no assurances of any kind
relative to, nor have there been any representations made by the Company or any
of its principals or affiliates regarding, any potential appreciation in value
of the securities being acquired by him. The undersigned hereby represents and
warrants that he has sufficient knowledge and experience in business and
financial matters to evaluate the merits and risks of an investment of this
type. The undersigned further represents and acknowledges that he has made other
investments in speculative businesses and is generally familiar with
"restricted" securities and he is otherwise knowledgeable with respect to the
Company and its proposed operations. Based upon the foregoing understandings,
<PAGE>
Pollution Research and Control Corp.
July 16, 1999
Page 7
the undersigned hereby reaffirms his acquisition of the securities described in
this Investment Letter and Memorandum of Subscription/Purchase Agreement.
The foregoing correctly expresses this intent, understanding and
acknowledgements of the undersigned.
/s/ Ronald E. Patterson
- -----------------------------------
Ronald E. Patterson
17 Prestile Place, Robbinsville, New Jersey 08691
- --------------------------------------------------------------------------------
Current residence address
###-##-#### (609) 259-2662
- ----------------------------------- ----------------------------------------
Social security number Current residence telephone number
Venture Capitalist Phillip Huss Phoenix Alliance
- ----------------------------------- ----------------------------------------
Current occupation and/or business Name of person connected with Pollution
position Research and Control Corp., with whom
conferred concerning this investment
(609) 259-2662 None
- ----------------------------------- ----------------------------------------
Current business telephone number Relationship, if any, with the above-
mentioned Company representative
N/A N/A
- ----------------------------------- ----------------------------------------
Current name of business with which Length of relationship, if any, with the
associated above-mentioned Company representative
<PAGE>
Pollution Research and Control Corp.
July 16, 1999
Page 8
Agreed and accepted this 16th day of July, 1999 on behalf of Pollution Research
and Control Corp.
/s/ Albert E. Gosselin, Jr.
- ---------------------------------------
Albert E. Gosselin, Jr., President, CEO
<PAGE>
NOTICE OF EXERCISE
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 face of the
attached warrant certificate unless the
warrant has been properly and lawfully
assigned.
Exhibit 4.22
INVESTMENT LETTER
AND
MEMORANDUM OF SUBSCRIPTION/PURCHASE AGREEMENT
July 16, 1999
Pollution Research and Control Corp.
506 Paula Avenue
Glendale, California 91201
Gentlemen:
In connection with the acquisition by the undersigned of 30,000 units
consisting of 30,000 shares of common stock, no par value per share (the "Common
Stock") and 20,475 common stock purchase warrants ("Warrants") exercisable at
$0.75 per share, at a combined per unit price of $1.00, of Pollution Research
and Control Corp. (the "Company"), in consideration for the sum of $30,000 in
cash, the undersigned wishes to advise you of his understanding of, agreement
with and/or representation of, the following:
These securities are not being registered under the Securities Act of 1933,
as amended (the "Act"), on the ground that this sale is exempt from registration
under ss.4(l) or ss.4(2) of the Act and the Rules and Regulations promulgated
thereunder as not involving any public offering. The Company's reliance on such
exemption is predicated in part on the representation of the undersigned that he
is acquiring such securities for investment for his own account, with no present
intention of dividing his participation with others or reselling or otherwise
distributing the same. These securities which the undersigned is acquiring are
"restricted securities" as that term is defined in Rule 144 of the General Rules
and Regulations under the Act. The undersigned acknowledges that he understands
that the securities covered hereby are unregistered and must be held
indefinitely, unless they are subsequently registered under the Act or an
exemption from such registration is available.
The undersigned agrees that any and all certificates, which may be issued
representing the securities acquired hereunder, shall contain substantially the
following legend, which the undersigned has read and understands:
The shares represented by this certificate have not been registered
under the Securities Act of 1933 (the "Act"), and are "restricted
securities" as the term is defined in Rule 144 under the Act. The
shares may not be offered for sale, sold or otherwise transferred
except pursuant to an effective registration statement under the Act,
or pursuant to an exemption from registration under the Act, the
availability of which is to be established to the satisfaction of the
Company.
<PAGE>
Pollution Research and Control Corp.
July 16, 1999
Page 2
The undersigned understands that the above legend on the certificates would
limit their value, including their value as collateral.
The undersigned further acknowledges that he understands that, if the
securities have been held for a period of at least one year and if Rule 144
adopted under the Act is applicable (there being no representation by the
Company that this Rule will be applicable), then he may make only routine sales
of the securities in limited amounts in a specified manner in accordance with
the terms and conditions of the Rule. The undersigned further acknowledges that
he understands that, if Rule 144 is applicable (no assurance of which can be
made), he may sell the securities without quantity limitation in sales not
involving a market maker or through brokerage transactions only if he has held
the securities for at least two years. In case the Rule is not applicable, any
sales made by the undersigned may be made only pursuant to other available
exemption from registration under the Act, or an effective registration
statement.
The undersigned further acknowledges that he is aware that only the Company
can file a registration statement or an offering statement pursuant to
Regulation A under the Act and that the Company has no obligation to do so,
other than via the registration rights referred to in the following paragraphs.
The undersigned also has been advised and acknowledges that he understands that,
in the event Rule 144 is not available, the circumstances under which he can
sell the securities, absent registration or compliance with Regulation A, are
extremely limited.
In the event, during the period commencing on the date hereof and expiring
three years from the date hereof (July 16, 2002), the Company shall register any
private, primary or secondary offering of any debt or equity security issued or
to be issued by it pursuant to a registration statement under the Securities Act
of 1933, as amended, pursuant to which the common stock and the securities
underlying the common stock purchase warrants can be registered, the Company
shall in each such event notify the undersigned in writing not less than thirty
(30) days prior to filing such registration statement with the Commission, and
the undersigned will have the right to register all of the aforementioned
securities therewith by notifying the Company in writing within fifteen (15)
days of receipt of the Company's notice, requesting registration of the
securities and setting forth the intended method of distribution and such other
data or information as the Company or its counsel reasonably shall require. Any
registration costs shall be borne by the Company, except for sales commissions
and related fees and/or transfer taxes incurred if the securities are
subsequently sold.
Warrants: The purchase rights evidenced by the common stock purchase
warrants may be exercised in whole or in part at any time, and from time to
time, on or after the date hereof but before July 16, 2002, by the undersigned
through the presentation and surrender of the warrant to the Company at its
<PAGE>
Pollution Research and Control Corp.
July 16, 1999
Page 3
principal office or at the office of the Company's stock transfer agent, if any,
accompanied by a duly executed Notice of Exercise, in the form attached hereto
as Exhibit A.
Adjustments: Stock Dividends, Reclassifications, Merger and Anti-Dilution
Provisions.
(a) If the Company increases or decreases the number of its issued and
outstanding shares of Common Stock, or changes in any way the rights
and privileges of such shares, by means of (i) the Common Stock, (ii)
a forward or reverse stock split or other subdivision of shares, (iii)
a consolidation or combination involving its Common Stock, or (iv) a
reclassification or recapitalization involving its Common Stock, then
the Warrant Exercise Price in effect at the time of such action and
the number of Shares shall be proportionately adjusted so that the
numbers, rights, and privileges relating to the Securities shall be
increased, decreased or changed in like manner.
(b) If at any time or from time to time the Company should issue or sell
any shares of Common Stock, including shares held in the Company's
Treasury, without consideration or for a per share consideration less
that the Warrant Exercise price of $0.75 per share, then the Warrant
Exercise price of $0.75 shall be adjusted downward accordingly to
equal the per share consideration received by the Company upon the
issuance or sale of its Common Stock.
(c) The Company will not at any time in the future conduct any equity
offering consisting of the sale or issuance of any class of common
stock or any class of stock purchase warrant at a price of $1.00 per
share or below without first providing the undersigned with first
right of refusal to participate in all or any portion of the offering.
The undersigned further acknowledges and represents to the Company that he
is purchasing the securities for his own account and not as a trustee or nominee
for any other person or persons, and that the funds or consideration invested
are his own. The undersigned further acknowledges and represents that there are
no existing legal restrictions applicable to him which would preclude his
acquisition of the securities for investment purposes, as described hereinabove.
The undersigned further represents that he has no present plans to enter into
any contract, undertaking, agreement or arrangement for resale, distribution,
subdivision or fractionalization of the securities purchased hereby.
<PAGE>
Pollution Research and Control Corp.
July 16, 1999
Page 4
The undersigned further acknowledges that he understands that an investment
in the Company is extremely speculative and subject to a high degree of risk. In
this connection, the undersigned understands that he may lose his entire
investment in the Company.
The undersigned further acknowledges and represents to the Company that he
is able to bear the economic risk of losing his entire investment. The
undersigned further acknowledges and warrants that his overall commitment to
investments which are not readily marketable is not disproportionate to his net
worth and his investment in the securities will not cause such overall
commitment to become excessive. The undersigned further represents that he has
adequate means of providing for his current needs and personal contingencies and
that he has no need for liquidity in connection with his investment in the
securities. The undersigned further acknowledges that he fully understands and
agrees that the price of the Company's securities acquired by him was
arbitrarily determined without regard to any value of the securities. The
undersigned understands, additionally, that the price of the securities bears no
relation to the value of the assets or net worth of the Company or any other
criteria of value. The undersigned is aware that no independent evaluation has
been made with respect to the value of the securities. The undersigned further
understands and agrees that shares of the common stock of the Company have been
or may in the future be issued to certain other persons for a consideration
which may be less than the price paid by him for the securities.
The undersigned further acknowledges and represents to the Company that he
is knowledgeable and experienced in venture capital investments in general and,
in particular, with respect to investments similar in nature to an investment in
the Company. The frequency of the undersigned's prior investments in stocks
(including restricted stocks), in general, and in high technology companies, in
particular, and other investments, of whatever kind, is as follows (check one in
each column):
Restricted High Technology
Stocks Stocks Companies Other
------ ------ --------- -----
Frequently x x x x
----- ----- ----- -----
Occasionally
----- ----- ----- -----
Never
----- ----- ----- -----
The undersigned further acknowledges that he is capable of evaluating the
merits and risks of the Company.
The undersigned further acknowledges that he has such knowledge and
experience in financial and business matters that he is capable of evaluating
the merits and risks of an investment in the Company; that he has been advised
by the Company to consult with counsel regarding this investment; and that he
<PAGE>
Pollution Research and Control Corp.
July 16, 1999
Page 5
has relied upon the advice of such counsel, accountants or other consultants as
he deems necessary with regard to tax aspects, risks and other considerations
involved in the investment. The undersigned's educational and occupational
background which renders him capable of evaluating the merits and risks of this
investment as follows:
University of Minnesota - Finance
---------------------------------------------------------------------------
Financial P.R. Consultant
---------------------------------------------------------------------------
---------------------------------------------------------------------------
The undersigned has made, or caused to be made, such investigation of the
Company, its management and its operations as he considers necessary and
appropriate to enable him to make an informed decision regarding his investment.
Prior to making his investment, the undersigned was presented with and
acted upon the opportunity to ask questions of and receive answers from the
Company and its management relating to the Company and to obtain any additional
information necessary to verify the accuracy of the information made available
to him.
Prior to making his investment, the undersigned made arrangements to
conduct such inspection as he deems necessary of the books, records, contracts,
instruments and other data relating to the Company.
Before acquiring these securities, the undersigned was presented with and
understood the Company's business plan, including, among other things, the
nature of the Company, financial reports and management.
The undersigned agrees that, upon the delivery of certificates for his
shares, the undersigned will execute and deliver to and for the benefit of the
Company any instruments the Company may require to evidence that the purchase of
his shares is for investment purposes only.
On the date the undersigned acquired the securities, he had a net worth
(exclusive of home, furnishings and personal automobile) of:
( ) Less than $500,000
(x) $500,000-$1,000,000
( ) $1,000,000-$3,000,000
( ) $3,000,000-$5,000,000
( ) More than $5,000,000
<PAGE>
Pollution Research and Control Corp.
July 16, 1999
Page 6
Liquid assets constituted the following percentage of the undersigned's net
worth, or his joint net worth with his spouse, on the date of acquisition of the
securities:
( ) Less than 1%
( ) 1%-10%
( ) 10%-20%
(x) 20%-50%
( ) More than 50%
The undersigned's approximate net taxable income (after regular deductions)
in each of the two most recent calendar years was:
( ) Less than $100,000
( ) $100,000-$200,000
(x) $200,000-$500,000
( ) $500,000-$1,000,000
( ) More than $1,000,000
The undersigned's approximate net taxable income in the current year is
expected to be:
( ) Less than $100,000
( ) $100,000-$200,000
( ) $200,000-$500,000
( ) $500,000-$1,000,000
(x) More than $1,000,000
Based upon the foregoing, the undersigned hereby acknowledges and
understands the high risk and speculative nature of the shares of common stock
of the Company which he is acquiring and the nature of the management, financial
condition, and all other pertinent factors regarding the Company and this
investment. The undersigned further represents and warrants that he has fully
satisfied himself with respect to the nature of this investment. The undersigned
further warrants and represents that he has received no assurances of any kind
relative to, nor have there been any representations made by the Company or any
of its principals or affiliates regarding, any potential appreciation in value
of the securities being acquired by him. The undersigned hereby represents and
warrants that he has sufficient knowledge and experience in business and
financial matters to evaluate the merits and risks of an investment of this
type. The undersigned further represents and acknowledges that he has made other
investments in speculative businesses and is generally familiar with
"restricted" securities and he is otherwise knowledgeable with respect to the
Company and its proposed operations. Based upon the foregoing understandings,
the undersigned hereby reaffirms his acquisition of the securities described in
this Investment Letter and Memorandum of Subscription/Purchase Agreement.
<PAGE>
Pollution Research and Control Corp.
July 16, 1999
Page 7
The foregoing correctly expresses this intent, understanding and
acknowledgements of the undersigned.
/s/ Philip T. Huss
- -----------------------------------
Philip T. Huss
22 Cedar Court, Durango, Colorado 81301
- --------------------------------------------------------------------------------
Current residence address
###-##-#### (970) 259-7263
- ----------------------------------- ----------------------------------------
Social security number Current residence telephone number
Financial Public Relations
- ----------------------------------- ----------------------------------------
Current occupation and/or business Name of person connected with Pollution
position Research and Control Corp., with whom
conferred concerning this investment
(970) 259-7241
- ----------------------------------- ----------------------------------------
Current business telephone number Relationship, if any, with the above-
mentioned Company representative
Phoenix Alliance, Inc.
- ----------------------------------- ----------------------------------------
Current name of business with which Length of relationship, if any, with the
associated above-mentioned Company representative
<PAGE>
Pollution Research and Control Corp.
July 16, 1999
Page 8
Agreed and accepted this 16th day of July, 1999 on behalf of Pollution Research
and Control Corp.
/s/ Albert E. Gosselin, Jr.
- ------------------------------------------
Albert E. Gosselin, Jr., President and CEO
<PAGE>
NOTICE OF EXERCISE
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 face of the
attached warrant certificate unless the
warrant has been properly and lawfully
assigned.
Exhibit 4.23
LOCK-UP AGREEMENT
THIS LOCK-UP AGREEMENT (the "Agreement") is made and entered into this 12th
day of August, 1999, by and between Pollution Research and Control Corp. (the
"Company"), a California corporation whose offices are located at 506 Paula
Avenue, Glendale, California 91201, and Mr. Albert E. Gosselin, Jr.
("Gosselin").
R E C I T A L S :
WHEREAS, Gosselin was granted the right by Fidelity Funding, Inc.
("Fidelity"), the shareholder of 100,000 shares (the "Shares") of common stock,
no par value per share (the "Common Stock"), of the Company, pursuant to that
certain Compromise, Settlement and Release Agreement entered into between the
Company and Fidelity on August 12, 1999 (the "Settlement Agreement"), to cause
the sale of the Shares, provided that the proceeds from the sale thereof shall
be applied in accordance with the terms and conditions of the Settlement
Agreement; and
WHEREAS, in order to facilitate the consummation of the transactions
contemplated by the Agreement, the parties hereto desire, notwithstanding the
provisions of paragraph 3 of the Settlement Agreement pursuant to which the
Company agreed to use its best efforts to register the Shares for sale, that the
Shares be sold by Gosselin in accordance with the volume limitations of
paragraph (e) of Rule 144 of the General Rules and Regulations under the
Securities Act of 1933, as amended (the "Act"), even if they become registered
for sale under the Act.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants, agreements, representations and warranties contained herein, Gosselin
hereby agrees not to cause the sale, assignment, transfer, conveyance or other
alienation of the Shares owned of record by Fidelity except in accordance with
the volume limitations of paragraph (e) of Rule 144 of the General Rules and
Regulations under the Act, regardless of whether the Shares become registered
for sale under the Act.
IN WITNESS WHEREOF, the Company and Gosselin have duly executed and
delivered this Agreement as of the day and year first above written.
POLLUTION RESEARCH AND CONTROL
CORP.
By: /s/ Albert E. Gosselin Jr /s/ Albert E. Gosselin, Jr.
------------------------------- ----------------------------------------
Albert E. Gosselin, Jr., Albert E. Gosselin, Jr.
President
Exhibit 4.24
COMPROMISE, SETTLEMENT AND RELEASE AGREEMENT
--------------------------------------------
This Compromise, Settlement and Release Agreement (the "Agreement") is made
and entered into by and between Fidelity Funding, Inc. ("Fidelity") and
Pollution Research and Control Corp. ("Pollution Research") and is as follows:
R E C I T A L S:
WHEREAS, on or about June 28, 1996, Fidelity agreed to provide financing to
Nutek, Inc. ("Nutek") pursuant to that certain Loan and Security Agreement
("Loan Agreement"), of even date by and between Fidelity and Nutek;
WHEREAS, Nutek's obligations under the Loan Agreement, including its
obligation to repay the advances made by Fidelity were secured by, among other
things, a General Continuing Guaranty dated June 28, 1996 (the "Guaranty")
executed by Pollution Research;
WHEREAS, Nutek defaulted under the terms of the Loan Agreement by, among
other things, (a) failing to pay when due certain payments pursuant to the terms
of the Loan Agreement; (b) failing to achieve for 1997 the net profits
requirements, such requirements established by the Loan Agreement; (c) allowing
the outstanding balance of advances to exceed the borrowing base established by
the Loan Agreement; and (d) suspending operations resulting in a material
adverse change, in violation of the Loan Agreement;
WHEREAS, by letter dated March 12 1998, Nutek and Pollution Research were
provided with formal notice of such defaults and of Fidelity's declaration that
all amounts due and owing by Nutek under the Loan Agreement had been declared
immediately due and payable, and in such letter Fidelity made demand for
immediate payment of all such amounts;
WHEREAS, by letter dated March 25, 1998, Fidelity, by and through its
counsel, once again advised Nutek of acceleration of its obligations under the
Loan Agreement and once again made demand upon Nutek, and by copy of such letter
demand upon Pollution Research, for payment of amounts then due and owing;
WHEREAS, on April 1, 1998, Nutek filed a bankruptcy case in the United
States Bankruptcy Court for the Northern District of Florida, Pensacola
Division;
WHEREAS, as a result of certain alleged defaults under the Guaranty a
lawsuit was filed on or about April 7, 1998, as amended on or about May 8, 1998,
in the 44th District Court, Dallas County, Texas (the "State Court"), styled
Fidelity Funding, Inc. v. Pollution Research and Control Corporation; No.
98-02820-B (the "Lawsuit"), wherein Fidelity is Plaintiff and Pollution Research
is Defendant;
-1-
<PAGE>
WHEREAS, Fidelity has asserted that pursuant to the Guaranty, Pollution
Research is obligated to pay all sums due and owing under the Loan Agreement,
together with attorneys' fees;
WHEREAS, on or about June 22, 1998, a Default Judgment was entered in favor
of Fidelity in the amount of $766,708.77, together with attorneys' fees in the
amount of $10,322.50, prejudgment interest after June 9, 1998, at a per diem
rate of $326.42, and costs and post-judgment interest at the rate of fifteen
percent per annum;
WHEREAS, on or about July 21, 1998, Pollution Research removed the Lawsuit
to the United States District Court for the Northern District of Texas and filed
Defendant's Motion to (1) Dismiss and/or Quash Service of Process Pursuant to
Fed. R. Civ. P. 12(b)(2)(4)(5) and (II) Set Aside Default Judgment Pursuant to
Fed. R. Civ. P. 55(c) and 60(b);
WHEREAS, on or about August 10, 1998, Fidelity filed Plaintiff's Motion for
Remand;
WHEREAS, on or about January 7, 1999, the Lawsuit was remanded to the State
Court for further proceedings;
WHEREAS, on or about January 11, 1999, Pollution Research filed Defendant's
Motion to Quash Service,
and, Subject Thereto, to Set Aside Default Judgment and for New Trial;
WHEREAS, Defendant's Motion to Quash Service, and, Subject Thereto, to Set
Aside Default Judgment and for New Trial was denied by operation of law;
WHEREAS, on or about March 8, 1999, Pollution Research filed Defendant's
Second Motion to Quash Service, and, Subject Thereto, to Set Aside Default
Judgment and for New Trial;
WHEREAS, the State Court took Defendant's Second Motion to Quash Service,
and, Subject Thereto, to Set Aside Default Judgment and for New Trial under
advisement;
WHEREAS, on or about March 9, 1999, Pollution Research filed its Notice of
Appeal seeking review of the Default Judgment;
WHEREAS, the parties to the Lawsuit, acting through their duly authorized
agents, desire and have agreed to fully and finally compromise and settle all
claims and all disputes between them, including all claim asserted in the
Lawsuit which could have been asserted in the Lawsuit;
NOW, THEREFORE, for and in consideration of the mutual promises and
undertakings herein contained, and such good and other valuable consideration,
the receipt and sufficiency of which is hereby acknowledged and confessed by
each of the parties hereto, the parties hereto agree as follows:
-2-
<PAGE>
1. Contemporaneously with the execution of this Agreement, Pollution
Research shall pay to Fidelity the sum of Nine Thousand Dollars
($9,000.00) (the "Initial Payment").
2. In addition to the Initial Payment, on or before February 1, 2000,
Pollution Research shall pay to Fidelity the aggregate of the sum of
Four Hundred Fifty Thousand Dollars ($450,000.00) (the "Settlement
Payment"). The unpaid portion of the Settlement Payment shall bear
interest at the rate of twelve percent (12%) per annum. All accrued
but unpaid interest shall be payable monthly on the first (1st) day of
each month next following the expiration of one (1) full month after
the date of the execution of this Agreement. In addition to the
Settlement Payment, as an additional consideration to Fidelity,
Pollution Research shall issue to Fidelity a warrant for twenty
thousand (20,000) shares of common stock of Pollution Research (the
"Warrants"), exercisable for three (3) years at the price of
seventy-five cents ($0.75) per share, contemporaneously with the
execution and delivery of this Agreement. Any amount realized or
received by Fidelity as a result of any exercise of the Warrants shall
not apply toward Pollution Research's payment of the Settlement
Payment, but shall be in addition to such payment.
3. In order to induce Fidelity to enter into this Agreement, Pollution
Research shall use its best efforts to register for sale one hundred
thousand (100,000) shares of common stock of Pollution Research (the
"Settlement Consideration Shares"), the Settlement Consideration
Shares to be (a) issued in the name of Fidelity, (b) endorsed by
Fidelity and (c) placed in escrow with a brokerage designated by
Pollution Research, in accordance with the Escrow Agreement attached
hereto as Exhibit A and incorporated herein by reference for all
purposes. Pollution Research shall have the right under such escrow to
cause such Settlement Consideration Shares to be sold provided,
however, that proceeds from such sale shall be applied to Pollution
Research's obligation to pay the Settlement Payment as set forth in
paragraph (2) above. Such proceeds shall be applied first to any
accrued but unpaid interest, and thereafter to the Settlement Payment.
Upon the full and timely payment to Fidelity of the Settlement
Payment, and any accrued but unpaid interest thereon, Fidelity shall
have no further rights in the Settlement Consideration Shares or the
proceeds of sale thereof. In the event that the proceeds of the sale
of such Settlement Consideration Shares exceed the amount of the
Settlement Payment and any accrued but unpaid interest thereon, after
payment to Fidelity of the Settlement Payment and any accrued but
unpaid interest, any excess shall be paid to Pollution Research.
-3-
<PAGE>
4. Pollution Research agrees to dismiss the pending appeal from the
Default Judgment within three (3) days of the date of execution of
this Agreement. The parties agree that the dismissal order shall
provide that all costs incurred in the appeal shall be taxed against
Pollution Research. Pollution Research hereby acknowledges that the
Default Judgment is a valid and binding judgment and hereby agrees not
to initiate any action to set aside the Default Judgment, provided,
however, that in the event Fidelity take steps to enforce the Default
Judgment, in accordance with the terms of this Agreement, nothing
contained herein shall preclude Pollution Research from claiming
credit for consideration paid pursuant to this Agreement, or otherwise
challenging the amount then outstanding on said Judgment.
5. The parties hereto agree that as of the date of this Agreement, the
outstanding balance of the Default Judgment is $468,000.00. Fidelity
agrees to take no steps to execute upon the Default Judgment entered
by the Court unless and until Pollution Research defaults under this
Agreement by failing to timely pay any amount due or otherwise. In the
event that Pollution Research timely performs its obligations under
this Agreement, Fidelity shall execute a Release of the Default
Judgment. In the event that Pollution Research fails to pay any
payments when due, fails to deliver the Warrants or otherwise defaults
under this Agreement, Fidelity shall immediately be entitled to
enforce the Default Judgment, provided, however, that all
consideration received pursuant to this Agreement shall be applied to
the Default Judgment.
6. Subject to the terms and provisions of this Agreement, Fidelity hereby
releases, remises and forever discharges Pollution Research, its
shareholders, representatives, officers, directors, employees,
attorneys, agents, subsidiaries, servants and successors-in-interest,
hereinafter referred to as the "Pollution Research Released Parties"
from any and all rights, claims, demands, actions, causes of action,
judgments, whether known or unknown, suspected or unsuspected, which
Fidelity has, may have, or may claim to have against Pollution
Research and the Pollution Research Released Parties, and, without
limiting the generality of the foregoing release, specifically
releases, remises and forever discharges the Pollution Research
Released Parties from all claims or allegations asserted or which
-4-
<PAGE>
could have been asserted by Fidelity or on its behalf in the Lawsuit,
arising from or relating to execution of and performance under the
Guaranty; provided, however, that Fidelity does not hereby waive,
relinquish or release any of its rights, or any of the obligations of
Pollution Research arising out of this Agreement. Provided, however,
that Fidelity does not hereby waive, relinquish or release any of its
rights, including the right to enforce the Default Judgment upon any
event of default by Pollution Research under this Agreement, or any of
the obligations of Pollution Research, arising out of this Agreement.
7. Subject to the terms and provisions of this Agreement, Pollution
Research hereby releases, remises and forever discharges Fidelity, its
shareholders, representatives, officers, directors, employees,
attorneys, agents, subsidiaries, servants and successors-in-interest,
hereinafter referred to as the "Fidelity Released Parties," from any
and all rights, claims, demands, actions, causes of actions,
judgments, whether known or unknown, suspected or unsuspected, which
Pollution Research has, may have or may claim to have against Fidelity
and the Fidelity Released Parties and, without limiting the generality
of the foregoing release, specifically releases, remises and forever
discharges Fidelity and the Fidelity Released Parties from all claims
or allegations asserted or which could have been asserted by Pollution
Research or on its behalf in the Lawsuit, arising from or relating to
execution of the Guaranty or performance thereunder; provided,
however, that Pollution Research does not hereby waive, relinquish or
release any of its rights, or any of the obligations of Fidelity or
the Fidelity Released Parties, arising out of this Agreement.
7. The parties hereby agree that except as set forth herein this
Agreement does not constitute an admission of liability; does not
constitute any factual or legal precedent or finding whatsoever; and
may not be used as evidence in any subsequent proceeding of any kind,
except in an action alleging breach of this Agreement or to enforce
the Default Judgment.
8. The parties further agree and acknowledge that the terms of this
Agreement are contractual, and not merely a recital. Further, except
as otherwise provided in the releases contained herein, this Agreement
shall be binding upon, and inure to the benefit of, each party and
their heirs, successors, subsidiaries, partners, assigns, agents,
servants, employees and attorneys.
9. The parties hereto warrant that they own all claims asserted or
assertable in the Lawsuit, and that they have not assigned any part of
such claims to any person, business or entity.
-5-
<PAGE>
10. This Agreement shall be governed by and construed in accordance with
the laws of the State of Texas.
11. This Agreement, in conjunction with the exhibits attached hereto,
contains the full and complete agreements of the parties hereto, and
all prior negotiations and agreements pertaining to the subject matter
hereof were merged into this Agreement. Each party hereto expressly
disclaims reliance upon any facts, promises, undertakings or
representations made by any other party, or agents or attorneys, prior
to the execution of this Agreement.
12. All parties to this Agreement have had the benefit of counsel of their
choice and have been afforded an opportunity to review this Agreement
with their chosen counsel.
13. This Agreement is one which cannot be modified, irrespective of what
might take place or occur, unless each of the parties hereto expressly
agrees to such modification in writing.
14. This Agreement shall be in full force and effect as of the date
executed by all parties.
15. To the extent necessary, the parties hereby acknowledge that the terms
of this Agreement have been presented to and approved by the parties'
respective board of directors.
16. Notwithstanding the foregoing, each of the parties hereto represents
and warrants that the person executing this Agreement is duly
authorized to enter into and execute this Agreement for and on behalf
of the party each person purports to represent.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the date set forth in the acknowledgements below:
[SIGNATURES TO FOLLOW ON SEPARATE PAGES]
-6-
<PAGE>
POLLUTION RESEARCH AND CONTROL CORP.
By: /s/ Albert E. Gosselin, Jr.
------------------------------------
Name: Albert E. Gosselin
Title: President
STATE OF CALIFORNIA )
)
COUNTY OF LOS ANGELES )
BEFORE ME, the undersigned authority, on this day personally appeared
ALBERT E. GOSSELIN, President of Pollution Research and Control Corp., a
California corporation, known to me to be the person whose name is subscribed to
the foregoing instrument, and acknowledged to me that he executed the same for
the purposes and consideration therein expressed, on behalf of said corporation.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this 12th day of August, 1999.
/s/ Marcia Smith
----------------------------------------
/s/ Marcia Smith
Notary Public in and for the
State of California
MARCIA SMITH
----------------------------------------
Printed name of Notary
My commission expires:
Feb 21, 2003
----------------------------------------
[SEAL]
-7-
<PAGE>
FIDELITY FUNDING, INC.
By: /s/ Edward Henkel
------------------------------------
Name: Edward Henkel
----------------------------------
Title: Agent for Fidelity Funding, Inc.
STATE OF TEXAS )
)
COUNTY OF DALLAS )
BEFORE ME, the undersigned authority, on this day personally appeared
Edward Henkel , Sr. Vice President of Fidelity Funding, Inc., a Agent for
Fidelity Funding, Inc. , known to me to be the person whose name is subscribed
to the foregoing instrument, and acknowledged to me that he executed the same
for the purposes and consideration therein expressed, on behalf of said
corporation .
GIVEN UNDER MY HAND AND SEAL OF OFFICE this 19th day of August, 1999.
/S/ Mary A. Sterner
----------------------------------------
Notary Public in and for the
[SEAL] State of Texas
Mary A. Sterner
----------------------------------------
Printed Name of Notary
My commission expires:
July 30, 2001
----------------------------------------
-8-
Exhibit 4.25
ESCROW AGREEMENT
----------------
THIS ESCROW AGREEMENT (the "Agreement") is made and entered into this 12th
day of August, 1999, by and among POLLUTION RESEARCH AND CONTROL CORP., a
California corporation (the "Company"), 506 Paula Avenue, Glendale, California
91201, FIDELITY FUNDING, INC., a Texas corporation ("Fidelity"), 8333 Douglas
Avenue, Suite 530, Dallas, Texas 75225, and AMERICAN ESCROW COMPANY, a Texas
corporation, as escrow agent (the "Escrow Agent").
WHEREAS, the Company and Fidelity have entered into that certain
Compromise, Settlement and Release Agreement (the "Settlement Agreement") of
even date herewith, a copy of which is attached hereto and incorporated herein
by this reference, which provides, among other things, for the Company to issue
100,000 shares of common stock of the Company, no par value per share, to
Fidelity; which shares are referred to hereinafter and in the Settlement
Agreement as the "Settlement Consideration Shares"; and
WHEREAS, Paragraph 2 of the Settlement Agreement further provides for the
Settlement Consideration Shares to be sold; provided, however, that proceeds
from such sale shall be applied to the Company's obligation to pay to Fidelity
the aggregate sum of Four Hundred Fifty Thousand Dollars ($450,000.00), which
sum is referred to hereinafter and in the Settlement Agreement as the
"Settlement Payment", together with any accrued but unpaid interest thereon; and
WHEREAS, the parties desire to enter into this Agreement pursuant to which
the Settlement Consideration Shares shall be delivered in escrow and released
only in accordance with instructions received from the Company to a licensed
broker-dealer for purposes of the sale thereof (including short sale, on margin
or otherwise) in the over-the-counter stock market or to a purchaser, assignee,
transferee or pledgee thereof in a purchaser transaction in consideration for
cash, as provided in Section 4.2.B. below, within the time period set forth
herein and, otherwise, the Settlement Consideration Shares are to be returned to
the Company.
NOW, THEREFORE, in consideration of the foregoing and the mutual promises
and covenants contained herein, IT IS HEREBY AGREED as follows:
ARTICLE I
APPOINTMENT AND AGREEMENT OF ESCROW AGENT
-----------------------------------------
American Escrow Company is hereby appointed as, and hereby agrees to
perform the duties of, the Escrow Agent in accordance with the terms and
conditions of this Agreement. This Agreement shall be administered, and the
certificates representing the Settlement Consideration Shares shall be held, by
the Escrow Agent at its office located at 300 Crescent Court, Suite 100, Dallas,
Texas 75201.
<PAGE>
ARTICLE II
DEPOSIT OF SETTLEMENT CONSIDERATION SHARES
------------------------------------------
Fidelity hereby delivers to the Escrow Agent, and the Escrow Agent
hereby acknowledges receipt of, ten (10) original stock certificates in the name
of Fidelity, each evidencing 10,000 shares of common stock, no par value per
share, of the Company, duly executed, endorsed and/or authenticated for
transfer, to be held in escrow by the Escrow Agent pursuant to the terms and
conditions of this Agreement and the Settlement Agreement.
ARTICLE III
NATURE OF ESCROW ACCOUNT
------------------------
During the Escrow Period (as hereinafter defined), none of the Settlement
Consideration Shares shall become the property of the Company, Fidelity or any
other person, or be subject to the debts of the Company, Fidelity or any other
person, and except as expressly provided herein with respect to disbursement and
delivery of the Settlement Consideration Shares by the Escrow Agent, pursuant to
one or more written instructions provided herein, Escrow Agent shall make or
permit no disbursement from the Escrow Account. Neither Fidelity nor the Company
(nor Escrow Agent) shall have any voting or investment rights with respect to
the Settlement Consideration Shares during the Escrow Period.
ARTICLE IV
TERM OF ESCROW PERIOD; DISBURSEMENT OF SETTLEMENT
CONSIDERATION SHARES AND/OR PAYMENT
OF CASH FROM PRIVATE DISPOSITION
--------------------------------
4.1 Termination Date. The Escrow Period shall begin on the date of the
deposit of the Settlement Consideration Shares with the Escrow Agent and shall
terminate on the first to occur on the following dates:
A. The one hundred eightieth (180th) day following the date of
this Agreement or February 1, 2000, whichever comes first. The
termination date in the preceding sentence may be extended upon mutual
agreement of Fidelity and the Company, with a copy of such notice of
extension provided to the Escrow Agent.
B. The date on which the Escrow Agent receives written
instructions from the Company directing the disbursement and delivery
of the last of the Settlement Consideration Shares held by Escrow Agent
to a licensed broker-dealer for purposes of the sale thereof (including
short sale, on margin or otherwise) in the over-the-counter stock
market or to a purchaser, assignee, transferee or pledgee thereof in a
private transaction in consideration for cash.
-2-
<PAGE>
4.2 Disbursement and Delivery of Settlement Consideration Shares.
-------------------------------------------------------------
A. In the event that the Escrow Period terminates pursuant to Section
4.1.A. hereinabove, the Escrow Agent, as promptly as possible, but in no event
later than thirty (30) days after such termination, shall disburse and deliver
the remaining Settlement Consideration Shares and any proceeds from the sale of
a portion of the Settlement Consideration Shares to Fidelity.
B. In the event that the Escrow Period terminates pursuant to Section
4.1.B. hereinabove, the Escrow Agent as promptly as possible, but in no event
later than thirty (30) days after such termination, shall disburse and deliver
the last of the Settlement Consideration Shares in accordance with the final
written instructions received from the Company, which shall specify the name and
address of the person to be the recipient of the Settlement Consideration
Shares. If said instructions are to disburse and deliver the Settlement
Consideration Shares to a broker-dealer, and in that event, the Company agrees
that the proceeds of the sale thereof in the event the over-the-counter stock
market shall be paid to Fidelity, and Fidelity agrees to pay the amount of sale
proceeds in excess of the Settlement Consideration Payment to the Company. If
said instructions are to disburse and deliver the last of the Settlement
Consideration Shares to a purchaser, assignee, transferee or pledgee thereof in
a private transaction in consideration for cash, then, and in that event, the
Escrow Agent shall pay the amount of cash received in consideration for said
sale, assignment, transfer or pledge (together with any proceeds from prior
disbursements, if any), as promptly as possible, but in no event later than
thirty (30) days thereafter, as follows:
(i) In the event that the amount of cash received is less than
or equal to the Settlement Consideration Payment, then, and in that
event, the Escrow Agent shall pay said cash sum to Fidelity.
(ii) In the event that the amount of cash received is in
excess of the Settlement Consideration Payment, then, and in that
event, the Escrow Agent shall pay said cash sum in the amount of the
Settlement Consideration Payment to Fidelity and the amount of cash in
excess thereof to the Company.
The parties contemplate that the Company may deliver written instructions
to disburse a portion of the Settlement Consideration Shares on more than one
(1) occasion during the Escrow Period. If the written instructions to disburse a
portion of the Settlement Consideration Shares will not result in the
disbursement of all of the remaining Settlement Consideration Shares, then all
proceeds from such disbursement shall be held by Escrow Agent until the
termination of the Escrow Period. Escrow Agent shall deposit any such cash
proceeds in an interest-bearing account, but Escrow Agent shall have no
investment liability for any level of return on such proceeds whatsoever or for
failure of the institution maintaining such account.
-3-
<PAGE>
At such time as the Escrow Agent shall have made the disbursement and/or
payment(s) provided for in the above paragraphs 4.2.B.(i) and (ii), the Escrow
Agent shall be completely discharged and released of any and all further
liabilities and responsibilities hereunder. The Escrow Agent shall be required
to make disbursement and delivery of the Settlement Consideration Shares only to
the person(s) named in the written instructions to be furnished by the Company
pursuant to Section 4.2.B. hereinabove at the address given in such written
instructions. With regard to any Settlement Consideration Shares or funds which
the Escrow Agent cannot, for any reason, disburse or pay, the Escrow Agent
shall, at its option and sole discretion, deposit said Settlement Consideration
Shares or funds with the Clerk of the District Court, Dallas County, State of
Texas and interplead the parties hereto. Upon so filing its complaint in
interpleader or upon making disbursement and/or payment(s) under this Article
IV, the Escrow Agent shall be completely discharged and released from all
further liability under the terms hereof. If the Escrow Agent elects to file a
complaint in interpleader, the parties hereto, for themselves and their
successors and assigns, do hereby summit themselves to the jurisdiction of said
Court and do hereby appoint the Clerk of said Court as their agent for service
of all process in connection with the proceeding described in this paragraph.
ARTICLE V
LIABILITY: REMEDIES AND EXCULPATION OF ESCROW AGENT
---------------------------------------------------
5.1 Liability.
----------
A. The Escrow Agent, in its actions pursuant to this Agreement, shall be
fully protected in every reasonable exercise of its discretion and shall have no
obligations hereunder to the Company or Fidelity, except as expressly set forth
herein. Fidelity and/or the Company, as the case may be, shall provide to the
Escrow Agent all information necessary to facilitate the administration of this
Agreement, and the Escrow Agent shall not incur any liability for any claims,
damages, losses, costs or expenses, except for willful misconduct or gross
negligence, and it shall, accordingly, not incur any such liability with respect
to (i) any action taken or omitted in good faith upon advice of its counsel
given with respect any questions relating to the duties and responsibilities of
the Escrow Agent under this Agreement, or (ii) any action taken or omitted in
reliance upon any instrument, including the written advises provided for herein,
not only as to its due execution and the validity and effectiveness of its
provisions, but also as to the truth and accuracy of any information contained
herein, which the Escrow Agent shall in good faith believe to be genuine, to
have been signed or presented by a proper person or persons and to conform with
the provisions of this Agreement. The Escrow Agent shall not be responsible for
fees in conjunction with the issuance or transfer of the Settlement
Consideration Shares.
B. The Escrow Agent is hereby expressly authorized and directed to
disregard any and all notices or warnings given by either of the other parties
hereto, other than those notices and warnings specifically called for in this
Agreement or the Settlement Agreement, or by any other person, excepting only
orders or process of court, and is hereby expressly authorized to comply with
and obey any and all orders, judgments or decrees of any court, and in case the
Escrow Agent obeys or complies with any such order, judgment or decree of any
court, it shall not be liable to either of the other parties hereto or to any
other person, firm or corporation by reason of such compliance, notwithstanding
that any such order, judgment or decree may be subsequently reversed, modified,
annulled, set aside or vacated or found to have been entered without
jurisdiction.
-4-
<PAGE>
5.2 Remedies.
---------
A. If the Escrow Agent is unable to disburse the Settlement Consideration
Shares in accordance with the provisions of Section 4.2.B. hereinabove or pay
the cash in accordance with the provisions of Section 4.2.B.(i) or (ii)
hereinabove for any reason, the Escrow Agent shall, at its election and sole
discretion, deposit the Settlement Consideration Shares or funds with the Clerk
of the District Court, County of Dallas, State of Texas, and interplead the
parties hereto. Upon so depositing said Settlement Consideration Shares or funds
and filing its complaint in interpleader under this Section 5.2, the Escrow
Agent shall be completely discharged and released from all further liability
under the terms hereof. If the Escrow Agent elects to invoke this Section 5.2,
the parties hereto, for themselves and their successors and assigns, do hereby
submit themselves to the jurisdiction of said Court and do hereby appoint the
Clerk of said Court as their agent for service of all process in connection with
the proceeding described in this paragraph.
B. If at any time a dispute shall exist as to the duties of the Escrow
Agent or the terms hereof or if the Escrow Agent fails to receive the
instructions from the Company required in Article IV within fifteen days after
the termination of the Escrow Period under Section 4.1, the Escrow Agent may, in
its sole discretion, deposit said Settlement Consideration Shares with the Clerk
of the District Court, County of Dallas, State of Texas, and may interplead the
parties hereto. The parties hereto, for themselves and their successors and
assigns, do hereby submit themselves to the jurisdiction, of said Court and do
hereby appoint the Clerk of said Court as their agent for service of all process
in connection with the proceeding described in this paragraph.
5.3 Exculpation of Escrow Agent.
----------------------------
A. Escrow Agent is not a party to, or bound by any instrument, agreement or
document which may be deposited under, evidenced by or which arises out of this
Agreement.
B. Escrow Agent acts hereunder as a depository only and is not responsible
or liable in any manner whatsoever for the sufficiency, correctness, genuineness
or validity of any instrument deposited with Escrow Agent hereunder, or with
respect to the form or execution of the same, or the identity, authority or
rights of any person executing or depositing the same.
C. Escrow Agent shall not be required to take or be bound by any notice of
any default of any person or to take any action with respect to such default
involving any expense or liability, unless notice in writing is given to an
officer of Escrow Agent of such default and unless Escrow Agent is indemnified
in a manner satisfactory to Escrow Agent against any such expense or liability.
-5-
<PAGE>
D. Escrow Agent shall be protected in acting upon any notice, request,
waiver, consent, receipt or other instrument or document believed by Escrow
Agent to be genuine and to be signed by the proper party or parties. Escrow
Agent shall not be liable for any error of judgment or for any act done or step
taken or omitted by it in good faith, or for any mistake in fact or law, or for
anything which it may do or refrain from doing in connection herewith, except
its own gross negligence or willful misconduct, and Escrow Agent shall have no
duties to any party except those parties to this Agreement.
E. Escrow Agent may consult with legal counsel in the event of any dispute
of or questions asked to the construction of this Agreement, or Escrow Agent's
duties hereunder, and Escrow Agent shall incur no liability and shall be fully
protected in acting in accordance with the opinion and instructions of such
counsel.
F. For its services hereunder, Escrow Agent shall be entitled to an initial
fee of $400.00, payable concurrently with its acceptance hereof, plus a fee of
$200.00 for every sale of a portion of the Settlement Consideration Shares after
the first such sale, and to additional compensation of $400.00 for each year
thereafter the Settlement Consideration Shares shall remain on deposit with the
Escrow Agent. All fees to Escrow Agent hereunder shall be paid by the Company.
G. In the event Escrow Agent is made a party to, or intervenes in, any
litigation pertaining to this Agreement or the subject matter hereof, including,
without limitation, an interpleader pursuant to Section 5.2 hereof, Escrow Agent
shall be reimbursed for all costs and expenses occasioned thereby, including,
without limitation, attorney's fees and costs and expenses, and the parties
hereto agree that the Settlement Consideration Shares, or the proceeds thereof,
shall be utilized to satisfy any such costs or expenses.
ARTICLE VI
[Intentionally left blank]
ARTICLE VII
MISCELLANEOUS PROVISIONS
------------------------
7.1 Parties in Interest. This Agreement shall be binding upon and insure to
the benefit of the parties hereto, and the successors and assigns of each of
them, but shall not confer, expressly or by implication, any rights or remedies
upon any other party.
7.2 Governing Law. This Agreement is made and shall be governed in all
respects, including validity, interpretation and effect, by the laws of the
State of California.
7.3 Notices. All notices, requests or demands and other communications
hereunder shall be deemed given sufficiently if in writing and sent by
registered or certified mail, return receipt requested and postage prepaid, or
sent telex, telegram or cable to:
-6-
<PAGE>
A. If to the Company, to: Pollution Research and Control Corp.
506 Paula Avenue
Glendale, California 91201
Attention: Albert E. Gosselin, Jr.
With a copy to: Dana M. Campbell, Esq.
Owens, Clary & Aiken, L.L.P.
1717 Main Street, Suite 2400
Dallas, Texas 75201
B. If to Fidelity, to: Fidelity Funding, Inc.
8333 Douglas Avenue, Suite 530
Dallas, Texas 75251
Attention: Ed Henkel
With a copy to: Brian Morris, Esq.
Winstead, Sechrest & Minick, P.C.
5400 Renaissance Tower
1201 Elm Street
Dallas, Texas 75270
C. If to the Escrow Agent, to: American Escrow Company
300 Crescent Court, Suite 100
Dallas, Texas 75201
Attention: William Kramer, Esq.
Any party hereto may change its address by written notice to the other
party given in accordance with this Section 7.3.
7.4 Entire Agreement. This Agreement contains the entire agreement between
and among the parties and supersedes all prior agreements, understandings and
writings between and among the parties with respect to the subject matter
hereof. Each party hereto acknowledges that no representations, inducements,
promises or agreements, verbal or otherwise, have been made by any party, or
anyone acting with authority on behalf of any party, which are not embodied
herein, and that no other agreement, statement or promise may be relied upon or
shall be valid or binding. Neither this Agreement nor any term hereof may be
changed, waived, discharged or terminated verbally. This Agreement may be
amended or any term hereof my be changed, waived, discharged or terminated by an
agreement in writing signed by each of the parties hereto.
7.5 Captions and Headings. The article and section headings throughout this
Agreement are for convenience and reference only, and shall in no way be deemed
to define, limit or add to the meaning of any provision of this Agreement.
-7-
<PAGE>
7.6 Attorneys' Fees. In the event of any litigation between or among
the parties hereto, the non-prevailing party(s) shall pay the reasonable
expenses, including the attorneys' fees, of the prevailing party(s) in
connection therewith.
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement on the day and year first above written.
COMPANY:
POLLUTION RESEARCH AND CONTROL
CORP.
By: /s/ Albert E. Gosselin, Jr.
------------------------------------
Albert E. Gosselin, Jr., President
FIDELITY:
FIDELITY FUNDING, INC.
By: /s/ Edward Henkel
------------------------------------
(Authorized Officer)
ESCROW AGENT:
AMERICAN ESCROW COMPANY
By: /s/ William S. Kramer
------------------------------------
Chairman (Authorized Officer)
-8-
Exhibit 4.26
DEBENTURE
NEITHER THIS DEBENTURE NOR THE COMMON STOCK ISSUABLE UPON CONVERSION OF THIS
DEBENTURE (COLLECTIVELY, THE "SECURITIES") HAS BEEN REGISTERED WITH THE UNITED
STATES SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE ACT) OR THE SECURITIES COMMISSION OF ANY STATE UNDER ANY STATE
SECURITIES LAW. THE SECURITIES ARE RESTRICTED AND MAY NOT BE OFFERED, RESOLD,
PLEDGED OR TRANSFERRED UNLESS THE SECURITIES ARE REGISTERED UNDER THE ACT AND
APPLICABLE STATE SECURITIES LAWS OR ARE PERMITTED UNDER THE ACT PURSUANT TO AN
AVAILABLE EXEMPTION FROM THE REGISTRATION REQU1REMENTS OF THOSE LAWS.
$150,000
POLLUTION RESEARCH AND CONTROL CORP.
12% SUBORDINATED CONVERTIBLE DEBENTURE
DUE JUNE 1, 2000
THIS DEBENTURE is the only one of a duly authorized issue of $150,000 in
Debentures of Pollution Research and Control Corp., a corporation duly organized
and existing under the laws of California (the "Company"), designated as its 12%
Subordinated Convertible Debenture Due June 1, 2000 (the "Debenture").
FOR VALUE RECEIVED, the Company promises to pay to Spiga Limited, the
registered holder hereof (the "Holder"), the principal sum of One Hundred Fifty
Thousand Dollars (US$150,000) Dollars on June 1, 2000 (the "Maturity Date") and
to pay interest on a monthly basis on the principal sum outstanding, at the rate
of 12% per annum commencing October 1, 1999. Subject to the provisions of
Section 4 below, the principal of, and interest on, this Debenture are payable
at the option of the Holder, in shares of Common Stock $.01 par value per share
of the Company ("Common Stock"), or in such coin or currency of the United
States of America as at the time of payment is legal tender for payment of
public and private debts, at the address last appearing on the Debenture
Register of the Company as designated in writing by the Holder from time to
time. The Company will pay the outstanding principal due upon this Debenture
before or on the Maturity Date, less any amounts required by law to be deducted
or withheld, to the Holder of this Debenture by check if paid more than ten days
prior to the Maturity Date or by wire transfer and addressed to such Holder at
the last address appearing on the Debenture Register. The forwarding of such
check or wire transfer shall constitute a payment of outstanding principal
hereunder and shall satisfy any discharge the liability for principal on this
Debenture to the extent of the sum represented by such check or wire transfer.
453480-2 8/24/99
<PAGE>
This Debenture is subject to the following additional provisions:
1. The Debenture is issuable in denominations of Fifty Thousand Dollars
(US$50,000) and integral multiples thereof. The Debenture is exchangeable for an
equal aggregate principal amount of debentures of different authorized
denominations (the "Debentures"), as requested by the Holder(s) surrendering the
same, but not less than US$50,000. No service charge will be made for such
registration, transfer or exchange, except that the Holder shall pay any tax or
other governmental charges payable in connection therewith.
2. The Company shall be entitled to withhold from all payments of principal
of, and interest on, this Debenture any amounts required to be withheld under
the applicable provisions of the United States income tax laws or other
applicable laws at the time of such payments, and Holder shall execute and
deliver all required documentation in connection therewith.
3. This Debenture may be transferred or exchanged only in compliance with
the Securities Act of 1933, as amended (the "Act"), and applicable state
securities laws. Prior to due presentment for transfer of this Debenture, the
Company and any agent of the Company may treat the person in whose name this
Debenture is duly registered on the Company's Debenture Register as the owner
hereof for all other purposes, whether or not this Debenture be overdue, and
neither the Company nor any such agent shall be affected or bound by notice to
the contrary.
4. The Holder of this Debenture is entitled, at its option, at any time
immediately following execution of this Agreement and delivery of the Debenture,
to convert all or any amount over $50,000 of the principal face amount of this
Debenture then outstanding (provided that the principal amount is at least
US$50,000, unless if at the time of such election to convert the aggregate
principal amount of all Debentures registered to the Holder is less than
US$50,000, then the whole amount thereof) into shares of Common Stock. The
conversion price (the "Conversion Price") for each share of Common Stock shall
be equal to the lesser of (a) 80% of the Market Price of the Common Stock on the
Conversion Date; or (b) $2.25. The shares of the Company's Common Stock issued
upon conversion of this Debenture shall hereinafter be referred to as the
"Conversion Shares." If the number of resultant Conversion Shares would as a
matter of law or pursuant to regulatory authority require the Company to seek
shareholder approval of such issuance, the Company shall, as soon as
practicable, take the necessary steps to seek such approval.
For purposes of this Section 4, the Market Price of the Common Stock shall
be the closing bid price of the Common Stock on the Conversion Date as reported
by Nasdaq, or the closing bid price on the over-the-counter market on such date
or, in the event the Common Stock is listed on a stock exchange, the closing bid
price shall be the closing price on the exchange on such date as reported in the
Wall Street Journal. Conversion shall be effectuated by surrendering the
Debentures to be converted to the Company with the form of conversion notice
453480-2 -2- 8/24/99
<PAGE>
attached hereto as Exhibit A, executed by the Holder of the Debenture evidencing
such Holder's intention to convert this Debenture or a specified portion (as
above provided) hereof, and accompanied, if required by the Company, by proper
assignment hereof in blank. Interest accrued or accruing from the date of
issuance to the date of conversion shall, at the option of the Holder, be paid
in cash or Common Stock upon conversion at the Conversion Rate. No fraction of
Shares or scrip representing fractions of shares will be issued on conversion,
but the number of shares issuable shall be rounded to the nearest whole share.
The date on which notice of conversion is given (the "Conversion Date") shall be
deemed to be the date on which the Holder has delivered this Debenture, with the
conversion notice duly executed, to the Company or the date set forth in such
facsimile delivery of the notice of conversion if the Debenture is received by
the Company within two (2) business days therefrom. Facsimile delivery of the
conversion notice shall be accepted by the Company at (818-247-7614); ATTN:
Albert Gosselin). Certificates representing Common Stock upon conversion will be
delivered within three (3) business days from the date the notice of conversion
with the original Debenture is delivered to the Company.
5. No provision of the Debenture shall alter or impair the obligation of
the Company, which is direct, absolute and unconditional, to pay the principal
of, and interest on, this Debenture at the time, place, and rate, and in the
form, herein prescribed.
6. The Company hereby expressly waives demand and presentment for payment,
notice of non-payment, protest, notice of protest, notice of dishonor, notice of
acceleration or intent to accelerate, and diligence in taking any action to
collect amounts called for hereunder and shall be directly and primarily liable
for the payment of all sums owing and to be owing hereto.
7. The Company agrees to pay all costs and expenses, including reasonable
attorneys' fees, which may be incurred by the Holder in collecting any amount
due under this Debenture.
8. The following shall constitute an "Event of Default":
(a) The Company shall default in the payment of principal or interest
on this Debenture and such default shall remain unremedied for
five (5) business days after the Company has been notified of the
default in writing by a Holder; or
(b) Any of the representations or warranties made by the Company
herein, and in the Registration Rights Agreement or in any
certificate or financial or other written statements furnished by
or on behalf of the Company in connection with the execution and
delivery of this Debenture and the Registration Rights Agreement
shall be false or misleading in any material respect at the time
made; or
453480-2 -3- 8/24/99
<PAGE>
(c) The Company fails to issue shares of Common Stock to the Holder
or to cause its Transfer Agent to issue shares of Common Stock
upon exercise by the Holder of the conversion rights of the
Holder in accordance with the terms of this Debenture, fails to
transfer or to cause its Transfer Agent to transfer any
certificate for shares of Common Stock issued to the Holder upon
conversion of this Debenture and when required by this Debenture
or the Registration Rights Agreement, or fails to remove any
restrictive legend or to cause its Transfer Agent to transfer on
any certificate or any shares of Common Stock issued to the
Holder upon conversion of this Debenture as and when required by
this Debenture, the Securities Purchase Agreement or the
Registration Rights Agreement and any such failure shall continue
uncured for five (5) business days after the Company has been
notified of such failure in writing by Holder.
(d) The Company shall fail to perform or observe, in any material
respect, any other covenant, term, provision, condition,
agreement or obligation of the Company under this Debenture and
such failure shall continue uncured for a period of thirty (30)
days after notice from the Holder or such failure; or
(e) The Company shall (1) become insolvent; (2) admit in writing its
inability to pay its debts generally as they mature; (3) make an
assignment for the benefit of creditors or commence proceedings
for it dissolution; or (4) apply for or consent to the
appointment of a trustee, liquidator or receiver for its or for a
substantial part of its property or business; or
(f) A trustee, liquidator or receiver shall be appointed for the
Company or for a substantial part of its property or business
without its consent and shall not be discharged within thirty
(30) days after such appointment; or
(g) Any governmental agency or any court of competent jurisdiction at
the instance of any governmental agency shall assume custody or
control of the whole or any substantial portion of the properties
or assets of the Company and shall not be dismissed within thirty
(30) days thereafter; or
453480-2 -4- 8/24/99
<PAGE>
(h) Any money judgment, writ warrant of attachment, or similar
process, in excess of One Hundred Thousand ($100,000) Dollars in
the aggregate shall be entered or filed against the Company or
any of its properties or other assets and shall remain unpaid,
unvacated, unbonded or unstayed for a period of fifteen (15) days
or in any event later than five (5) days prior to the date of any
proposed sale thereunder; or
(i) Bankruptcy, reorganization, insolvency or liquidation proceedings
or other proceedings for relief under any bankruptcy law or any
law for the relief of debtors shall be instituted by or against
the Company and, if instituted against the Company, shall not be
dismissed within sixty (30) days after such institution or the
Company shall by any action or answer approve of, consent to, or
acquiesce in any such proceedings or admit the material
allegations of, or default in answering a petition filed in any
such proceeding; or
(j) The Company shall have its Common Stock suspended or delisted
from an exchange or over-the-counter market from trading for in
excess of five trading days.
Then, or at any time thereafter, unless cured, and in each and every such case,
unless such Event or Default shall have been waived in writing by the Holder
(which waiver shall not be deemed to be a waiver of any subsequent default) at
the option of the Holder and in the Holder's sole discretion, the Holder may
consider this Debenture immediately due and payable, without presentment,
demand, protest or (further) notice of any kind (other than notice of
acceleration), all of which are hereby expressly waived, anything herein or in
any note or other instruments contained to the contrary notwithstanding, and the
Holder may immediately, and without expiration of any period of grace, enforce
any and all of the Holder's rights and remedies provided herein and any other
rights or remedies afforded by law.
9. The Holder of the Debenture, by acceptance hereof, agrees that this
Debenture is being acquired for investment and that such Holder will not offer,
sell or otherwise dispose of this Debenture or the shares of Common Stock
issuable upon conversion thereof except under circumstances which will not
result in a violation of the Act or any applicable state Blue Sky or foreign
laws or similar laws relating to the sale of securities.
10. Nothing contained in this Debenture shall be construed as conferring
upon the Holder the right to vote or to receive dividends or to consent or
receive notice as a shareholder in respect of any meeting of shareholders or any
rights whatsoever as a shareholder of the Company, unless and to the extent
converted in accordance with the terms hereof.
453480-2 -5- 8/24/99
<PAGE>
11. This Debenture represents a prioritized obligation of the Company.
However, no recourse shall be had for the payment of the principal of, or the
interest on, this Debenture, or for any claim based hereon, or otherwise in
respect hereof, against any incorporator, shareholder, officer or director, as
such, past, present or future, of the Company or any successor corporation,
whether by virtue or any constitution, statute or rule of law, or by the
enforcement of any assessment or penalty or other wise, all such liability
being, by the acceptance hereof and as part of the consideration for the issue
hereof, expressly waived and released.
12. If the Company merges or consolidates with another corporation or sells
or transfers all or substantially all of its assets to another person and the
holders of the Common Stock are entitled to receive stock, securities or
property in respect of or in exchange for Common Stock, then as a condition of
such merger, consolidation, sale or transfer, the Company and any such
successor, purchaser or transferee agree that the Debenture may thereafter be
converted on the terms and subject to the conditions set forth above into the
kind and amount of stock, securities or property receivable upon such merger,
consolidation, sale or transfer by a holder of the number of shares of Common
Stock into which this Debenture might have been converted immediately before
such merger, consolidation, sale or transfer, subject to adjustments which shall
be as nearly equivalent as may be practicable. In the event of any proposed
merger, consolidation or sale or transfer of all or substantially all of the
assets of the Company (a "Sale"), the Holder hereof shall have the right to
convert by delivering a Notice of Conversion to the Company within fifteen (15)
days of receipt of notice of such Sale from the Company. In the event the Holder
hereof shall elect not to convert, the Company may prepay all outstanding
principal and accrued interest on this Debenture, less all amounts required by
law to be deducted, upon which tender of payment following such notice, the
right of conversion shall terminate.
13. Concurrently with the execution and delivery of this Debenture, the
parties hereto will execute and deliver a Registration Rights Agreement in which
the Company will undertake to register the Conversion Shares under the
Securities Act of 1933.
14. A. Notwithstanding any other provision hereof to the contrary, at any
time prior to the Conversion Date, the Company shall have the right to redeem
all or any portion of the then outstanding principal amount of the Debentures
then held by the Holder for an amount (the "Redemption Payment") equal to the
sum of (a) such outstanding principal of the Debentures plus all accrued but
unpaid interest thereon through the date the Redemption Amount is paid to the
Holder (the "Redemption Payment Date"), multiplied by (b) 1.25. The Company
shall give at least ten (10) business days' written notice of such redemption to
the Holder (the "Notice of Redemption").
B. Anything in the preceding provisions of this Section 14 to the
contrary notwithstanding, the Redemption Payment shall, unless otherwise agreed
to in writing by the Holder after receiving the Notice of Redemption, be paid to
the Holder at least ten (10) business days from the date of the Notice of
Redemption. Upon the Holder's receipt of the Notice of Redemption, the Holder
453480-2 -6- 8/24/99
<PAGE>
shall have the right, exercisable within ten (10) business days of the Holder's
receipt of the Notice of Redemption, to give a Notice of Conversion to the
Company for any or all of the principal amount of the Debenture covered by the
Notice of Redemption (such Notice of Conversion, a "Redemption Notice of
Conversion"). The Redemption Notice of Conversion shall take precedence over the
Notice of Redemption and such Debentures shall be converted in accordance with
the terms hereof. The Redemption Payment for any portion of the Debentures
covered by the Notice of Redemption but not by a Redemption Notice of Conversion
shall be paid no later than on the date ( the "Redemption Payment Date") which
is ten (10) business days after the date the Notice of Redemption.
15. In case any provision of this Debenture is held by a court of competent
Jurisdiction to be excessive in scope or otherwise invalid or unenforceable,
such provision shall be adjusted rather than voided, if possible, so that it is
enforceable to the maximum extent possible, and the validity and enforceability
of the remaining provisions of this Debenture will not in any way be affected or
impaired thereby.
16. This Debenture and the agreements referred to in this Debenture
constitute the full and entire understanding and agreement between the Company
and the Holder with respect to the subject hereof. Neither this Debenture nor
any term hereof may be amended, waived, discharged or terminated other than by a
written instrument signed by the Company and the Holder.
17. This Debenture shall be governed by and construed in accordance with
the laws of the State of New York. Each of the parties consents to the
jurisdiction of the federal courts whose districts encompass any part of the
City of New York or the state courts of the State of New York sitting in the
City of New York in connection with any dispute arising under this Agreement and
hereby waives, to the maximum extent permitted by law, any objection, including
any objection based on forum non coveniens, to the bringing of any such
proceeding in such jurisdictions. At Holder's election, any dispute between the
parties may be arbitrated rather than litigated in the courts, before the
arbitration board of the American Arbitrators Association in New York City and
pursuant to its rules. Upon demand made by the Holder to the Company, the
Company agrees to submit to and participate in such arbitration. This Agreement
may be executed in counterparts, and the facsimile transmission of an executed
counterpart to this Agreement shall be effective as an original.
IN WITNESS WHEREOF, the Company has caused this instrument to be executed
by an officer thereunto duly authorized.
Dated: September 1, 1999
POLLUTION RESEARCH AND CONTROL CORP.
By: /s/ Albert E. Gosselin, Jr.
------------------------------------
Albert E. Gosselin, President
453480-2 -7- 8/24/99
<PAGE>
EXHIBIT I
NOTICE OF CONVERSION
(To be Executed by the Registered Holder in order to Convert the Debenture)
The undersigned hereby irrevocably elects to convert $ _____________ of the
above Debenture No.____________ into shares of Common Stock of Pollution
Research and Control Corp. (the "Company") according to the conditions set forth
in such Debenture, as of the date written below.
If Shares are to be issued in the name of a person other than the
undersigned, the undersigned will pay all transfer and other Taxes and charges
payable with respect thereto.
Date of Conversion______________________________________________________________
Applicable Conversion Price_____________________________________________________
Signature_______________________________________________________________________
Print Name Holder and Title of Signer___________________________________________
Address_________________________________________________________________________
________________________________________________________________________________
SSN or EIN______________________________________________________________________
Shares are to be registered in the following name:
Name____________________________________________________________________________
Address_________________________________________________________________________
Tel.____________________________________________________________________________
Fax_____________________________________________________________________________
SSN or EIN______________________________________________________________________
Shares are to be sent or delivered to following account:
Account Name____________________________________________________________________
Address_________________________________________________________________________
453480-2 -8- 8/24/99
Exhibit 4.27
DEBENTURE
NEITHER THIS DEBENTURE NOR THE COMMON STOCK ISSUABLE UPON CONVERSION OF THIS
DEBENTURE (COLLECTIVELY, THE "SECURITIES") HAS BEEN REGISTERED WITH THE UNITED
STATES SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE ACT) OR THE SECURITIES COMMISSION OF ANY STATE UNDER ANY STATE
SECURITIES LAW. THE SECURITIES ARE RESTRICTED AND MAY NOT BE OFFERED, RESOLD,
PLEDGED OR TRANSFERRED UNLESS THE SECURITIES ARE REGISTERED UNDER THE ACT AND
APPLICABLE STATE SECURITIES LAWS OR ARE PERMITTED UNDER THE ACT PURSUANT TO AN
AVAILABLE EXEMPTION FROM THE REGISTRATION REQU1REMENTS OF THOSE LAWS.
$150,000
POLLUTION RESEARCH AND CONTROL CORP.
12% SUBORDINATED CONVERTIBLE DEBENTURE
DUE JUNE 1, 2000
THIS DEBENTURE is the only one of a duly authorized issue of $150,000 in
Debentures of Pollution Research and Control Corp., a corporation duly organized
and existing under the laws of California (the "Company"), designated as its 12%
Subordinated Convertible Debenture Due June 1, 2000 (the "Debenture").
FOR VALUE RECEIVED, the Company promises to pay to Spiga Limited, the
registered holder hereof (the "Holder"), the principal sum of One Hundred Fifty
Thousand Dollars (US$150,000) Dollars on June 1, 2000 (the "Maturity Date") and
to pay interest on a monthly basis on the principal sum outstanding, at the rate
of 12% per annum commencing October 1, 1999. Subject to the provisions of
Section 4 below, the principal of, and interest on, this Debenture are payable
at the option of the Holder, in shares of Common Stock $.01 par value per share
of the Company ("Common Stock"), or in such coin or currency of the United
States of America as at the time of payment is legal tender for payment of
public and private debts, at the address last appearing on the Debenture
Register of the Company as designated in writing by the Holder from time to
time. The Company will pay the outstanding principal due upon this Debenture
before or on the Maturity Date, less any amounts required by law to be deducted
or withheld, to the Holder of this Debenture by check if paid more than ten days
prior to the Maturity Date or by wire transfer and addressed to such Holder at
the last address appearing on the Debenture Register. The forwarding of such
check or wire transfer shall constitute a payment of outstanding principal
hereunder and shall satisfy any discharge the liability for principal on this
Debenture to the extent of the sum represented by such check or wire transfer.
453480-2 8/24/99
<PAGE>
This Debenture is subject to the following additional provisions:
1. The Debenture is issuable in denominations of Fifty Thousand Dollars
(US$50,000) and integral multiples thereof. The Debenture is exchangeable for an
equal aggregate principal amount of debentures of different authorized
denominations (the "Debentures"), as requested by the Holder(s) surrendering the
same, but not less than US$50,000. No service charge will be made for such
registration, transfer or exchange, except that the Holder shall pay any tax or
other governmental charges payable in connection therewith.
2. The Company shall be entitled to withhold from all payments of principal
of, and interest on, this Debenture any amounts required to be withheld under
the applicable provisions of the United States income tax laws or other
applicable laws at the time of such payments, and Holder shall execute and
deliver all required documentation in connection therewith.
3. This Debenture may be transferred or exchanged only in compliance with
the Securities Act of 1933, as amended (the "Act"), and applicable state
securities laws. Prior to due presentment for transfer of this Debenture, the
Company and any agent of the Company may treat the person in whose name this
Debenture is duly registered on the Company's Debenture Register as the owner
hereof for all other purposes, whether or not this Debenture be overdue, and
neither the Company nor any such agent shall be affected or bound by notice to
the contrary.
4. The Holder of this Debenture is entitled, at its option, at any time
immediately following execution of this Agreement and delivery of the Debenture,
to convert all or any amount over $50,000 of the principal face amount of this
Debenture then outstanding (provided that the principal amount is at least
US$50,000, unless if at the time of such election to convert the aggregate
principal amount of all Debentures registered to the Holder is less than
US$50,000, then the whole amount thereof) into shares of Common Stock. The
conversion price (the "Conversion Price") for each share of Common Stock shall
be equal to the lesser of (a) 80% of the Market Price of the Common Stock on the
Conversion Date; or (b) $2.25. The shares of the Company's Common Stock issued
upon conversion of this Debenture shall hereinafter be referred to as the
"Conversion Shares." If the number of resultant Conversion Shares would as a
matter of law or pursuant to regulatory authority require the Company to seek
shareholder approval of such issuance, the Company shall, as soon as
practicable, take the necessary steps to seek such approval.
For purposes of this Section 4, the Market Price of the Common Stock shall
be the closing bid price of the Common Stock on the Conversion Date as reported
by Nasdaq, or the closing bid price on the over-the-counter market on such date
or, in the event the Common Stock is listed on a stock exchange, the closing bid
price shall be the closing price on the exchange on such date as reported in the
Wall Street Journal. Conversion shall be effectuated by surrendering the
Debentures to be converted to the Company with the form of conversion notice
-2-
<PAGE>
attached hereto as Exhibit A, executed by the Holder of the Debenture evidencing
such Holder's intention to convert this Debenture or a specified portion (as
above provided) hereof, and accompanied, if required by the Company, by proper
assignment hereof in blank. Interest accrued or accruing from the date of
issuance to the date of conversion shall, at the option of the Holder, be paid
in cash or Common Stock upon conversion at the Conversion Rate. No fraction of
Shares or scrip representing fractions of shares will be issued on conversion,
but the number of shares issuable shall be rounded to the nearest whole share.
The date on which notice of conversion is given (the "Conversion Date") shall be
deemed to be the date on which the Holder has delivered this Debenture, with the
conversion notice duly executed, to the Company or the date set forth in such
facsimile delivery of the notice of conversion if the Debenture is received by
the Company within two (2) business days therefrom. Facsimile delivery of the
conversion notice shall be accepted by the Company at (818-247-7614); ATTN:
Albert Gosselin). Certificates representing Common Stock upon conversion will be
delivered within three (3) business days from the date the notice of conversion
with the original Debenture is delivered to the Company.
5. No provision of the Debenture shall alter or impair the obligation of
the Company, which is direct, absolute and unconditional, to pay the principal
of, and interest on, this Debenture at the time, place, and rate, and in the
form, herein prescribed.
6. The Company hereby expressly waives demand and presentment for payment,
notice of non-payment, protest, notice of protest, notice of dishonor, notice of
acceleration or intent to accelerate, and diligence in taking any action to
collect amounts called for hereunder and shall be directly and primarily liable
for the payment of all sums owing and to be owing hereto.
7. The Company agrees to pay all costs and expenses, including reasonable
attorneys' fees, which may be incurred by the Holder in collecting any amount
due under this Debenture.
8. The following shall constitute an "Event of Default":
(a) The Company shall default in the payment of principal or interest
on this Debenture and such default shall remain unremedied for
five (5) business days after the Company has been notified of the
default in writing by a Holder; or
(b) Any of the representations or warranties made by the Company
herein, and in the Registration Rights Agreement or in any
certificate or financial or other written statements furnished by
or on behalf of the Company in connection with the execution and
delivery of this Debenture and the Registration Rights Agreement
shall be false or misleading in any material respect at the time
made; or
-3-
<PAGE>
(c) The Company fails to issue shares of Common Stock to the Holder
or to cause its Transfer Agent to issue shares of Common Stock
upon exercise by the Holder of the conversion rights of the
Holder in accordance with the terms of this Debenture, fails to
transfer or to cause its Transfer Agent to transfer any
certificate for shares of Common Stock issued to the Holder upon
conversion of this Debenture and when required by this Debenture
or the Registration Rights Agreement, or fails to remove any
restrictive legend or to cause its Transfer Agent to transfer on
any certificate or any shares of Common Stock issued to the
Holder upon conversion of this Debenture as and when required by
this Debenture, the Securities Purchase Agreement or the
Registration Rights Agreement and any such failure shall continue
uncured for five (5) business days after the Company has been
notified of such failure in writing by Holder.
(d) The Company shall fail to perform or observe, in any material
respect, any other covenant, term, provision, condition,
agreement or obligation of the Company under this Debenture and
such failure shall continue uncured for a period of thirty (30)
days after notice from the Holder or such failure; or
(e) The Company shall (1) become insolvent; (2) admit in writing its
inability to pay its debts generally as they mature; (3) make an
assignment for the benefit of creditors or commence proceedings
for it dissolution; or (4) apply for or consent to the
appointment of a trustee, liquidator or receiver for its or for a
substantial part of its property or business; or
(f) A trustee, liquidator or receiver shall be appointed for the
Company or for a substantial part of its property or business
without its consent and shall not be discharged within thirty
(30) days after such appointment; or
(g) Any governmental agency or any court of competent jurisdiction at
the instance of any governmental agency shall assume custody or
control of the whole or any substantial portion of the properties
or assets of the Company and shall not be dismissed within thirty
(30) days thereafter; or
-4-
<PAGE>
(h) Any money judgment, writ warrant of attachment, or similar
process, in excess of One Hundred Thousand ($100,000) Dollars in
the aggregate shall be entered or filed against the Company or
any of its properties or other assets and shall remain unpaid,
unvacated, unbonded or unstayed for a period of fifteen (15) days
or in any event later than five (5) days prior to the date of any
proposed sale thereunder; or
(i) Bankruptcy, reorganization, insolvency or liquidation proceedings
or other proceedings for relief under any bankruptcy law or any
law for the relief of debtors shall be instituted by or against
the Company and, if instituted against the Company, shall not be
dismissed within sixty (30) days after such institution or the
Company shall by any action or answer approve of, consent to, or
acquiesce in any such proceedings or admit the material
allegations of, or default in answering a petition filed in any
such proceeding; or
(j) The Company shall have its Common Stock suspended or delisted
from an exchange or over-the-counter market from trading for in
excess of five trading days.
Then, or at any time thereafter, unless cured, and in each and every such case,
unless such Event or Default shall have been waived in writing by the Holder
(which waiver shall not be deemed to be a waiver of any subsequent default) at
the option of the Holder and in the Holder's sole discretion, the Holder may
consider this Debenture immediately due and payable, without presentment,
demand, protest or (further) notice of any kind (other than notice of
acceleration), all of which are hereby expressly waived, anything herein or in
any note or other instruments contained to the contrary notwithstanding, and the
Holder may immediately, and without expiration of any period of grace, enforce
any and all of the Holder's rights and remedies provided herein and any other
rights or remedies afforded by law.
9. The Holder of the Debenture, by acceptance hereof, agrees that this
Debenture is being acquired for investment and that such Holder will not offer,
sell or otherwise dispose of this Debenture or the shares of Common Stock
issuable upon conversion thereof except under circumstances which will not
result in a violation of the Act or any applicable state Blue Sky or foreign
laws or similar laws relating to the sale of securities.
10. Nothing contained in this Debenture shall be construed as conferring
upon the Holder the right to vote or to receive dividends or to consent or
receive notice as a shareholder in respect of any meeting of shareholders or any
rights whatsoever as a shareholder of the Company, unless and to the extent
converted in accordance with the terms hereof.
-5-
<PAGE>
11. This Debenture represents a prioritized obligation of the Company.
However, no recourse shall be had for the payment of the principal of, or the
interest on, this Debenture, or for any claim based hereon, or otherwise in
respect hereof, against any incorporator, shareholder, officer or director, as
such, past, present or future, of the Company or any successor corporation,
whether by virtue or any constitution, statute or rule of law, or by the
enforcement of any assessment or penalty or other wise, all such liability
being, by the acceptance hereof and as part of the consideration for the issue
hereof, expressly waived and released.
12. If the Company merges or consolidates with another corporation or sells
or transfers all or substantially all of its assets to another person and the
holders of the Common Stock are entitled to receive stock, securities or
property in respect of or in exchange for Common Stock, then as a condition of
such merger, consolidation, sale or transfer, the Company and any such
successor, purchaser or transferee agree that the Debenture may thereafter be
converted on the terms and subject to the conditions set forth above into the
kind and amount of stock, securities or property receivable upon such merger,
consolidation, sale or transfer by a holder of the number of shares of Common
Stock into which this Debenture might have been converted immediately before
such merger, consolidation, sale or transfer, subject to adjustments which shall
be as nearly equivalent as may be practicable. In the event of any proposed
merger, consolidation or sale or transfer of all or substantially all of the
assets of the Company (a "Sale"), the Holder hereof shall have the right to
convert by delivering a Notice of Conversion to the Company within fifteen (15)
days of receipt of notice of such Sale from the Company. In the event the Holder
hereof shall elect not to convert, the Company may prepay all outstanding
principal and accrued interest on this Debenture, less all amounts required by
law to be deducted, upon which tender of payment following such notice, the
right of conversion shall terminate.
13. Concurrently with the execution and delivery of this Debenture, the
parties hereto will execute and deliver a Registration Rights Agreement in which
the Company will undertake to register the Conversion Shares under the
Securities Act of 1933.
14. A. Notwithstanding any other provision hereof to the contrary, at any
time prior to the Conversion Date, the Company shall have the right to redeem
all or any portion of the then outstanding principal amount of the Debentures
then held by the Holder for an amount (the "Redemption Payment") equal to the
sum of (a) such outstanding principal of the Debentures plus all accrued but
unpaid interest thereon through the date the Redemption Amount is paid to the
Holder (the "Redemption Payment Date"), multiplied by (b) 1.25. The Company
shall give at least ten (10) business days' written notice of such redemption to
the Holder (the "Notice of Redemption").
B. Anything in the preceding provisions of this Section 14 to the
contrary notwithstanding, the Redemption Payment shall, unless otherwise agreed
to in writing by the Holder after receiving the Notice of Redemption, be paid to
the Holder at least ten (10) business days from the date of the Notice of
Redemption. Upon the Holder's receipt of the Notice of Redemption, the Holder
shall have the right, exercisable within ten (10) business days of the Holder's
receipt of the Notice of Redemption, to give a Notice of Conversion to the
-6-
<PAGE>
Company for any or all of the principal amount of the Debenture covered by the
Notice of Redemption (such Notice of Conversion, a "Redemption Notice of
Conversion"). The Redemption Notice of Conversion shall take precedence over the
Notice of Redemption and such Debentures shall be converted in accordance with
the terms hereof. The Redemption Payment for any portion of the Debentures
covered by the Notice of Redemption but not by a Redemption Notice of Conversion
shall be paid no later than on the date ( the "Redemption Payment Date") which
is ten (10) business days after the date the Notice of Redemption.
15. In case any provision of this Debenture is held by a court of
competent Jurisdiction to be excessive in scope or otherwise invalid or
unenforceable, such provision shall be adjusted rather than voided, if possible,
so that it is enforceable to the maximum extent possible, and the validity and
enforceability of the remaining provisions of this Debenture will not in any way
be affected or impaired thereby.
16. This Debenture and the agreements referred to in this Debenture
constitute the full and entire understanding and agreement between the Company
and the Holder with respect to the subject hereof. Neither this Debenture nor
any term hereof may be amended, waived, discharged or terminated other than by a
written instrument signed by the Company and the Holder.
17. This Debenture shall be governed by and construed in accordance
with the laws of the State of New York. Each of the parties consents to the
jurisdiction of the federal courts whose districts encompass any part of the
City of New York or the state courts of the State of New York sitting in the
City of New York in connection with any dispute arising under this Agreement and
hereby waives, to the maximum extent permitted by law, any objection, including
any objection based on forum non coveniens, to the bringing of any such
proceeding in such jurisdictions. At Holder's election, any dispute between the
parties may be arbitrated rather than litigated in the courts, before the
arbitration board of the American Arbitrators Association in New York City and
pursuant to its rules. Upon demand made by the Holder to the Company, the
Company agrees to submit to and participate in such arbitration. This Agreement
may be executed in counterparts, and the facsimile transmission of an executed
counterpart to this Agreement shall be effective as an original.
IN WITNESS WHEREOF, the Company has caused this instrument to be
executed by an officer thereunto duly authorized.
Dated: September 1, 1999
POLLUTION RESEARCH AND CONTROL CORP.
By: /s/ Albert E. Gosselin, Jr.
-------------------------------------
Albert E. Gosselin, President
-7-
<PAGE>
EXHIBIT I
NOTICE OF CONVERSION
(To be Executed by the Registered Holder in order to Convert the Debenture)
The undersigned hereby irrevocably elects to convert $ _____________ of the
above Debenture No.____________ into shares of Common Stock of Pollution
Research and Control Corp. (the "Company") according to the conditions set forth
in such Debenture, as of the date written below.
If Shares are to be issued in the name of a person other than the
undersigned, the undersigned will pay all transfer and other Taxes and charges
payable with respect thereto.
Date of Conversion______________________________________________________________
Applicable Conversion Price_____________________________________________________
Signature_______________________________________________________________________
Print Name Holder and Title of Signer___________________________________________
Address_________________________________________________________________________
________________________________________________________________________________
SSN or EIN______________________________________________________________________
Shares are to be registered in the following name:
Name____________________________________________________________________________
Address_________________________________________________________________________
Tel.____________________________________________________________________________
Fax_____________________________________________________________________________
SSN or EIN______________________________________________________________________
Shares are to be sent or delivered to following account:
Account Name____________________________________________________________________
Address_________________________________________________________________________
-8-
Exhibit 4.28
INVESTMENT LETTER
AND
MEMORANDUM OF SUBSCRIPTION/PURCHASE AGREEMENT
Pollution Research and Control Corp.
506 Paula Avenue
Glendale, California 91201
Gentlemen:
In connection with the acquisition by the undersigned, 50,000 shares
of common stock, no par value per share (the "Common Stock"), of Pollution
Research and Control Corp. (the "Company"), in consideration for the sum of
$75,000 in cash, the undersigned wishes to advise you of his understanding of,
agreement with and/or representation of, the following: + 25,000 warrants
exercisable at $2.40 for three years.
These securities are not being registered under the Securities Act of
1933, as amended (the "Act"), on the ground that this sale is exempt from
registration under ss.4(1) or ss.4(2) of the Act and the Rules and Regulations
promulgated thereunder as not involving any public offering. The Company's
reliance on such exemption is predicated in part on the representation of the
undersigned that he is acquiring such securities for investment for his own
account, with no present intention of dividing his participation with others or
reselling or otherwise distributing the same. These securities which the
undersigned is acquiring are "restricted securities" as that term is defined in
Rule 144 of the General Rules and Regulations under the Act. The undersigned
acknowledges that he understands that the securities covered hereby are
unregistered and must be held indefinitely, unless they are subsequently
registered under the Act or an exemption from such registration is available.
The undersigned agrees that any and all certificates, which may be
issued representing the securities acquired hereunder, shall contain
substantially the following legend, which the undersigned has read and
understands:
The shares represented by this certificate have not been registered
under the Securities Act of 1933 (the "Act"), and are "restricted
securities" as the term is defined in Rule 144 under the Act. The
shares may not be offered for sale, sold or otherwise transferred
except pursuant to an effective registration statement under the Act,
or pursuant to an exemption from registration under the Act, the
availability of which is to be established to the satisfaction of the
Company.
The undersigned understands that the above legend on the certificates
would limit their value, including their value as collateral.
<PAGE>
Pollution Research and Control Corp.
Page 2
The undersigned further acknowledges that he understands that, if the
securities have been held for a period of at least one year and if Rule 144
adopted under the Act is applicable (there being no representation by the
Company that this Rule will be applicable), then he may make only routine sales
of the securities in limited amounts in a specified manner in accordance with
the terms and conditions of the Rule. The undersigned further acknowledges that
he understands that, if Rule 144 is applicable (no assurance of which can be
made), he may sell the securities without quantity limitation in sales not
involving a market maker or through brokerage transactions only if he has held
the securities for at least two years. In case the Rule is not applicable, any
sales made by the undersigned may be made only pursuant to other available
exemption from registration under the Act, or an effective registration
statement.
The undersigned further acknowledges that he is aware that only the
Company can file a registration statement or an offering statement pursuant to
Regulation A under the Act and that the Company has no obligation to do so or to
take steps necessary to make Rule 144 available to him. The undersigned also has
been advised and acknowledges that he understands that, in the event Rule 144 is
not available, the circumstances under which he can sell the securities, absent
registration or compliance with Regulation A, are extremely limited.
The undersigned further acknowledges and represents to the Company
that he is purchasing the securities for his own account and not as a trustee or
nominee for any other person or persons, and that the funds or consideration
invested are his own. The undersigned further acknowledges and represents that
there are no existing legal restrictions applicable to him which would preclude
his acquisition of the securities for investment purposes, as described
hereinabove. The undersigned further represents that he has no present plans to
enter into any contract, undertaking, agreement or arrangement for resale,
distribution, subdivision or fractionalization of the securities purchased
hereby.
The undersigned further acknowledges that he understands that an
investment in the Company is extremely speculative and subject to a high degree
of risk. In this connection, the undersigned understands that he may lose his
entire investment in the Company.
The undersigned further acknowledges and represents to the Company
that he is able to bear the economic risk of losing his entire investment. The
undersigned further acknowledges and warrants that his overall commitment to
investments which are not readily marketable is not disproportionate to his net
worth and his investment in the securities will not cause such overall
commitment to become excessive. The undersigned further represents that he has
adequate means of providing for his current needs and personal contingencies and
that he has no need for liquidity in connection with his investment in the
securities.
The undersigned further acknowledges that he fully understands and
agrees that the price of the Company's securities acquired by him was
arbitrarily determined without regard to any value of the securities. The
undersigned understands, additionally, that the price of the securities bears no
relation to the value of the assets or net worth of the Company or any other
criteria of value. The undersigned is aware that no independent evaluation has
been made with respect to the value of the securities. The undersigned further
understands and agrees that shares of the common stock of the Company have been
or may in the future be issued to certain other persons for a consideration
which may be less than the price paid by him for the securities.
<PAGE>
Pollution Research and Control Corp.
Page 3
The undersigned further acknowledges and represents to the Company that he
is knowledgeable and experienced in venture capital investments in general and,
in particular, with respect to investments similar in nature to an investment in
the Company. The frequency of the undersigned's prior investments in stocks
(including restricted stocks), in general, and in high technology companies, in
particular, and other investments, of whatever kind, is as follows (check one in
each column):
Restricted High Technology
Stocks Stocks Companies Other
Frequently x x x
----- ----- ----- -----
Occasionally
----- ----- ----- -----
Never
----- ----- ----- -----
The undersigned further acknowledges that he is capable of evaluating the
merits and risks of the Company.
The undersigned further acknowledges that he has such knowledge and
experience in financial and business matters that he is capable of evaluating
the merits and risks of an investment in the Company; that he has been advised
by the Company to consult with counsel regarding this investment; and that he
has relied upon the advice of such counsel, accountants or other consultants as
he deems necessary with regard to tax aspects, risks and other considerations
involved in the investment. The undersigned's educational and occupational
background which renders him capable of evaluating the merits and risks of this
investment as follows:
The undersigned has made, or caused to be made, such investigation of the
Company, its management and its operations as he considers necessary and
appropriate to enable him to make an informed decision regarding his investment.
<PAGE>
Pollution Research and Control Corp.
Page 4
Prior to making his investment, the undersigned was presented with and
acted upon the opportunity to ask questions of and receive answers from the
Company and its management relating to the Company and to obtain any additional
information necessary to verify the accuracy of the information made available
to him.
Prior to making his investment, the undersigned made arrangements to
conduct such inspection as he deems necessary of the books, records, contracts,
instruments and other data relating to the Company.
Before acquiring these securities, the undersigned was presented with and
understood the Company's business plan, including, among other things, the
nature of the Company, financial reports and management.
The undersigned agrees that, upon the delivery of certificates for his
shares, the undersigned will execute and deliver to and for the benefit of the
Company any instruments the Company may require to evidence that the purchase of
his shares is for investment purposes only.
On the date the undersigned acquired the securities, he had a net worth
(exclusive of home, furnishings and personal automobile) of:
( ) Less than $500,000
( ) $500,000 - $1,000,000
(x) $1,000,000 - $3,000,000
( ) $3,000,000 - $5,000,000
( ) More than $5,000,000
Liquid assets constituted the following percentage of the undersigned's net
worth, or his joint net worth with his spouse, on the date of acquisition of the
securities:
( ) Less than 1%
(x) 1% - 10%
( ) 10% - 20%
( ) 20% - 50%
( ) More than 50%
The undersigned's approximate net taxable income (after regular deductions)
in each of the two most recent calendar years was:
<PAGE>
Pollution Research and Control Corp.
Page 5
( ) Less than $100,000
( ) $100,000-$200,000
(x) $200,000-$500,000
( ) $500,000-$1,000,000
( ) More than $1,000,000
The undersigned's approximate net taxable income in the current year is
expected to be:
( ) Less than $100,000
( ) $100,000-$200,000
(x) $200,000-$500,000
( ) $500,000-$1,000,000
( ) More than $1,000,000
Based upon the foregoing, the undersigned hereby acknowledges and
understands the high risk and speculative nature of the shares of common stock
of the Company which he is acquiring and the nature of the management, financial
condition, and all other pertinent factors regarding the Company and this
investment. The undersigned further represents and warrants that he has fully
satisfied himself with respect to the nature of this investment. The undersigned
further warrants and represents that he has received no assurances of any kind
relative to, nor have there been any representations made by the Company or any
of its principals or affiliates regarding, any potential appreciation in value
of the securities being acquired by him. The undersigned hereby represents and
warrants that he has sufficient knowledge and experience in business and
financial matters to evaluate the merits and risks of an investment of this
type. The undersigned further represents and acknowledges that he has made other
investments in speculative businesses and is generally familiar with
"restricted" securities and he is otherwise knowledgeable with respect to the
Company and its proposed operations. Based upon the foregoing understandings,
the undersigned hereby reaffirms his acquisition of the securities described in
this Investment Letter and Memorandum of Subscription/Purchase Agreement.
The foregoing correctly expresses this intent, understanding and
acknowledgements of the undersigned.
/s/ Maria Molinsky
----------------------------------------
Maria Molinsky
<PAGE>
Pollution Research and Control Corp.
Page 6
51 Lord's Highway East, Weston, Connecticut 06883
- --------------------------------------------------------------------------------
Current residence address
###-##-#### (203) 222-7153
- ----------------------------------- ----------------------------------------
Social security number Current residence telephone number
Investor - Housewife & mother
- -----------------------------------
Current occupation and/or business Name of person connected with Pollution
position Research and Control Corp., with whom
conferred concerning this investment
- ----------------------------------- ----------------------------------------
Current business telephone number Relationship, if any, with the above-
mentioned Company representative
- ----------------------------------- ----------------------------------------
Current name of business with which Length of relationship, if any, with the
associated above-mentioned Company representative
Agreed and accepted this 13th day of September, 1999, on behalf of Pollution
Research and Control Corporation.
/s/ Albert E. Gosselin, Jr.
- ------------------------------------------
Albert E. Gosselin, Jr., President and CEO
Exhibit 4.29
INVESTMENT LETTER
AND
MEMORANDUM OF SUBSCRIPTION/PURCHASE AGREEMENT
Pollution Research and Control Corp.
506 Paula Avenue
Glendale, California 91201
Gentlemen:
In connection with the acquisition by the undersigned of 50,000 shares of
common stock, no par value per share (the "Common Stock") and 25,000 warrants to
purchase common stock at an exercise price of $2.40 per share of Pollution
Research and Control Corp. (the "Company"), in consideration for the sum of
$75,000 in cash, the undersigned wishes to advise you of his understanding of,
agreement with and/or representation of, the following:
These securities are not being registered under the Securities Act of 1933,
as amended (the "Act"), on the ground that this sale is exempt from registration
under Paragraph 4(1) or Paragraph 4(2) of the Act and the Rules and Regulations
promulgated thereunder as not involving any public offering. The Company's
reliance on such exemption is predicated in part on the representation of the
undersigned that he is acquiring such securities for investment for his own
account, with no present intention of dividing his participation with others or
reselling or otherwise distributing the same. These securities which the
undersigned is acquiring are "restricted securities" as that term is defined in
Rule 144 of the General Rules and Regulations under the Act. The undersigned
acknowledges that he understands that the securities covered hereby are
unregistered and must be held indefinitely, unless they are subsequently
registered under the Act or an exemption from such registration is available.
The undersigned agrees that any and all certificates, which may be issued
representing the securities acquired hereunder, shall contain substantially the
following legend, which the undersigned has read and understands:
The shares represented by this certificate have not been registered
under the Securities Act of 1933 (the "Act"), and are "restricted
securities" as the term is defined in Rule 144 under the Act. The
shares may not be offered for sale, sold or otherwise transferred
except pursuant to an effective registration statement under the Act,
or pursuant to an exemption from registration under the Act, the
availability of which is to be established to the satisfaction of the
Company.
The undersigned understands that the above legend on the certificates would
limit their value, including their value as collateral.
<PAGE>
Pollution Research and Control Corp.
Page 2
The undersigned further acknowledges that he understands that, if the
securities have been held for a period of at least one year and if Rule 144
adopted under the Act is applicable (there being no representation by the
Company that this Rule will be applicable), then he may make only routine sales
of the securities in limited amounts in a specified manner in accordance with
the terms and conditions of the Rule. The undersigned further acknowledges that
he understands that, if Rule 144 is applicable (no assurance of which can be
made), he may sell the securities without quantity limitation in sales not
involving a market maker or through brokerage transactions only if he has held
the securities for at least two years. In case the Rule is not applicable, any
sales made by the undersigned may be made only pursuant to other available
exemption from registration under the Act, or an effective registration
statement.
The undersigned further acknowledges that he is aware that only the Company
can file a registration statement or an offering statement pursuant to
Regulation A under the Act and that the Company has no obligation to do so,
other than via the registration rights referred to in the following paragraphs.
The undersigned also has been advised and acknowledges that he understands that,
in the event Rule 144 is not available, the circumstances under which he can
sell the securities, absent registration or compliance with Regulation A, are
extremely limited.
The undersigned further acknowledges and represents to the Company that he
is purchasing the securities for his own account and not as a trustee or nominee
for any other person or persons, and that the funds or consideration invested
are his own. The undersigned further acknowledges and represents that there are
no existing legal restrictions applicable to him which would preclude his
acquisition of the securities for investment purposes, as described hereinabove.
The undersigned further represents that he has no present plans to enter into
any contract, undertaking, agreement or arrangement for resale, distribution,
subdivision or fractionalization of the securities purchased hereby.
The undersigned further acknowledges that he understands that an investment
in the Company is extremely speculative and subject to a high degree of risk. In
this connection, the undersigned understands that he may lose his entire
investment in the Company.
The undersigned further acknowledges and represents to the Company that he
is able to bear the economic risk of losing his entire investment. The
undersigned further acknowledges and warrants that his overall commitment to
investments which are not readily marketable is not disproportionate to his net
worth and his investment in the securities will not cause such overall
commitment to become excessive. The undersigned further represents that he has
adequate means of providing for his current needs and personal contingencies and
that he has no need for liquidity in connection with his investment in the
securities.
<PAGE>
Pollution Research and Control Corp.
Page 3
The undersigned further acknowledges that he fully understands and agrees
that the price of the Company's securities acquired by him was arbitrarily
determined without regard to any value of the securities. The undersigned
understands, additionally, that the price of the securities bears no relation to
the value of the assets or net worth of the Company or any other criteria of
value. The undersigned is aware that no independent evaluation has been made
with respect to the value of the securities. The undersigned further understands
and agrees that shares of the common stock of the Company have been or may in
the future be issued to certain other persons for a consideration which may be
less than the price paid by him for the securities.
The undersigned further acknowledges and represents to the Company that he
is knowledgeable and experienced in venture capital investments in general and,
in particular, with respect to investments similar in nature to an investment in
the Company. The frequency of the undersigned's prior investments in stocks
(including restricted stocks), in general, and in high technology companies, in
particular, and other investments, of whatever kind, is as follows (check one in
each column):
Restricted High Technology
Stocks Stocks Companies Other
------ ------ --------- -----
Frequently x x x
----- ----- ----- -----
Occasionally
----- ----- ----- -----
Never
----- ----- ----- -----
The undersigned further acknowledges that he is capable of evaluating the
merits and risks of the Company.
The undersigned further acknowledges that he has such knowledge and
experience in financial and business matters that he is capable of evaluating
the merits and risks of an investment in the Company; that he has been advised
by the Company to consult with counsel regarding this investment; and that he
has relied upon the advice of such counsel, accountants or other consultants as
he deems necessary with regard to tax aspects, risks and other considerations
involved in the investment. The undersigned's educational and occupational
background which renders him capable of evaluating the merits and risks of this
investment as follows:
The undersigned has made, or caused to be made, such investigation of the
Company, its management and its operations as he considers necessary and
appropriate to enable him to make an informed decision regarding his investment.
<PAGE>
Pollution Research and Control Corp.
Page 4
Prior to making his investment, the undersigned was presented with and
acted upon the opportunity to ask questions of and receive answers from the
Company and its management relating to the Company and to obtain any additional
information necessary to verify the accuracy of the information made available
to him.
Prior to making his investment, the undersigned made arrangements to
conduct such inspection as he deems necessary of the books, records, contracts,
instruments and other data relating to the Company.
Before acquiring these securities, the undersigned was presented with and
understood the Company's business plan, including, among other things, the
nature of the Company, financial reports and management.
The undersigned agrees that, upon the delivery of certificates for his
shares, the undersigned will execute and deliver to and for the benefit of the
Company any instruments the Company may require to evidence that the purchase of
his shares is for investment purposes only.
On the date the undersigned acquired the securities, he had a net worth
(exclusive of home, furnishings and personal automobile) of:
( ) Less than $500,000
( ) $500,000 - $1,000,000
( ) $1,000,000 - $3,000,000
( ) $3,000,000 - $5,000,000
(x) More than $5,000,000
Liquid assets constituted the following percentage of the undersigned's net
worth, or his joint net worth with his spouse, on the date of acquisition of the
securities:
( ) Less than 1%
( ) 1% - 10%
( ) 10% - 20%
( ) 20% - 50%
(x) More than 50%
The undersigned's approximate net taxable income (after regular deductions)
in each of the two most recent calendar years was:
<PAGE>
Pollution Research and Control Corp.
Page 5
( ) Less than $100,000
( ) $100,000-$200,000
( ) $200,000-$500,000
( ) $500,000-$1,000,000
(x) More than $1,000,000
The undersigned's approximate net taxable income in the current year is
expected to be:
( ) Less than $100,000
( ) $100,000-$200,000
( ) $200,000-$500,000
( ) $500,000-$1,000,000
(x) More than $1,000,000
Based upon the foregoing, the undersigned hereby acknowledges and
understands the high risk and speculative nature of the shares of common stock
of the Company which he is acquiring and the nature of the management, financial
condition, and all other pertinent factors regarding the Company and this
investment. The undersigned further represents and warrants that he has fully
satisfied himself with respect to the nature of this investment. The undersigned
further warrants and represents that he has received no assurances of any kind
relative to, nor have there been any representations made by the Company or any
of its principals or affiliates regarding, any potential appreciation in value
of the securities being acquired by him. The undersigned hereby represents and
warrants that he has sufficient knowledge and experience in business and
financial matters to evaluate the merits and risks of an investment of this
type. The undersigned further represents and acknowledges that he has made other
investments in speculative businesses and is generally familiar with
"restricted" securities and he is otherwise knowledgeable with respect to the
Company and its proposed operations. Based upon the foregoing understandings,
the undersigned hereby reaffirms his acquisition of the securities described in
this Investment Letter and Memorandum of Subscription/Purchase Agreement.
The foregoing correctly expresses this intent, understanding and
acknowledgements of the undersigned.
/s/ Lee Sion
----------------------------------------
Lee Sion
<PAGE>
P.O. Box 910, Glendale, California 91209
- --------------------------------------------------------------------------------
Current residence address
###-##-####
Social security number Current residence telephone number
Psychologist Al Gosselin
- ----------------------------------- ----------------------------------------
Current occupation and/or business Name of person connected with Pollution
position Research and Control Corp., with whom
conferred concerning this investment
(626) 308-4521
- ----------------------------------- ----------------------------------------
Current business telephone number Relationship, if any, with the above-
mentioned Company representative
- ----------------------------------- ----------------------------------------
Current name of business with which Length of relationship, if any, with the
associated above-mentioned Company representative
Agreed and accepted this 13th day of September, 1999, on behalf of Pollution
Research and Control Corporation.
/s/ Albert E. Gosselin, Jr.
- ------------------------------------------
Albert E. Gosselin, Jr., President and CEO
<PAGE>
NOTICE OF EXERCISE
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 face of the
attached warrant certificate unless the
warrant has been properly and lawfully
assigned.
Exhibit 4.30
INVESTMENT LETTER
AND
MEMORANDUM OF SUBSCRIPTION/PURCHASE AGREEMENT
Pollution Research and Control Corp.
506 Paula Avenue
Glendale, California 91201
Gentlemen:
In connection with the acquisition by the undersigned of 50,000 shares of
common stock, no par value per share (the "Common Stock") and 25,000 warrants to
purchase common stock at an exercise price of $2.40 per share of Pollution
Research and Control Corp. (the "Company"), in consideration for the sum of
$75,000 in cash, the undersigned wishes to advise you of his understanding of,
agreement with and/or representation of, the following:
These securities are not being registered under the Securities Act of 1933,
as amended (the "Act"), on the ground that this sale is exempt from registration
under Paragraph 4(1) or Paragraph 4(2) of the Act and the Rules and Regulations
promulgated thereunder as not involving any public offering. The Company's
reliance on such exemption is predicated in part on the representation of the
undersigned that he is acquiring such securities for investment for his own
account, with no present intention of dividing his participation with others or
reselling or otherwise distributing the same. These securities which the
undersigned is acquiring are "restricted securities" as that term is defined in
Rule 144 of the General Rules and Regulations under the Act. The undersigned
acknowledges that he understands that the securities covered hereby are
unregistered and must be held indefinitely, unless they are subsequently
registered under the Act or an exemption from such registration is available.
The undersigned agrees that any and all certificates, which may be issued
representing the securities acquired hereunder, shall contain substantially the
following legend, which the undersigned has read and understands:
The shares represented by this certificate have not been registered
under the Securities Act of 1933 (the "Act"), and are "restricted
securities" as the term is defined in Rule 144 under the Act. The
shares may not be offered for sale, sold or otherwise transferred
except pursuant to an effective registration statement under the Act,
or pursuant to an exemption from registration under the Act, the
availability of which is to be established to the satisfaction of the
Company.
The undersigned understands that the above legend on the certificates would
limit their value, including their value as collateral.
<PAGE>
Pollution Research and Control Corp.
Page 2
The undersigned further acknowledges that he understands that, if the
securities have been held for a period of at least one year and if Rule 144
adopted under the Act is applicable (there being no representation by the
Company that this Rule will be applicable), then he may make only routine sales
of the securities in limited amounts in a specified manner in accordance with
the terms and conditions of the Rule. The undersigned further acknowledges that
he understands that, if Rule 144 is applicable (no assurance of which can be
made), he may sell the securities without quantity limitation in sales not
involving a market maker or through brokerage transactions only if he has held
the securities for at least two years. In case the Rule is not applicable, any
sales made by the undersigned may be made only pursuant to other available
exemption from registration under the Act, or an effective registration
statement.
The undersigned further acknowledges that he is aware that only the Company
can file a registration statement or an offering statement pursuant to
Regulation A under the Act and that the Company has no obligation to do so,
other than via the registration rights referred to in the following paragraphs.
The undersigned also has been advised and acknowledges that he understands that,
in the event Rule 144 is not available, the circumstances under which he can
sell the securities, absent registration or compliance with Regulation A, are
extremely limited.
The undersigned further acknowledges and represents to the Company that he
is purchasing the securities for his own account and not as a trustee or nominee
for any other person or persons, and that the funds or consideration invested
are his own. The undersigned further acknowledges and represents that there are
no existing legal restrictions applicable to him which would preclude his
acquisition of the securities for investment purposes, as described hereinabove.
The undersigned further represents that he has no present plans to enter into
any contract, undertaking, agreement or arrangement for resale, distribution,
subdivision or fractionalization of the securities purchased hereby.
The undersigned further acknowledges that he understands that an investment
in the Company is extremely speculative and subject to a high degree of risk. In
this connection, the undersigned understands that he may lose his entire
investment in the Company.
The undersigned further acknowledges and represents to the Company that he
is able to bear the economic risk of losing his entire investment. The
undersigned further acknowledges and warrants that his overall commitment to
investments which are not readily marketable is not disproportionate to his net
worth and his investment in the securities will not cause such overall
commitment to become excessive. The undersigned further represents that he has
adequate means of providing for his current needs and personal contingencies and
that he has no need for liquidity in connection with his investment in the
securities.
The undersigned further acknowledges that he fully understands and agrees
that the price of the Company's securities acquired by him was arbitrarily
determined without regard to any value of the securities. The undersigned
understands, additionally, that the price of the securities bears no relation to
the value of the assets or net worth of the Company or any other criteria of
value. The undersigned is aware that no independent evaluation has been made
with respect to the value of the securities. The undersigned further understands
and agrees that shares of the common stock of the Company have been or may in
the future be issued to certain other persons for a consideration which may be
less than the price paid by him for the securities.
<PAGE>
Pollution Research and Control Corp.
Page 3
The undersigned further acknowledges and represents to the Company that he
is knowledgeable and experienced in venture capital investments in general and,
in particular, with respect to investments similar in nature to an investment in
the Company. The frequency of the undersigned's prior investments in stocks
(including restricted stocks), in general, and in high technology companies, in
particular, and other investments, of whatever kind, is as follows (check one in
each column):
Restricted High Technology
Stocks Stocks Companies Other
------ ------ --------- -----
Frequently x x x
----- ----- ----- -----
Occasionally
----- ----- ----- -----
Never
----- ----- ----- -----
The undersigned further acknowledges that he is capable of evaluating the
merits and risks of the Company.
The undersigned further acknowledges that he has such knowledge and
experience in financial and business matters that he is capable of evaluating
the merits and risks of an investment in the Company; that he has been advised
by the Company to consult with counsel regarding this investment; and that he
has relied upon the advice of such counsel, accountants or other consultants as
he deems necessary with regard to tax aspects, risks and other considerations
involved in the investment. The undersigned's educational and occupational
background which renders him capable of evaluating the merits and risks of this
investment as follows:
The undersigned has made, or caused to be made, such investigation of the
Company, its management and its operations as he considers necessary and
appropriate to enable him to make an informed decision regarding his investment.
<PAGE>
Pollution Research and Control Corp.
Page 4
Prior to making his investment, the undersigned was presented with and
acted upon the opportunity to ask questions of and receive answers from the
Company and its management relating to the Company and to obtain any additional
information necessary to verify the accuracy of the information made available
to him.
Prior to making his investment, the undersigned made arrangements to
conduct such inspection as he deems necessary of the books, records, contracts,
instruments and other data relating to the Company.
Before acquiring these securities, the undersigned was presented with and
understood the Company's business plan, including, among other things, the
nature of the Company, financial reports and management.
The undersigned agrees that, upon the delivery of certificates for his
shares, the undersigned will execute and deliver to and for the benefit of the
Company any instruments the Company may require to evidence that the purchase of
his shares is for investment purposes only.
On the date the undersigned acquired the securities, he had a net worth
(exclusive of home, furnishings and personal automobile) of:
( ) Less than $500,000
( ) $500,000 - $1,000,000
( ) $1,000,000 - $3,000,000
( ) $3,000,000 - $5,000,000
(x) More than $5,000,000
Liquid assets constituted the following percentage of the undersigned's net
worth, or his joint net worth with his spouse, on the date of acquisition of the
securities:
( ) Less than 1%
( ) 1% - 10%
( ) 10% - 20%
( ) 20% - 50%
(x) More than 50%
The undersigned's approximate net taxable income (after regular deductions)
in each of the two most recent calendar years was:
<PAGE>
Pollution Research and Control Corp.
Page 5
( ) Less than $100,000
( ) $100,000-$200,000
( ) $200,000-$500,000
( ) $500,000-$1,000,000
(x) More than $1,000,000
The undersigned's approximate net taxable income in the current year is
expected to be:
( ) Less than $100,000
( ) $100,000-$200,000
( ) $200,000-$500,000
( ) $500,000-$1,000,000
(x) More than $1,000,000
Based upon the foregoing, the undersigned hereby acknowledges and
understands the high risk and speculative nature of the shares of common stock
of the Company which he is acquiring and the nature of the management, financial
condition, and all other pertinent factors regarding the Company and this
investment. The undersigned further represents and warrants that he has fully
satisfied himself with respect to the nature of this investment. The undersigned
further warrants and represents that he has received no assurances of any kind
relative to, nor have there been any representations made by the Company or any
of its principals or affiliates regarding, any potential appreciation in value
of the securities being acquired by him. The undersigned hereby represents and
warrants that he has sufficient knowledge and experience in business and
financial matters to evaluate the merits and risks of an investment of this
type. The undersigned further represents and acknowledges that he has made other
investments in speculative businesses and is generally familiar with
"restricted" securities and he is otherwise knowledgeable with respect to the
Company and its proposed operations. Based upon the foregoing understandings,
the undersigned hereby reaffirms his acquisition of the securities described in
this Investment Letter and Memorandum of Subscription/Purchase Agreement.
The foregoing correctly expresses this intent, understanding and
acknowledgements of the undersigned.
/s/ Steven Sion
----------------------------------------
Steven Sion
<PAGE>
Pollution Research and Control Corp.
Page 6
c/o Lee Sion, P.O. Box 910, Glendale, California 91209
- --------------------------------------------------------------------------------
Current residence address
###-##-####
Social security number Current residence telephone number
Businessman Lee Sion
- ----------------------------------- ----------------------------------------
Current occupation and/or business Name of person connected with Pollution
position Research and Control Corp., with whom
conferred concerning this investment
(626) 308-4521 Brother
- ----------------------------------- ----------------------------------------
Current business telephone number Relationship, if any, with the above-
mentioned Company representative
- ----------------------------------- ----------------------------------------
Current name of business with which Length of relationship, if any, with the
associated above-mentioned Company representative
Agreed and accepted this 13th day of September, 1999, on behalf of Pollution
Research and Control Corporation.
/s/ Albert E. Gosselin, Jr.
- -----------------------------------------
Albert E. Gosselin, Jr., President and CEO
<PAGE>
NOTICE OF EXERCISE
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 face of the
attached warrant certificate unless the
warrant has been properly and lawfully
assigned.
Exhibit 23.2
AJ. ROBBINS, P.C.
CERTIFIED PUBLIC ACCOUNTANTS
AND CONSULTANTS
3033 EAST 1ST AVENUE, SUITE 201
DENVER, COLORADO 80206
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTS
We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Form S-3 of Pollution Research and Control Corp. of
our report dated February 12, 1999 relating to the consolidated financial
statements of Pollution Research and Control Corp. and to the reference made to
our firm under the caption "Experts" which appear in such documents.
/s/ AJ.Robbins, P.C.
----------------------------------------
AJ. ROBBINS, P.C.
CERTIFIED PUBLIC ACCOUNTANTS
AND CONSULTANTS
Denver, Colorado
September 27, 1999
