U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
(Mark One)
{X} Annual Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 (Fee Required) for the fiscal year ended December
31, 1998
{ } Transition Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 (No Fee Required)
Pollution Research and Control Corp.
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(Name of Small Business Issuer as Specified in its Charter)
California 95-2746949
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
506 Paula Avenue, Glendale, California 91201
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(Address of Principal Executive Offices) (Zip Code)
Small Business Issuer's telephone number, including area code (818) 247-7601
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Securities registered pursuant to Section 12(b) of the Act: None Securities
registered pursuant to Section 12(g) of the Act:
Common Stock, no par value
(Title of Class)
Check whether the Small Business Issuer (1) has filed all reports required to be
filed by Section 13 of 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the Small Business Issuer
was required to file such reports), and (2) has been subject to such filing
requirements of the past 90 days. Yes X No
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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-B is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of the Form 10-KSB or any amendment to
this Form 10-KSB {X}.
Small Business Issuer's revenues for its most recent fiscal year: $2,800,000
The aggregate market value of the voting stock held by non-affiliates of the
Small Business Issuer, computed by reference to the average bid and asked prices
of such stock on March 22, 1999 was $3,158,833.
Total number of pages - 206 Exhibit Index is located at Page E-1
DOCUMENTS INCORPORATED BY REFERENCE:
Certain exhibits to this Annual Report as set forth in the Exhibit
Index located at page E-1.
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POLLUTION RESEARCH AND CONTROL CORP.
Form 10-KSB
For the Fiscal Year Ended December 31, 1998
TABLE OF CONTENTS
Part I Page
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Item 1. Description of Business 4
General 4
History of the Company 4
The Air Pollution Industry 6
Instrument Market 6
Control Market 7
Governmental Approval 7
Governmental Regulation and Enforcement 8
Company Products 8
Marketing and Sales; Backlog 9
Foreign Sales 10
Manufacturing and Purchasing 11
Research and Development 11
Employees 11
Competition 12
Intellectual Property 12
Item 2. Description of Properties 12
Item 3. Legal Proceedings 13
Item 4. Submission of Matters to a Vote of Security Holders 14
Part II.
Item 5. Market for Common Equity and Related Stockholder
Matters 16
Item 6. Management's Discussion and Analysis or Plan of
Operation 16
Liquidity and Capital Resources 18
Seasonality 18
Year 2000 Compliance 18
Item 7. Financial Statements 18
Item 8. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosures 19
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TABLE OF CONTENTS
(continued)
Part III Page
Item 9. Directors, Executive Officers, Promoters and
Control Persons;
Compliance with Section 16(a) of the Exchange Act 20
Directors, Executive Officers and Key Employees 20
Family Relationships 20
Business Experience 20
Section 16(a) Beneficial Ownership Reporting Compliance 23
Item 10. Executive Compensation 23
Executive Compensation 23
Compensation of Directors 23
Employment Agreements 24
Item 11. Security Ownership of Certain Beneficial Owners and
Management 24
Item 12. Certain Relationships and Related Transactions 26
Item 13. Exhibits and Reports on Form 8-KA
(a) Exhibits 27
(b) Reports on Form 8-KA 27
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Item 1. Description of Business
General
The Company's core business for over twenty years has been primarily the
design, manufacture and marketing of automated continuous monitoring 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. The Company's products are generally used to measure
air pollution levels in geographic areas which 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, which is classified as
"core business related."
Because severe competitive price pressures in its core business have
developed (see "History of the Company" below), the Company has during the past
few years, pursued various areas of diversification of its developed technology
primarily including air pollution control of flue gas-emitted air pollutants and
medical, asthma-related, diagnostic instrumentation. At this time no
diversification is being pursued (See "Instrumentation Market" and "Control
Market" below) and singular focus is being applied to the "core business" as
described above.
History of the Company and Recent Developments
The Company was organized as a California corporation on December 24, 1971,
under the name of "A.E. Gosselin Engineering, Inc." as a wholly-owned subsidiary
of "Pollution Research and Control Corp." ("PRCC"), a California corporation
co-founded in 1966 by Albert E. Gosselin, Jr., the Company's President and Chief
Executive Officer, and his wife, Barbara Gosselin, an executive officer and
director of the Company. Mr. and Mrs. Gosselin founded the Company to design,
manufacture and market air pollution monitoring equipment for ambient air (i.e.,
the surrounding air) as distinguished from the customer stack source monitoring
systems then being designed, manufactured and sold by PRCC. The name of the
Company was changed to "Dasibi Environmental Corp." on March 22, 1973. (See Item
9. "Directors, Executive Officers, Promoters and Control Person; Compliance with
Section 16(a) of the Exchange Act - Directors, Executive Officers and Key
Employees.")
The Company was operated as a wholly-owned subsidiary of PRCC until its
initial public offering of securities in May 1985. In 1984, PRCC discontinued
its research and development activities and assigned them to the Company. From
1984 through May 1985, PRCC acted primarily as a holding company for the Company
and Applied Conservation Technology, Inc. ("ACT"), then a wholly-owned
subsidiary of PRCC engaged in the business of providing environmental impact
reports to electric utilities. ACT was purchased by its management from PRCC in
November 1986. Gary Dudley, a director and former Vice President of the Company
and a former executive officer and director of PRCC, has been the President and
a principal shareholder of ACT, a diversified environmental consulting firm now
located in Westminster, California, since November 1986. (See Item 9.
"Directors, Executive Officers, Promoters and Control Persons; Compliance with
Section 16(a) of the Exchange Act - Directors, Executive Officers and Key
Employees.")
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The Company changed its name to "Pollution Research and Control Corp.," the
name of its former parent, PRCC, in November 1989. In January 1990, the Company
acquired all of the issued and outstanding shares of Common Stock, $1.00 par
value per share, of an inactive California corporation, organized by Mr. and
Mrs. Gosselin as co-founders under the name of "Baral Engineering, Inc." in July
1976, which changed its name to "Dasibi Environmental Corp." ("Dasibi") in
January 1990. All of the Company's operations were transferred to Dasibi
subsequent to the acquisition. Also in 1990, the Company changed its fiscal year
from June 30 to December 31.
In March 1994, the Company entered into an exclusive worldwide requirements
agreement over a three-year period with London-based Logan Research, Ltd.
("LRL") to provide LRL with oxides of nitrogen instrument parts on an "as
required" basis for use in medical technology applications. In October 1995, the
agreement was modified to be exclusive with a domestic corporation, Logan
Medical Devices ("LMD"), which acquired Logan Research, Ltd. In 1995, the
Company advanced $164,000 to LRL. The $164,000 was charged against operations in
1995. In June 1996 the Company acquired 100% of the common stock of LMD for
150,125 options to LMD shareholders, all options above market bid price and
vesting in January, 1998, such bid price as existed in the date of agreement. In
addition, the Company contributed $250,000 to LMD for working capital.
Also, in June, 1996, the Company acquired 100% of the stock of Nutek, Inc.,
a Pensacola, Florida, electrical control panel and printed circuit board
manufacturer. No company stock was issued, but 85,000 options at above market
bid price on the date of agreement were issued to key employees in this
transaction, lawyers and "finders." Such options vested in January 1998. The
Company directly paid $250,000 cash into an estimated total purchase price of
$1,900,000, the balance obtained from asset based financing solely on Nutek's
assets. The Company acquired Nutek primarily for the customer list as it would
fit into the Company's air pollution control technology diversification plans.
In January, 1998, the the Company began a reorganization program designed
to focus on its "core business" alone. The Company's management believed that it
could secure long-term contractual business in The People's Republic of China
("China") sufficient to allow expansion of the Company's business independent of
competitive price pressures. The initial step of the reorganization was
dissolution of the Nutek subsidiary and separation of "LRL" from "LMD". The
Company is involved in significant litigation regarding the Nutek dissolution.
(See Item 3. "Legal Proceedings.")
In June, 1998, the Company signed a $5.1 million dollar contract with China
to supply equipment and software to monitor air pollution in eleven cities.
Initiation of the work was contingent on final agreement between China and U.S.
banks and the Export-Import Bank (Ex-Im) guarantee for financing arranged by the
Company. Financing was expected to be completed within a few months, however,
the Company has been informed that the earliest date for Ex-Im approval is March
29, 1999. (See "Foreign Sales.") Concurrently, the Company requires in-house
financing for above normal working capital needs for a project considerably
larger than previously experienced. At this time management believes the Company
can obtain, at least, a minimum required through debt financing. There is no
assurance that the Company can obtain more than a minimum to initiate the
project by debt financing, in which case, the Company would be required to
pursue equity financing in which the Company has demonstrated successful
experience.
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The Air Pollution Industry
Air pollution consist of certain gases or particles, generally the products
of combustion or other industrial processes, which are or may be hazardous to
human health. Pollutants include carbon monoxide, ozone, oxides of sulfur and
nitrogen, hydrogen sulfide and particles. Small amounts of these pollutants,
such as a few parts per million or part per billion, may be harmful. The
instruments produced and sold by the Company, the "core business" detect and
measure these pollutants and are also utilized in calibrating other pollution
measurement equipment. Any systems or processes such as the Company's "flue gas
purification system" patent employ chemical and mechanical means to remove these
same pollutants from combustion exhaust gases. (See "Research and Development"
under this Item 1. "Description of Business").
Industrial entities require equipment to detect the presence and measure
the level of pollutants in order to comply with governmental regulations and
government regulatory agencies require equipment to enforce governmental
standards. Currently, international priority has been given to control (and
therefore to monitor) such gaseous pollutants as sulfur dioxide, oxides of
nitrogen, carbon monoxide, ozone and particulates (suspended dust).
Although manual sampling of both gases and particulates is still performed
routinely, improvements in the reliability and accuracy of automated, continuous
monitoring equipment, such as that manufactured and sold by the Company, have
made manual sampling less desirable and automated monitoring increasingly
common.
In basic continuous monitoring instruments, ambient air is taken into a
manifold, the function of which is to direct a fast-moving stream of ambient air
to the monitor. The instrument may use a filter to remove particulates or
scrubbers to remove gasses that might interfere with accurate measurement of the
pollutant. The pollutant is then introduced into a measurement cell environment
where it undergoes a chemical or physical reaction, the output of which can be
converted to an electrical signal which, in turn, can be read locally or
transmitted to some remote monitoring plant or computer. Measurement cells can
be based in many different methods for the detection of the pollutants of
interest. Thus, an instrument designer may have many different methods available
by which a pollutant may be identified and measured.
Some methods used by the Company are flame photometry (wherein
concentrations of gaseous elements are measured by burning them and optically
observing the color and intensity of the flame generated thereby), infrared
absorption (wherein concentrations of infrared absorbing gases are measured by
detecting changes in intensity of a radiation beam closed cell),
chemiluminescence (wherein a chemical generates a light or a wave length
measurable by a photo multiplier tube), ultraviolet spectroscopy (wherein the
pollutants' decrease in ultraviolet light intensity is converted by a
photoelectric detector to an electric signal) and beta ray attenuation (wherein
a radioactive source's beta ray emanation is reduced in direct proportion to the
mass of a particle).
Instrument Market
The air pollution monitoring equipment market includes two markets: (i)
source instrumentation for monitoring the source's pollutant emissions as they
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are discharged into the air and (ii) ambient air for instrumentation for
monitoring ambient air pollution. The two markets are quite different in that
source instrumentation is generally not subject to rigid governmental-imposed
guidelines because of the difficult analyses involved, while ambient air
instruments are subject to rigid governmental guidelines because the pollutants
are easier to define and measure.
Generally, the Company sells its instruments for use in systems for the
measurement of ambient air pollution. In a system, air pollution monitoring
instruments are united with additional equipment to provide a comprehensive
measurement unit. In an ambient air instrumentation system, the monitoring
instrument is combined with a manifold intake, a calibrator and data
transmitters. The system samples the ambient air, measure the pollutants and
transmits the data. The Company designs and manufactures all instruments used in
a system, including the data tabulation and transmission devices.
Control Market
The air pollution control market makes only minimal use of measurement
instrumentation. This market is concerned with "purification" of exhaust gases
emanating from combustion-related or even chemical-only processes. The
"purification" process consists of using various types of equipment which may or
may not involve catalysts and/or reagents to cause reactions and/or mechanical
removal of a high percentage of selected air pollutants. The highest percentage
obtainable will relate, at any given time, to the state-of-the-art of the
technology involved and the economics of implementing the technology. The market
is old, in essence dating to the beginnings of the industry when soot collectors
were first installed on combustion chambers. However, the market size is
embryonic since technology has not materially advanced and implementation
remains costly so as not to allow any generally accepted control of source
pollutants. The Company filed a patent application in April 1994 for a "flue gas
purification system," which issued in 1996, and a second patent issued on the
system in March, 1999, however, the commercial viability of a market for this
invention is not assured. (See "Research and Development" and "Intellectual
Property" under this Item 1. "Description of Business.")
Governmental Approval
The Environmental Protection Agency (the "EPA") administers the federal
Clean Air Act, as amended by the Clean Air Act Amendments of 1990, and approves
ambient air pollution monitoring equipment meeting certain requirements as
either reference or equivalent methods for measuring pollutants. The EPA
established the reference method as the basic method for measuring a pollutant.
An equivalent method measures the same pollutant utilizing a different technique
which achieves results identical to those of the referenced method.
As a practical matter, before a monitoring instrument can be sold in the
United States, it must receive EPA-approval as either a "reference" or
"equivalent" method. Such approvals are given only after rigorous and expensive
testing by the applicant and the submission to, and approval by, the EPA of the
results of such testing. The testing and approval process generally requires
between 12 and 18 months. Following approval, the EPA typically acquires and
tests a production model of the device. If the model being tested does not meet
the standards established by the approval process, the approval may be
withdrawn.
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Each of the Company's models of ozone monitors and its sulfur dioxide and
oxides of nitrogen monitors have been approved as equivalent methods by the EPA.
Additionally, the Company's carbon monoxide have been approved as equivalent
methods by the EPA. The Company is currently testing a particulate analyzer
(beta ray attenuation) for approval as an equivalent method by the EPA. The
Company has never had, or been threatened with, a recall as the result of
subsequent testing by the EPA of a production model of any of its instruments.
The Company believes that, as the performance of air monitoring equipment
improves and monitoring technology becomes available in the market, government
regulatory agencies tend to adopt regulations requiring the use of such
technology. The Company has never been required to modify or discontinue any of
its products as a result of improved technology. However, there can be no
assurance that future technological improvements will not mandate changes in, or
cause the obsolescence of, Company products.
Governmental Regulation and Enforcement
Legislation requiring more precise air pollution monitoring and enforcement
is increasing as the sophistication of the technology improves and as concern
for the environment, particularly the depletion of the ozone layer, becomes more
acute. The Clean Air Act and the Clean Air Act Amendments of 1990 (the "1990
Amendments"), require increased control of industrial air pollution and
represent an increasing threat of shut-down for U.S. industrial concerns which
fail to obtain necessary permits and engage in other conduct violative of the
legislation. Because increased control requires increased management and
monitoring of air pollutants by government and industry, the Company expects,
but cannot assure, an increasing market for its products. Company management
believes that governmental enforcement policy also has a significant effect on
the demand for the Company's products. A relaxation during 1982 in the federal
enforcement of governmental standards resulted in a decrease in demand for the
Company's products. Since then, the worldwide trend toward increasingly
stringent environmental standards for industrial air pollution together with
stricter governmental enforcement of environmental regulations, is expected by
management to cause continued expansion of segments of the analytical
instruments market and a continued increase in demand for the Company's
products. In essence, the Company furnishes a product that the customer does not
want to buy voluntarily. In previous years, price difference was not significant
to the selection process. Since 1994, sizeable discounts have become significant
to the purchasers.
Company Products
In 1972, the Company developed, and in 1974 initially marketed, the first
ultraviolet ozone monitor, of which eight models are currently marketed by the
Company, including high concentration, manual, remote and
microprocessor-controlled versions. The Company will continue to seek to develop
new versions of its basic model of ozone monitor, but does not expect any change
in the basic principle upon which the instrument operates. Since 1974 the
Company has been generally considered the leader in ozone measurement technology
in the world.
The Company developed microprocessor-controlled carbon monoxide, sulfur
dioxide and oxides of nitrogen monitors in 1981, 1986 and 1987, respectively.
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Calibration equipment, which is utilized to independently verify the
measurements made by other monitoring equipment, was first manufactured and sold
by the Company in 1976 and known as the "Auditor," was followed by a
manually-operated, portable model which performs similar functions. In 1990,
both of these models were superseded by the Company's Model 5008
state-of-the-art, programmable calibration equipment.
The Company completed development, in 1991, of a Model 7001 beta-gauge to
measure sub-micronic particulates, a Model 8001 data-logger to gather and
transmit measured air pollutant information.
In February 1994, the Company acquired the technology and inventory of the
Byron Hydrocarbon Analyzer line which resulted in a completion of the ability to
offer a System 1000. This analyzer is a microprocessor controlled, gas
chromatograph type methane, non-methane analyzer designated as Model 302.
All instruments plus proprietary reporting and predictive software (See
"Research and Development") comprise a System 1000 which can serve as a
stand-alone satellite in a regional monitoring network.
The Company offers a two-year warranty on all of its instruments, with the
exception of certain components, such as lamps, which have short lives. With
respect to such components, the Company passes on to the customer the warranty
(usually one year) which it receives from the manufacturer. The Company's
warranty provides for repair or replacement of defective products. During each
of the last five fiscal years, the Company has been required to honor its
warranty with respect to less than 0.3% of total instruments sales during each
such year.
Marketing and Sales; Backlog Instruments
The marketing and sales activities of the Company include advertising by
mail and in trade journals (primarily Pollution Equipment News and Air Pollution
Control Association Journal) and attendance and exhibition at worldwide air
pollution conferences. The Company attends the annual conference of the Air
Pollution Control Association as well as worldwide conferences. The Company's
core business instruments have been sold to customers world-wide, including
industrial manufacturers; federal, state, city, local and foreign governmental
agencies; major industrial companies; and educational and research institutions
in over 30 countries. Sales made in the United States are handled directly by
the Company's sales staff. Nearly all of the Company's foreign sales are made to
distributors who, in turn, resell to the end users. The Company sells to these
distributors at a discount from the listed price. Management believes that,
normally, the loss of a distributor who may account for a large percentage of
sales would have little impact on net revenues as the end users of the Company's
products could be transferred to new distributors.
An exception in foreign sales is China. Here the Company's distributor
serves a dual role with primary emphasis on a role as a representative, when the
Company sells direct to the government. The recent China contract (See "Foreign
Sales") is a direct sale. Further, it is expected that a loss of this
distributor or representative would have a materially adverse impact on the
Company's revenues.
Historically and currently foreign sales represent approximately 50 percent
of the Dasibi Environmental subsidiary - the core business.
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The Company's core business sales in the export market are evenly
distributed among all of its products. Export sales are billed and paid in
United States dollars only. In 1999, it is expected that one customer, China,
may account for as much as 90% of the sale of the Company products.
The Company's core business instruments have been sold during the past five
years to over 300 customers in over 30 countries, including industrial
manufacturers; federal, state, city, local and foreign governmental agencies;
and educational and research institutions. However, a significant loss in the
number of government agencies, industrial companies or research agencies which
typically purchase the Company's instruments could have a material adverse
effect on the Company. Similarly in 1999, the loss of China would have a
material adverse effect on the Company.
Historically, none of the Company's business has been subject to the
re-negotiation of profits, and no government orders have ever been terminated.
The indicated core business backlog at December 31, 1998 was approximately
$5,500,000 which amount the Company considers material. However, $5,100,000 of
this backlog was due to the China contract, discussed below, which, although
formally signed, had a contingency of no shipments until "bank to bank" document
financing was completed. As of March 22, 1999 this financing has not been
completed, although Ex-Im Bank approval was received.
Foreign Sales
The following table sets forth certain information regarding the Company's
foreign sales for the last two fiscal years:
Year Ended
December 31,
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1998 1997
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(In thousands)
Aggregate sales to unaffiliated foreign customers:
Europe and The United Kingdom $ 987 $1,104
Asia and Pacific Rim $ 934 $ 622
Latin America & Other $ 397 $ 434
During the fiscal years ended December 31, 1997 & 1998, no one customer
accounted for more than 10% of net sales.
In June 1998, the Company was awarded a contract from China for
installation of the Company's systems in an eleven city network. Since November,
1995, the Company negotiated U.S. Export-Import financing for China specifically
for this project. Technical and contractual negotiations were concluded at the
June award at The People's Hall in Beijing. Financing aspects of the project,
however, required nearly nine months of apparently normal bank to bank delays.
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Because it is not possible to define a time frame to anyone of three banks
involved, the backlog of the China project is not considered "firm", until Ex-Im
Bank approval received on March 22, 1999 is supplemented with completed bank
agreements.
Historically, backlog has not been significant to the Company's operations
because orders usually require delivery in 45 to 60 days. As of December 31,
1998, the Company had approximately $300,000 in "firm" orders which required
delivery in 90 days or less, a backlog which the Company does not consider
significant. The $5,100,000 additional backlog attributed to China is
significant to the Company since it is long term (8 months) in nature and
therefore should allow cost saving benefits of manufacture planning and quantity
purchase discounts.
Manufacturing and Purchasing
The Company manufactures many components and subsystems for use in its
products, including critical optical components and analog and digital
circuitry. Other components, including packaging materials, integrated circuits,
microprocessors and minicomputers, are purchased from unaffiliated third
parties. Most of the raw materials and supplies purchased by the Company are
either available from a number of different suppliers or alternative sources
could be developed without a materially adverse effect on the Company's
business. However, the availability and quality of certain key instrument
components, such as printed circuit board designs and lamps, are controlled by a
limited number of vendors. A vendor's inability to supply these components to
the Company in a timely fashion, or to the Company's satisfaction, can affect
the Company's ability to deliver its instruments on time.
Research and Development
Historically, the Company has been actively engaged in research and
development in order to produce new products. However, the competitive price
pressures experienced by the Company since early 1994 have sharply limited the
new product development to areas of software as opposed to hardware. Developed
over the past three years, DECS (Dasibi Environmental Central Software) is a
Windows-based, network control and reporting program for multi systems of
pollutant analyzers and ancillaries. Similar programs exist but management
believes none are under single manufacturer design and responsibility. Within
the same constraints, the Company is developing predictive pollutant modeling
programs.
Because of price pressure demands, the Company has been limiting Flue Gas
Purification System development work.
Employees
As of March 22, 1999, the Company had 31 full-time employees, of whom 5
were engaged in administration, 3 in engineering, 21 in manufacturing and 2 in
sales and marketing. None of the Company's employees are represented by a labor
union. The Company has never had a strike or lockout and considers its employee
relations to be good.
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Competition - Instruments
The Company is the smallest competitor in the ambient air pollution
instrumentation market. Therefore, it is subject to the effects of
better-financed competitors and their research and development efforts, and
price discounting. The Company competes on the basis of technical advances in
its products and its reputation among customers as a quality provider of
products and services. To a lesser extent, the Company competes on the basis of
price.
Although the Company is not aware of any other company that competes with
it in all of its product lines and software capabilities, 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. ("Thermo Instrument Systems") and
Monitor Labs, Inc. ("Monitor Labs"). In the foreign market, the Company's
primary competitors are Thermo Instrument Systems, Monitor Labs, Environnement
S.A of France ("Environnement") and Horiba Instruments ("Horiba Instruments.")
Intellectual Property
Although the Company obtained patents for its ozone monitor and various
techniques in instrument design, it has generally been the Company's policy to
proceed without patent protection since it is management's belief that the
disclosure requirements of the federal patent laws provide competitors with easy
access to the secrets of rapidly changing technology. The instrument patents
obtained by the Company, all of which have expired, are not deemed by management
to be significant to the Company's business operations or potential success. The
Company has no federal or state registered trademarks and no franchises or
concessions. The Company has common law rights to the trademark "Dasibi."
Albert E. Gosselin, Jr., the Company's co-founder, has, for the past
several years, devoted personal research time to developing an innovative, cost
conscious system for purifying exhaust gases. His efforts resulted in the filing
of a patent application for such system on behalf of the Company in April 1994,
subsequently granted in September 1996, and a second grant in March, 1999.
Item 2. Description of Properties
In July 1994, the Company moved its administrative, instrument
manufacturing and employee facilities to 39,070 square feet, increased to 45,000
square feet in 1997, at 506 Paula Avenue, Glendale, California. The Company
leases the space from an unaffiliated third party for a term of ten years
commencing as of July 1, 1994, at a base rent of $24,223 per month plus
operating costs and taxes, with a provision for increases in the base rent
related to increases in the Consumer Price Index to the present rent of $30,000
per month. The Company utilizes most of its existing office and manufacturing
space and believes that such space is more than adequate for its needs for the
foreseeable future.
In May, 1998, the Company acquired a facility consisting of approximately
3000 square feet and located in Macao, China. The facility was needed as a
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and training center for an anticipated China contract. (See "History of Company
and Recent Developments.") A lease back agreement with an affiliated company in
Macau, PIC Computers, Ltd.("PIC") calls for $8,000 per month rent to the Company
while PIC performs service and training for China requirements under specific
contracts furnished as needed from the Company. (See Item 12. "Certain
Relationships and Related Transactions.") No lease payments are due, nor are any
contracts contemplated until the China contract shipments begin. The facility
therefore is not utilized at this time, and no lease payments are due or
accrued.
Item 3. Legal Proceedings
Turbodyne
- ---------
In August, 1998, the Company executed an agreement with Turbodyne
Technologies, Inc. which was subsequently wrongfully repudiated by Turbodyne. On
October 2, 1998, the Company filed suit in the Superior Court of the State of
California, which case is entitled Pollution Research and Control Corp., Dasibi
Environmental Corp. and Logan Medical Devices v. Turbodyne Technologies, Inc.
and Does 1 through 100, inclusive, Case No. BC 198 521. The complaint alleges
that Turbodyne breached an agreement to purchase the Company's two subsidiaries,
Dasibi Environmental Corp. and Logan Medical Devices when Turbodyne willfully
repudiated its contract with the Company shortly after signing and delivering
it. The Complaint alleges that Turbodyne's actions constituted breach of
contract, a breach of the covenant of good faith and fair dealing, intentional
interference with prospective business advantage and negligent interference with
prospective business advantage. The Complaint seeks compensatory damages,
punitive damages and declaratory relief.
Fidelity Funding
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In seeking to focus on its core business the Company attempted to sell
Nutek. This attempt failed. Management then decided that every effort should be
made to maximize the liquidated value of fabrication equipment and that the
"printed circuit board" portion of Nutek, Inc. had operating value as a vehicle
to eventually pay off deficiency sums, if any, and unsecured creditors. Nutek
was therefore placed into Chapter 11 reorganization. The major secured lender
opposed this filing and at a June 19, 1998 hearing before the Bankruptcy Court,
prevailed against Nutek, Inc. in having the Bankruptcy Code's automatic stay,
imposed when the case was filed, vacated, to permit a secured lender sale of the
mortgaged property based principally upon the secured lender's assertion that
the assets of Nutek, Inc. were insufficient to cover the amount of the secured
loans. The assertion was supported by a "new" appraisal which management of
Nutek, Inc. had not seen until the proceedings were commenced by the secured
lender to vacate the automatic stay. From an original 1996 appraisal which
disclosed a forced liquidation value for the mortgaged property of $1,200,000,
the new appraisal indicated an apparent value of approximately $341,000.
Management believes that there is the possibility of questionable activities on
the "selling" side in the original 1996 purchase of Nutek, Inc. and the
financing with the secured lender and appraisal obtained and utilized, and is
investigating the role of all parties involved in the acquisition and financing.
An auction sale was held by the secured lender on July 28, 1998 which realized
only $160,000. On July 1, 1998, the Company received a notice of default
Judgment against the Company's guarantee of debt entered in a Texas State court
in the sum of $766,708.77. The Company has retained Texas counsel, filed a
Notice of Removal of the Texas State court case to the United States District
13
<PAGE>
Court Northern District of Texas, Dallas Division, and has filed a Motion to
dismiss and/or quash service of process and to set aside the Default Judgment.
Although the matter is still pending, the amount of the Default Judgment
described above has been reduced to approximately $400,000 by collection of
Nutek receivables. The Company has established a reserve of $350,000 for this
matter.
Item 4. Submission of Matters to a Vote of Security Holders
On May 6, 1998, the Board of Directors voted in favor of a reverse stock
split of the Company's issued and outstanding shares of common stock, no par
value per share (the "Common Stock") on May 15, 1998 on the basis of the
conversion of each four shares of Common Stock then issued and outstanding into
one share of Common Stock (the "Reverse Split") and directed that the Reverse
Stock Split be placed on the agenda for consideration by shareholders at the
Annual Meeting. The Board of Directors believed that the per share price of the
Company's Common Stock prior to May 15, 1998, negatively impacted the
marketability of the existing shares, the amount and percentage of transaction
costs paid by individual shareholders and the potential ability of the Company
to raise capital by issuing new shares.
At the Annual Meeting held on October 15, 1998, the shareholders approved
the Reverse Stock Split so that the number of issued and outstanding shares of
Common Stock of the Company was reduced from 8,673,732 shares to approximately
2,168,433 shares, based upon the total number of issued and outstanding shares
of the Company's Common Stock as of May 15, 1998.
An affirmative vote of a majority of the shares of Common Stock present or
represented by proxy and voting at the Annual Meeting was received for approval
of the proposal with the following vote:
For 1,588,397
Against 55,736
Abstain 10,147
The following members of the Board of Directors were re-elected at the
Annual Meeting with the following vote:
Vote For Withheld
Albert E. Gosselin 1,617,689 36,591
Gary L. Dudley 1,618,399 35,881
Craig E. Gosselin 1,615,398 38,882
Barbara L. Gosselin 1,617,023 37,257
Marcia Smith 1,618,399 35,881
Barry Soltani 1,618,399 35,881
Additionally, the firm of AJ. Robbins, P.C. was elected as the Company's
auditors for the fiscal year ending December 31, 1998 with the following vote:
For 1,537,058
14
<PAGE>
Against 107,673
Abstain 9,549
15
<PAGE>
PART II
Item 5. Market for Common Equity and Related Stockholder Matters
The Company's Common Stock is traded over-the-counter in the NASDAQ System
as NASDAQ Small Cap securities 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 1998 and
1997. Quotations represent inter-dealer quotations, without adjustment for
retail mark-ups, mark-downs or commissions, and may not necessarily represent
actual transactions.
Fiscal 1998 Fiscal 1997
Quarter Ended High Bid Low Bid High Bid Low Bid
- ------------- -------- ------- -------- -------
Common Stock:
March 31 $4.52 $ 2.52 $5.12 $2.76
June 30 3.13 2.48 3.24 1.88
September 30 2.25 .26 2.76 1.36
December 31 1.25 .56 1.88 .64
As of March 19, 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.
A one for four reverse split was approved by shareholders during 1998 (See
Item 4. "Submission of Matters to a Vote of Security Holders.") and all values
pertaining to the Company's stock have been adjusted in this report. As of March
22, 1999, there are 3,277,438 shares of Common Stock outstanding, 541,708
warrants and 915,500 options.
Item 6. Management's Discussion and Analysis or Plan of Operation
The Company's operating profit for fiscal 1994, 1995, 1996, 1997, and 1998
decreased significantly as compared to fiscal 1993. These declines were
principally because of significant competitive price pressure for the Company's
air pollution monitoring instruments, thus forcing the Company to lower its
domestic and foreign bids, reducing the number of the Company's bids awarded and
reducing the profit margin on the bids awarded to the Company. In the middle of
1996 two companies were acquired in an attempt to diversify the Company's
technology and to increase profit margins. The revenue increased in 1996 and
1997 due to these acquisitions, however the profit margin did not increase and
the additional overhead continued the downward trend for the Company. Beginning
in the third quarter of fiscal 1994, the Company implemented certain cost
reduction measures in its operating expenses, suspended major new product
development efforts and scaled back its efforts to improve or modify existing
technologies in response to the competitive price pressures. Throughout 1995 and
1996 the Company shipped record numbers of instrumentation units, but continued
competitive pricing pressure resulted in lowered gross margins. In July 1996 the
above acquisitions were completed. The program to diversify was deemed
unsuccessful and a reorganization was begun in early 1998 consisting of the
16
<PAGE>
disposition of acquired subsidiary assets and a reduction of personnel.
Management determined that the focus of its core business should be redirected
to an attempt to achieve designated vendor status in the People's Republic of
China. In June 1998 the Company was awarded the largest contract in its history,
in excess of $5 million dollars, in a designated vendor's status. Due to banking
factors outside of the control of the contractual parties no revenues were
obtained during 1998. This banking delay has continued to the date of this
report.
Net revenues in 1998 were $2,808,000 compared to $6,793,000 in 1997, a 59%
decrease. The decrease was entirely due to the discontinuance of subsidiary
business. The revenues for the core business were essentially the same as the
year before.
Gross margin was 35% of consolidated net revenues in 1998 compared to 20%
of the consolidated revenues of 1997. The increase in gross margin was due to
the disposition of the subsidiary businesses.
Selling, general and administrative expenses decreased from a
consolidated $2,495,000 in 1997 to $1,584,000 in 1998.
Research and development expense was essentially unchanged.
Interest expense decreased from $233,000 in 1997 to $28,000 in 1998,
primarily due to the elimination of subsidiary financing in 1997.
Because of the disposition of subsidiary assets in 1998 the Company
sustained a net loss from discontinued operations of $1,034,000.
The core business sustained a loss of $527,000 from continuing operations
primarily due to increased staffing and related expenses in anticipation of the
China contract performance which failed to commence during 1998.
As a result of the foregoing factors, net loss was $1,561,000 in 1998
compared to a net loss of $1,231,000 in 1997.
Comprehensive loss is comprised of the foreign currency translation
adjustment and the change in unrealized gain on marketable securities.
Comprehensive loss was $27,837 in 1998 compared to a comprehensive loss of
$117,988 in 1997.
The Company initiated attempts to sell Nutek on February 16, 1998 which
were unsuccessful and resulted in a Chapter XI filing with subsequent
liquidation.
Even though the 1997 liquidation appraisal of the subsidiary Nutek assets
was indicated as approximately $1,200,000, the actual liquidation realized
$160,000 in July 1998. These proceeds plus the Nutek receivables were
approximatley $400,000 short of the amount due under a guaranty by the Company.
A reserve of $350,000 has been established and is part of the indicated
$1,034,000 loss from discontinued operations.
17
<PAGE>
Liquidity and Capital Resources
The Company has historically financed operations through bank borrowings
and the issuance of common stock in both public and private offerings. Current
market value of the Company's Common Stock does not preclude this approach as of
this date.
Since January 1998, the Company has raised $697,569 in private placements
which have resulted in the issuance of 854,005 shares of Common Stock and
253,874 options and warrants.
Working capital at December 31, 1998 was $1,376,000. Management believes
that the anticipated cash flows from operations will be sufficient to meet the
Company's short-term cash needs. As of March 19, 1999, the Company had no
material commitments for capital expenditures.
Cash decreased from $515,000 at the end of 1997 to $64,000 at the end of
1998. The inventory purchased in anticipation of performance of the contract
with China was increased $333,000 and long-term liabilities were reduced
$291,000 during 1998.
Seasonality
Management does not believe that the Company's business is seasonal.
Year 2000 Compliance
General. The Company believes it has completed all internal efforts to
avoid the adverse effects of the Year 2000 issue.
State of Readiness. The Company received certifications of compliance from
all vendors deemed material to its business operations during the first quarter
of 1999.
Contingency Plans. The Company believes it should not rely completely on
key vendor compliance certification. Therefore costs are being incurred to
enable the Company to utilize alternative design procedures to allow alternate
vendor supply. These design changes are on-going and the costs are not expected
to be material.
Risks. The Company presently does not anticipate any material business
disruption will occur as a result of Year 2000 issues. The greatest potential
risk appears to be with federal, state and local governments.
Item 7. Financial Statements
The Company's Financial Statements and the related Notes thereto are set
forth at pages F-1 through F-23.
18
<PAGE>
Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosures
None.
19
<PAGE>
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act
Directors, Executive Officers and Key Employees
Set forth below are the names, ages, positions and business experience of
the directors, executive officers and key employees of the Company and Dasibi
Environmental Corp.
Name Age Position(s) With Company And Dasibi
---- --- -----------------------------------
Albert E. Gosselin, Jr. (1) 66 President, Chief Executive Officer
and Chairman of the Board of
Directors
Cynthia L. Gosselin 37 Operations Manager of Dasibi
Barbara L. Gosselin (1) 63 Secretary and Director
Marcia A. Smith 60 Director of Pollution Research and
Control Corp.; Manager of
Administration of Dasibi
Environmental Corp.
Gary L. Dudley 61 Director
Craig E. Gosselin (1) 39 Director
Barry Soltani 42 Director
(1) The individuals named above hold the identical positions indicated with
Dasibi Environmental Corp. ("Dasibi")
All directors hold office until the next annual meeting of the Company's
shareholders and until their successors have been elected and qualify. Officers
serve at the pleasure of the board of directors.
Family Relationships
Albert E. Gosselin, Jr., and Barbara L. Gosselin, husband and wife, are the
parents of Craig E, and Cynthia L., Gosselin, both of whom are adults. All of
the foregoing are presently serving as executive officers and/or directors of
the Company. Except as set forth herein, no family relationship exists between
or among any director or executive officer or the Company.
Business Experience
Albert E. Gosselin, Jr., has served as the President, Chief Executive
Officer and Chairman of the Board of Directors of the Company (formerly "Dasibi
Environmental Corp." and "A.E. Gosselin Engineering, Inc.") and Dasibi (formerly
"Baral Engineering, Inc."), corporations which he co-founded with Barbara L.
20
<PAGE>
Gosselin, since the organization of those corporations in December 1971 and July
1976, respectively. He also served as the President, Chief Executive Officer and
Chairman of the Board of Directors of the Company's former parent corporation, a
corporation also named "Pollution Research and Control Corp. ("PRCC") which he
co-founded with Mrs. Gosselin under the name of "A.E. Gosselin Engineering Co.,"
from its inception date in 1966 through the date of its spin-off in October
1986. Mr. Gosselin also served as the President, Chief Executive Officer and
Chairman of the Board of Directors of Applied Conservation Technology, Inc.
("ACT"), a former wholly-owned subsidiary of Pollution Research and Control
Corp. engaged in the business of providing environmental impact reports to
electric utilities, together with the Company, from 1980 through the date of the
purchase of ACT by its management from PRCC in November 1986. ACT is presently a
diversified environmental consulting firm owned and managed by Gary L. Dudley, a
Company director, and other members of management. Mr. Gosselin received a
Bachelor of Science in mechanical engineering from Loyola University, Los
Angeles, California, in 1954. He has been a registered mechanical engineer in
the State of California since 1959.
Cynthia L. Gosselin served as the Chief Financial Officer of the Company
and Dasibi from May 1990 to January 1998, when she resigned those positions and
became Operations Manager of Dasibi and the Company. Additionally, she has acted
as Dasibi's Purchasing Agent since May 1990. She was employed by Dasibi in
various capacities, including Production Manager, from 1983 through April 1990.
Ms. Gosselin received a B.S. in business from the University of California at
Long Beach in 1982.
Barbara L. Gosselin has served as an executive officer and a director of
the Company, which she co-founded with Albert E. Gosselin, Jr., in December
1971, since its inception. Mrs. Gosselin has served in the office of Secretary
of the Company since April 1990 and, from inception through April 1990, she
served as the Company's Chief Financial Officer. Mrs. Gosselin, together with
Mr. Gosselin, co-founded Dasibi in July 1976 and she has served as the Secretary
and a director of Dasibi since its organization. Mrs. Gosselin was the
co-founder in 1966, with Mr. Gosselin, of PRCC, the Company's former parent
corporation, for which she served as an executive officer and a director until
it was spun-off in October 1986.
Marcia A. Smith has served as a director of the Company and Dasibi since
May 1990. She has been employed as the Manager of Administration and in various
other capacitities with Dasibi since 1979.
Gary L. Dudley has served as a director of the Company during the periods
since June 1991 and from 1980 through January 1991, and he served as the
Company's Vice President from 1979 through November 1986. Mr. Dudley also served
as an executive officer and a director of PRCC, the Company's former parent
corporation, from 1984 through the date of the spin-off of PRCC in October 1986.
Mr. Dudley has been the President and a principal shareholder of ACT, now
located in Westminster, California, a diversified environmental consulting firm
formerly wholly-owned, together with the Company, by PRCC, since the purchase of
ACT by its management from PRCC in November 1986. He served as ACT's Vice
President from 1980 through 1986. From 1962 through 1978, Mr. Dudley was
employed in various engineering- related positions by Southern California Edison
Company, TRW Systems, McDonnell Douglas Corporation and North American Rockwell
Corporation. He received a Bachelor of Science in engineering from California
State University in 1962 and a Masters Degree in Mechanical Engineering from the
University of Southern California in 1966. Mr. Dudley is a registered mechanical
engineer in the State of California and a member of the Association of
Environmental Professionals.
21
<PAGE>
Craig E. Gosselin has served as a director of the Company and Dasibi since
October 1987. Mr. Gosselin is an attorney who has been licensed to practice law
in the State of California since 1984. He has served as the Vice President and
General Counsel of Vans, Inc., a publicly-held manufacturer, distributor and
retailer of footwear, snowboard boots, apparel and related accessories located
in Santa Fe Springs, California, since July 1992. He received a Bachelor of
Business Administration from Loyola Marymount University in 1981 and a Juris
Doctor from Southwestern University School of Law in 1984.
Barry Soltani received a PhD in economics from the University of
California, Riverside in 1989, his Master's from the University of California,
Riverside in 1983, and graduated from San Diego State University in 1981 with a
B.B.A. in economics. Dr. Soltani is directly involved in funding for industrial
development projects in China and since 1993 has been an independent consultant
in corporate finance for joint ventures in China. Dr. Soltani has served as a
director of the Company since April 22, 1997. Since 1989, he has served as the
President and a director of PIC Computers, Ltd., Macau, a Macau company owned
50% by him and Mr. Mehrdad Etemad, each of whom is the record owner of
approximately 7% of the Company's outstanding shares of Common Stock, which is
engaged in the marketing, resale and wholesale distribution of computers and
computer-related equipment.
The Company, Albert E. Gosselin, Jr., President, Chief Executive Officer
and Chairman of the Board of Directors of the Company, and Cynthia L. Gosselin,
Operations Manager of Dasibi and former Chief Financial Officer of the Company
were named as defendants in Case Number 1.94CV01425 filed by the Securities and
Exchange Commission in the United States District Court for the District of
Columbia on June 28, 1994. The Commission alleged in the Complaint for Permanent
Injunction and Other Relief, among other things, that the Company and Mr.
Gosselin committed numerous violations of the federal securities laws in 1989,
1990 and 1991, including disseminating materially false and misleading
information about the Company to the investing public through public
announcements and filings with the Commission relating, primarily, to the
Company's acquisition and subsequent disposition of two companies, Air
Instruments and Measurements, Inc. and Environmental Information Systems.
Additionally, the Complaint alleged that the Company's financial statements
incorrectly reported inventory figures and failed to reflect timely write-offs
of uncollectible accounts receivable and that the Company materially understated
annual and quarterly losses during this period. The allegations against Ms.
Gosselin were that she served as the Company's Chief Financial Officer and that
she was responsible for the Company's inadequate books and records and internal
controls during this period. The Commission also alleged that the Company
violated the federal securities laws in connection with an unregistered public
distribution of securities. The Commission sought to enjoin the defendants from
engaging in the future in similar illegal acts and practices and to order
defendant Albert E. Gosselin, Jr., to pay civil penalties. On July 14, 1994, the
defendants, without admitting or denying any of the allegations of the
Complaint, consented to the entry of Final Judgment of Permanent Injunction and
Other Relief (the "Final Judgment"). The Final Judgment as to Mr. Gosselin
required him to pay a civil penalty in the amount of $25,000.
22
<PAGE>
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's executive officers and directors, and persons who own more than
ten percent of a registered class of the Company's equity securities, to file
with the Securities and Exchange Commission initial reports of ownership, and
reports of changes in ownership, of Common Stock and other equity securities of
the Company. Executive officers, directors and greater than ten percent
shareholders are required by Commission regulations to furnish the Company with
copies of all Section 16(a) reports they file. To the Company's knowledge, based
solely on a review of the copies of such reports furnished to the Company, and
representations that no other reports were required during the fiscal year ended
December 31, 1998, the Company's executive officers, directors and greater than
ten per cent beneficial owners of its Common Stock, complied with all Section
16(a) filing requirements applicable to them.
Item 10. Executive Compensation
Executive Compensation
The following table sets forth the total cash and non-cash compensation
paid by the Company for the fiscal years ended December 31, 1996, 1997, and 1998
to the Company's President and Chief Executive Officer who was the only
executive officer of the Company whose aggregate cash compensation exceeded
$100,000 for the 1998 fiscal year.
SUMMARY COMPENSATION TABLE
Annual Compensation
Long Term
Compensation Awards
Securities Underlying
Name and Principal Position Year Salary Options/SARs(#)
- ---------------------------- ---- ------ --------------------
Albert E. Gosselin, Jr., President, 1998 $ 202,223 --
Chief Executive Officer and 1997 $ 151,000 --
Chairman of the Board 1996 $ 211,925 55,000
The Company does not provide officers or employees with pension, stock
appreciation rights, long-term incentive or other plans.
Compensation of Directors
Directors do not receive compensation pursuant to any standard arrangement
for their services as directors.
23
<PAGE>
Employment Agreements
The Company has employment agreements with Albert E. Gosselin, Jr., the
President, Chief Executive Officer and Chairman of the Board of Directors of the
Company, Cynthia L. Gosselin, and Marcia Smith. Mr. Gosselin's employment
agreement (the "Agreement") was first approved by the Board of Directors on July
30, 1987, and has since been extended through August 31, 2003. The Agreement, as
extended, provides for the payment to Mr. Gosselin of a base salary of $200,000,
$210,000, 220,000, 230,000, 240,000 and $250,000 during the one-year periods
ending August 31, 1998, 1999, 2000, 2001, 2002, and 2003 respectively. (See
"Executive Compensation" under this Item 10. "Executive Compensation"
hereinabove.) The Agreement further obligates the Company to permit Mr. Gosselin
to participate in the Company's Employee's Incentive Stock Option Plan and Group
Medical Plan and any other health, life insurance, group medical, disability
income insurance and/or stock option plan adopted by the Company. Under the
Agreement, Mr. Gosselin's salary continues in the event of his disability and
for two years after his death. He is also entitled to a lump sum severance
payment equivalent to 2.99 times his current salary in the event of his
termination as President or Chief Executive Officer within eighteen months after
a "change of control" of the Company, including, among other events, certain
types of mergers and other business combinations, material changes in the
composition of the Board of Directors or the beneficial ownership of the Common
Stock, the sale of substantially all of the Company's assets or securities and
the material downsizing or dissolution of the Company. If such an event occurs
during fiscal 1999, Mr. Gosselin would be entitled to receive $627,900 as a
severance payment.
The Company's employment agreement with Cynthia L. Gosselin first commenced
on July 20, 1994, was amended on February 9, 1998 and continues through August
31, 2003. Marcia Smith's employment agreement commenced on June 9, 1997 and
continues through August 31, 2003 The agreements provide for the payment to them
of a base salary of $75,000 during each one-year period ended July 20, 1997,
through 2003 and annual increases in the discretion of the Board of Directors.
Pursuant to the employment agreements, they are required to be reimbursed by the
Company for their expenses incurred in connection with the performance of their
responsibilities. In the event of their death or disability, the agreements
provide for their salary to continue for six months thereafter. They are also
entitled to participate in any Company health, life insurance, group medical,
disability income insurance and/or stock option plan. The employment agreements
provide that they are entitled to a lump sum severance payment equivalent to
2.99 times their current salary in the event of their termination within
eighteen months after a "change in control" of the Company, as defined in the
Company's Employment Agreement with Mr. Albert E. Gosselin, Jr., described
hereinabove. They would each be entitled to receive a severance payment of
$224,250 if a change in control of the Company occurs during fiscal 1999.
Item 11. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth information as of March 19, 1999, regarding
the ownership of the Company's Common Stock by each shareholder known by the
Company to be the beneficial owner of more than five percent of its outstanding
shares of Common Stock, each of the named executive officers, each director, and
24
<PAGE>
all executive officers and directors as a group. Except as otherwise indicated,
each of the shareholders has sole voting and investment power with respect to
the shares of Common Stock beneficially owned.
Name and Address Amount Percent of
of Beneficial Owner (1) Beneficially Owned Class (2)
- ----------------------- ------------------ -----------
Ronald Patterson 358,666 (3) 10.5 %
Albert E. and Barbara L. Gosselin, Jr. 284,057 (4) 8.5 %
Barry Soltani 235,000 (5) 7.1 %
Mehrdad Etemad 225,000 6.8 %
Phillip Huss 183,332 (6) 5.4 %
Lee N. Sion 164,125 (7) 4.9 %
Gary L. Dudley 47,500 (8) 1.4 %
Marcia A. Smith 30,320 (9) *
Craig E. Gosselin 16,250 (10) *
All Executive Officers and Directors as
a Group (seven persons) 17.0 %
* Less than one percent
(1) The address of Mr. Lee Sion is P.O. Box 910, Glendale, California 91209.
The addresses of the rest of the individuals named above is 506 Paula
Avenue, Glendale, California 91201.
(2) Assumes the exercise of outstanding options and warrants specific to the
referenced party, the denominator of which is made up of the outstanding
shares of Common Stock plus those specific warrants and options.
(3) Includes 133,333 shares of Common Stock issuable upon the exercise of an
option owned of record by Ronald Patterson.
(4) Includes 73,250 shares of Common Stock issuable upon the exercise of
options owned of record by Albert E. Gosselin, Jr. exercisable within 60
days. Does not include a total of 3,833 shares of Common Stock owned of
25
<PAGE>
record collectively by Craig. E., Cynthia L., and Jennifer Gosselin, the
adult children of Albert E. and Barbara Gosselin, Jr., as to which Mr. and
Mrs. Gosselin disclaim any benefical ownership. Mr. & Mrs. Gosselin hold
their shares of Common Stock as community property and exercise joint
voting and investment power with respect to such shares.
(5) Includes 10,000 shares of Common Stock issuable upon the exercise of an
option owned of record by Barry Soltani and exercisable within 60 days.
(6) Includes 116,666 shares of Common Stock issuable upon the exercise of
options owned of record by Phillip Huss.
(7) Includes 21,875 shares of Common Stock issuable upon the exercise of
options owned of record by Lee N. Sion which is exercisable within 60 days.
(8) Represents 27,500 shares of Common Stock issuable upon the exercise of
options owned of record by Gary L. Dudley which is exercisable within 60
days.
(9) Includes 28,750 shares of Common Stock issuable upon the exercise of an
option owned of record by Marcia Smith, and exercisable within 60 days.
(10) Craig E. Gosselin is the adult son of Albert E. and Barbara L. Gosselin,
Jr., who disclaim any beneficial ownership of his shares and includes
15,000 shares of Common Stock issuable upon the exercise of options owned
of record and exercisable within 60 days.
Item 12. Certain Relationships and Related Transactions
On May 8, 1998, the Company issued an aggregate of 100,000 and 20,000
shares of Series A Preferred Stock to each of Messrs. Albert E. Gosslein, Jr.,
and Gary L. Dudley, executive officers and/or directors of the Company,
respectively, in consideration for the amounts of $50,000 and $10,000 in cash,
respectively. Each share of Series A Convertible Preferred Stock was converted
into and exchanged for one share of Common Stock on March 17, 1999.
The Company issued a total of 225,000 shares of Series B Preferred Stock to
each of Dr. Barry Soltani and Mr. Mehrdad Etemad on June 24, 1998 in
consideration for the sale to the Company of a facility comprised of
approximately 3000 square feet known as the "Macau Technician Service Office
Center" located at Units E and F, Iau Luen Building, #15 Rua Ferreira, Do
Amaral, Macau. The facility has been leased to PIC Computers, Ltd., a Macau
corporation owned by Dr. Soltani and Mr. Etemad, pursuant to a "triple net"
lease agreement for a period of five years at a rental rate of approximately
$8,000 per month. Each share of Series B Preferred Stock was converted into one
share of Common Stock on March 17, 1999.
26
<PAGE>
Item 13. Exhibits and Reports on Form 8-KA
(a) Exhibits
The exhibits listed in the Exhibit Index located at Pages E-1
through E-155 are filed pursuant to Item 13(a) of this Report.
(b) Reports on Form 8-KA
The Company filed one report on Form 8-KA on August 28, 1998
disclosing that Turbodyne Technology, Inc. unilaterally terminated an agreement
theCompany and Turbodyne had executed pursuant to which Turbodyne had agreed to
acquire two of the Company's w holly-owned subsidiaries, Dasibi Environmental
Corp. and Logan Medical Devices.
27
<PAGE>
SIGNATURES
In Accordance with Section 13 or 15(d) of the Securities and Exchange Act
of 1934, the registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Date: March 22, 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 of Directors
In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the registrant and on the dates indicated.
Date: March 22, 1999 /s/ Albert E. Gosselin, Jr.
-----------------------------------------
Albert E. Gosselin, Jr., President, Chief
Executive Officer and Chairman of the
Board of Directors
(Principal Executive Officer)
Date: March 22, 1999 /s/ Barbara L. Gosselin
--------------------------------
Barbara L. Gosselin, Director
Date: March 22, 1999 /s/ Gary L. Dudley
--------------------------------
Gary L. Dudley, Director
Date: March 22, 1999 /s/ Marcia A. Smith
--------------------------------
Marcia A. Smith, Director
Date: March 22, 1999 /s/ Craig E. Gosselin
--------------------------------
Craig E. Gosselin, Director
Date: March 22, 1999 /s/ Barry Soltani
--------------------------------
Barry Soltani, Director
28
<PAGE>
INDEX
-----
Page
----
Independent Auditors' Report F-2
Consolidated Balance Sheet F-3
Consolidated Statements of Operations and Comprehensive Loss F-5
Consolidated Statements of Stockholders' Equity F-6
Consolidated Statements of Cash Flows F-7
Notes to Consolidated Financial Statements F-8
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors
Pollution Research and Control Corp.
Glendale, California
We have audited the accompanying consolidated balance sheet of Pollution
Research and Control Corp. and Subsidiaries as of December 31, 1998, and the
related consolidated statements of operations and comprehensive loss,
stockholders' equity and cash flows for the years ended December 31, 1998 and
1997. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Pollution Research
and Control Corp. and Subsidiaries as of December 31, 1998, and the consolidated
results of their operations and their cash flows for the years ended December
31, 1998 and 1997 in conformity with generally accepted accounting principles.
AJ. ROBBINS, P.C.
CERTIFIED PUBLIC ACCOUNTANTS
AND CONSULTANTS
Denver, Colorado
February 12, 1999
F-2
<PAGE>
POLLUTION RESEARCH AND CONTROL CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31, 1998
-----------------------
ASSETS
------
CURRENT ASSETS:
Cash $ 63,951
Accounts receivable, trade, less allowance
for doubtful accounts of $4,734 217,869
Accounts receivable, related party 227,938
Due from factor 55,164
Inventories 1,627,155
Other current assets 9,080
----------
Total Current Assets 2,201,157
----------
PROPERTY, EQUIPMENT AND LEASEHOLD
IMPROVEMENTS, less accumulated
depreciation and amortization of $183,979 111,495
----------
OTHER ASSETS:
Technical Service Center 600,000
Patents 23,509
----------
Total Other Assets 623,509
----------
$2,936,161
==========
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
F-3
<PAGE>
POLLUTION RESEARCH AND CONTROL CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31, 1998
-----------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Accounts payable, trade $ 256,693
Accrued liabilities 568,062
-----------
Total Current Liabilities 824,755
DEFERRED RENT 58,134
-----------
Total Liabilities 882,889
-----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, 20,000,000 shares authorized:
Series A, $.01 par value, 220,000 shares
issued and outstanding, distribution upon
liquidation equal to the offering price 2,200
Series B, $.01 par value, 450,000 shares issued
and outstanding, distribution upon liquidation
equal to the offering price 4,500
Common stock, no par value, 30,000,000 shares
authorized, 2,368,439 issued and outstanding 6,704,195
Additional paid-in capital 928,831
Accumulated deficit (5,586,454)
-----------
Total Stockholders' Equity 2,053,272
-----------
$ 2,936,161
===========
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
F-4
<PAGE>
<TABLE>
<CAPTION>
POLLUTION RESEARCH AND CONTROL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
1998 1997
----------- -----------
<S> <C> <C>
NET REVENUES $ 2,807,511 $ 3,072,600
COST OF GOODS SOLD 1,816,350 2,246,712
----------- -----------
GROSS PROFIT 991,161 825,888
----------- -----------
OPERATING EXPENSES:
Selling, general and administrative 1,583,679 1,695,889
Research and development 20,175 36,903
----------- -----------
Total Operating Expenses 1,603,854 1,732,792
----------- -----------
LOSS FROM OPERATIONS (612,693) (906,904)
----------- -----------
OTHER INCOME (EXPENSE):
Gain on sale of marketable securities 6,428 82,896
Other income 101,000 --
Interest income 6,029 3,499
Interest expense (27,961) (16,097)
----------- -----------
Net Other Income (Expense) 85,496 70,298
----------- -----------
LOSS FROM CONTINUING OPERATIONS, BEFORE INCOME
TAXES (BENEFIT) (527,197) (836,606)
----------- -----------
PROVISION (BENEFIT) FOR INCOME TAXES:
Current -- (9,800)
Deferred -- 335,000
----------- -----------
Total Provision (Benefit) for Income Taxes -- 325,200
----------- -----------
LOSS FROM CONTINUING OPERATIONS (527,197) (1,161,806)
----------- -----------
LOSS FROM DISCONTINUED OPERATIONS:
Loss from operations, less applicable
income tax benefit of $-0- and $390,000 (115,301) (69,166)
Loss on disposal/abandonment, less applicable
income tax benefit of $-0- (918,411) --
----------- -----------
Total Loss From Discontinued Operations (1,033,712) (69,166)
----------- -----------
NET LOSS (1,560,909) (1,230,972)
----------- -----------
OTHER COMPREHENSIVE LOSS:
Foreign currency translation adjustment (24,587) (22,238)
Change in unrealized gain on marketable securities (3,250) (95,750)
----------- -----------
Total Other Comprehensive Loss (27,837) (117,988)
----------- -----------
COMPREHENSIVE LOSS $(1,588,746) $(1,348,960)
=========== ===========
NET LOSS PER SHARE - Basic and Diluted:
Continuing operations $ (.23) $ (.54)
Discontinued operations:
Loss from operations (.05) (.03)
Loss on disposal (.40) --
----------- -----------
$ (.68) $ (.57)
----------- -----------
Weighted Average Shares 2,283,093 2,168,433
=========== ===========
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
F-5
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
POLLUTION RESEARCH AND CONTROL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1998
Series A Series B
Common Stock Preferred Stock Preferred Stock
----------------------- ---------------------- ------------------------
Shares Amount Shares Amount Shares Amount
--------- ----------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Balances, 2,168,433 $ 6,588,980 -- $ -- -- $ --
December 31, 1996
Change in unrealized gain -- -- -- -- -- --
on marketable securities
Change in unrealized -- -- -- -- -- --
foreign currency
translation loss
Net loss for the year -- -- -- -- -- --
----------- ----------- ----------- ----------- ----------- -----------
Balances, 2,168,433 6,588,980 -- -- -- --
December 31, 1997
Sale of common stock, net 231,256 202,072 -- -- -- --
of offering costs of
$49,997
Sale of preferred stock -- -- 220,000 2,200 -- --
Issuance of preferred -- -- -- -- 450,000 4,500
stock for the Technical
Service Center
Forgiveness of notes (31,250) (86,857) -- -- -- --
Stock-based compensation -- -- -- -- -- --
expense recognized
Change in unrealized gain -- -- -- -- -- --
on marketable securities
Change in unrealized -- -- -- -- -- --
foreign currency
translation loss
Net loss for the year -- -- -- -- -- --
----------- ----------- ----------- ----------- ----------- -----------
Balances, 2,368,439 $ 6,704,195 220,000 $ 2,200 450,000 $ 4,500
=========== =========== =========== =========== =========== ===========
December 31, 1998
F-6 (Continued on following page)
<PAGE>
POLLUTION RESEARCH AND CONTROL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Continued)
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1998
Unrealized
Unrealized Foreign
Notes Due Additional Gain on Currency Total
From Sale Paid-In Accumulated Marketable Translation Stockholders'
Of Stock Capital Deficit Securities Gain Equity
------------ ---------- ----------- ---------- ------------ --------------
Balances, $ (86,857) $ 145,764 $(2,794,573 $ 99,000 $ 46,825 $ 3,999,139
December 31, 1996
Change in unrealized gain -- -- -- (95,750) -- (95,750)
on marketable securities
Change in unrealized -- -- -- -- (22,238) (22,238)
foreign currency
translation loss
Net loss for the year -- -- (1,230,972) -- -- (1,230,972)
----------- ----------- ----------- ----------- ----------- -----------
Balances, (86,857) 145,764 (4,025,545) 3,250 24,587 2,650,179
December 31, 1997
Sale of common stock, net -- -- -- -- -- 202,072
of offering costs of
$49,997
Sale of preferred stock -- 107,800 -- -- -- 110,000
Issuance of preferred -- 595,500 -- -- -- 600,000
stock for the Technical
Service Center
Forgiveness of notes 86,857 -- -- -- -- --
Stock-based compensation -- 79,767 -- -- -- 79,767
expense recognized
Change in unrealized gain -- -- -- (3,250) -- (3,250)
on marketable securities
Change in unrealized -- -- -- -- (24,587) (24,587)
foreign currency
translation loss
Net loss for the year -- -- (1,560,909) -- -- (1,560,909)
----------- ----------- ----------- ----------- ----------- -----------
Balances, $ -- $ 928,831 $(5,586,454) $ -- $ -- $ 2,053,272
December 31, 1998 =========== =========== =========== =========== =========== ===========
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
F-6
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
POLLUTION RESEARCH AND CONTROL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
1998 1997
------------ -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Reconciliation of net income (loss) to net cash flows
(used in) operating activities:
Net income (loss) $(1,560,909) $(1,230,972)
Loss on disposition/abandonment of operations 918,411 --
Depreciation and amortization 90,034 229,025
Deferred rent (11,534) 3,466
Deferred income taxes -- (55,000)
Stock-based compensation expense 54,977 --
Changes in operating assets and liabilities:
Accounts receivable, trade, net 8,384 1,064,863
Accounts receivable, related party (20,389) --
Inventories 123,717 62,191
Due from factor (55,164) --
Other current assets 4,769 4,242
Secured overdraft facility 22,794 58,021
Accounts payable, trade 96,708 (333,656)
Accounts payable, officer (12,497) 176
Accrued liabilities (3,242) 58,091
Customer advances (143,695) 92,875
Income taxes payable -- (9,800)
Other assets (14) 11,527
----------- -----------
Net Cash Flows (Used in) Operating Activities (487,650) (44,951)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, equipment and (1,919) (9,838)
leasehold improvements
Other 515 --
----------- -----------
Net Cash Flows (Used in) Investing Activities (1,404) (9,838)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock 252,069 --
Payment of offering costs (25,207)
Advances on notes payable -- 3,774,645
Payments on notes payable (267,674) (3,799,180)
Additions to long term debt -- 100,000
Payments of long term debt (15,565) (221,368)
Payments of long term debt - related parties (14,517) (5,413)
Proceeds from issuance of preferred stock 110,000 --
----------- -----------
Net Cash Flows (Used In) Provided
by Financing Activities 39,106 (151,316)
----------- -----------
EFFECT OF EXCHANGE RATE CHANGES ON CASH (1,323) (1,843)
----------- -----------
(DECREASE) IN CASH (451,271) (207,948)
CASH, beginning of year 515,222 723,170
----------- -----------
CASH, end of year $ 63,951 $ 515,222
=========== ===========
Supplemental Cash Flow Information:
See Note 17
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
F-7
</TABLE>
<PAGE>
POLLUTION RESEARCH AND CONTROL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
----------------------------------------------
NOTE 1 - BUSINESS ACTIVITY AND MANAGEMENT'S PLANS
Pollution Research and Control Corp., a California corporation, primarily
designs, manufactures and markets air pollution monitoring instruments, through
its wholly-owned subsidiary Dasibi Environmental Corporation ("Dasibi").
Pollution Research and Control Corp. also designed and manufactured electrical
control panels and medical instrumentation through its wholly-owned subsidiaries
Nutek, Inc. ("Nutek"), and Logan Medical Devices, Inc. ("LMD") and LMD's wholly
owned subsidiary, Logan Research Limited ("LRL"), respectively. The operations
of Nutek and LRL were discontinued in April 1998 and February 1998, respectively
(Note 9).
In 1998, Dasibi was awarded a $5.2 million contract to install an eleven city
air monitoring network in the Peoples Republic of China. Dasibi's ability to
perform under the terms of the agreement between Dasibi and China National
Technical Import and Export Corporation and China Green Enterprises, is
contingent upon Dasibi obtaining working capital to finance the cost of
equipment, training and contingencies. Management is currently working on
securing the working capital financing, which is expected to close in the near
future.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Consolidation
- -------------
The consolidated financial statements include the accounts of Pollution Research
and Control Corp. and its wholly-owned subsidiaries (the "Company"). All
significant intercompany balances and transactions have been eliminated in
consolidation.
Revenue Recognition
- -------------------
Revenue is recognized upon shipment of products.
Inventories
- -----------
Inventories are stated at the lower of cost or market. Cost is determined on the
first-in first-out (FIFO) basis.
Property, Equipment and Leasehold Improvements and Depreciation
- ---------------------------------------------------------------
Property, equipment and leasehold improvements are stated at cost less
accumulated depreciation and amortization. Depreciation is provided for on the
straight-line method over the estimated useful lives of the assets, generally
five to ten years. Amortization of leasehold improvements is over the shorter of
the life of the lease or five years. Total depreciation expense was $79,427 and
$190,047 for the years ended December 31, 1998 and 1997, respectively.
F-8
<PAGE>
POLLUTION RESEARCH AND CONTROL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
----------------------------------------------
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Goodwill
- --------
Goodwill had been previously recorded in connection with the acquisition of
Logan Medical Devices, Inc. and was being amortized on a straight-line basis
over 40 years. Amortization of goodwill was $7,003 for the year ended December
31, 1997. The goodwill was eliminated upon the discontinuance of Logan's
operation (Note 9).
Stock-Based Compensation
- ------------------------
The Company accounts for stock based compensation in accordance with Statement
of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" ("SFAS 123"). This standard requires the Company to adopt the
"fair value" method with respect to stock-based compensation of consultants and
other non-employees. The Company did not change its method of accounting with
respect to employee stock options; the Company continues to account for these
under the "intrinsic value" method, and to furnish the proforma disclosures
required by SFAS 123. See Notes 13 and 14 for additional information with
respect to stock-based compensation.
Earnings per Share
- ------------------
In 1997, the Financial Accounting Standards Board (FASB) issued Statement No.
128, "Earnings Per Share". Statement 128 replaced the calculation of primary and
fully diluted earnings per share with basic and diluted earnings per share.
Unlike primary earnings per share, basic earnings per share excludes any
dilutive effects of options, warrants and convertible securities. Diluted
earnings per share is very similar to the previously reported fully diluted
earnings per share. All earnings per share amounts for all periods have been
presented, to conform to Statement 128 requirements.
Cash Equivalents
- ----------------
For purposes of reporting cash flows, the Company considers all funds with
original maturities of three months or less to be cash equivalents.
Fair Value of Financial Instruments
- -----------------------------------
The carrying amounts of cash, accounts receivable, accounts payable and accrued
expenses approximate fair value because of the short maturity of these items.
F-9
<PAGE>
POLLUTION RESEARCH AND CONTROL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
----------------------------------------------
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Investments in Equity Securities
- --------------------------------
Management determines the appropriate classification of its investments in
equity securities at the time of purchase and reevaluates such determinations at
each balance sheet date. The Company has classified its investment portfolio as
available for sale. Available for sale securities are stated at fair market
value with unrealized gains and losses included as a separate component of
stockholders' equity. Realized gains and losses are included in earnings and are
derived using the specific identification method.
Impairment Of Long-Lived Assets
- -------------------------------
The Company evaluates its long-lived assets by measuring the carrying amounts of
assets against the estimated undiscounted future cash flows associated with
them. At the time such evaluations indicate the future undiscounted cash flows
of certain long-lived assets are not sufficient to cover the carrying value of
such assets, the assets are adjusted to their fair values.
Research and Development Costs
- ------------------------------
Research and development costs are charged to operations as incurred.
Income Taxes
- ------------
Deferred income taxes are recorded to reflect the tax consequences in future
years of temporary differences between the tax basis of the assets and
liabilities and their financial statement amounts at the end of each reporting
period. Valuation allowances are established when necessary to reduce deferred
tax assets to the amount expected to be realized. Income tax expense is the tax
payable for the current period and the change during the period in deferred tax
assets and liabilities. The deferred tax assets and liabilities have been netted
to reflect the tax impact of temporary differences. A valuation allowance has
been established for the entire deferred tax asset as management believes that
it is more likely than not that a tax benefit will not be realized.
Use of Estimates in the Preparation of Financial Statements
- -----------------------------------------------------------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
F-10
<PAGE>
POLLUTION RESEARCH AND CONTROL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
----------------------------------------------
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Reclassification
- ----------------
Certain amounts reported in the Company's financial statements for the year
ended December 31, 1997 have been reclassified to conform to the current year
presentation.
Comprehensive Income
- --------------------
In 1998, the Company adopted FASB Statement No. 130, "Reporting Comprehensive
Income". This statement establishes rules for reporting comprehensive income and
its components, which include net income and all other changes in net assets
from non-owner sources. The Company has changed the format of its statement of
operations to present comprehensive income, and has restated prior periods to
conform to the standard.
Segment Reporting
- -----------------
In 1997, the Company adopted FASB Statement No. 131, Disclosures About Segments
of An Enterprise and Related Information. Information regarding the Company's
reportable segments are disclosed in footnote 18.
Year 2000 Issues
- ----------------
Many computer systems and other equipment with embedded chips or microprocessors
may not be able to appropriately interpret dates after December 31, 1999 because
such systems use only two digits to indicate a year in the date field rather
than four digits. If not corrected, many computers and computer applications
could fail or create miscalulations, causing disruptions to the Company's
operations. In addition, the failure of customer and supplier computer systems
could result in interruption of sales and deliveries of key supplies or
utilities. Because of the complexity of the issues and the number of parties
involved, the Company cannot reasonably predict with certainty the nature or
likelihood of such impacts.
Using internal staff and outside consultants, the Company is actively addressing
this situation and anticipates that it will not experience a material adverse
impact to its operations, liquidity or financial condition related to systems
under its control. The Company has addressed the Year 2000 issue by purchasing
and installing Year 2000 compatible software and computers, assessing critical
business relationships requiring modification prior to 2000 and developing
contingency and business continuation plans to mitigate any disruption of the
Company's operations arising from the Year 2000 issue.
The Company is in the process of implementing a plan to obtain information from
its external service providers, significant suppliers and customers, and
financial institutions to confirm their plans and readiness to become Year 2000
compliant, in order to better understand and evaluate how their Year 2000 issues
may affect the Company's operations. The Company currently is not in a position
to assess this aspect of the Year 2000 issue, however, the Company plans to take
the necessary steps to provide itself with reasonable assurance that its service
providers, suppliers, customers and financial institutions are Year 2000
compliant.
F-11
<PAGE>
POLLUTION RESEARCH AND CONTROL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
----------------------------------------------
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
While the Company believes that its own internal assessment and planning efforts
with respect to external service providers, suppliers, customers and financial
institutions are and will be adequate to address its Year 2000 concerns, there
can be no assurance that these efforts will be successful or will not have a
material adverse effect on the Company's operations.
NOTE 3 - MARKETABLE SECURITIES
During 1997 the Company sold 86,000 of Atlanta Technology Group, Inc. (ATYG)
shares, realizing net proceeds and a gain of $82,897 since the shares were
carried at $-0-. The remaining 13,000 shares were sold during the year ended
December 31, 1998, realizing net proceeds and a gain of $6,428.
NOTE 4 - INVENTORIES
Inventories at December 31, 1998 consisted of the following:
Raw materials $ 836,157
Work in process 419,936
Finished goods 371,062
-----------------
Total $ 1,627,155
=================
Inventories at December 31, 1998 include overhead of $429,374.
NOTE 5 - PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS
Property, equipment and leasehold improvements at December 31, 1998 consisted of
the following:
Machinery and equipment $ 79,728
Furniture and fixtures 28,555
Leasehold improvements 187,191
-----------------
295,474
Less accumulated depreciation and amortization 183,979
$ 111,495
=================
F-12
<PAGE>
POLLUTION RESEARCH AND CONTROL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
----------------------------------------------
NOTE 6 - OTHER ASSETS
In June 1998, the Company purchased a technical service center including two
property units comprised of a modern office facility and a technical laboratory
(The Tech Center), valued at $600,000.
The Tech Center is to be used to provide technical and project management
services in connection with the contract to install an eleven city air
monitoring network in the Peoples Republic of China. See Notes 1 and 16.
NOTE 7 - ACCRUED LIABILITIES
Accrued liabilities at December 31, 1998 consisted of the following:
Accrued settlement loss - Nutek $ 349,397
Accrued payroll and related taxes 161,834
Accrued vacation 25,013
Current portion of deferred rent 23,012
Other 8,806
-----------------
Total $ 568,062
=================
NOTE 8 - DEFERRED RENT
Upon execution of a 10 year lease for its present facility in Glendale,
California commencing July 1, 1994, the Company was granted 6 months "free"
rent. As required by generally accepted accounting principles, rent expense is
being recognized by amortizing the total minimum rentals payable under the lease
over the terms of the lease on a straight-line basis. The deferred rent shown on
the balance sheet as of December 31, 1998 represents the excess of the total
amount charged to rent expense over the amounts actually due and payable under
the lease as of such date, of which $23,012 has been classified as current and
$58,135 as long term, respectively.
F-13
<PAGE>
POLLUTION RESEARCH AND CONTROL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
----------------------------------------------
NOTE 9 - DISCONTINUED OPERATIONS
Nutek -
In April 1998, Nutek filed for protection under the Federal Bankruptcy Code. In
June 1998, as a result of the major secured lender's opposition to the
Bankruptcy Code's automatic stay, the Bankruptcy Court permitted the sale of
Nutek's mortgaged property, to satisfy the working capital facility and term
loan obligations to the major secured lender, based upon the major secured
lenders assertion that the assets of Nutek were insufficient to cover the amount
of the secured obligation. The assertion was supported by an appraisal of the
assets, which differed significantly from the original appraisal obtained upon
the purchase of Nutek in 1996. Management believes that there is the possibility
of questionable activities in the 1996 purchase of Nutek and the financing with
the secured lender and appraisal obtained and utilized, and is investigating the
role of all parties involved in the acquisition and financing. Additionally, the
unsecured notes payable to Nutek's former stockholders and to a family member of
an employee were not repaid. The results of operations for Nutek for the
respective periods are reported as a component of discontinued operations in the
consolidated statements of operations. Additionally, the loss incurred on the
disposition/abandonment of assets and liabilities is also presented separately
as a component of discontinued operations.
Logan Research, Ltd. -
In February 1998, the Company disposed of LRL, through a return of 100% of LRL's
stock to its original owner in exchange for release from a $300,000 note payable
and $47,250 of related accrued interest. Unsecured advances from an officer of
LRL were not repaid. The results of operations of LRL for the respective periods
are reported as a component of discontinued operations in the consolidated
statements of operations. Additionally, the gain (loss) incurred on the disposal
of LRL is also presented separately as a component of discontinued operations.
Summarized results of operations for Nutek for the years ended December 31, 1998
and 1997 are as follows:
1998 1997
------------- -------------
Net sales $ 731,636 $ 3,299,687
============= =============
Operating loss $ 61,778 $ 143,755
============= =============
Loss (income) on discontinued operations $ 82,133 $ (58,752)
============= =============
Summarized results of operations for LRL for the years ended December 31, 1998
and 1997 are as follows:
1998 1997
------------- -------------
Net sales $ 49,313 $ 420,480
============= =============
Operating loss $ 25,741 $ 99,497
============= =============
Loss (income) on discontinued operations $ 33,168 $ 127,918
============= =============
F-14
<PAGE>
POLLUTION RESEARCH AND CONTROL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
----------------------------------------------
NOTE 10 - NOTES PAYABLE
In May 1997, the Company entered into an extension of its line of credit
agreement with a bank, which provided borrowings of up to $200,000 through June
3, 1998. Borrowings under this agreement bore interest at the bank's prime rate
plus 2% and was collateralized by substantially all of the Company's assets. The
agreement contained several restrictive covenants common to lines of credit,
including certain tangible net worth and current ratio requirements. The balance
outstanding at December 31, 1997 was $140,000. The line of credit agreement was
not renewed and the outstanding balance was repaid during 1998.
NOTE 11 - DUE FROM FACTOR
In September 1998, the Company entered into a factor agreement with Tri Capital
Finance Corp. to factor its accounts receivable up to $500,000. The Company will
receive up to 80% of the receivables at the time of factoring. The Company
assigns substantially all of its domestic accounts receivable to the factor
without recourse under the terms of the agreement and the factor has a
continuing security in the Company's receivables. A corporate guaranty has been
given to the factor by the Company.
NOTE 12 - INCOME TAXES
The income tax provision (benefit) for the years ended December 31, 1998 and
1997 differs from the computed expected provision (benefit) at the federal
statutory rate for the following reasons:
1998 1997
--------- ---------
Computed expected income tax provision (benefit) $(165,000) $(291,000)
Non-deductible meals and entertainment 3,000 2,000
Temporary differences for items
deductible from (includible in) taxable
income in future years:
Depreciation 1,000 1,000
Inventory valuation allowance (5,000) 29,000
Bad debt allowance -- (2,000)
State income taxes, net of federal income tax effect (23,000) (37,000)
Net operating loss carryforward unutilized (utilized) 189,000 298,000
Alternative minimum tax -- (9,800)
Increase to valuation allowance -- 335,000
--------- ---------
Income tax provision $ -- $ 325,200
========= =========
F-15
<PAGE>
POLLUTION RESEARCH AND CONTROL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
----------------------------------------------
NOTE 12 - INCOME TAXES (Continued)
The components of the deferred tax assets and liabilities as of December 31,
1998 were as follows:
1998
Deferred tax assets: -----------
Temporary differences:
Allowance for doubtful accounts $ 2,000
Inventory valuation allowance 31,000
Accrued expenses 14,000
Stock based compensation 70,000
Loss on joint venture investment 66,000
Tax depreciation in excess of book depreciation (13,000)
Net operating loss carryforward 1,588,000
Less valuation allowance (1,758,000)
-----------
Net long-term deferred tax liability $ --
===========
The components of the deferred tax expense were as follows:
1998
-----------
Allowance for doubtful accounts $ 1,000
Inventory valuation allowance 5,000
Accrued expenses (1,000)
Stock-based compensation (22,000)
Depreciation 13,000
(Unutilization) utilization of net
operating loss carryforward (313,000)
Change in valuation allowance 317,000
-----------
$ --
===========
F-16
<PAGE>
POLLUTION RESEARCH AND CONTROL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
----------------------------------------------
NOTE 12 - INCOME TAXES (Continued)
As of December 31, 1998 the Company has net operating loss carryforwards
available to offset future taxable income of approximately $4,000,000 expiring
in 2005 through 2013.
NOTE 13 - STOCKHOLDERS' EQUITY
Issuance of Common Stock
- ------------------------
On June 30, 1998, the Company sold 231,256 shares of common stock in a private
placement, receiving net proceeds of $226,863 after paying a finders fee of
$25,207.
Reverse Stock Split
- -------------------
During the year ended December 31, 1998, the Company affected a 4 to 1 reverse
stock split. All shares within these financial statements have been adjusted to
reflect this transaction.
Issuance of Preferred Stock
- ---------------------------
The Company is authorized to issue up to 5,000,000 shares of preferred stock,
$.01 par value per share in series to be designated by the Board of Directors.
On May 8, 1998, the Company issued 220,000 shares of Series A Preferred Stock
for a purchase price of $.50 per share, resulting in proceeds to the Company of
$110,000. These shares are convertible into 220,000 shares of common stock after
July 30, 1998. The Series A Preferred Stock have voting rights but no dividend
rights. On June 24, 1998, the Company issued 450,000 shares of Series B
Preferred Stock in connection with the purchase of a Technical Service Center in
Macau (a foreign country located outside of China). These shares are convertible
into 450,000 shares of the Company's common stock after December 31, 1998. The
Series B Preferred Stock have voting rights but no dividend rights.
Warrants
- --------
During 1998, there were 15,000 warrants to purchase the Company's common stock
at $6.80 per share which expired August 31, 1998, and 1,250 warrants at $8.00
per share which expired November 7, 1998.
Options
- -------
On May 30, 1996, the Company issued to a public relations firm options to
purchase 250,000 shares at $3.76 per share and 75,000 shares at $5.00 per share.
The options expire May 29, 2000. The Company believes the public relations firm
has not performed under its contract and the options are presently in dispute.
On May 31, 1996, in connection with the acquisition of Nutek, the Company issued
options to purchase 85,000 shares at $4.40 per share to various consultants and
employees of Nutek. The options may be exercised beginning January 7, 1998 and
expire May 31, 2000. In 1997 8,750 options were cancelled due to employee
departures. The Board of Directors approved a reduction in the exercise price in
1998 to $.75 per share in relation to 5,000 of these options.
F-17
<PAGE>
POLLUTION RESEARCH AND CONTROL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
----------------------------------------------
NOTE 13 - STOCKHOLDERS' EQUITY (Continued)
On June 1, 1996, in connection with the acquisition of LMD, the Company
exchanged options to purchase 150,125 shares at $4.40 per share for the
1,201,000 shares of LMD it did not already own. The options may be exercised
beginning January 7, 1998 and expire May 31, 2000. The 150,125 options include
30,750 issued to the Chief Executive Officer and a director of the Company,
5,000 shares each to four directors and 75,000 to the President of the Company's
subsidiaries LMD and LRL. The Board of Directors approved a reduction in the
exercise price in 1998 to $.75 per share in relation to 65,125 of these options.
Also on June 1, 1996, the Company issued options to purchase 70,000 shares at
$4.40, expiring May 31, 2000, to the officers and directors of the Company
referred to in the previous paragraph, as follows: Chief Executive Officer
30,000, 10,000 each to four directors. The Board of Directors approved the
reduction in the exercise price in 1998 to $.75 per share in relation to these
options. Additionally, the Company granted options to purchase 10,000 shares at
$4.40 per share to an unrelated individual.
On March 3, 1997, the Company granted options to purchase 10,000 shares at $3.80
per share to a consultant/director. The options expire on January 6, 2002. The
Board of Directors approved a reduction in the exercise price in 1998 to $.75
per share in relation to these options.
On April 30, 1997, the Company granted options to purchase 12,500 shares at
$3.00 to a consultant. The options expire on November 4, 2000. The Board of
Directors approved a reduction in the exercise price in 1998 to $.75 per share
in relation to these options.
In May 1998, the Company granted options to purchase 50,000 shares at $2.20 per
share to a public relations firm. The options expire May 15, 2000. In connection
with the June 30, 1998 private placement, the Company granted options to
purchase 23,125 shares at $2.20, the options expire June 19, 2001.
On November 22, 1996, the Company granted options to purchase 100,000 shares at
$4.48 per share to a consultant. The options expire November 4, 1999. In 1997,
58,250 options were cancelled due to non-performance.
Additionally, the Company has outstanding options granted in 1991 to purchase
12,500 shares at $2.20 per share, expiring May 28, 2001, to the Chief Executive
Office and a director of the Company, 12,500 to an owner of record of 6% of the
Company's outstanding common stock and 11,250 to a director of the Company. The
Board of Directors approved a reduction in the exercise price in 1998 to $.75
per share in relation to these options.
Additionally, in 1997, 2,500 options to purchase the Company's common stock at
$2.52 per share were cancelled due to an employees departure and 6,250 options
at $5.52 per share expired. In 1998, 6,250 options to purchase the Company's
common stock at $5.52 per share expired and 3,750 options at $2.52 per share
were cancelled.
F-18
<PAGE>
POLLUTION RESEARCH AND CONTROL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
----------------------------------------------
NOTE 13 - STOCKHOLDERS' EQUITY (Continued)
The following table summarizes the activity of options and warrants for the two
years ended December 31, 1998:
<TABLE>
<CAPTION>
Weighted
Average
Number of Exercise Exercise
Options Warrants Price Amount
------- -------- ----- ------
<S> <C> <C> <C> <C>
Outstanding, December 31, 1996 801,375 318,959 $ 4.32 $ 4,821,386
Granted 22,500 16,250 $ 4.16 156,750
Cancelled (69,500) (16,250) $ 4.52 (387,010)
Expired (6,250) -- $ 5.52 (34,500)
-------- ---------- -----------
Outstanding, December 31, 1997 748,125 318,959 $ 4.27 4,556,626
Granted 99,375 -- $ 1.82 180,563
Reduction to exercise price -- -- -- (622,644)
Cancelled (3,750) -- $ 2.52 (9,450)
Expired (6,250) (16,250) $ 6.51 (146,500)
-------- ---------- -----------
Outstanding, December 31, 1998 837,500 302,709 $ 3.47 $ 3,958,595
======== ========== ===========
</TABLE>
At December 31, 1998 and 1997, the Company had a total of 1,140,209 and
1,067,084 options and warrants outstanding, respectively, at exercise prices
ranging from $.75 to $8.00, with a weighted average remaining contractual term
of 1.3 years.
Notes Receivable
- ----------------
In 1990, the Company issued 37,500 shares of its common stock for notes
receivable totaling $86,587. The notes were originally due in 1994 with interest
at 10% per year. The notes were amended to be due with no interest. The
underlying shares were collateral for the note and were held by the Company. In
December 1998, the notes were forgiven and the outstanding shares were returned
to the Company and cancelled. In connection with the cancellation the Company
granted options to purchase 26,250 shares at $.75 per share. The options expire
December 14, 2002.
F-19
<PAGE>
POLLUTION RESEARCH AND CONTROL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
----------------------------------------------
NOTE 14 - STOCK-BASED COMPENSATION
The Company accounts for stock based compensation in accordance with Statement
of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation". The standard requires the Company to adopt the "fair value"
method with respect to stock-based compensation of consultants and other
non-employees, which resulted in a charge to operations of $54,977 in 1998.
Additionally, $24,790 was capitalized as offering costs in connection with the
private placement.
The Company did not adopt the fair value method with respect to employee stock
options; the Company continues to account for these under the "intrinsic value"
method. Had the Company adopted the fair value method with respect to options
issued to employees as well, an additional $35,617 would have been charged to
income in 1998; proforma net loss would have been $1,607,000 and net loss per
share would have been $.70 on both a basic and diluted basis.
In 1998 the Board approved a reduction in the exercise price for options granted
to certain employees, consultants, and other non-employees. Because of this, it
was necessary to calculate the difference between the fair value of the modified
option and the value of the old option immediately before the terms were
modified.
NOTE 15 - COMMITMENTS AND CONTINGENCIES
Operating Leases
- ----------------
The Company leases its facilities under long-term non-cancelable operating
leases. The lease terms provide for increases in future minimum rental payments
based on the Consumer Price Index, and an option to purchase during the lease
term. Future minimum lease commitments as of December 31, 1998 are as follows:
Year Ended Total
December 31, Commitments
------------ --------------
1999 $ 368,966
2000 368,384
2001 347,585
2002 342,168
2003 336,864
Thereafter 196,504
--------------
Total $ 1,960,471
==============
Total rentals under all operating leases charged against income amounted to
$404,475 and $474,500 for the years ended December 31, 1998 and 1997,
respectively.
F-20
<PAGE>
POLLUTION RESEARCH AND CONTROL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
----------------------------------------------
NOTE 15 - COMMITMENTS AND CONTINGENCIES (Continued)
Employment Agreements
The Company is obligated to make certain minimum salary payments to the Chief
Executive Officer and other employee/directors. All contracts expire in 2003, as
follows:
Year Ended
December 31, Total
------------ --------------
1999 $ 344,600
2000 344,600
2001 344,600
2002 344,600
2003 229,733
--------------
Total $ 1,608,133
==============
Contingencies
- -------------
In connection with the discontinued operations and bankruptcy proceedings of
Nutek as discussed in Note 9, the Company is party to a lawsuit filed by the
major secured lender. The Company has accrued a settlement loss of approximately
$350,000 as the probable outcome of this lawsuit. The original claim filed was
approximately $800,000, however, management does not feel the lawsuit will be
settled for this amount.
The Company has filed a breach of contract lawsuit. The complaint alleges that
the defendant breached an agreement to purchase the Company's two subsidiaries.
The Complaint alleges that the defendants actions constituted breach of
contract, a breach of the covenant of good faith and fair dealing, intentional
interference with prospective business advantage and negligent interference with
prospective business advantage. The Complaint seeks compensatory damages,
punitive damages and declaratory relief. In July 1998 the Company borrowed
$101,000 from the defendant Company at 13% interest. Due to the legal
proceedings above, the Company has written off the note payable to other income
since it is probable that the funds will not be repaid upon settlement.
NOTE 16 - RELATED PARTY TRANSACTIONS
Prior to the disposal of LRL, the Company advanced $203,938 to this subsidiary.
These advances are expected to be repaid from a joint venture relationship
between the Company and LRL.
F-21
<PAGE>
POLLUTION RESEARCH AND CONTROL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
----------------------------------------------
NOTE 16 - RELATED PARTY TRANSACTIONS (Continued)
In June 1998, the Company purchased a Tech Center from PIC Computers Ltd.
("PIC"), a Macau corporation of which one of the owners is a director of the
Company, through the issuance of 450,000 shares of its Series B Preferred Stock.
In July 1998, PIC agreed to lease back the Tech Center for a period of five
years for a monthly payment of $8,000, commencing when the following joint
venture agreement becomes operational.
In July 1998, the Company entered into a three year joint venture agreement with
PIC, whereby PIC will provide technical and project management services in
connection with the Company's contract to install an eleven city air monitoring
network in the Peoples Republic of China. PIC will also develop new business
opportunities to help expand the Company's market in the Peoples Republic of
China. Fees for PIC services will be negotiated on a project by project basis.
In December 1998, the Company loaned $24,000 to an officer/director in the form
of a promissory note. The note bears no interest and is due January 31,1999. The
note was subsequently repaid in January 1999.
NOTE 17 - SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for income taxes was $-0- and $1,817 during the years ended December
31, 1998 and 1997, respectively. Cash paid for interest was $103,746 and
$192,955 during the years ended December 31, 1998 and 1997, respectively.
During the year ended December 31, 1998, the company issued Series B preferred
stock of $600,000 in connection with the purchase of the Tech Center.
During the year ended December 31, 1998 the Company issued options valued at
$24,790 in connection with the private placement.
F-22
<PAGE>
POLLUTION RESEARCH AND CONTROL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
----------------------------------------------
NOTE 18 - INDUSTRY SEGMENT AND EXPORT INFORMATION
Beginning in 1996 with the acquisitions of Nutek and LMD, the Company operated
in three business segments; air pollution monitoring equipment, electrical
control panels, and medical instrumentation. Following is certain information
related to each segment for 1997:
1997 Electrical
Air Pollution Control Medical
Instruments Panels Instruments
Revenues $ 3,072,600 $ 3,299,687 $ 420,480
============== =========== ===========
Income (loss) from operations $ (906,904) $ (143,755) $ (99,497)
============== =========== ===========
Identifiable assets $ 2,334,399 $ 2,608,459 $ 565,002
============== =========== ===========
Depreciation and amortization $ 33,128 $ 184,170 $ 11,727
============== =========== ===========
Capital expenditures $ -- $ 5,417 $ 4,421
============== =========== ===========
During 1998, operations of the electrical control panel and medical instruments
divisions were discontinued.
NOTE 19 - CONCENTRATION OF CREDIT RISK
Concentrations of credit risk with respect to trade receivables exist due to
large balances with a few customers. At December 31, 1998, accounts receivable
balances from three significant customers were $158,019, or 71% of the total
accounts receivable balance. Substantially all of the Company's domestic
receivables at December 31, 1998 are factored (Note 11). Ongoing credit
evaluations of customers' financial conditions are performed and generally no
collateral is required. The Company maintains reserves for potential credit
losses, and such losses in the aggregate have not exceeded management's
expectations. Customers are located throughout the world.
The Company maintains all cash in bank accounts, which at times may exceed
federally insured limits.
F-23
<PAGE>
EXHIBIT INDEX
Item
Number Description
- ------ -----------
3.1 Articles of Incorporation of A. E. Gosselin Engineering, Inc.
(now "Pollution Research and Control Corp.") (Incorporated herein
by reference to Exhibit 3(a) to the Amendment No. 1 to the
Registration Statement on Form 10 of Dasibi Environmental
Corporation (now "Pollution Research and Control Corp.")
3.2 Certificate of Amendment of Articles of Incorporation of A. E.
Gosselin Engineering, Inc. (now "Pollution Research and Control
Corp.") (Incorporated herein by reference to Exhibit 3(a) to the
Amendment No. 1 to the Registration Statement on Form 10 of
Dasibi Environmental Corporation (now "Pollution Research and
Control Corp.")
3.3 Certificate of Amendment of Articles of Incorporation of Dasibi
Environmental Corp. (now "Pollution Research and Control
Corp.")(Incorporated herein by reference to Exhibit 3(a) to the
Amendment No. 1 to the Registration Statement on Form 10 of
Dasibi Environmental Corporation (now "Pollution Research and
Control Corp.")
3.4 By-laws of A. E. Gosselin Engineering, Inc. (now "Pollution
Research and Control Corp.") (Incorporated herein by reference to
Exhibit 3(a) to the Amendment No. 1 to the Registration Statement
on Form 10 of Dasibi Environmental Corporation (now "Pollution
Research and Control Corp.")
4.1 Form of Warrant Agreement. (Incorporated herein by reference to
Exhibit 4.1 to the Registration Statement on Form S-1 (File No.
33-26558 of Pollution Research and Control Corp., dated January
17, 1989.)
4.2 Form of Unit Purchase Warrant. (Incorporated herein by reference
to Exhibit 4.2 to the Registration Statement on Form S-1 (File
No. 33-26558 of Pollution Research and Control Corp., dated
January 17, 1989.)
4.3 Form of Stock Purchase Warrant. (Incorporated herein by reference
to Exhibit 4.3 to the Registration Statement on Form S-1 (File
No. 33-26558 of Pollution Research and Control Corp., dated
January 17, 1989.)
10.1 Warrant to Purchase 7,500 shares of Common Stock issued to Frost
& Company P.S. on February 10, 1987. (Incorporated herein by
reference to Exhibit 10.2 to the Registration Statement on Form
S-1 (File No. 33-26558) of Pollution Research and Control Corp.,
dated January 17, 1989.)
10.2 Employment Agreement, dated July 31, 1987, between Pollution
Research and Control Corp. and Albert E. Gosselin, Jr.
(Incorporated herein by reference to Exhibit 10.3 to the
Registration Statement on Form S-1 (File No. 33-26558) of
Pollution Research and Control Corp., dated January 17, 1989.)
10.3 Employees' Incentive Stock Option Plan. (Incorporated herein by
reference to Exhibit 10.4 to the Registration Statement on Form
S-1 (File No. 33-26558) of Pollution Research and Control Corp.,
dated January 17, 1989.)
E-1
<PAGE>
10.4 Employment Agreement, as amended, dated August 19, 1989, between
Pollution Research and Control Corp. and Albert E. Gosslein, Jr.
(Incorporated herein by reference to Exhibit 10-28 to the Annual
Report on Form 10-K for the fiscal year ended June 30, 1989.)
10.5 Lease, dated July 1, 1989, between Pollution Research and Control
Corp. and Shahik Mardeross-ASL. (Incorporated herein by reference
to Exhibit 10.30 to the Annual Report on Form 10-K for the fiscal
year ended June 30, 1989.)
10.6 Stock Option Agreement, dated May 28, 1991, between Pollution
Research and Control Corp. and Lee Sion. (Incorporated herein by
reference to Exhibit 10.14 to the Transition Report on Form 10-K
for the transition period ended June 30, 1991.)
10.7 Stock Option Agreement, dated May 28, 1991, between Pollution
Research and Control Corp. and Albert E. Gosselin, Jr.,
(Incorporated herein by reference to Exhibit 10.15 to the
Transition Report on Form 10-K for the transition period ended
June 30, 1991.)
10.8 Stock Option Agreement, dated May 28, 1991, between Pollution
Research and Control Corp. and Gary L. Dudley, (Incorporated
herein by reference to Exhibit 10.13 to the Transition Report on
Form 10-K for the transition period ended June 30, 1991.)
10.9 Agreement, dated November 1, 1991, between Pollution Research and
Control Corp. and KVB, Inc. (Incorporated herein by reference to
Exhibit 10.1 to the Quarterly Report on Form 10-Q for the fiscal
quarter ended September 30, 1991.)
10.10 Purchase Agreement, dated as of December 2, 1991, between
Pollution Research and Control Corp. and CSC Industries, Inc. and
affiliated companies Pension Plans Trust. (Incorporated herein by
reference to Exhibit 10.7 to the Amendment No. 1 to the
Registration Statment on form S-1 (File No., 33-43124) of
Pollution Research and Control Corp. dated December 23, 1991.)
10.11 Warrant, dated as of December 2, 1991, issued to CSC Industries,
Inc. and affiliated companies Pension Plans Trust. (Incorporated
herein by reference to Exhibit 10.8 to the Amendment No. 1 to the
Registration Statement on form S-1 (File No. 33-43124) of
Pollution Research and Control Corp. dated December 23, 1991.)
10.12 Purchase Agreement, dated as of December 9, 1991, between
Pollution Research and Control Corp. and Richard M. Molinsky
(Incorporated herein by reference to Exhibit 10.9 to the
Amendment No. 1 to the Registration Statment on form S-1 (File
No. 33- 43124) of Pollution Research and Control Corp. dated
December 23, 1991.)
10.13 Warrant, dated as of December 9, 1991, issued to Richard M.
Molinsky. (Incorporated herein by reference to Exhibit 10.10 to
the Amendment No. 1 to the Registration Statment on form S-1
(File No. 33-43124) of Pollution Research and Control Corp. dated
December 23, 1991.)
10.14 Purchase Agreement, dated as of December 11, 1991, between
Pollution Research and Control Corp. and Global Environment Fund.
(Incorporated herein by reference to Exhibit 10.11 to the
Amendment No. 1 to the Registration Statment on form S-1 (File
No. 33-43124) of Pollution Research and Control Corp. dated
December 23, 1991.)
E-2
<PAGE>
10.15 Warrant, dated as of December 11, 1991, issued to Global
Enviroment Fund. (Incorporated herein by reference to Exhibit
10.7 to the Amendment No. 1 to the Registration Statement on form
S-1 (File No. 33-43124) of Pollution Research and Control Corp.
dated December 23, 1991.)
10.16 Purchase Agreement, dated as of December 13, 1991, between
Pollution Research and Control Corp. and Robert A. Tantleff
(Incorporated herein by reference to Exhibit 10.13 to the
Amendment No. 1 to the Registration Statement on form S-1 (File
No. 33-43124) of Pollution Research and Control Corp. dated
December 23, 1991.)
10.17 Warrant, dated as of December 2, 1991, issued to Robert A.
Tantleff. (Incorporated herein by reference to Exhibit 10.14 to
the Amendment No. 1 to the Registration Statement on form S-1
(File No. 33-43124) of Pollution Research and Control Corp. dated
December 23, 1991.)
10.18 Purchase Agreement, dated as of December 16, 1991, between
Pollution Research and Control Corp. and Stanley Baker.
(Incorporated herein by reference to Exhibit 10.15 to the
Amendment No. 1 to the Registration Statement on form S-1 (File
No. 33- 43124) of Pollution Research and Control Corp. dated
December 23, 1991.)
10.19 Warrant, dated as of December 16, 1991, issued to Stanley Baker.
(Incorporated herein by reference to Exhibit 10.16 to the
Amendment No. 1 to the Registration Statment on form S-1 (File
No. 33-43124) of Pollution Research and Control Corp. dated
December 23, 1991.)
10.20 Purchase Agreement, dated as of December 16, 1991, between
Pollution Research and Control Corp. and Bruce Lynch.
(Incorporated herein by reference to Exhibit 10.17 to the
Amendment No. 1 to the Registration Statement on form S-1 (File
No. 33- 43124) of Pollution Research and Control Corp. dated
December 23, 1991.)
10.21 Warrant, dated as of December 16, 1991, issued to Bruce Lynch.
(Incorporated herein by reference to Exhibit 10.18 to the
Amendment No. 1 to the Registration Statement on form S-1 (File
No. 33-43124) of Pollution Research and Control Corp. dated
December 23, 1991.)
10.22 Purchase Agreement, dated as of December 16, 1991, between
Pollution Research and Control Corp. and John Kilmartin.
(Incorporated herein by reference to Exhibit 10.19 to the
Amendment No. 1 to the Registration Statement on form S-1 (File
No. 33- 43124) of Pollution Research and Control Corp. dated
December 23, 1991.)
10.23 Warrant, dated as of December 16, 1991, issued to John Kilmartin.
(Incorporated herein by reference to Exhibit 10.20 to the
Amendment No. 1 to the Registration Statement on form S-1 (File
No. 33-43124) of Pollution Research and Control Corp. dated
December 23, 1991.)
10.24 Consulting Agreement, dated January 3, 1992, between Pollution
Research and Control Corp. and Total Software, Inc. (Incorporated
herein by reference to Exhibit 10.24 to the Annual Report on Form
10-K for the fiscal year ended December 31, 1992.)
10.25 Option Agreement, dated January 3, 1992, between Pollution
Research and Control Corp. and Total Software, Inc. (Incorporated
herein by reference to Exhibit 10.25 to the Annual Report on Form
10-K for the fiscal year ended December 31, 1992.)
E-3
<PAGE>
10.26 Option Agreement, dated March 11, 1992 between Pollution Research
and Control Corp. and Total Software, Inc. (Incorporated herein
by reference to Exhibit 10.26 to the Annual Report on Form 10-K
for the fiscal year eneded December 31, 1992.)
10.27 Agreement, dated March 5, 1992, between Pollution Research and
Control Corp. and Lee Sion. (Incorporated herein by reference to
Exhibit 10.27 to the Annual Report on Form 10-K for the fiscal
year ended December 31, 1992.)
10.28 Option Agreement, dated June 22, 1992, between Pollution Research
and Control Corp. and Total Software, Inc. (Incorporated herein
by reference to Exhibit 10.28 to the Annual Report on Form 10-K
for the fiscal year ended December 31, 1992.)
10.29 Option Agreement, dated June 22, 1992, between Pollution Research
and Control Corp. and Total Software, Inc. (Incorporated herein
by reference to Exhibit 10.29 to the Annual Report on Form 10-K
for the fiscal year ended December 31, 1992.)
10.30 Lease Agreement, dated June 1, 1992, between Dasibi Environmental
Group. and Bernard C. Mills, Jr. (Incorporated herein by
reference to Exhibit 10.30 to the Annual Report on form 10-KSB
for the fiscal year ended December 31, 1994.)
10.31 Lease Agreement, dated January 6, 1994, between Dasibi
Environmental Group. and the Prudential Insurance Company of
America. (Incorporated herein by reference to Exhibit 10.31 to
the Annual Report on form 10-KSB for the fiscal year ended
December 31, 1994.)
10.32 Agreement, and Bill of Sale, dated February 18, 1994, between
Pollution Research and Control Corp. and General Monitors, Inc.
(Incorporated herein by reference to Exhibit 10.32 to the Annual
Report on form 10-KSB for the fiscal year ended December 31,
1994.)
10.33 Stipulation of Settlement, dated February 1994, between Pollution
Research and Control Corp. and Diversified Research Partners
Limited Partnership. (Incorporated herein by reference to Exhibit
10.33 to the Annual Report on form 10-KSB for the fiscal year
ended December 31, 1994.)
10.34 Requirements Contract dated March 10, 1994, between Pollution
Research and Control Corp. and Logan Research, Ltd. (Incorporated
herein by reference to Exhibit 10.34 to the Annual Report on form
10-KSB for the fiscal year ended December 31, 1994.)
10.35 Lease Agreement dated April 15, 1994, between Dasibi
Environmental Corp. and Summit Park Associates. (Incorporated
herein by reference to Exhibit 10.35 to the Annual Report on form
10-KSB for the fiscal year ended December 31, 1994.)
10.36 Amended Employment Agreement, effective August 31, 1993, between
Pollution Research and Control Corp. and Albert E. Gosselin, Jr.,
(Incorporated herein by reference to Exhibit 10.36 to the Annual
Report on form 10-KSB for the fiscal year ended December 31,
1994.)
10.37 Employment Agreement, dated July 20, 1994, between Pollution
Research and Control Corp. and Cynthia L. Gosselin (Incorporated
herein by reference to Exhibit 10.37 to the Annual Report on form
10-KSB for the fiscal year ended December 31, 1994.)
E-4
<PAGE>
10.38 Final Judgment of Permanent Injunction and Other Relief as to
Pollution Research and Control Corp. dated July 7, 1994 in Case
Number 1.94CV01425, the Securities and Exchange Commission v.
Pollution Research and Control Corp., Albert E. Gosselin and
Cynthia Gosselin. (Incorporated herein by reference to Exhibit
10.38 to the Annual Report on form 10-KSB for the fiscal year
ended December 31, 1994.)
10.39 Final Judgment of Permanent Injunction and Other Relief as to
Pollution Research and Contorl Corp. dated July 13, 1994 in Case
Number 1.94CV01425, the Securities and Exchange Commission v.
Pollution Research and Control Corp., Albert E. Gosselin and
Cynthia Gosselin. (Incorporated herein by reference to Exhibit
10.39 to the Annual Report on form 10-KSB for the fiscal year
ended December 31, 1994.)
10.40 Consent of Albert E. Gosselin dated June 7, 1994, in Case Number
1.94CV01425, the Securities and Exchange Commission v. Pollution
Research and Control Corp., Albert E. Gosselin and Cynthia
Gosselin. (Incorporated herein by reference to Exhibit 10.40 to
the Annual Report on form 10-KSB for the fiscal year ended
December 31, 1994.)
10.41 Final Judgment of Permanent Injunction and Other Relief as to
Cynthia Gosselin,. dated July 13, 1994 in Case Number
1.94CV01425, the Securities and Exchange Commission v. Pollution
Research and Control Corp., Albert E. Gosselin and Cynthia
Gosselin. (Incorporated herein by reference to Exhibit 10.41 to
the Annual Report on form 10-KSB for the fiscal year ended
December 31, 1994.)
10.42 Consent of Cynthia L.. Gosselin dated June 7, 1994, in Case
Number 1.94CV01425, the Securities and Exchange Commission v.
Pollution Research and Control Corp., Albert E. Gosselin and
Cynthia Gosselin. (Incorporated herein by reference to Exhibit
10.41 to the Annual Report on form 10-KSB for the fiscal year
ended December 31, 1994.)
10.43 Warrant to Purchase 40,000 Shares of Common Stock of Pollution
Research and Control Corp., dated January 22, 1990, issued to
Marty Williams. ((Incorporated herein by reference to Exhibit 4.9
to the Registration Statement on form S-3 (Registration No.
33-60035) of Pollution Research and Control Corp. dated June 7,
1995.)
10.44 Amendment to Warrant to Purchase Common Stock of Pollution
Research and Control Corp., of Marty Williams, dated effective
June 6, 1994. ((Incorporated herein by reference to Exhibit 4.10
to the Registration Statement on form S-3 (Registration No.,
33-60035) of Pollution Research and Control Corp. dated June 7,
1995.)
10.45 Warrant to Purchase 202,500 Shares of Common Stock of Pollution
Research and Control Corp., dated December 2, 1991, issued to CSC
Industries, Inc. and affiliated companies. (Incorporated herein
by reference to Exhibit 4.11 to the Registration Statement on
form S-3 (Registration No. 33-60035) of Pollution Research and
Control Corp. dated June 7, 1995.)
10.46 Amendment Warrant to Purchase Common Stock of Pollution Research
and Control Corp., of CSC Industries, Inc. and affiliated
companies Pension Plans Trust, dated effective June 6, 1994.
(Incorporated herein by reference to Exhibit 4.12 to the
Registration Statement on form S-3 (Registration No. 33-60035) of
Pollution Research and Control Corp. dated June 7, 1995.)
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10.47 Warrant to Purchase 67,500 Shares of Common Stock of Pollution
Research and Control Corp., dated December 8, 1991, issued to
Richard M. Molinsky. (Incorporated herein by reference to Exhibit
4.13 to the Registration Statement on form S-3 (Registration No.
33-60035) of Pollution Research and Control Corp. dated June 7,
1995.)
10.48 Amendment to Warrant to Purchase Common Stock of Pollution
Research and Control Corp., of Richard M. Molinsky, dated
effective June 6, 1994. (Incorporated herein by reference to
Exhibit 4.14 to the Registration Statement on form S-3
(Registration No. 33-60035) of Pollution Research and Control
Corp. dated June 7, 1995.)
10.49 Warrant to Purchase 135,000 Shares of Common Stock of Pollution
Research and Control Corp., dated December 11, 1991, issued to
Kingsley & Co. (formerly Global Environment Fund) (Incorporated
herein by reference to Exhibit 4.15 to the Registration Statement
on form S-3 (Registration No. 33-60035) of Pollution Research and
Control Corp. dated June 7, 1995.)
10.50 Amendment to Warrant to Purchase Common Stock of Pollution
Research and Control Corp. of Kingsley & Co. (formerly Global
Environment Fund), dated effective June 6, 194. (Incorporated
herein by reference to Exhibit 4.16 to the Registration Statement
on form S-3 (Registration No. 33-60035) of Pollution Research and
Control Corp. dated June 7, 1995.)
10.51 Warrant to Purchase 67,500 Shares of Common Stock of Pollution
Research and Control Corp., dated December 13, 1991, issued to A.
Robert Tantleff. (Incorporated herein by reference to Exhibit
4.17 to the Registration Statement on form S-3 (Registration No.
33-60035) of Pollution Research and Control Corp. dated June 7,
1995.)
10.52 Amendment to Warrant to Purchase Common Stock of Pollution
Research and Control Corp. of A. Robert Tantleff, dated effective
June 6, 1994. (Incorporated herein by reference to Exhibit 4.18
to the Registration Statement on form S-3 (Registration No.
33-60035) of Pollution Research and Control Corp. dated June 7,
1995.)
10.53 Warrant to Purchase 101,250 Shares of Common Stock of Pollution
Research and Control Corp., dated December 16, 1991, issued to
Stanley Becker. (Incorporated herein by reference to Exhibit 4.19
to the Registration Statement on form S-3 (Registration No.
33-60035) of Pollution Research and Control Corp. dated June 7,
1995.)
10.54 Amendment to Warrant to Purchase Common Stock of Pollution
Research and Control Corp. of Stanley Becker, dated effective
June 6, 1994. (Incorporated herein by reference to Exhibit 4.20
to the Registration Statement on form S-3 (Registration No.
33-60035) of Pollution Research and Control Corp. dated June 7,
1995.)
10.55 Warrant to Purchase 27,000 Shares of Common Stock of Pollution
Research and Control Corp., dated December 16, 1991, issued to
John Kilmartin. (Incorporated herein by reference to Exhibit 4.21
to the Registration Statement on form S-3 (Registration No.
33-60035) of Pollution Research and Control Corp. dated June 7,
1995.)
10.56 Amendment to Warrant to Purchase Common Stock of Pollution
Research and Control Corp. of John Kilmartin, dated effective
June 6, 1994. (Incorporated herein by reference to Exhibit 4.22
to the Registration Statement on form S-3 (Registration No.
33-60035) of Pollution Research and Control Corp. dated June 7,
1995.)
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10.57 Warrant to Purchase 74,250 Shares of Common Stock of Pollution
Research and Control Corp., dated December 16, 1991, issued to
Bruce Lynch.. (Incorporated herein by reference to Exhibit 4.23
to the Registration Statement on form S-3 (Registration No.
33-60035) of Pollution Research and Control Corp. dated June 7,
1995.)
10.58 Amendment to Warrant to Purchase Common Stock of Pollution
Research and Control Corp. of Bruce Lynch, dated effective June
6, 1994. (Incorporated herein by reference to Exhibit 4.24 to the
Registration Statement on form S-3 (Registration No. 33- 60035)
of Pollution Research and Control Corp. dated June 7, 1995.)
10.59 Warrant to Purchase 25,000 Shares of Common Stock of Pollution
Research and Control Corp. of Michael Young, dated May 24, 1991.
(Incorporated herein by reference to Exhibit 4.25 to the
Registration Statement on form S-3 (Regsistration No. 33-60035)
of Pollution Research and Control Corp. dated June 7, 1995.)
10.60 Amendment to Warrant to Purchase Common Stock of Pollution
Research and Control Corp. of Michael Young, dated effective June
6, 1994. (Incorporated herein by reference to Exhibit 4.26 to the
Registration Statement on form S-3 (Regsistration No. 33-60035)
of Pollution Research and Control Corp. dated June 7, 1995.)
10.61 Warrant to Purchase 12,000 Shares of Common Stock of Pollution
Research and Control Corp., dated December 16, 1991, of Kennedy
Capital Management, dated November 26, 1991. (Incorporated herein
by reference to Exhibit 4.27 to the Registration Statement on
form S-3 (Regsistration No. 33-60035) of Pollution Research and
Control Corp. dated June 7, 1995.)
10.62 Amendment to Warrant to purchase Common Stock of Pollution
Research and Control Corp. of Kennedy Capital Management dated
effective June 6, 1994. (Incorporated herein by reference to
Exhibit 4.28 to the Registration Statement on form S-3
(Regsistration No. 33-60035) of Pollution Research and Control
Corp. dated June 7, 1995.)
10.63 Pollution Research and Control Corp. Common Stock Purchase
Warrant for the purchase of 60,000 shares of the Equity Group
Inc. dated August 31, 1993. (Incorporated herein by reference to
Exhibit 4.29 to the Registration Statement on Form S-3
(Registration No. 33-60035) of Pollution Research and Control
Corp. dated June 7, 1995.)
10.64 Warrant to Purchase 7,500 Shares of Common Stock of Pollution
Research and Control Corp. of Stanely Becker dated November 8,
1993. (Incorporated herein by reference to Exhibit 4.30 to the
Registration Statement on Form S-3 (Registration No. 33-60035) of
Pollution Research and Control Corp. dated June 7, 1995.)
10.65 Amendment to Warrant to Purchase Common Stock of Pollution
Research and Control Corp. of Stanley Becker, dated effective
June 6, 1994. (Incorporated herein by reference to Exhibit 4.31
to the Registration Statement on Form S-3 (Registration No.
33-60035) of Pollution Research and Control Corp. dated June 7,
1995.)
10.66 Warrant to Purchase 5,500 Shares of Common Stock of Pollution
Research and Control Corp. of Bruce Lynch dated November 8, 1993.
(Incorporated herein by reference to Exhibit 4.32 to the
Registration Statement on Form S-3 (Registration No. 33-60035) of
Pollution Research and Control Corp. dated June 7, 1995.)
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<PAGE>
10.67 Amendment to Warrant to Purchase Common Stock of Pollution
Research and Control Corp. of Bruce Lynch, dated effective June
6, 1994. (Incorporated herein by reference to Exhibit 4.33 to the
Registration Statement on Form S-3 (Registration No. 33- 60035)
of Pollution Research and Control Corp. dated June 7, 1995.)
10.68 Warrant to Purchase 7,500 Shares of Common Stock of Pollution
Research and Control Corp. of Robert Tantleff dated November 8,
1993. (Incorporated herein by reference to Exhibit 4.34 to the
Registration Statement on Form S-3 (Registration No. 33-60035) of
Pollution Research and Control Corp. dated June 7, 1995.)
10.69 Amendment to Warrant to Purchase Common Stock of Pollution
Research and Control Corp. of Robert Tantleff, dated effective
June 6, 1994. (Incorporated herein by reference to Exhibit 4.35
to the Registration Statement on Form S-3 (Registration No.
33-60035) of Pollution Research and Control Corp. dated June 7,
1995.)
10.70 Warrant to Purchase 5,000 Shares of Common Stock of Pollution
Research and Control Corp. of Edward G. Lowell dated November 8,
1995. (Incorporated herein by reference to Exhibit 4.36 to the
Registration Statement on Form S-3 (Registration No. 33-60035) of
Pollution Research and Control Corp. dated June 7, 1995.)
10.71 Option to Purchase 25,000 Shares of Common Stock of Pollution
Research and Control Corp. of Randy Foy dated as of July 4, 1994.
(Incorporated herein by reference to Exhibit 4.37 to the
Registration Statement on Form S-3 (Registration No. 33-60035) of
Pollution Research and Control Corp. dated June 7, 1995.)
10.72 Amendment to Warrant to Purchase Common Stock of Pollution
Research and Control Corp. of Frost and Company P.S. dated
effective February 9, 1992. (Incorporated herein by reference to
Exhibit 4.38 to the Registration Statement on Form S-3
(Registration No. 33-60035) of Pollution Research and Control
Corp. dated June 7, 1995.)
10.73 Amendment to Warrant to Purchase Common Stock of Pollution
Research and Control Corp. of Kial, Ltd., dated effective January
9, 1992. (Incorporated herein by reference to Exhibit 4.39 to the
Registration Statement on Form S-3 (Registration No. 33- 60035)
of Pollution Research and Control Corp. dated June 7, 1995.)
10.74 Option to Purchase 40,000 Shares of Common Stock of Pollution
Research and Control Corp. of Albert E. Gosselin, Jr., dated as
of June 29, 1995 (Incorporated herein by reference to Exhibit
4.40 to the Post-Effective Amendment No. 1 to the Registration
Statement on Form S-3 (Registration No. 33-60035) of Pollution
Research and Control Corp., dated January 17, 1996.)
10.75 Option to Purchase 20,000 Shares of Common Stock of Pollution
Research and Control Corp. of Cindy Gosselin dated as of June 29,
1995. (Incorporated herein by reference to Exhibit 4.41 to the
Post-Effective Amendment No. 1 to the Registration Statement on
Form S-3 (Registration No. 33-60035) of Pollution Research and
Control Corp., dated January 17, 1996.)
10.76 Option to Purchase 20,000 Shares of Common Stock of Pollution
Research and Control Corp. of Barbara L. Gosselin dated as of
June 29, 1995. (Incorporated herein by reference to Exhibit 4.42
to the Post-Effective Amendment No. 1 to the Registration
Statement on Form S-3 (Registration No. 33-60035) of Pollution
Research and Control Corp., dated January 17, 1996.)
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<PAGE>
10.77 Option to Purchase 20,000 Shares of Common Stock of Pollution
Research and Control Corp. of Gary L. Dudley dated as of June 29,
1995. (Incorporated herein by reference to Exhibit 4.43 to the
Post-Effective Amendment No. 1 to the Registration Statement on
Form S-3 (Registration No. 33-60035) of Pollution Research and
Control Corp., dated January 17, 1996.)
10.78 Option to Purchase 20,000 Shares of Common Stock of Pollution
Research and Control Corp. of Marcia Smith dated as of June 29,
1995. (Incorporated herein by reference to Exhibit 4.44 to the
Post-Effective Amendment No. 1 to the Registration Statement on
Form S-3 (Registration No. 33-60035) of Pollution Research and
Control Corp., dated January 17, 1996.)
10.79 Option to Purchase 20,000 Shares of Common Stock of Pollution
Research and Control Corp. of Craig E. Gosselin dated as of June
29, 1995. (Incorporated herein by reference to Exhibit 4.45 to
the Post-Effective Amendment No. 1 to the Registration Statement
on Form S-3 (Registration No. 33-60035) of Pollution Research and
Control Corp., dated January 17, 1996.)
10.80 Option to Purchase 20,000 Shares of Common Stock of Pollution
Research and Control Corp. of Keith Gosselin dated as of June 29,
1995. (Incorporated herein by reference to Exhibit 4.46 to the
Post-Effective Amendment No. 1 to the Registration Statement on
Form S-3 (Registration No. 33-60035) of Pollution Research and
Control Corp., dated January 17, 1996.)
10.81 Option to Purchase 10,000 Shares of Common Stock of Pollution
Research and Control Corp. of Mike Chu dated as of June 29, 1995.
(Incorporated herein by reference to Exhibit 4.47 to the
Post-Effective Amendment No. 1 to the Registration Statement on
Form S-3 (Registration No. 33-60035) of Pollution Research and
Control Corp., dated January 17, 1996.)
10.82 Option to Purchase 10,000 Shares of Common Stock of Pollution
Research and Control Corp. of Kimberly Chu dated as of June 29,
1995. (Incorporated herein by reference to Exhibit 4.48 to the
Post-Effective Amendment No. 1 to the Registration Statement on
Form S-3 (Registration No. 33-60035) of Pollution Research and
Control Corp., dated January 17, 1996.)
10.83 Option to Purchase 5,000 Shares of Common Stock of Pollution
Research and Control Corp. of Tolly Smith dated as of June 29,
1995. (Incorporated herein by reference to Exhibit 4.49 to the
Post-Effective Amendment No. 1 to the Registration Statement on
Form S-3 (Registration No. 33-60035) of Pollution Research and
Control Corp., dated January 17, 1996.)
10.84 Option to Purchase 25,000 Shares of Common Stock of Pollution
Research and Control Corp. of Randy Foy dated as of June 29,
1995. (Incorporated herein by reference to Exhibit 4.50 to the
Post-Effective Amendment No. 1 to the Registration Statement on
Form S-3 (Registration No. 33-60035) of Pollution Research and
Control Corp., dated January 17, 1996.)
10.85 Option to Purchase 200,000 Shares of Common Stock of Pollution
Research and Control Corp. of J. Paul Consulting Group dated
effective July 18, 1995. (Incorporated herein by reference to
Exhibit 4.51 to the Post-Effective Amendment No. 1 to the
Registration Statement on Form S-3 (Registration No. 33-60035) of
Pollution Research and Control Corp., dated January 17, 1996.)
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10.86 Agreement dated June 11, 1996, among Logan Medical Devices, Inc.,
party of the first part, Ronald Bruce Logan-Sinclair and Howard
George Vincent Cooke, parties of the second part, and Pollution
Research and Control Corp., party of the third part.
(Incorporated herein by reference to Exhibit 10.86 to the Annual
Report on Form 10- K for the fiscal year ended December 31,
1996.)
10.87 Employment Agreement dated June 11, 1996, between Logan Medical
Devices, Inc. and Logan Research Ltd., on the one hand, and
Ronald Bruce Logan-Sinclair, on the other hand. (Incorporated
herein by reference to Exhibit 10.87 to the Annual Report on Form
10-K for the fiscal year ended December 31, 1996.)
10.88 Guarantee dated effective June 11, 1996, by Logan Medical
Devices, Inc. in favor of Namulas Pension Trustees Limited.
(Incorporated herein by reference to Exhibit 10.88 to the Annual
Report on Form 10-K for the fiscal year ended December 31, 1996.)
10.89 Loan and Security Agreement dated June 28, 1996, between Logan
Medical Devices, Inc., on the one hand, and Ronald Bruce
Logan-Sinclair and Howard George Vincent Cooke, on the other
hand. (Incorporated herein by reference to Exhibit 10.89 to the
Annual Report on Form 10-K for the fiscal year ended December 31,
1996.)
10.90 Nine Per Cent Debenture due June 28, 2,006, in the face amount of
$285,714.29, bearing interest quarterly commencing June 30, 1998.
(Incorporated herein by reference to Exhibit 10.90 to the Annual
Report on Form 10-K for the fiscal year ended December 31, 1996.)
10.91 Option to Purchase 10,000 Shares of Common Stock of Pollution
Research and Control Corp. issued to Phil Huss. Option Agreement,
datedas of April 1, 1996 between Pollution Research and Control
Corp. and Phil Hull. (Incorporated herein by reference to Exhibit
4.11 to the Registration Statement on Form S-3 (Registration No.
33-14133) of Pollution Research and Control Corp. dated October
15, 1996.)
10.92 Consulting Agreement dated as of May 30, 1996, between Pollution
Research and Control Corp. and Liviakis Financial Communications,
Inc. (Incorporated herein by reference to Exhibit 4.12 to the
Registration Statement on Form S-3 (Registration No. 33-14133) of
Pollution Research and Control Corp. dated October 15, 1996.)
10.93 Non-Qualified Stock Option Agreement dated as of May 30, 1996,
between Pollution Research and Control Corp. and Liviakis
Financial Communications, Inc. (Incorporated herein by reference
to Exhibit 4.13 to the Registration Statement on Form S-3
(Registration No. 33-14133) of Pollution Research and Control
Corp. dated October 15, 1996.)
10.94 Non-Qualified Stock Option Agreement dated as of May 30, 1996,
between Pollution Research and Control Corp. and Robert B. Prag.
(Incorporated herein by reference to Exhibit 4.14 to the
Registration Statement on Form S-3 (Registration No. 33- 14133)
of Pollution Research and Control Corp. dated October 15, 1996.)
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10.95 Amendment to Non-Qualified Stock Option Agreement dated July 31,
1996, between Pollution Research and Control Corp. and Liviakis
Financial Communications, Inc. (Incorporated herein by reference
to Exhibit 4.15 to the Registration Statement on Form S-3
(Registration No. 33-14133) of Pollution Research and Control
Corp. dated October 15, 1996.)
10.96 Amendment to Non-Qualified Stock Option Agreement dated July 31,
1996, between Pollution Research and Control Corp. and Robert B.
Prag. (Incorporated herein by reference to Exhibit 4.16 to the
Registration Statement on Form S-3 (Registration No. 33-14133) of
Pollution Research and Control Corp. dated October 15, 1996.)
10.97 Amendment to Consulting Agreement dated 5/30/96 between Pollution
Research and Control Corp. and Liviakis Financial Communications,
Inc., dated July 31, 1996. (Incorporated herein by reference to
Exhibit 4.17 to the Registration Statement on Form S-3
(Registration No.33-14133) of Pollution Research and Control
Corp. dated October 15, 1996.)
10.98 Second Amendment to Consulting Agreement dated 5/30/96 between
Pollution Research and Control Corp. and Liviakis Financial
Communications, Inc. dated as of August 28, 1996. (Incorporated
herein by reference to Exhibit 4.18 to the Registration Statement
on Form S-3 (Registration No. 33-14133) of Pollution Research and
Control Corp. dated October 15, 1996.)
10.99 Option to Purchase 55,000 Shares of Common Stock of Pollution
Research and Control Corp. issued to Aubrey Hornsby; Option
Agreement dated as of May 31, 1996, between Pollution Research
and Control Corp. and Aubrey Hornsby. (Incorporated herein by
reference to Exhibit 10.99 to the Annual Report on Form 10- K for
the fiscal year ended December 31, 1996.)
10.100 Option to Purchase 40,000 Shares of Common Stock of Pollution
Research and Control Corp. issued to Ernestine Taylor; Option
Agreement, dated as of May 31, 1996, between Pollution Research
and Control Corp. Ernestine Taylor. (Incorporated herein by
reference to Exhibit 10.100 to the Annual Report on Form 10-K for
the fiscal year ended December 31, 1996.)
10.101 Option to Purchase 30,000 Shares of Common Stock of Pollution
Research and Control Corp. issued to Debbie Kendrick; Option
Agreement, dated as of May 31, 1996, between Pollution Research
and Control Corp. and Debbie Kendrick. (Incorporated herein by
reference to Exhibit 10.101 to the Annual Report on Form 10- K
for the fiscal year ended December 31, 1996.)
10.102 Option to Purchase 25,000 Shares of Common Stock of Pollution
Research and Control Corp. issued to Roland Fink; Option
Agreement, dated as of May 31, 1996, between Pollution Research
and Control Corp. and Roland Fink. (Incorporated herein by
reference to Exhibit 10.102 to the Annual Report on Form 10-K for
the fiscal year ended December 31, 1996.)
10.103 Option to Purchase 20,000 Shares of Common Stock of Pollution
Research and Control Corp. issued to Charles Conner; Option
Agreement, dated as of May 31, 1996 between Pollution Research
and Control Corp. and Charles Conner. (Incorporated herein by
reference to Exhibit 10.103 to the Annual Report on Form 10-K for
the fiscal year ended December 31, 1996.)
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10.104 Option to Purchase 20,000 Shares of Common Stock of Pollution
Research and Control Corp. issued to Patricia Cudd; Option
Agreement, dated as of May 31, 1996, between Pollution Research
and Control Corp. and Patricia Cudd. (Incorporated herein by
reference to Exhibit 10.104 to the Annual Report on Form 10-K for
the fiscal year ended December 31, 1996.)
10.105 Option to Purchase 20,000 Shares of Common Stock of Pollution
Research and Control Corp. issued to Jeffrey Harkey; Option
Agreement, dated as of May 31, 1996, between Pollution Research
and Control Corp. and Jeffrey Harkey. (Incorporated herein by
reference to Exhibit 10.105 to the Annual Report on Form 10-K for
the fiscal year ended December 31, 1996.)
10.106 Option to Purchase 10,000 Shares of Common Stock of Pollution
Research and Control Corp. issued to James Bowers; Option
Agreement, dated as of May 31, 1996, between Pollution Research
and Control Corp. and James Bowers. (Incorporated herein by
reference to Exhibit 10.106 to the Annual Report on Form 10-K for
the fiscal year ended December 31, 1996.)
10.107 Option to Purchase 10,000 Shares of Common Stock of Pollution
Research and Control Corp. issued to Michael Jones; Option
greement, dated as of May 31, 1996, between Pollution Research
Corp. and Michael Jones. (Incorporated herein by reference to
Exhibit 10.107 to the Annual Report on Form 10-K for the fiscal
year ended December 31, 1996.)
10.108 Option to Purchase 10,000 Shares of Common Stock of Pollution
Research and Control Corp. issued to Charles McQuaig; Option
Agreement, dated as of May 31, 1996, between Pollution Research
and Control Corp. and Charles McQuaig.(Incorported herein by
reference to Exhibit 10.108 to the Annual Report on Form 10-K for
the fiscal year ended December 31, 1996.)
10.109 Option to Purchase 10,000 Shares of Common Stock of Pollution
Research and Control Corp. issued to Daniel Patanjo; Option
Agreement, dated as of May 31, 1996, between Pollution Research
and Control Corp. and Daniel Patanjo. (Incorporated herein by
reference to Exhibit 10.109 to the Annual Report on Form 10-K for
the fiscal year ended December 31, 1996.)
10.110 Option to Purchase 10,000 Shares of Common Stock of Pollution
Research and Control Corp. issued to Karen Perry; Option
Agreement, dated as of May 31, 1996, between Pollution Research
and Control Corp. and Karen Perry. (Incorporated herein by
reference to Exhibit 10.110 to the Annual Report on Form 10-K for
the fiscal year ended December 31, 1996.)
10.111 Option to Purchase 10,000 Shares of Common Stock of Pollution
Research and Control Corp. issued to Ricky Sonnier; Option
Agreement, dated as of May 31, 1996, between Pollution Research
and Control Corp. and Ricky Sonnier. (Incorporated herein by
reference to Exhibit 10.111 to the Annual Report on Form 10-K for
the fiscal year ended December 31, 1996.)
10.112 Option to Purchase 10,000 Shares of Common Stock of Pollution
Research and Control Corp. issued to Victor Valerio; Option
Agreement, dated as of May 31, 1996, between Pollution Research
and Control Corp. and Victor Valerio. (Incorporated herein by
reference to Exhibit 10.112 to the Annual Report on Form 10-K for
the fiscal year ended December 31, 1996.)
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10.113 Option to Purchase 5,000 Shares of Common Stock of Pollution
Research and Control Corp. issued to Spencer Abrams; Option
Agreement, dated as of May 31, 1996, between Pollution Research
and Control Corp. and Spencer Abrams. (Incorporated herein by
reference to Exhibit 10.113 to the Annual Report on Form 10-K for
the fiscal year ended December 31, 1996.)
10.114 Option to Purchase 5,000 Shares of Common Stock of Pollution
Research and Control Corp. issued to Dan Busby; Option Agreement,
dated as of May 31, 1996, between Pollution Research and Control
Corp. and Dan Busby. (Incorporated herein by reference to Exhibit
10.114 to the Annual Report on Form 10-K for the fiscal year
ended December 31, 1996.)
10.115 Option to Purchase 5,000 Shares of Common Stock of Pollution
Research and Control Corp. issued to Frank Getautas; Option
Agreement, dated as of May 31, 1996, between Pollution Research
and Control Corp. and Frank Getautas. (Incorporated herein by
reference to Exhibit 10.115 to the Annual Report on Form 10-K for
the fiscal year ended December 31, 1996.)
10.116 Option to Purchase 5,000 Shares of Common Stock of Pollution
Research and Control Corp. issued to Mitzi Narramore; Option
Agreement, dated as of May 31, 1996, between Pollution Research
and Control Corp. and Mitzi Narramore. (Incorporated herein by
reference to Exhibit 10.116 to the Annual Report on Form 10-K for
the fiscal year ended December 31, 1996.)
10.117 Option to Purchase 300,000 Shares of Common Stock of Pollution
Research and Control Corp. issued to Ron Logan-Sinclair; Option
Agreement, dated as of June 1, 1996, between Pollution Research
and Control Corp. and Ron Logan-Sinclair. (Incorporated herein by
reference to Exhibit 10.117 to the Annual Report on Form 10- K
for the fiscal year ended December 31, 1996.)
10.118 Option to Purchase 123,000 Shares of Common Stock of Pollution
Research and Control Corp. issued to Albert E. Gosselin; Option
Agreement, dated as of June 1, 1996, between Pollution Research
and Control Corp. and Albert E. Gosselin. (Incorporated herein by
reference to Exhibit 10.118 to the Annual Report on Form 10- K
for the fiscal year ended December 31, 1996.)
10.119 Option to Purchase 120,000 Shares of Common Stock of Pollution
Research and Control Corp. issued to Albert E. Gosselin; Option
Agreement, dated as of June 1, 1996, between Pollution Research
and Control Corp. and Albert E. Gosslein. (Incorporated herein by
reference to Exhibit 4.19 to the Registration Statement on Form
S-3 (Registration No. 33-14133) of Pollution Research and Control
Corp. dated October 15, 1996.)
10.120 Option to Purchase 40,000 Shares of Common Stock of Pollution
Research and Control Corp. issued to Gary L. Dudley; Option
Agreement, dated as of June 1, 1996, between Pollution Research
and Control Corp. and Gary L. Dudley. (Incorporated herein by
reference to Exhibit 4.20 to the Registration Statement on Form
S-3 (Registration No. 33-14133) of Pollution Research and Control
Corp.dated October 15, 1996.)
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10.121 Option to Purchase 20,000 Shares of Common Stock of Pollution
Research and Control Corp. issued to Gary L. Dudley; Option
Agreement, dated as of June 1, 1996, between Pollution Research
and Control Corp. and Gary L. Dudley. (Incorporated herein by
reference to Exhibit 10.121 to the Annual Report on Form 10-K for
the fiscal year ended December 31, 1996.)
10.122 Option to Purchase 40,000 Shares of Common Stock of Pollution
Research and Control Corp. issued to Craig E. Gosselin; Option
Agreement, dated as of June 1, 1996, between Pollution Research
and Control Corp. and Craig E. Gosselin. (Incorporated herein by
reference to Exhibit 4.21 to the Registration Statement on Form
S-3 (Registration No. 33-14133) of Pollution Research and Control
Corp. dated October 15, 1996.)
10.123 Option to Purchase 20,000 Shares of Common Stock of Pollution
Research and Control Corp. issued to Craig E. Gosselin; Option
Agreement, dated as of June 1, 1996, between Pollution Research
and Control Corp. and Craig E. Gosselin. (Incorporated herein by
reference to Exhibit 10.123 to the Annual Report on Form 10- K
for the fiscal year ended December 31, 1996.)
10.124 Option to Purchase 40,000 Shares of Common Stock of Pollution
Research and Control Corp. issued to Cynthia L. Gosselin; Option
Agreement, dated as of June 1, 1996, between Pollution Research
and Control Corp. and Cynthia L. Gosselin. (Incorporated herein
by reference to Exhibit 4.22 to the Registration Statement on
Form S-3 (Registration No. 33-14133) of Pollution Research and
Control Corp. dated October 15, 1996.
10.125 Option to Purchase 20,000 Shares of Common Stock of Pollution
Research and Control Corp. issued to Cynthia L. Gosslin; Option
Agreement, dated as of June 1, 1996, between Pollution Research
and Control Corp. and Cynthia L. Gosselin. (Incorporated herein
by reference to Exhibit 10.125 to the Annual Report on Form 10- K
for the fiscal year ended December 31, 1996.)
10.126 Option to Purchase 40,000 shares of Common Stock of Pollution
Research and Control Corp. issued to Marcia Smith; Option
Agreement, dated as of June 1, 1996, between Pollution Research
and Control Corp. and Marcia Smith. (Incorporated herein by
reference to Exhibit 4.23 to the Registration Statement on Form
S-3 (Registration No. 33-14133) of Pollution Research and Control
Corp. dated October 15, 1996.)
10.127 Option to Purchase 20,000 Shares of Common Stock of Pollution
Research and Control Corp. issued to Marcia Smith; Option
Agreement, dated as of June 1, 1996, between Pollution Research
and Control Corp. and Marcia Smith. (Incorporated herehin by
reference to Exhibit 10.127 to the Annual Report on Form 10-K for
the fiscal year ended December 31, 1996.)
10.128 Option to Purchase 40,000 Shares of Common Stock of Pollution
Research and Control Corp. issued to Margaret Jones; Option
Agreement, dated as of June 1, 1996, between Pollution Research
and Control Corp. and Margaret Jones. (Incorporated herein by
reference to Exhibit 4.24 to the Registration Statement on Form
S-3 (Registration No. 33-14133) of Pollution Research and Control
Corp. dated October 15, 1996.)
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<PAGE>
10.129 Option to Purchase 20,000 Shares of Common Stock of Pollution
Research and Control Corp. issued to Margaret Jones; Option
Agreement, dated as of June 1, 1996, between Pollution Research
and Control Corp. and Margaret Jones. (Incorporated herein by
reference to Exhibit 10.129 to the Annual Report on Form 10-K for
the fiscal year ended December 31, 1996.)
10.130 Option to Purchase 37,500 Shares of Common Stock of Pollution
Research Corp. issued to Lee Sion; Option Agreement, dated as of
June 1, 1996, between Pollution Research and Control Corp. and
Lee Sion. (Incorporated herein by reference to Exhibit 10.130 to
the Annual Report on Form 10-K for the fiscal year ended December
31, 1996.)
10.131 Option to Purchase 20,000 Shares of Common Stock of Pollution
Research and Control Corp. issued to Patricia Cudd; Option
Agreement, dated as of June 1, 1996, between Pollution Research
and Control Corp. and Patricia Cudd. (Incorporated herein by
reference to Exhibit 10.131 to the Annual Report on Form 10-K for
the fiscal year ended December 31, 1996.)
10.132 Option to Purchase 20,000 Shares of Common Stock of Pollution
Research and Control Corp. issued to Roland Fink; Option
Agreement, dated as of June 1, 1996, between Pollution Research
and Control Corp. and Roland Fink. (Incorporated herein by
reference to Exhibit 10.132 to the Annual Report on Form 10-K for
the fiscal year ended December 31, 1996.)
10.133 Purchase Agreement, dated as of June 14, 1996, between Pollution
Research and Control Corp. and John Ann Hotchkiss; Warrant to
Purchase 291,667 Shares of Common Stock of Pollution Research and
Control Corp. dated June 15, 1996, issued to John Ann Hotchkiss.
(Incorporated herein by reference to Exhibits 4.25 and 4.26 to
the Registration Statement on Form S-3 (Registration No.
33-14133) of Pollution Research and Control Corp. dated October
15, 1996.)
10.134 Purchase Agreement, dated as of June 14, 1996, between Pollution
Research and Control Corp. and David Firestone; Warrant to
Purchase 166,667 Shares of Common Stock of Pollution Research and
Control Corp. dated June 15, 1996, issued to David Firestone.
(Incorporated herein by reference to Exhibits 4.27 and 4.28 to
the Registration Statement on Form S-3 (Registration No.
33-14133) of Pollution Research and Control Corp. dated October
15, 1996.)
10.135 Purchase Agreement, dated as of June 14, 1996, between Pollution
Research and Control Corp. and Irawan Onggara; Warrant to
Purchase 166,667 Shares of Common Stock of Pollution Research and
Control Corp., dated June 15, 1996, issued to Irawan
Onggara.(Incorporated herein by reference to Exhibits 4.29 and
4.30 to the Registration Statement on Form S-3 (Registration No.
33-14133) of Pollution Research and Control Corp. dated October
15, 1996.)
10.136 Purchase Agreement, dated as of June 14, 1996, between Pollution
Research and Control Corp. and John M. Liviakis; Warranto to
Purchase 66,667 Shares of Common Stock of Pollution Research and
Control Corp. dated June 15, 1996, issued to John M. Liviakis.
(Incorporated herein by reference to Exhibits 4.31 and 4.32 to
the Registration Statement on Form S-3 (Registration No.
33-14133) of Pollution Research and Control Corp. dated October
15, 1996.)
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<PAGE>
10.137 Purchase Agreement, dated as of June 14, 1996, between Pollution
Research and Control Corp. and Robert S. London; Warrant to
Purchase 66,667 Shares of Common Stock of Pollution Research and
Control Corp., dated June 15, 1996, issued to Robert S. London.
(Incorporated herein by reference to Exhibits 4.33 and 4.34 to
the Registration Statement on Form S-3 (Registration No.
33-14133) of Pollution Research and Control Corp. dated October
15, 1996.)
10.138 Purchase Agreement, dated as of June 14, 1996, between Pollution
Research and Control Corp. and Robert B. Prag; Warranto to
Purchase 66,667 Shares of Common Stock of Pollution Research and
Control Corp., dated June 15, 1996, issued to Robert B. Prag.
(Incorporated herein by reference to Exhibits 4.35 and 4.36 to
the Registration Statement on Form S-3 (Registration No.
33-14133) of Pollution Research and Control Corp. dated October
15, 1996.)
10.139 Purchase Agreement, dated as of June 14, 1996, between Pollution
Research and Control Corp. and Shawn Cady; Warrant to Purchase
41,667 Shares of Common Stock of Pollution Research and Control
Corp., dated June 15, 1996, issued to Shawn Cady. (Incorporated
herein by reference to Exhibits 4.37 and 4.38 to the Registration
Statement on Form S-3 (Registration No. 33-14133) of Pollution
Research and Control Corp. dated October 15, 1996.)
10.140 Purchase Agreement, dated as of June 14, 1996, between Pollution
Research and Control Corp. and Donald Carstens; Warrant to
Purchase 41,667 Shares of Common Stock of Pollution Research and
Control Corp., dated June 15, 1996 issued to Donald Carstens.
(Incorporated herein by reference to Exhibits 4.39 and 4.40 to
the Registration Statement on Form S-3 (Registration No.
33-14133) of Pollution Research and Control Corp. dated October
15, 1996.)
10.141 Purchase Agreement, dated as of June 14, 1996, between Pollution
Research and Control Corp. and Ling Nen Chuan; Warrant to
Purchase 41,667 Shares of Common Stock of Pollution Research and
Control Corp., dated June 15, 1996, issued to Ling Nen Chuan.
(Incorporated herein by reference to Exhibits 4.41 and 4.42 to
the Registration Statement on Form S-3 (Registration No.
33-14133) of Pollution Research and Control Corp. dated October
15, 1996.)
10.142 Purchase Agreement, dated as of June 14, 1996, between Pollution
Research and Control Corp. and Sanibel Capital Corporation;
Warrant to Purchase 41,667 Shares of Common Stock of Pollution
Research and Control Corp. dated June 15, 1996, issued to Sanibel
Capital Corporation. (Incorporated herein by reference to
Exhibits 4.43 and 4.44 to the Registration Statement on Form S-3
(Registration No. 33-14133) of Pollution Research and Control
Corp. dated October 15, 1996.)
10.143 Purchase Agreement, dated as of June 14, 1996, between Pollution
Research and Control Corp. and Donna Sizemore; Warrant to
Purchase 8,333 Shares of Common Stock of Pollution Research and
Control Corp., dated June 15, 1996, issued to Donna Sizemore.
(Incorporated herein by reference to Exhibits 4.45 and 4.46 to
the Registration Statement on Form S-3 (Registration No.
33-14133) of Pollution Research and Control Corp. dated October
15, 1996.)
10.144 Option to Purchase 25,000 Shares of Common Stock of Pollution
Research and Control Corp. issued to Randy Foy; Option Agreement,
dated as of July 1, 1996, between Pollution Research and Control
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<PAGE>
Corp. and Randy Foy. (Incorporated herein by reference to
Exhibits 4.47 to the Registration Statement on Form S-3
(Registration No. 33-14133) of Pollution Research and Control
Corp. dated October 15, 1996.)
10.145 Option to Purchase 40,000 Shares of Common Stock of Pollution
Research and Control Corp. issued to Paul Richardson; Option
Agreement, dated as of August 6, 1996, between Pollution Research
and Control Corp. and Paul Richardson. (Incorporated herein by
reference to Exhibit 10.145 to the Annual Report on Form 10- K
for the fiscal year ended December 31, 1996.)
10.146 Letter Agreement, dated as of September 20, 1996, between
Pollution Research and Control Corp. and Neil C. Sullivan;
Warrant to Purchase 300,000 Shares of Common Stock of Pollution
Research and Control Corp. dated September 20, 1996, issued to
Neil C. Sullivan. (Incorporated herein by reference to Exhibits
4.48 and 4.49 to the Registration Statement on Form S-3
(Registration No. 33-14133) of Pollution Research and Control
Corp. dated October 15, 1996.)
10.147 Consulting Agreement dated November 19, 1996, between Pollution
Research and Control Corp. and Fenway Advisory Group.
(Incorporated herein by reference to Exhibit 10.147 to the Annual
Report on Form 10-K for the fiscal year ended December 31, 1996.)
10.148 Option to Purchase 400,000 Shares of Pollution Research and
Control Corp. issued to Fenway Advisory Group; Option Agreement
dated as of November 19, 1996, between Pollution Research and
Control Corp. and Fenway Advisory Group. (Incorporated herein by
reference to Exhibit 10.148 to the Annual Report on Form 10- K
for the fiscal year ended December 31, 1996.)
10.149 Option to purchase 40,000 Shares of Common Stock of Pollution
Research and Control Corp. dated as of March 3, 1997 issued to
Barry Soltani. (Incorporated herein by reference to Exhibit
10.149 to the Annual Report on Form 10-K for the fiscal year
ended December 31, 1997.)
10.150 Option to purchase 50,000 Shares of Common Stock of Pollution
Research and Control Corp. dated as of April 30, 1997 issued to
Jorel Management.(Incorporated herein by reference to Exhibit
10.150 to the Annual Report on Form 10-K for the fiscal year
ended December 31, 1997.)
10.151 Employment Agreement, dated June 9, 1997, between Pollution
Research and Control Corp. and Marcia Smith. (Incorporated herein
by reference to Exhibit 10.151 to the Annual Report on Form 10-K
for the fiscal year ended December 31, 1997.)
10.152 Amended Employment Agreement dated February 9, 1998 between
Pollution Research and Control Corp. and Cindy Gosselin.
(Incorporated herein by reference to Exhibit 10.152 to the Annual
Report on Form 10-K for the fiscal year ended December 31, 1997.)
10.153 Letter Agreement dated 3-10-98 to annul the acquisition of Logan
Research Limited (LRL) by Logan Medical Devices (LMD).
(Incorporated herein by reference to Exhibit 10.153to the Annual
Report on Form 10K for the fiscal year ended December 31, 1997.)
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<PAGE>
10.154* Purchase Agreement dated May 8, 1998 between Pollution Research
and Control Corp. and Albert E. Gosselin, Jr. to purchase 400,000
Shares of Preferred Convertible Stock.
10.155* Purchase Agreement dated May 8, 1998 between Pollution Research
and Control Corp. and Patricia Cudd to purchase 400,000 Shares of
Preferred Convertible Stock.
10.156* Purchase Agreement dated May 8, 1998 between Pollution Research
and Control Corp. and Gary L. Dudley to purchase 80,000 Shares of
Preferred Convertible Stock.
10.157* Purchase Agreement dated June 19, 1998 between Pollution Research
and Control Corp. and William T. Richey to purchase 20,000 shares
of Common Stock.
10.158* Purchase Agreement dated June 19, 1998 between Pollution Research
and Control Corp. and Ronald E. Patterson to purchase 23,190
shares of Common Stock.
10.159* Purchase Agreement dated June 19, 1998 between Pollution Research
and Control Corp. and Ronald E. Patterson to purchase 68,810
shares of Common Stock.
10.160* Purchase Agreement dated June 19, 1998 between Pollution Research
and Control Corp. and Mayer Zarchi to purchase 20,000 shares of
Common Stock.
10.161* Purchase Agreement dated June 19, 1998 between Pollution Research
and Control Corp. and Fred J. Zalokar to purchase 23,000 shares
of Common Stock.
10.162* Purchase Agreement dated June 19, 1998 between Pollution Research
and Control Corp. and Frank T. Anaya to purchase 9,174 shares of
Common Stock.
10.163* Purchase Agreement dated June 19, 1998 between Pollution Research
and Control Corp. and Donald A. Carstens to purchase 9,082 shares
of Common Stock.
10.164* Purchase Agreement dated June 19, 1998 between Pollution Research
and Control Corp. and Alan L. Talesnick to purchase 18,000 shares
of Common Stock.
10.165* Option to purchase 23,125 Shares of Pollution Research and
Control Corp. issued to Phoenix Alliance, Inc.; Option Agreement
dated June 19, 1998 between Pollution Research and Control Corp.
and Phoenix Alliance, Inc.
10.166* Agreement to purchase a technician service center in Macau from
PIC Computers, Ltd. Agreement dated as of June 24, 1998 between
Pollution Research and Control Corp. and PIC Computers, Ltd.
10.167* Option to purchase 13,750 Shares of Common Stock issued to Marcia
Smith; Option Agreement dated as of December 14, 1998 between
Pollution Research and Control Corp. and Marcia Smith.
10.168* Option to purchase 12,500 Shares of Common Stock issued to Cindy
Gosselin; Option Agreement dated as of December 14, 1998 between
Pollution Research and Control Corp. and Cindy Gosselin.
10.169* Promissory Note dated as of January 27, 1999 between Pollution
Research and Control Corp. and Mark S. Rose.
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<PAGE>
10.170* Option to purchase 48,000 Shares of Common Stock issued to Mark
S. Rose; OptionAgreement dated as of January 27, 1999 between
Pollution Research and Control Corp. and Mark S. Rose
10.171* Finder's Agreement dated January 27, 1999 between Pollution
Research and Control Corp. and Rosemary Althaus.
10.172* Option to purchase 5,000 Shares of Common Stock of Pollution
Research and Control Corp.; Option Agreement dated as of January
27, 1999 between Pollution Research and Control Corp. and
Rosemary Althaus.
10.173* 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.
10.174* 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.
10.175* 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 Huss.
10.176* Option to Purchase 25,000 Shares of Common Stock of Pollution
Research and Control Corp. issued to Anthony Reneau;Option
Agreement dated as of February 25, 1999 between Pollution
Research and Control Corp. and Anthony Reneau.
10.177* 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.
21* List of Subsidiaries.
*Filed herewith.
E-19
EXHIBIT 10.154
PURCHASE AGREEMENT
POLLUTION RESEARCH AND CONTROL CORP.
THIS PURCHASE AGREEMENT ("Agreement" herein) is entered into as of the 8th
day of May, 1998 between POLLUTION RESEARCH AND CONTROL CORP., a California
corporation with its principal offices at 506 Paula Avenue, Glendale, California
91201 (the "Company") and Albert E. Gosselin, Jr. whose address is 506 Paula
Avenue, Glendale, Ca 91201 (the "Purchaser").
WHEREAS, the Company elects to issue and sell its Preferred Convertible
Stock (the "Shares") and the Purchaser desires to acquire the Shares for a
purchase price of $.125 cents per share. This new issue of shares has voting
rights but no dividend rights and is convertible anytime after July 30, 1998.*
NOW, THEREFORE, for and in consideration of the mutual covenants
hereinafter set forth, the parties hereto do hereby agree as follows:
I. PURCHASE OF SHARES AND REPRESENTATIONS BY SUBSCRIBER.
1.1 Subject to the terms and conditions hereinafter set forth, the
Purchaser hereby purchases 400,000 Shares and the Company agrees to sell the
Shares to the Purchaser for a purchase price of $50,000. The purchase price is
payable by a cashier's check made payable to the Company, or by wire transfer to
an account determined by the Company contemporaneously with the execution and
delivery of this Agreement. The Shares will be delivered by the Company to the
Purchaser within ten (10) days following the execution of the Agreement.
1.2 The Purchaser recognizes that the purchase of the Shares involves a
high degree of risk in that an investment in the company is highly speculative
and only an investor who can afford to lose its entire investment in the Company
should purchase the Shares.
1.3 The Purchaser acknowledges that he is able to bear the economic risk of
this investment.
1.4 The Purchaser represents that he is an "accredited investor," as such
term is defined in Rule 501 of Regulation D promulgated under the Securities Act
of 1933, as amended (the "Act").
1.5 The Purchaser acknowledges that he has prior investment experience,
including investment in non-listed and non-registered securities, or he has
employed the services of an investment advisor, attorney or accountant to read
all of the documents furnished or made available by the Company to him and to
evaluate the merits and risks of such an investment on his behalf.
1.6 The Purchaser hereby represents that he has been furnished by the
Company during the course of this transaction with all information regarding the
Company which he had requested or desired to know; that all documents which
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<PAGE>
could be reasonably provided have been made available for his inspection and
review; that he has been afforded the opportunity to ask questions of and
receive answers from duly authorized officers or other representatives of the
Company concerning the terms and conditions of his investment in the Company,
and any additional information which he had requested.
1.7 The Purchaser hereby acknowledges that this offering has not been
reviewed by the Securities and Exchange Commission (the "Commission") since this
offering is intended to be a non-public offering pursuant to Section 4 (2) of
the Act. The Purchaser represents that the Shares are being purchased for his
own account, for investment, and not for distribution or resale to others. The
Purchaser agrees that he will not sell or otherwise transfer such securities
unless they are registered under the Act or unless an exemption from such
registration is available.
1.8 The Purchaser understands that the Shares have not been registered
under the Act by reason of a claimed exemption under the provisions of the Act
which depends, in part, upon its investment intention. In this connection, the
Purchaser understands that it is the position of the Commission that the
statutory basis for such exemption would not be present if his representations
merely meant that its present intention was to hold such securities for a short
period, for a deferred sale, for a market rise, assuming that a market develops,
or for any other fixed period. The Purchaser realizes that, in the view of the
Commission, a purchase now with an intent to resell would represent a purchase
with an intent inconsistent with his representation to the Company, and the
Commission might regard such a sale or disposition as a deferred sale to which
the exemption is not available.
1.9 The Purchaser consents that the Company may, if he desires, permit the
transfer of the Shares out of his name only when his request for transfer is
accompanied by an opinion of council reasonably satisfactory to the Company that
neither the sale nor the proposed transfer results in a violation of the Act or
any applicable state "blue sky" laws (collectively, the "Securities Laws"). The
Purchaser agrees to hold the Company, its directors, officers and controlling
persons and their respective heirs, representatives, successors and assigns
harmless and to indemnify them against all liabilities, costs and expenses
incurred by them as a result of any misrepresentation made by him contained
herein or in the Confidential Purchaser Questionnaire completed by him or any
sale or distribution by the Purchaser in violation of any Securities Laws.
1.10 The Purchaser consents to the placement of a legend on any certificate
or other document evidencing the Shares stating that they have not been
registered under the Act and setting forth or referring to the restrictions on
transferability and sale thereof. The Purchaser is aware that the Company will
make a notation in its appropriate records with respect to the restrictions on
the transferability of such securities.
II. REPRESENTATIONS BY, AND COVENANTS OF, THE COMPANY.
The Company represents and covenants to the Purchaser that:
(a) The Company is a corporation duly organized, existing and in good
standing under the laws of the State of California which has the corporate power
to conduct the business which it conducts and proposes to conduct.
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<PAGE>
(b) The execution, delivery and performance of this Agreement by the
Company has been duly approved by the Board of Directors of the Company and all
other actions required to authorize and effect the offer and sale of the Shares
have been duly taken and approved.
(c) The Shares have been duly and validly authorized and, when issued and
paid for in accordance with the terms hereof, will be validly binding
obligations of the Company enforceable in accordance with their respective terms
except that the enforceability thereof may be limited by bankruptcy, insolvency,
or other laws affecting the rights of creditors generally or by general
equitable principles.
(d) The Company has obtained all licenses, permits and other governmental
authorizations necessary to the conduct of its business; such licenses, permits
and other governmental authorizations obtained are in full force and effect; and
the Company is in all material respects complying therewith.
III. REGISTRATION OF SECURITIES.
The Company acknowledges that it currently has no effective registration
statement on Form S-3 on file with the Securities and Exchange Commission.
IV. MISCELLANEOUS.
4.1 Any notice or other communication given hereunder shall be deemed
sufficient if in writing and sent by registered or certified mail, return
receipt requested, address to the Company, at its principal office, 506 Paula
Avenue, Glendale, California 91201, Attention: President, with a copy to
Patricia Cudd & Associates, Attorney at Law, 1120 Lincoln Street, Suite 703,
Denver, Colorado 80203, Attention: Patricia Cudd, and to the Purchaser at the
address listed on the signature page hereof. Notices shall be deemed to have
been given on the date of mailing, except notices of change of address, which
shall be deemed to have been given when received.
4.2 This Agreement shall not be changed, modified or made except by a
writing signed by the parties to be charged, and this Agreement may not be
discharged except by performance in accordance with its terms or by a writing
signed by the party to be charged.
4.3 This Agreement shall be binding upon and inure to the benefit of the
parties hereto and to their respective heirs, legal representatives, successors
and assigns. This Agreement sets forth the entire agreement and understanding
between the parties as to the subject matter hereof and merges and supersedes
all prior discussions, agreements and understandings of any and every nature
among them.
4.4 This Agreement and its validity, construction and performance shall be
governed in all respects by the laws of the State of California, without regard
to principles of conflicts of law.
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<PAGE>
4.5 This Agreement may be executed in counterparts.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first written above.
Purchaser: /s/ Albert E. Gosselin, Jr. The Company:
---------------------------
POLLUTION RESEARCH AND CONTROL CORP.,
506 Paula Ave a California corporation
- -------------------------
(Address)
Glendale, Ca 91201 By: /s/ Albert E. Gosselin, Jr.
- ------------------------- ---------------------------------
(City, State) Albert E. Gosselin, Jr.,
President and Chief
Executive Officer
Date: May 8, 1998
*Purchase price is based on closing bid May 8, 1998 of .31 cents, modified by
dividend formula (based on .20 cents pre-dividend announcement with additional
40% lettered discount).
E-23
EXHIBIT 10.155
PURCHASE AGREEMENT
POLLUTION RESEARCH AND CONTROL CORP.
THIS PURCHASE AGREEMENT ("Agreement" herein) is entered into as of the 8th
day of May, 1998 between POLLUTION RESEARCH AND CONTROL CORP., a California
corporation with its principal offices at 506 Paula Avenue, Glendale, California
91201 (the "Company") and Patricia Cudd whose address is 1120 Lincoln Street,
#703, Denver, Co 80203 (the "Purchaser").
WHEREAS, the Company elects to issue and sell its Preferred Convertible
Stock (the "Shares") and the Purchaser desires to acquire the Shares for a
purchase price of $.125 cents per share. This new issue of shares has voting
rights but no dividend rights and is convertible anytime after July 30, 1998.*
NOW, THEREFORE, for and in consideration of the mutual covenants
hereinafter set forth, the parties hereto do hereby agree as follows:
I. PURCHASE OF SHARES AND REPRESENTATIONS BY SUBSCRIBER.
1.1 Subject to the terms and conditions hereinafter set forth, the
Purchaser hereby purchases 400,000 Shares and the Company agrees to sell the
Shares to the Purchaser for a purchase price of $50,000. The purchase price is
payable by a cashier's check made payable to the Company, or by wire transfer to
an account determined by the Company contemporaneously with the execution and
delivery of this Agreement. The Shares will be delivered by the Company to the
Purchaser within ten (10) days following the execution of the Agreement.
1.2 The Purchaser recognizes that the purchase of the Shares involves a
high degree of risk in that an investment in the company is highly speculative
and only an investor who can afford to lose its entire investment in the Company
should purchase the Shares.
1.3 The Purchaser acknowledges that she is able to bear the economic risk
of this investment.
1.4 The Purchaser represents that she is an "accredited investor," as such
term is defined in Rule 501 of Regulation D promulgated under the Securities Act
of 1933, as amended (the "Act").
1.5 The Purchaser acknowledges that she has prior investment experience,
including investment in non-listed and non-registered securities, or she has
employed the services of an investment advisor, attorney or accountant to read
all of the documents furnished or made available by the Company to her and to
evaluate the merits and risks of such an investment on her behalf.
1.6 The Purchaser hereby represents that she has been furnished by the
Company during the course of this transaction with all information regarding the
Company which she had requested or desired to know; that all documents which
could be reasonably provided have been made available for his inspection and
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<PAGE>
review; that she has been afforded the opportunity to ask questions of and
receive answers from duly authorized officers or other representatives of the
Company concerning the terms and conditions of his investment in the Company,
and any additional information which she had requested.
1.7 The Purchaser hereby acknowledges that this offering has not been
reviewed by the Securities and Exchange Commission (the "Commission") since this
offering is intended to be a non-public offering pursuant to Section 4 (2) of
the Act. The Purchaser represents that the Shares are being purchased for her
own account, for investment, and not for distribution or resale to others. The
Purchaser agrees that she will not sell or otherwise transfer such securities
unless they are registered under the Act or unless an exemption from such
registration is available.
1.8 The Purchaser understands that the Shares have not been registered
under the Act by reason of a claimed exemption under the provisions of the Act
which depends, in part, upon its investment intention. In this connection, the
Purchaser understands that it is the position of the Commission that the
statutory basis for such exemption would not be present if her representations
merely meant that its present intention was to hold such securities for a short
period, for a deferred sale, for a market rise, assuming that a market develops,
or for any other fixed period. The Purchaser realizes that, in the view of the
Commission, a purchase now with an intent to resell would represent a purchase
with an intent inconsistent with her representation to the Company, and the
Commission might regard such a sale or disposition as a deferred sale to which
the exemption is not available.
1.9 The Purchaser consents that the Company may, if she desires, permit the
transfer of the Shares out of her name only when her request for transfer is
accompanied by an opinion of council reasonably satisfactory to the Company that
neither the sale nor the proposed transfer results in a violation of the Act or
any applicable state "blue sky" laws (collectively, the "Securities Laws"). The
Purchaser agrees to hold the Company, its directors, officers and controlling
persons and their respective heirs, representatives, successors and assigns
harmless and to indemnify them against all liabilities, costs and expenses
incurred by them as a result of any misrepresentation made by him contained
herein or in the Confidential Purchaser Questionnaire completed by him or any
sale or distribution by the Purchaser in violation of any Securities Laws.
1.10 The Purchaser consents to the placement of a legend on any certificate
or other document evidencing the Shares stating that they have not been
registered under the Act and setting forth or referring to the restrictions on
transferability and sale thereof. The Purchaser is aware that the Company will
make a notation in its appropriate records with respect to the restrictions on
the transferability of such securities.
II. REPRESENTATIONS BY, AND COVENANTS OF, THE COMPANY.
The Company represents and covenants to the Purchaser that:
(a) The Company is a corporation duly organized, existing and in good
standing under the laws of the State of California which has the corporate power
to conduct the business which it conducts and proposes to conduct.
E-25
<PAGE>
(b) The execution, delivery and performance of this Agreement by the
Company has been duly approved by the Board of Directors of the Company and all
other actions required to authorize and effect the offer and sale of the Shares
have been duly taken and approved.
(c) The Shares have been duly and validly authorized and, when issued and
paid for in accordance with the terms hereof, will be validly binding
obligations of the Company enforceable in accordance with their respective terms
except that the enforceability thereof may be limited by bankruptcy, insolvency,
or other laws affecting the rights of creditors generally or by general
equitable principles.
(d) The Company has obtained all licenses, permits and other governmental
authorizations necessary to the conduct of its business; such licenses, permits
and other governmental authorizations obtained are in full force and effect; and
the Company is in all material respects complying therewith.
III. REGISTRATION OF SECURITIES.
The Company acknowledges that it currently has no effective registration
statement on Form S-3 on file with the Securities and Exchange Commission.
IV. MISCELLANEOUS.
4.1 Any notice or other communication given hereunder shall be deemed
sufficient if in writing and sent by registered or certified mail, return
receipt requested, address to the Company, at its principal office, 506 Paula
Avenue, Glendale, California 91201, Attention: President, with a copy to
Patricia Cudd & Associates, Attorney at Law, 1120 Lincoln Street, Suite 703,
Denver, Colorado 80203, Attention: Patricia Cudd, and to the Purchaser at the
address listed on the signature page hereof. Notices shall be deemed to have
been given on the date of mailing, except notices of change of address, which
shall be deemed to have been given when received.
4.2 This Agreement shall not be changed, modified or made except by a
writing signed by the parties to be charged, and this Agreement may not be
discharged except by performance in accordance with its terms or by a writing
signed by the party to be charged.
4.3 This Agreement shall be binding upon and inure to the benefit of the
parties hereto and to their respective heirs, legal representatives, successors
and assigns. This Agreement sets forth the entire agreement and understanding
between the parties as to the subject matter hereof and merges and supersedes
all prior discussions, agreements and understandings of any and every nature
among them.
4.4 This Agreement and its validity, construction and performance shall be
governed in all respects by the laws of the State of California, without regard
to principles of conflicts of law.
E-26
<PAGE>
4.5 This Agreement may be executed in counterparts.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first written above.
Purchaser: /s/ Patricia Cudd The Company:
-------------------------
POLLUTION RESEARCH AND CONTROL CORP.,
1120 Lincoln St. #703 a California corporation
- ------------------------------------
(Address)
Denver, Co 80203 By: /s/ Albert E. Gosselin, Jr.
- ------------------------------------ ---------------------------------
(City, State) Albert E. Gosselin, Jr.,
President and Chief
Executive Officer
Date: May 8, 1998
*Purchase price is based on closing bid May 8, 1998 of .31 cents, modified by
dividend formula (based on .20 cents pre-dividend announcement with additional
40% lettered discount).
E-27
EXHIBIT 10.156
PURCHASE AGREEMENT
POLLUTION RESEARCH AND CONTROL CORP.
THIS PURCHASE AGREEMENT ("Agreement" herein) is entered into as of the 8th
day of May, 1998 between POLLUTION RESEARCH AND CONTROL CORP., a California
corporation with its principal offices at 506 Paula Avenue, Glendale, California
91201 (the "Company") and Gary Dudley whose address is 2700 Panorama Drive,
#304, Signal Hill, Ca 90806 (the "Purchaser").
WHEREAS, the Company elects to issue and sell its Preferred Convertible
Stock (the "Shares") and the Purchaser desires to acquire the Shares for a
purchase price of $.125 cents per share. This new issue of shares has voting
rights but no dividend rights and is convertible anytime after July 30, 1998.*
NOW, THEREFORE, for and in consideration of the mutual covenants
hereinafter set forth, the parties hereto do hereby agree as follows:
I. PURCHASE OF SHARES AND REPRESENTATIONS BY SUBSCRIBER.
1.1 Subject to the terms and conditions hereinafter set forth, the
Purchaser hereby purchases 80,000 Shares and the Company agrees to sell the
Shares to the Purchaser for a purchase price of $10,000. The purchase price is
payable by a cashier's check made payable to the Company, or by wire transfer to
an account determined by the Company contemporaneously with the execution and
delivery of this Agreement. The Shares will be delivered by the Company to the
Purchaser within ten (10) days following the execution of the Agreement.
1.2 The Purchaser recognizes that the purchase of the Shares involves a
high degree of risk in that an investment in the company is highly speculative
and only an investor who can afford to lose its entire investment in the Company
should purchase the Shares.
1.3 The Purchaser acknowledges that he is able to bear the economic
risk of this investment.
1.4 The Purchaser represents that he is an "accredited investor," as such
term is defined in Rule 501 of Regulation D promulgated under the Securities Act
of 1933, as amended (the "Act").
1.5 The Purchaser acknowledges that he has prior investment experience,
including investment in non-listed and non-registered securities, or he has
employed the services of an investment advisor, attorney or accountant to read
all of the documents furnished or made available by the Company to him and to
evaluate the merits and risks of such an investment on his behalf.
1.6 The Purchaser hereby represents that he has been furnished by the
Company during the course of this transaction with all information regarding the
Company which he had requested or desired to know; that all documents which
could be reasonably provided have been made available for his inspection and
E-28
<PAGE>
review; that he has been afforded the opportunity to ask questions of and
receive answers from duly authorized officers or other representatives of the
Company concerning the terms and conditions of his investment in the Company,
and any additional information which he had requested.
1.7 The Purchaser hereby acknowledges that this offering has not been
reviewed by the Securities and Exchange Commission (the "Commission") since this
offering is intended to be a non-public offering pursuant to Section 4 (2) of
the Act. The Purchaser represents that the Shares are being purchased for his
own account, for investment, and not for distribution or resale to others. The
Purchaser agrees that he will not sell or otherwise transfer such securities
unless they are registered under the Act or unless an exemption from such
registration is available.
1.8 The Purchaser understands that the Shares have not been registered
under the Act by reason of a claimed exemption under the provisions of the Act
which depends, in part, upon its investment intention. In this connection, the
Purchaser understands that it is the position of the Commission that the
statutory basis for such exemption would not be present if his representations
merely meant that its present intention was to hold such securities for a short
period, for a deferred sale, for a market rise, assuming that a market develops,
or for any other fixed period. The Purchaser realizes that, in the view of the
Commission, a purchase now with an intent to resell would represent a purchase
with an intent inconsistent with his representation to the Company, and the
Commission might regard such a sale or disposition as a deferred sale to which
the exemption is not available.
1.9 The Purchaser consents that the Company may, if he desires, permit the
transfer of the Shares out of his name only when his request for transfer is
accompanied by an opinion of council reasonably satisfactory to the Company that
neither the sale nor the proposed transfer results in a violation of the Act or
any applicable state "blue sky" laws (collectively, the "Securities Laws"). The
Purchaser agrees to hold the Company, its directors, officers and controlling
persons and their respective heirs, representatives, successors and assigns
harmless and to indemnify them against all liabilities, costs and expenses
incurred by them as a result of any misrepresentation made by him contained
herein or in the Confidential Purchaser Questionnaire completed by him or any
sale or distribution by the Purchaser in violation of any Securities Laws.
1.10 The Purchaser consents to the placement of a legend on any certificate
or other document evidencing the Shares stating that they have not been
registered under the Act and setting forth or referring to the restrictions on
transferability and sale thereof. The Purchaser is aware that the Company will
make a notation in its appropriate records with respect to the restrictions on
the transferability of such securities.
II. REPRESENTATIONS BY, AND COVENANTS OF, THE COMPANY.
The Company represents and covenants to the Purchaser that:
(a) The Company is a corporation duly organized, existing and in good
standing under the laws of the State of California which has the corporate power
to conduct the business which it conducts and proposes to conduct.
E-29
<PAGE>
(b) The execution, delivery and performance of this Agreement by the
Company has been duly approved by the Board of Directors of the Company and all
other actions required to authorize and effect the offer and sale of the Shares
have been duly taken and approved.
(c) The Shares have been duly and validly authorized and, when issued and
paid for in accordance with the terms hereof, will be validly binding
obligations of the Company enforceable in accordance with their respective terms
except that the enforceability thereof may be limited by bankruptcy, insolvency,
or other laws affecting the rights of creditors generally or by general
equitable principles.
(d) The Company has obtained all licenses, permits and other governmental
authorizations necessary to the conduct of its business; such licenses, permits
and other governmental authorizations obtained are in full force and effect; and
the Company is in all material respects complying therewith.
III. REGISTRATION OF SECURITIES.
The Company acknowledges that it currently has no effective registration
statement on Form S-3 on file with the Securities and Exchange Commission.
IV. MISCELLANEOUS.
4.1 Any notice or other communication given hereunder shall be deemed
sufficient if in writing and sent by registered or certified mail, return
receipt requested, address to the Company, at its principal office, 506 Paula
Avenue, Glendale, California 91201, Attention: President, with a copy to
Patricia Cudd & Associates, Attorney at Law, 1120 Lincoln Street, Suite 703,
Denver, Colorado 80203, Attention: Patricia Cudd, and to the Purchaser at the
address listed on the signature page hereof. Notices shall be deemed to have
been given on the date of mailing, except notices of change of address, which
shall be deemed to have been given when received.
4.2 This Agreement shall not be changed, modified or made except by a
writing signed by the parties to be charged, and this Agreement may not be
discharged except by performance in accordance with its terms or by a writing
signed by the party to be charged.
4.3 This Agreement shall be binding upon and inure to the benefit of the
parties hereto and to their respective heirs, legal representatives, successors
and assigns. This Agreement sets forth the entire agreement and understanding
between the parties as to the subject matter hereof and merges and supersedes
all prior discussions, agreements and understandings of any and every nature
among them.
4.4 This Agreement and its validity, construction and performance shall be
governed in all respects by the laws of the State of California, without regard
to principles of conflicts of law.
E-30
<PAGE>
4.5 This Agreement may be executed in counterparts.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first written above.
Purchaser: /s/ Gary Dudley The Company:
POLLUTION RESEARCH AND CONTROL CORP.,
2700 Panorama Drive #304 a California corporation
- ------------------------------
(Address)
Signal Hill, Ca 90806 By: /s/ Albert E. Gosselin, Jr.
- ------------------------------ ----------------------------------
(City, State) Albert E. Gosselin, Jr.,
President and Chief
Executive Officer
Date: May 8, 1998
*Purchase price is based on closing bid May 8, 1998 of .31 cents, modified by
dividend formula (based on .20 cents pre-dividend announcement with additional
40% lettered discount).
E-31
EXHIBIT 10.157
INVESTMENT LETTER
AND
MEMORANDUM OF SUBSCRIPTION/PURCHASE AGREEMENT
June 19, 1998
Pollution Research and Control Corp.
506 Paula Avenue
Glendale, California 91201
Gentlemen:
In connection with the acquisition by the undersigned of 20,000 shares of
common stock, no par value per share (the "Common Stock"), at a per share price
of $1.09 (60% of the bid price per share of Common Stock as of June 18, 1998),
of Pollution Research and Control Corp. (the "Company"), in consideration for
the sum of $21,800.00 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 Paragraph 4(1) or 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.
E-32
<PAGE>
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 if 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
E-33
<PAGE>
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
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:
Stock Broker Since 1970
-----------------------------------------------------------------------
-----------------------------------------------------------------------
-----------------------------------------------------------------------
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,
E-34
<PAGE>
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:
(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
E-35
<PAGE>
( ) $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/ William T. Richey
------------------------------
William T. Richey
Current Residence Address: 4960 Lakeshore Dr. Littleton, Co 80123
Current Residence Telephone Number: 303-794-7411
SS. No. ###-##-####
Current Occupation and/or Business Position: Stock Broker
Current Business Telephone Number: 303-629-5555
Current Name of Business with which Associated: Rocky Mtn. Securities
Name of Person connected with Pollution Research
And Control Corp., with whom conferred
Concerning this investment: Philip Huss, Phoenix Alliance
Relationship, if any, with the above mentioned Co. Rep: None
E-36
EXHIBIT 10.158
INVESTMENT LETTER
AND
MEMORANDUM OF SUBSCRIPTION/PURCHASE AGREEMENT
June 19, 1998
Pollution Research and Control Corp.
506 Paula Avenue
Glendale, California 91201
Gentlemen:
In connection with the acquisition by the undersigned of 23,190 shares of
common stock, no par value per share (the "Common Stock"), at a per share price
of $1.09 (60% of the bid price per share of Common Stock as of June 18, 1998),
of Pollution Research and Control Corp. (the "Company"), in consideration for
the sum of $25,277.10 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 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.
E-37
<PAGE>
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 if 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
E-38
<PAGE>
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
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:
Wharton School Graduate U of P Finance & Investments Major
-----------------------------------------------------------------------
35 years as a 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.
E-39
<PAGE>
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%
(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
(x) $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
E-40
<PAGE>
( ) $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/ Ronald E. Patterson
-----------------------------------
Ronald E. Patterson
Current Residence Address: 17 Prestile Place, Robbinsville, NJ 08691
Current Residence Telephone Number: 609-259-2662
SS. No. ###-##-####
Current Occupation and/or Business Position: Venture Capitalist
Current Business Telephone Number: 609-259-2662
Current Name of Business with which Associated: N/A
Name of Person connected with Pollution Research
And Control Corp., with whom conferred
Concerning this investment: Philip Huss, Phoenix Alliance
Relationship, if any, with the above mentioned Co. Rep: None
E-41
EXHIBIT 10.159
INVESTMENT LETTER
AND
MEMORANDUM OF SUBSCRIPTION/PURCHASE AGREEMENT
June 19, 1998
Pollution Research and Control Corp.
506 Paula Avenue
Glendale, California 91201
Gentlemen:
In connection with the acquisition by the undersigned of 68,810 shares of
common stock, no par value per share (the "Common Stock"), at a per share price
of $1.09 (60% of the bid price per share of Common Stock as of June 18, 1998),
of Pollution Research and Control Corp. (the "Company"), in consideration for
the sum of $75,002.90 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 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.
E-42
<PAGE>
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 if 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
E-43
<PAGE>
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
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:
Wharton School Graduate U of P Finance & Investments Major
-----------------------------------------------------------------------
35 years as a 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.
E-44
<PAGE>
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%
(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
(x) $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
E-45
<PAGE>
( ) $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/ Ronald E. Patterson
-----------------------------------
Ronald E. Patterson
Current Residence Address: 17 Prestile Place, Robbinsville, NJ 08691
Current Residence Telephone Number: 609-259-2662
SS. No. ###-##-####
Current Occupation and/or Business Position: Venture Capitalist
Current Business Telephone Number: 609-259-2662
Current Name of Business with which Associated: N/A
Name of Person connected with Pollution Research
And Control Corp., with whom conferred
Concerning this investment: Philip Huss, Phoenix Alliance
Relationship, if any, with the above mentioned Co. Rep: None
E-46
EXHIBIT 10.160
INVESTMENT LETTER
AND
MEMORANDUM OF SUBSCRIPTION/PURCHASE AGREEMENT
June 19, 1998
Pollution Research and Control Corp.
506 Paula Avenue
Glendale, California 91201
Gentlemen:
In connection with the acquisition by the undersigned of 20,000 shares of
common stock, no par value per share (the "Common Stock"), at a per share price
of $1.09 (60% of the bid price per share of Common Stock as of June 18, 1998),
of Pollution Research and Control Corp. (the "Company"), in consideration for
the sum of $21,800.00 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 Paragraph 4(1) or 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.
E-47
<PAGE>
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 if 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
E-48
<PAGE>
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:
Medicl Equipment Stocks
-----------------------------------------------------------------------
-----------------------------------------------------------------------
-----------------------------------------------------------------------
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.
E-49
<PAGE>
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:
(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:
( ) 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
(x) $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
(x) $100,000-$200,000
( ) $200,000-$500,000
E-50
<PAGE>
( ) $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/ Mayer Zarchi
--------------------------------
Mayer Zarchi
Current Residence Address: 383 Kingston Ave, #110, Brooklyn, NY 11213
Current Residence Telephone Number: 718-467-8110
SS. No. ###-##-####
Current Occupation and/or Business Position: CEO
Current Business Telephone Number: 718-266-5553
Current Name of Business with which Associated:
Name of Person connected with Pollution Research
And Control Corp., with whom conferred
Concerning this investment: Philip Huss, Phoenix Alliance
Relationship, if any, with the above mentioned Co. Rep: N/A
E-51
EXHIBIT 10.161
INVESTMENT LETTER
AND
MEMORANDUM OF SUBSCRIPTION/PURCHASE AGREEMENT
June 19, 1998
Pollution Research and Control Corp.
506 Paula Avenue
Glendale, California 91201
Gentlemen:
In connection with the acquisition by the undersigned of 23,000 shares of
common stock, no par value per share (the "Common Stock"), at a per share price
of $1.09 (60% of the bid price per share of Common Stock as of June 18, 1998),
of Pollution Research and Control Corp. (the "Company"), in consideration for
the sum of $25,070.00 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 Paragraph 4(1) or 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.
E-52
<PAGE>
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 if 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
E-53
<PAGE>
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 ______ ___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 as follows:
MBA - Real Estate Stock & Option InvestorInvestments Major
-----------------------------------------------------------------------
Finance Manager
-----------------------------------------------------------------------
-----------------------------------------------------------------------
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.
E-54
<PAGE>
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
(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%
(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
E-55
<PAGE>
( ) $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/ Fred J. Zalokar
--------------------------------
Fred J. Zalokar
Current Residence Address: 310 N. Civic Dr #415, Walnut Creek, Ca 94596-3643
Current Residence Telephone Number: 925-947-6777
SS. No. ###-##-####
Current Occupation and/or Business Position: Finance Manager
Current Business Telephone Number: 510-287-0201
Current Name of Business with which Associated: East Bay Municipal
Name of Person connected with Pollution Research
And Control Corp., with whom conferred
Concerning this investment: Philip Huss, Phoenix Alliance
Relationship, if any, with the above mentioned Co. Rep: None
E-56
EXHIBIT 10.162
INVESTMENT LETTER
AND
MEMORANDUM OF SUBSCRIPTION/PURCHASE AGREEMENT
June 19, 1998
Pollution Research and Control Corp.
506 Paula Avenue
Glendale, California 91201
Gentlemen:
In connection with the acquisition by the undersigned of 9,174 shares of
common stock, no par value per share (the "Common Stock"), at a per share price
of $1.09 (60% of the bid price per share of Common Stock as of June 18, 1998),
of Pollution Research and Control Corp. (the "Company"), in consideration for
the sum of $9,999.66 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 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.
E-57
<PAGE>
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 if 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
E-58
<PAGE>
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
------ ------- ------------- ------
Occasionally X X 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 as follows:
BS DEGREE IN METEOROLOGY AND GEOGRAPHY, BA IN SOCIOLOGY.
-----------------------------------------------------------------------
EXTENSIVE BUSINESS EXPERIENCE.
-----------------------------------------------------------------------
-----------------------------------------------------------------------
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,
E-59
<PAGE>
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:
(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:
( ) Less than 1%
( ) 1% - 10%
(X) 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
(X) $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
(X) $100,000-$200,000
( ) $200,000-$500,000
E-60
<PAGE>
( ) $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/ Frank T. Anaya
-------------------------------
Frank T. Anaya
Current Residence Address: 1330 Claremont Dr., Tracy, Ca 95376
Current Residence Telephone Number: 209-835-5750
SS. No. ###-##-####
Current Occupation and/or Business Position: Gen Sales Manager
Current Business Telephone Number: 510-441-5500
Current Name of Business with which Associated: Chapel of Chimes
Name of Person connected with Pollution Research
And Control Corp., with whom conferred
Concerning this investment: Phil Huss
Relationship, if any, with the above mentioned Co. Rep: Personal
Length of relationship: 8 years
E-61
EXHIBIT 10.163
INVESTMENT LETTER
AND
MEMORANDUM OF SUBSCRIPTION/PURCHASE AGREEMENT
June 19, 1998
Pollution Research and Control Corp.
506 Paula Avenue
Glendale, California 91201
Gentlemen:
In connection with the acquisition by the undersigned of 9,082 shares of
common stock, no par value per share (the "Common Stock"), at a per share price
of $1.09 (60% of the bid price per share of Common Stock as of June 18, 1998),
of Pollution Research and Control Corp. (the "Company"), in consideration for
the sum of $9,900.00 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 Paragraph 4(1) or 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.
E-62
<PAGE>
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 if 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
E-63
<PAGE>
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
------ ------- --------------- -------
Occasionally X X
------ ------- --------------- -------
Never 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 as follows:
BS DEGREE IN METEOROLOGY AND GEOGRAPHY, BA IN SOCIOLOGY.
-----------------------------------------------------------------------
EXTENSIVE BUSINESS EXPERIENCE.
-----------------------------------------------------------------------
-----------------------------------------------------------------------
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.
E-64
<PAGE>
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%
( ) 1% - 10%
(X) 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
(x) $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
E-65
<PAGE>
( ) $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/ Donald A. Carstens
-----------------------------------
Donald A. Carstens
Current Residence Address: 3 Upper Newport Pl., Newport Beach, Ca 92660
Current Residence Telephone Number: 949-851-9611
SS. No. ###-##-####
Current Occupation and/or Business Position: Attorney
Current Business Telephone Number: 949-851-9611
Current Name of Business with which Associated: None
Name of Person connected with Pollution Research
And Control Corp., with whom conferred
Concerning this investment: Phil Huss
Relationship, if any, with the above mentioned Co. Rep: None
Length of relationship: none
E-66
EXHIBIT 10.164
INVESTMENT LETTER
AND
MEMORANDUM OF SUBSCRIPTION/PURCHASE AGREEMENT
June 19, 1998
Pollution Research and Control Corp.
506 Paula Avenue
Glendale, California 91201
Gentlemen:
In connection with the acquisition by the undersigned of 18,000 shares of
common stock, no par value per share (the "Common Stock"), at a per share price
of $1.09 (60% of the bid price per share of Common Stock as of June 18, 1998),
of Pollution Research and Control Corp. (the "Company"), in consideration for
the sum of $19,260.00 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 Paragraph 4(1) or 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.
E-67
<PAGE>
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 if 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
E-68
<PAGE>
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
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:
Attorney specializing in corporate, securities & business matters.. MBA Harvard
- --------------------------------------------------------------------------------
Business School (1972). JD Harvard Law School (1972)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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.
E-69
<PAGE>
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
(x) $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
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<PAGE>
( ) $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/ Alan Talesnick
------------------------------------
Alan Talesnick
Current Residence Address: 5030 Bow Mar Drive, Littleton, Co 80123
Current Residence Telephone Number: 303-795-5990
SS. No. ###-##-####
Current Occupation and/or Business Position: Attorney/President
Current Business Telephone Number: 303-572-6500
Current Name of Business with which Associated: Bearman Talesnick & Clowdus P.C.
Name of Person connected with Pollution Research
And Control Corp., with whom conferred
Concerning this investment: William Richey, Phil Huss
Relationship, if any, with the above mentioned Co. Rep: William Richey,
stockbroker, former client,
Phil Huss, business relationship (former client)
Length of relationship: William Richey 19 years, Phil Huss 2 years
E-71
EXHIBIT 10.165
THE OPTION REPRESENTED BY THIS CERTIFICATE AND THE SHARES OF COMMON STOCK
ISSUABLE UPON THE EXERCISE OF THE OPTION HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR REGISTERED OR QUALIFIED UNDER
THE SECURITIES LAWS OF ANY STATE AND THUS MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED UNLESS REGISTERED UNDER THAT ACT AND REGISTERED OR QUALIFIED UNDER
APPLICABLE SECURITIES LAW OR UNLESS AN EXEMPTION FROM SUCH REGISTRATION OR
QUALIFICATION IS AVAILABLE.
OPTION TO PURCHASE 23,125 SHARES OF COMMON STOCK OF
POLLUTION RESEARCH AND CONTROL CORP.
FROM JUNE 19, 1998
VOID AFTER 5:00 P.M., LOS ANGELES TIME, ON JUNE 19, 2001
This certifies that Phoenix Alliance, Inc. or registered assigns, is
entitled, subject to the terms set forth below, to purchase from Pollution
Research and Control Corp., a California corporation (the "Company"), the above
number of fully paid and nonassessable shares of Common Stock of the Company
("Common Stock") at a purchase price of $.2.20 per share ("Purchase Price").
This Option is exercisable from June 19, 1998 to and including 5:00 p.m.,
Los Angeles time, on June 19, 2001.
Registered Owner: Phoenix Alliance, Inc.
Purchase Price: $2.20 per share
E-72
<PAGE>
OPTION AGREEMENT
This Option Agreement (the "Agreement") is made and entered into effective
as of June 19, 1998 by and between Pollution Research and Control Corp., a
California corporation ("PRCC") and Phoenix Alliance, Inc. ("Optionee").
WHEREAS, Optionee has been providing valuable services as recognized by the
Company's Board of Directors to PRCC and PRCC is desirous of having Optionee
continue to provide such services to it; and
WHEREAS, PRCC is willing to grant Optionee an option to purchase up to an
aggregate of 23,125 shares of the no par value common stock of PRCC (the "Common
Stock") under the terms and conditions set forth below.
NOW, THEREFORE, the parties agree as follows:
1. Grant of Option. PRCC hereby grants to Optionee, as a matter of separate
agreement and not in lieu of other compensation for services, the right and
option (the "Option") to purchase on the terms and conditions set forth in this
Agreement all or any part of up to an aggregate of 23,125 shares of Common Stock
(the "Option Shares"), for continuous, uninterrupted, employment service to PRCC
or by specific acknowledgement of exception by the Company's Board of Directors.
2. Option Price. At any time when shares of Common Stock are to be
purchased pursuant to the Option, the purchase price for each Option share shall
be $2.20 ("Option Price"), and for purposes of record, the bid price of the
Company's stock on this date was $1.94.
3. Option Period. The option period shall commence on June 19, 1998 (the
"Date of Grant") and shall terminate June 19, 2001.
4. Exercise of Option. The Option may be exercised in whole or in part at
any time after the date hereof by delivering to the Chief Financial Officer of
PRCC (a) a Notice and Agreement of Exercise of Option, substantially in the form
attached hereto as Exhibit "A," specifying the number of Option Shares with
respect to which the Option is exercised, and (b) full payment of the Option
Price for such Shares.
E-73
<PAGE>
5. Securities Laws Requirements. The Option Shares have not been registered
under the Securities Act of 1933, as amended (the "Act"), and no Shares may be
sold, offered for sale, transferred, pledged, hypothecated or otherwise disposed
of except in compliance with the Act and any other applicable federal and state
securities laws. Additionally, the Option and the Option Shares have not been
qualified under the California Securities Law of 1968, as amended (the
"California Law"). PRCC has no obligation to register the Option shares under
the Act or qualify the Option Shares under the California Law. Optionee
acknowledges that he is aware that Rule 144 of the General Rules and Regulations
under the Act ("Rule 144") affords a limited exemption from registration for the
public resale of registered securities and under the terms of Rule 144 as
currently in effect, the Shares received by Optionee may be sold to the public
without registration only after a period of two (2) years has elapsed from the
exercise date of the Option and then only in compliance with all other
requirements of Rule 144 and the Act. Optionee hereby acknowledges, represents,
warrants and agrees as follows:
(a) That the Option and the Option Shares are not registered under the
Act or qualified under the California Law, and the Option Shares shall be,
acquired solely for the account of Optionee for investment purposes only and
with no view to their resale or other distribution of any kind;
(b) Neither the Option nor any Option Share shall be sold or otherwise
distributed in violation of the Act, the California Law or any other applicable
federal or state securities law;
(c) His overall commitment to investments that are not readily
marketable is not disproportionate to his net worth, and his investment in PRCC
will not cause such overall commitment to become excessive;
(d) He has the financial ability to bear the economic risk of his
investment, has adequate means of providing for his current needs and personal
contingencies, and has no need for liquidity in his investment in PRCC;
(e) He either: (i) has a preexisting personal or business relationship
with PRCC or its officers, directors or controlling persons, or (ii) has
evaluated the business of PRCC and the high risks of investing in PRCC, the
competitive nature of the business in which PRCC is engaged, and hs the business
E-74
<PAGE>
or financial experience or has business or financial advisors who are
unaffiliated with, and not compensated by, PRCC and protect him interests in
connection with the transaction;
(f) He has been given the opportunity to review all books, records and
documents of PRCC and to ask questions and receive answers from PRCC concerning
PRCC's business, to obtain additional information necessary to verify the
accuracy of the information he has desired in order to evaluate his investment,
and to consult with such attorneys, accountants and other advisors as he has
desired;
(g) His residence set forth below is his true and correct residence,
and he has no present intention of becoming a resident or domiciliary of any
other state of jurisdiction;
(h) In making the decision to accept the Option and/or purchase the
Option Shares, he has relied solely upon independent investigations made by or
on behalf of him; (i) No federal or state agency has made any finding or
determination as to the fairness of an investment in PRCC; and
(j) He understands that all the representations and warranties made by
him herein, and all information furnished by him to PRCC, is true, correct and
complete in all respects.
6. Optionee hereby acknowledges that he understands the meaning and legal
consequences of the representations, warranties and covenants contained herein
and that PRCC has relied on the representations made by Optionee in paragraph 5
hereof in granting this Option, and Optionee agrees to indemnify and hold
harmless PRCC and its officers, directors, controlling persons, attorneys,
agents and employees from and against any and all loss, damage or liability,
together with all costs and expenses (including attorneys' fees and
disbursements) which any of them may incur by reason of any breach and any
representation, warranty, covenant or agreement contained herein. All
representations, warranties, covenants and agreements, and the indemnification
contained herein shall survive the grant of the Option and the issuance of the
Option Shares by PRCC.
7. Legend of Certificates. All Option Shares issued pursuant to this
Agreement shall be subject to the provisions of this Agreement and the
certificates representing such Option Shares shall bear the following legend or
language substantially equivalent thereto:
E-75
<PAGE>
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED OR QUALIFIED UNDER FEDERAL OR STATE SECURITIES
LAWS. THE SHARES MAY NOT BE OFFERED FOR SALE, SOLD, PLEDGED
OR OTHERWISE TRANSFERRED UNLESS SO REGISTERED OR QUALIFIED
OR UNLESS AN EXEMPTION EXISTS, THE AVAILABILITY OF WHICH IS
TO BE ESTABLISHED TO THE SATISFACTION OF THE COMPANY."
8. Transferability of Option. The Option shall not be transferable except
by the laws of descent and distribution and any attempt to do so shall void the
Option.
9. Adjustment. The Option Price and the number and kind of Option Shares
shall be subject to corresponding adjustment in the event of any change in the
Common stock by reason of any reclassification, recapitalization, split-up,
combination, exchange of shares, readjustment or stock dividend, in like manner
as if such Option Shares had been issued and outstanding, fully paid and
non-assessable at the time of such occurrence.
10. Privilege of Ownership. Optionee shall not have any of the rights of a
shareholder with respect to the shares covered by the Option except to the
extent that one or more certificates for such Shares shall be delivered to him
upon on e (1) or more exercises of the Option.
11. Notices. Any notices required or permitted to be given under this
Agreement shall be in writing and they shall be deemed to have been given upon
personal delivery or two (2) business days after mailing the notice by postage,
registered or certified mail. Such notice shall be addressed to the party to be
notified as shown below:
PRCC: POLLUTION RESEARCH AND CONTROL CORP.
506 Paula Avenue
Glendale, CA 91201
Attn: President
OPTIONEE: Phoenix Alliance
22 Cedar Court
Durango, CO 81301
Any party may change its address for purposes of this Section by giving the
other party written notice of the new address in the manner set forth above.
E-76
<PAGE>
12. General Provisions. This Agreement:
(a) Contains the entire agreement between PRCC and Optionee regarding
options of PRCC to Optionee and supersedes all prior communications, oral or
written;
(b) Shall not be construed to give Optionee any rights as to PRCC or
the Common Stock, except as specifically provided herein;
(c) May not be amended nor may any rights hereunder be waived except
by an instrument in writing signed by the party sought to be charged with such
amendment or waiver;
(d) Shall be construed in accordance with, and governed by, the laws
of the State of California; and
(e) Shall be binding upon and shall inure to the benefit of PRCC and
Optionee, and their respective successors and assigns, except that Optionee
shall not have the right to assign or otherwise transfer his rights hereunder to
any person.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
PRCC:
POLLUTION RESEARCH AND CONTROL
CORP., a California corporation
By: /s/ Albert E. Gosselin, Jr.
------------------------------------
Albert E. Gosselin, Jr.,
President and Chief Executive Officer
OPTIONEE:
PHOENIX ALLIANCE, INC.
By: /s/ Phil Huss
--------------------------------------
Phil Huss
E-77
<PAGE>
EXHIBIT A
To Pollution Research and Control Corp.
NOTICE AND AGREEMENT OF EXERCISE OF OPTION
I hereby exercise the Option granted to me by POLLUTION RESEARCH AND
CONTROL CORP., a California corporation ("PRCC"), dated as of .................
as to .......................... shares of PRCC's no par value Common Stock.
Enclosed are the documents and payment specified in Paragraph 4 of my Agreement
regarding the Option.
- -------------------------- ------------------------------
(Print Your Name) Signature
E-78
EXHIBIT 10.166
AGREEMENT
Pursuant to certain discussions between PIC Computers, Ltd. (PIC) a Macau
Corporation, and Pollution Research and Control Corporation (PRCC) a California
Corporation, the parties have reached the following definitive agreement:
Whereas PIC is a company expert in system integration and project management,
with substantial China project management expertise, and is located in Macau, a
gateway to the China market, and is desirous to sell its technician service
center office.
Whereas PRCC is a company that through its wholly owned subsidiary, Dasibi
Environmental Corporation (Dasibi) has been actively seeking projects in China,
and is desirous to purchase PIC's technician service center office.
Now therefore in consideration of mutual covenants and benefits the parties
agree as follows:
Party A: PIC Computers, Ltd.
Party A's owners: Mehrdad Etemad and Barry Soltani, and Hopetown Trading
(100% owned by Etemad and Soltani).
Party B: Pollution Research and Control Corporation
Party B's owners: PRCC is a public corporation
1. In consideration for issuance of 450,000 (current post-split) Series B
voting, non dividend, preferred, common stock shares of PRCC, by PRCC. PIC
agrees to sell its technician service center office to PRCC. The shares shall be
issued by June 26th and registered with best effort. The property is located at
Iau Luen Building, Units E and F, No 15 Rua Ferreira do Amaral, Macau. The net
usable area is 2,320 sq. ft.
2. PIC agrees to lease back the service center back from PRCC basxed on triple
net lease for a period of 5 years and a monthly payment of $8,000. A separate
lease agreement (Attachment 1 to this Agreement) shall be signed.
3. Dasibi shall pay the Macau government transfer tax (i.e. Sisa).
4. Dasibi and PIC shall sign a Joint Venture Agreement (Attachment 2 to this
Agreement) for project management services to be rendered by PIC for Dasibi's
China projects.
E-79
<PAGE>
Agreed:
On behalf of Pollution Research and Control Corporation
/s/ Albert E. Gosselin, Jr., Date: 6/24/98
- --------------------------------------
Albert E. Gosselin, Jr.,
Chairman and CEO
On Behalf of PIC Computers, Ltd.
/s/ Mehrdad Etemad Date: 6/24/98
- --------------------------------------
Mehrdad Etemad,
Managing Director
On behalf of Hopetown Trading
/s/ Mehrdad Etemad Date: 6/24/98
- --------------------------------------
Mehrdad Etemad,
Managing Director
/s/ Barry Soltani Date: 6/24/98
- --------------------------------------
Barry Soltani
E-80
<PAGE>
Lease Agreement
Attachment 1
Pursuant to an Agreement signed by and between Pollution Research and Control
Corporation (PRCC) a California Corporation and PIC Computers, Ltd. (PIC) a
Macau Corporation on June 24, 1998 where PRCC purchased a technician service
center in Macau from PIC and its principals, now PRCC and its wholly owned
subsidiary Dasibi Environmental Corporation, a California Corporaiton (Dasibi)
and PIC agree on the following Lease Agreement:
Whereas PIC is a company expert in system integration and project management,
with substantial China project management expertise, and is located in Macau, a
gateway to the China market, and is desirous to cooperate with, Dasibi and PRCC
regarding certain project implementation services in China.
Whereas PRCC is a company that through its wholly owned subsidiary, Dasibi has
been awarded a project to supply certain air pollution monitoring equipment in
China, and is desirous to cooperate with PIC in certain project implementation
services in China.
Now therefore in consideration of mutual covenants and benefits herein under the
parties agree as follows:
1. Premise: PIC agrees to lease the Technician Service Center office located
at Iau Luen Building, Units E and F (with net usable area of 2,320 sq.
ft.), No. 15 Rua Ferreira do Amaral, Macau from PRCC.
2. Rent: The lease agreement is a triple net, with a monthly payment of $8,000
payable beginning at the beginning of each month. Utilities and management
fees and other operational charges are the responsibilities of the tenant.
3. Term: The term of the lease is for a period of 5 years starting from the
date the "Technical and Project Management Service Agreement" signed
between the two parties is in effect and operational. Should the China
related jobs be completed the lease is cancelable after one year.
4. Use of premise: The premises shall be used for technical and other related
business of PIC or its affiliates and shall not be used for entertainment
and related purposes.
5. Maintenance: The tenant is responsible for normal maintenance of the
property.
6. Alterations: The tenantagrees to inform PRCC of any intended alterations to
the premises and any such alterations shall be agreed to by PRCC in regards
to costs and improvements in advance.
E-81
<PAGE>
7. Possession: Should the tenant vacate the premises the landlord is free to
terminate this agreement and regain lawful possession.
8. Attorney's Fees. If an action or proceeding out of this agreement the
prevailing party shall be entitled to reasonable attorney's fees and costs.
9. Waiver: The waiver of any breach shall not be construed to be a continuing
waiver of any subsequent breach.
10. Notice: Notice to the landlord may be served at: Pollution Research and
Control Corporation, 506 Paula Avenue, Glendale, CA, USA.
11. Entire Contract: The terms agreed to in this agreement is the final
expression of their agreement by the parties. The parties intend that this
agreement is the complete and exclusive statement of its terms and no
extrinsic evidence whatsoever may be introduced involving this agreement.
12. Acknowledgement: The undersigned have read the foregoing prior to execution
and acknowledge receipt of a copy.
On behalf of Pollution Research and Control Corporation
/s/ Albert E. Gosselin, Jr. Date: 7/9/98
- -------------------------------- --------------
Albert E. Gosselin, Jr.,
Chairman and CEO
On behalf of Dasibi Environmental Corporation
/s/ Albert E. Gosselin, Jr. Date: 7/9/98
- -------------------------------- --------------
Albert E. Gosselin, Jr.
President
On Behalf of PIC Computers, Ltd.
/s/ Mehrdad Etemad Date: 7/9/98
- -------------------------------- --------------
Mehrdad Etemad,
Managing Director
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<PAGE>
JOINT VENTURE AGREEMENT
ATTACHMENT 2
Pursuant to certain discussions between Pollution Research and Control
Corporation (PRCC) and Dasibi Environmental Corporation (Dasibi) a subsidiary of
PRCC, California Corporation and PIC Computers Ltd. (PIC), a company registered
in Macau, the parties have reached the following Agreement.
Whereas Dasibi has been awarded a project to supply ambient air monitoring
equipment through the Chinese Environmental Protection Administration (SEPA) to
11 Chinese Cities, and is desirous to cooperate with and hire PIC for the
implementation of certain technical and project management services for the
above project in China.
Whereas PIC is a leading IT company in Macau with expertise in networking
technology, software development, IT training as well as industrial project
management services and implementation and set up of joint ventures with
substantial China project management experience, and are desirous to cooperate
with Dasibi for the implementation of certain technical and project management
services as well as promotion of future business for Dasibi in China.
Whereas, Barry Soltani, Director of PIC has been instrumental in concluding the
above project for Dasibi.
Now therefore the parties agree as follows:
1. To develop new business opportunities for PRCC/Dasibi to further expand its
market in China through direct sales and/or joint venture cooperation for
its current products and/or new products.
2. To identify the appropriate partner for joint venture cooperation.
3. To formulate and discuss the joint venture cooperation with the Chinese
party.
4. To set up and manage equipment maintenance programs for the PRCC/Dasibi
installations in China.
5. The fee for these tasks shall be negotiated between the two parties in
advance of performing the tasks and payments shall be made in US Dollars.
For the Technical and Project Management Services regarding the current China
project, PIC shall perform the following tasks for PRCC/Dasibi on exclusive
gasis:
1. Dasibi shall hire PIC to perform installation, system configuration,
software implementation, customization and start-up, in addition to
warranty services for Dasibi's current Urban Air Quality Auto-Monitoring
System project in 11 Chinese Cities.
2. The scope of services to be performed by PIC and or its affiliates include:
o Computer systems support, installation, configuration, and
installation service for the 11 cities.
2.1 China Training
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<PAGE>
o PIC shall provide 3 dedicated engineers to help implement this
project.
o PIC shall send the engineers to Dasibi for an intensive training
program.
o The Training Program shall be for 33 Chinese trainees for a duration
of 12 weeks total in Wenzhou, or Macau.
2.2 Equipment Installation and Calibration
|X| PIC shall provide 2 dedicated engineers to perform start-up of the
equipment (both hardware and software) at each city for two weeks.
2.3 Handover of the project to the Chinese
|X| PIC shall assist in the handover of the project to the Chinese.
|X| PIC shall coordinae the performance of the tasks and the Handover
program in full consultation with Dasibi and per recommendation of the
California Air Resources Board.
2.4 Warranty services
|X| PIC shall perform all warranty related labor and management services
for the 11 Chinese cities in accordance with warranty terms.
3. The fee for each task shall be negotiated between the two parties in
advance of performing the task and payments shall be made in US Dollars.
Other terms and conditions:
1. Duration:
The duration of this agreement shall be three years from the signing of
this agreement. The agreement shall automatically be renewed for
another year unless terminated by either party 90 days prior to
expiration of the agreement.
2. Exclusivity and non-circumvention.
The Parties agree to deal with each other on an exclusive basis.
The Parties agree not to circumvent or bypass the other, either
directly or indirectly, to avoid payment of fees and commissions.
Neither party nor its agents/employees shall attempt to deal directly
with companies introduced by the other.
3. Confidentiality of information.
The Parties herein agree to treat as confidential all information and
documentation obtained and exchanged by and from each other (the
"Confidential Information"). The Parties shall not disclose the
confidential information to any third party, nor shall the Parties use
the confidential information except for the purposes of fulfilling its
obligations under this agreement.
4. LAWS
The parties shall attempt to settle any and all disputes amicably
through friendly discussions and consultations. If the dispute cannot
be so resolved, it will be settled by arbitration in accordance with
the rules of the American Arbitration Association, in effect as at the
date of
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<PAGE>
this Agreement. It is mutually agreed taht all arbitration proceedings
shall be held in Los Angeles, California, U.S.A. and the number of
arbitrators shall be three.
On behalf of Pollution Research and Control Corporation:
/s/ Albert E. Gosselin, Jr. Date: 7/9/98
- ----------------------------------
Chairman and CEO
On behalf of PIC Computers Ltd.
/s/ Mehrdad Etemad Date: 7/9/98
- ----------------------------------
Mehrdad Etemad,
Managing Director
E-85
EXHIBIT 10.167
THE OPTION REPRESENTED BY THIS CERTIFICATE AND THE SHARES OF COMMON STOCK
ISSUABLE UPON THE EXERCISE OF THE OPTION HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR REGISTERED OR QUALIFIED UNDER
THE SECURITIES LAWS OF ANY STATE AND THUS MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED UNLESS REGISTERED UNDER THAT ACT AND REGISTERED OR QUALIFIED UNDER
APPLICABLE SECURITIES LAW OR UNLESS AN EXEMPTION FROM SUCH REGISTRATION OR
QUALIFICATION IS AVAILABLE.
OPTION TO PURCHASE 13,750 SHARES OF COMMON STOCK OF
POLLUTION RESEARCH AND CONTROL CORP.
FROM DECEMBER 14, 1998
VOID AFTER 5:00 P.M., LOS ANGELES TIME, ON DECEMBER 14, 2002
This certifies that Marcia Smith or registered assigns, is entitled,
subject to the terms set forth below, to purchase from Pollution Research and
Control Corp., a California corporation (the "Company"), the above number of
fully paid and nonassessable shares of Common Stock of the Company ("Common
Stock") at a purchase price of $.75 per share ("Purchase Price").
This Option is exercisable from December 14, 1998 to and including 5:00
p.m., Los Angeles time, on December 14, 2002.
Registered Owner: Marcia Smith
Purchase Price: $ .75 per share
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<PAGE>
OPTION AGREEMENT
This Option Agreement (the "Agreement") is made and entered into effective
as of December 14, 1998 by and between Pollution Research and Control Corp., a
California corporation ("PRCC") and Marcia Smith ("Optionee").
WHEREAS, Optionee has been providing valuable services as recognized by the
Company's Board of Directors to PRCC and PRCC is desirous of having Optionee
continue to provide such services to it; and
WHEREAS, PRCC is willing to grant Optionee an option to purchase up to an
aggregate of 13,750 shares of the no par value common stock of PRCC (the "Common
Stock") under the terms and conditions set forth below.
NOW, THEREFORE, the parties agree as follows:
1. Grant of Option. PRCC hereby grants to Optionee, as a matter of separate
agreement and not in lieu of other compensation for services, the right and
option (the "Option") to purchase on the terms and conditions set forth in this
Agreement all or any part of up to an aggregate of 13,750 shares of Common Stock
(the "Option Shares"), for continuous, uninterrupted, employment service to PRCC
or by specific acknowledgement of exception by the Company's Board of Directors.
2. Option Price. At any time when shares of Common Stock are to be
purchased pursuant to the Option, the purchase price for each Option share shall
be $ .75 ("Option Price"), and for purposes of record, the bid price of the
Company's stock on this date was $.69.
3. Option Period. The option period shall commence on December 14, 1998
(the "Date of Grant") and shall terminate December 14, 2002.
4. Exercise of Option. The Option may be exercised in whole or in part at
any time after the date hereof by delivering to the Chief Financial Officer of
PRCC (a) a Notice and Agreement of Exercise of Option, substantially in the form
attached hereto as Exhibit "A," specifying the number of Option Shares with
respect to which the Option is exercised, and (b) full payment of the Option
Price for such Shares.
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5. Securities Laws Requirements. The Option Shares have not been registered
under the Securities Act of 1933, as amended (the "Act"), and no Shares may be
sold, offered for sale, transferred, pledged, hypothecated or otherwise disposed
of except in compliance with the Act and any other applicable federal and state
securities laws. Additionally, the Option and the Option Shares have not been
qualified under the California Securities Law of 1968, as amended (the
"California Law"). PRCC has no obligation to register the Option shares under
the Act or qualify the Option Shares under the California Law. Optionee
acknowledges that he is aware that Rule 144 of the General Rules and Regulations
under the Act ("Rule 144") affords a limited exemption from registration for the
public resale of registered securities and under the terms of Rule 144 as
currently in effect, the Shares received by Optionee may be sold to the public
without registration only after a period of two (2) years has elapsed from the
exercise date of the Option and then only in compliance with all other
requirements of Rule 144 and the Act. Optionee hereby acknowledges, represents,
warrants and agrees as follows:
(a) That the Option and the Option Shares are not registered under the
Act or qualified under the California Law, and the Option Shares shall be,
acquired solely for the account of Optionee for investment purposes only and
with no view to their resale or other distribution of any kind;
(b) Neither the Option nor any Option Share shall be sold or otherwise
distributed in violation of the Act, the California Law or any other applicable
federal or state securities law;
(c) Her overall commitment to investments that are not readily
marketable is not disproportionate to her net worth, and her investment in PRCC
will not cause such overall commitment to become excessive;
(d) She has the financial ability to bear the economic risk of her
investment, has adequate means of providing for her current needs and personal
contingencies, and has no need for liquidity in her investment in PRCC;
(e) She either: (i) has a preexisting personal or business
relationship with PRCC or its officers, directors or controlling persons, or
(ii) has evaluated the business of PRCC and the high risks of investing in PRCC,
the competitive nature of the business in which PRCC is engaged, and has the
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<PAGE>
business or financial experience or has business or financial advisors who are
unaffiliated with, and not compensated by, PRCC and protect her interests in
connection with the transaction;
(f) She has been given the opportunity to review all books, records
and documents of PRCC and to ask questions and receive answers from PRCC
concerning PRCC's business, to obtain additional information necessary to verify
the accuracy of the information she has desired in order to evaluate her
investment, and to consult with such attorneys, accountants and other advisors
as she has desired;
(g) Her residence set forth below is her true and correct residence,
and she has no present intention of becoming a resident or domiciliary of any
other state of jurisdiction;
(h) In making the decision to accept the Option and/or purchase the
Option Shares, she has relied solely upon independent investigations made by or
on behalf of him; (i) No federal or state agency has made any finding or
determination as to the fairness of an investment in PRCC; and
(j) She understands that all the representations and warranties made
by him herein, and all information furnished by him to PRCC, is true, correct
and complete in all respects.
6. Optionee hereby acknowledges that she understands the meaning and legal
consequences of the representations, warranties and covenants contained herein
and that PRCC has relied on the representations made by Optionee in paragraph 5
hereof in granting this Option, and Optionee agrees to indemnify and hold
harmless PRCC and its officers, directors, controlling persons, attorneys,
agents and employees from and against any and all loss, damage or liability,
together with all costs and expenses (including attorneys' fees and
disbursements) which any of them may incur by reason of any breach and any
representation, warranty, covenant or agreement contained herein. All
representations, warranties, covenants and agreements, and the indemnification
contained herein shall survive the grant of the Option and the issuance of the
Option Shares by PRCC.
7. Legend of Certificates. All Option Shares issued pursuant to this
Agreement shall be subject to the provisions of this Agreement and the
certificates representing such Option Shares shall bear the following legend or
language substantially equivalent thereto:
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<PAGE>
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED OR QUALIFIED UNDER FEDERAL OR STATE SECURITIES
LAWS. THE SHARES MAY NOT BE OFFERED FOR SALE, SOLD, PLEDGED
OR OTHERWISE TRANSFERRED UNLESS SO REGISTERED OR QUALIFIED
OR UNLESS AN EXEMPTION EXISTS, THE AVAILABILITY OF WHICH IS
TO BE ESTABLISHED TO THE SATISFACTION OF THE COMPANY."
8. Transferability of Option. The Option shall not be transferable except
by the laws of descent and distribution and any attempt to do so shall void the
Option.
9. Adjustment. The Option Price and the number and kind of Option Shares
shall be subject to corresponding adjustment in the event of any change in the
Common stock by reason of any reclassification, recapitalization, split-up,
combination, exchange of shares, readjustment or stock dividend, in like manner
as if such Option Shares had been issued and outstanding, fully paid and
non-assessable at the time of such occurrence.
10. Privilege of Ownership. Optionee shall not have any of the rights of a
shareholder with respect to the shares covered by the Option except to the
extent that one or more certificates for such Shares shall be delivered to him
upon on e (1) or more exercises of the Option.
11. Notices. Any notices required or permitted to be given under this
Agreement shall be in writing and they shall be deemed to have been given upon
personal delivery or two (2) business days after mailing the notice by postage,
registered or certified mail. Such notice shall be addressed to the party to be
notified as shown below:
PRCC: POLLUTION RESEARCH AND CONTROL CORP.
506 Paula Avenue
Glendale, CA 91201
Attn: President
OPTIONEE: Marcia Smith
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Any party may change its address for purposes of this Section by giving the
other party written notice of the new address in the manner set forth above.
12. General Provisions. This Agreement:
(a) Contains the entire agreement between PRCC and Optionee regarding
options of PRCC to Optionee and supersedes all prior communications, oral or
written;
(b) Shall not be construed to give Optionee any rights as to PRCC or
the Common Stock, except as specifically provided herein;
(c) May not be amended nor may any rights hereunder be waived except
by an instrument in writing signed by the party sought to be charged with such
amendment or waiver;
(d) Shall be construed in accordance with, and governed by, the laws
of the State of California; and
(e) Shall be binding upon and shall inure to the benefit of PRCC and
Optionee, and their respective successors and assigns, except that Optionee
shall not have the right to assign or otherwise transfer her rights hereunder to
any person.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
PRCC:
POLLUTION RESEARCH AND CONTROL
CORP., a California corporation
By: /s/ Albert E. Gosselin, Jr.
----------------------------------
Albert E. Gosselin, Jr.,
President and Chief Executive Officer
OPTIONEE:
By: /s/ Marcia Smith
-----------------------------------
Marcia Smith
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EXHIBIT A
To Pollution Research and Control Corp.
NOTICE AND AGREEMENT OF EXERCISE OF OPTION
I hereby exercise the Option granted to me by POLLUTION RESEARCH AND
CONTROL CORP., a California corporation ("PRCC"), dated as of
..................as to ...................... shares of PRCC's no par value
Common Stock.
Enclosed are the documents and payment specified in Paragraph 4 of my
Agreement regarding the Option.
- ---------------------------- -------------------------
(Print Your Name) Signature
E-92
EXHIBIT 10.168
THE OPTION REPRESENTED BY THIS CERTIFICATE AND THE SHARES OF COMMON STOCK
ISSUABLE UPON THE EXERCISE OF THE OPTION HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR REGISTERED OR QUALIFIED UNDER
THE SECURITIES LAWS OF ANY STATE AND THUS MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED UNLESS REGISTERED UNDER THAT ACT AND REGISTERED OR QUALIFIED UNDER
APPLICABLE SECURITIES LAW OR UNLESS AN EXEMPTION FROM SUCH REGISTRATION OR
QUALIFICATION IS AVAILABLE.
OPTION TO PURCHASE 12,500 SHARES OF COMMON STOCK OF
POLLUTION RESEARCH AND CONTROL CORP.
FROM DECEMBER 14, 1998
VOID AFTER 5:00 P.M., LOS ANGELES TIME, ON DECEMBER 14, 2002
This certifies that Cindy Gosselin or registered assigns, is entitled,
subject to the terms set forth below, to purchase from Pollution Research and
Control Corp., a California corporation (the "Company"), the above number of
fully paid and nonassessable shares of Common Stock of the Company ("Common
Stock") at a purchase price of $.75 per share ("Purchase Price").
This Option is exercisable from December 14, 1998 to and including 5:00
p.m., Los Angeles time, on December 14, 2002.
Registered Owner: Cindy Gosselin
Purchase Price: $ .75 per share
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<PAGE>
OPTION AGREEMENT
This Option Agreement (the "Agreement") is made and entered into effective
as of December 14, 1998 by and between Pollution Research and Control Corp., a
California corporation ("PRCC") and Cindy Gosselin ("Optionee").
WHEREAS, Optionee has been providing valuable services as recognized by the
Company's Board of Directors to PRCC and PRCC is desirous of having Optionee
continue to provide such services to it; and
WHEREAS, PRCC is willing to grant Optionee an option to purchase up to an
aggregate of 12,500 shares of the no par value common stock of PRCC (the "Common
Stock") under the terms and conditions set forth below.
NOW, THEREFORE, the parties agree as follows:
1. Grant of Option. PRCC hereby grants to Optionee, as a matter of separate
agreement and not in lieu of other compensation for services, the right and
option (the "Option") to purchase on the terms and conditions set forth in this
Agreement all or any part of up to an aggregate of 12,500 shares of Common Stock
(the "Option Shares"), for continuous, uninterrupted, employment service to PRCC
or by specific acknowledgement of exception by the Company's Board of Directors.
2. Option Price. At any time when shares of Common Stock are to be
purchased pursuant to the Option, the purchase price for each Option share shall
be $ .75 ("Option Price"), and for purposes of record, the bid price of the
Company's stock on this date was $.69.
3. Option Period. The option period shall commence on December 14, 1998
(the "Date of Grant") and shall terminate December 14, 2002.
4. Exercise of Option. The Option may be exercised in whole or in part at
any time after the date hereof by delivering to the Chief Financial Officer of
PRCC (a) a Notice and Agreement of Exercise of Option, substantially in the form
attached hereto as Exhibit "A," specifying the number of Option Shares with
respect to which the Option is exercised, and (b) full payment of the Option
Price for such Shares.
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<PAGE>
5. Securities Laws Requirements. The Option Shares have not been registered
under the Securities Act of 1933, as amended (the "Act"), and no Shares may be
sold, offered for sale, transferred, pledged, hypothecated or otherwise disposed
of except in compliance with the Act and any other applicable federal and state
securities laws. Additionally, the Option and the Option Shares have not been
qualified under the California Securities Law of 1968, as amended (the
"California Law"). PRCC has no obligation to register the Option shares under
the Act or qualify the Option Shares under the California Law. Optionee
acknowledges that he is aware that Rule 144 of the General Rules and Regulations
under the Act ("Rule 144") affords a limited exemption from registration for the
public resale of registered securities and under the terms of Rule 144 as
currently in effect, the Shares received by Optionee may be sold to the public
without registration only after a period of two (2) years has elapsed from the
exercise date of the Option and then only in compliance with all other
requirements of Rule 144 and the Act. Optionee hereby acknowledges, represents,
warrants and agrees as follows:
(a) That the Option and the Option Shares are not registered under the
Act or qualified under the California Law, and the Option Shares shall be,
acquired solely for the account of Optionee for investment purposes only and
with no view to their resale or other distribution of any kind;
(b) Neither the Option nor any Option Share shall be sold or otherwise
distributed in violation of the Act, the California Law or any other applicable
federal or state securities law;
(c) Her overall commitment to investments that are not readily
marketable is not disproportionate to her net worth, and her investment in PRCC
will not cause such overall commitment to become excessive;
(d) She has the financial ability to bear the economic risk of her
investment, has adequate means of providing for her current needs and personal
contingencies, and has no need for liquidity in her investment in PRCC;
(e) She either: (i) has a preexisting personal or business
relationship with PRCC or its officers, directors or controlling persons, or
(ii) has evaluated the business of PRCC and the high risks of investing in PRCC,
the competitive nature of the business in which PRCC is engaged, and has the
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<PAGE>
business or financial experience or has business or financial advisors who are
unaffiliated with, and not compensated by, PRCC and protect her interests in
connection with the transaction;
(f) She has been given the opportunity to review all books, records
and documents of PRCC and to ask questions and receive answers from PRCC
concerning PRCC's business, to obtain additional information necessary to verify
the accuracy of the information she has desired in order to evaluate her
investment, and to consult with such attorneys, accountants and other advisors
as she has desired;
(g) Her residence set forth below is her true and correct residence,
and she has no present intention of becoming a resident or domiciliary of any
other state of jurisdiction;
(h) In making the decision to accept the Option and/or purchase the
Option Shares, she has relied solely upon independent investigations made by or
on behalf of him;
(i) No federal or state agency has made any finding or determination
as to the fairness of an investment in PRCC; and
(j) She understands that all the representations and warranties made
by him herein, and all information furnished by him to PRCC, is true, correct
and complete in all respects.
6. Optionee hereby acknowledges that she understands the meaning and legal
consequences of the representations, warranties and covenants contained herein
and that PRCC has relied on the representations made by Optionee in paragraph 5
hereof in granting this Option, and Optionee agrees to indemnify and hold
harmless PRCC and its officers, directors, controlling persons, attorneys,
agents and employees from and against any and all loss, damage or liability,
together with all costs and expenses (including attorneys' fees and
disbursements) which any of them may incur by reason of any breach and any
representation, warranty, covenant or agreement contained herein. All
representations, warranties, covenants and agreements, and the indemnification
contained herein shall survive the grant of the Option and the issuance of the
Option Shares by PRCC.
7. Legend of Certificates. All Option Shares issued pursuant to this
Agreement shall be subject to the provisions of this Agreement and the
certificates representing such Option Shares shall bear the following legend or
language substantially equivalent thereto:
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<PAGE>
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED OR QUALIFIED UNDER FEDERAL OR STATE SECURITIES
LAWS. THE SHARES MAY NOT BE OFFERED FOR SALE, SOLD, PLEDGED
OR OTHERWISE TRANSFERRED UNLESS SO REGISTERED OR QUALIFIED
OR UNLESS AN EXEMPTION EXISTS, THE AVAILABILITY OF WHICH IS
TO BE ESTABLISHED TO THE SATISFACTION OF THE COMPANY."
8. Transferability of Option. The Option shall not be transferable except
by the laws of descent and distribution and any attempt to do so shall void the
Option.
9. Adjustment. The Option Price and the number and kind of Option Shares
shall be subject to corresponding adjustment in the event of any change in the
Common stock by reason of any reclassification, recapitalization, split-up,
combination, exchange of shares, readjustment or stock dividend, in like manner
as if such Option Shares had been issued and outstanding, fully paid and
non-assessable at the time of such occurrence.
10. Privilege of Ownership. Optionee shall not have any of the rights of a
shareholder with respect to the shares covered by the Option except to the
extent that one or more certificates for such Shares shall be delivered to him
upon on e (1) or more exercises of the Option.
11. Notices. Any notices required or permitted to be given under this
Agreement shall be in writing and they shall be deemed to have been given upon
personal delivery or two (2) business days after mailing the notice by postage,
registered or certified mail. Such notice shall be addressed to the party to be
notified as shown below:
PRCC: POLLUTION RESEARCH AND CONTROL CORP.
506 Paula Avenue
Glendale, CA 91201
Attn: President
OPTIONEE: Cindy Gosselin
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<PAGE>
Any party may change its address for purposes of this Section by giving the
other party written notice of the new address in the manner set forth above. 12.
General Provisions. This Agreement:
(a) Contains the entire agreement between PRCC and Optionee regarding
options of PRCC to Optionee and supersedes all prior communications, oral or
written;
(b) Shall not be construed to give Optionee any rights as to PRCC or
the Common Stock, except as specifically provided herein;
(c) May not be amended nor may any rights hereunder be waived except
by an instrument in writing signed by the party sought to be charged with such
amendment or waiver;
(d) Shall be construed in accordance with, and governed by, the laws
of the State of California; and
(e) Shall be binding upon and shall inure to the benefit of PRCC and
Optionee, and their respective successors and assigns, except that Optionee
shall not have the right to assign or otherwise transfer her rights hereunder to
any person.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
PRCC:
POLLUTION RESEARCH AND CONTROL
CORP., a California corporation
By: /s/ Albert E. Gosselin, Jr.
------------------------------------
Albert E. Gosselin, Jr.,
President and Chief Executive Officer
OPTIONEE:
By: /s/ Cindy Gosselin
----------------------------------
Cindy Gosselin
E-98
<PAGE>
EXHIBIT A
To Pollution Research and Control Corp.
NOTICE AND AGREEMENT OF EXERCISE OF OPTION
I hereby exercise the Option granted to me by POLLUTION RESEARCH AND
CONTROL CORP., a California corporation ("PRCC"), dated as of ..................
as to .......................... shares of PRCC's no par value Common Stock.
Enclosed are the documents and payment specified in Paragraph 4 of my
Agreement regarding the Option.
- ------------------------- ------------------------------
(Print Your Name) Signature
E-99
EXHIBIT 10.169
PROMISSORY NOTE
$100,000 Glendale, California
January 27, 1999
FOR VALUE RECEIVED, the undersigned, Pollution Research and Control Corp.,
a California corporation (hereinafter referred to as the "Maker"), with its
address at 506 Paula Avenue, Glendale, California 91201, agrees and promises to
pay to the order of Mark S. Rose (hereinafter referred to as the "Holder"), at
72 West Avenue, Patchogue, New York 11772, or such other place as the Holder may
designate in writing, in coin or currency of the United States of America, which
at the time of payment is legal tender for the payment of public and private
debts, the principal sum of one hundred thousand dollars ($100,000), together
with interest thereon at the rate of eleven per cent (11%) per annum, from the
date hereof until maturity, as hereinafter provided. The principal balance of
this Promissory Note (hereinafter referred to as the "Note"), together with all
interest then accrued and unpaid, shall be due and payable on May 27, 1999.
The Maker may prepay any part or all of this Note at any time without
penalty. Each payment or pre-payment made by the Maker hereunder shall be
applied first to the payment or pre-payment of accrued interest, if any, due on
the unpaid principal balance of this Note and the remainder of each payment or
pre-payment made by the Maker shall be applied to the reduction of the unpaid
principal balance hereof.
If default is made in the payment of this Note, as and when the same is or
becomes due, the Holder may, after notice and failure to cure as hereinafter
provided, without additional notice or demand, declare the entire unpaid
principal balance hereof and accrued and unpaid interest, if any, at once due
and payable.
Except as otherwise specifically set out herein, the Maker waives demand
and presentment for payment, notice of non-payment, protest, notice of protest,
notice of acceleration of the indebtedness due hereunder, bringing of suit and
diligence in taking any action to collect amounts called for hereunder, and
agrees that the time of payments hereof may be extended without notice at any
time and from time-to-time, and for periods of time for a term or terms in
excess of the original term without notice or consideration to, or consent from
the Maker, without same constituting a waiver of the Holder's rights under this
Note.
If payment is not received by the tenth day after it is due, then the
Holder agrees to give written notice of such to the Maker. If payment is not
received within five days of said notice, then the Holder may at his election
accelerate this Note. The Holder may charge a late charge of two per cent (2%)
of the amount of the payment received after the tenth day such payment is due.
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<PAGE>
If the entire outstanding principal balance becomes due, the Maker agrees
to pay the Holder's reasonable costs (including reasonable attorney's fees and
court costs) in collecting on this Note, including the reasonable costs of
obtaining and enforcing a judgment for any balance due on this Note.
This Note has been executed in the City identified in the heading and
delivered to the Holder at the address stated herein. It is to be performed, in
whole or in part, in the State of California, and the laws of such state shall
govern the validity, construction, enforcement and interpretation of this Note.
Jurisdiction and venue for any action hereunder shall be in the County of the
City identified in the heading.
The Maker represents that it is duly authorized and empowered to enter
into, deliver, perform and be fully bound by all of the terms, provisions and
conditions of this Note. The Maker also represents that the making and delivery
of this Note, and the performance of any agreement or instrument made in
connection herewith, does not conflict with or violate any other agreement to
which the Maker is a party.
No provision of this Note shall require the payment or permit the
collection of interest in excess of the maximum permitted by law, and in the
event of any such excess, neither the Maker nor its successors or assigns shall
be obligated to pay any such excess to the extent that it is more than the
amount permitted by law. If an excess amount is received, charged, collected or
applied as interest, it shall automatically be made so as to reduce the rate to
that permitted by law and any excess interest then received, charged or
collected shall be applied to reduce the amount of any collateral to which the
Holder is entitled.
In the event that any word, phrase, clause, sentence or other provision
hereof shall violate any applicable statute, ordinance or rule of law in any
jurisdiction in which it is used, such provision shall be ineffective to the
extent of such violation without invalidating any other provision hereof.
IN WITNESS HEREOF, this Note is executed on the date and year above
written.
POLLUTION RESEARCH AND CONTROL CORP.
By: /s/ Albert E. Gosselin, Jr.
------------------------------------------
Albert E. Gosselin, Jr., President
E-101
EXHIBIT 10.170
POLLUTION RESEARCH AND CONTROL CORP.
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (the "Agreement") is made and entered into
effective as of the 27th day of January, 1999, by and between Pollution Research
and Control Corp., a California corporation (the "Company"), 506 Paula Avenue,
Glendale, California 91201, and Mark S. Rose (the "Optionee"), 72 West Avenue,
Patchogue, New York 11772.
The Company desires to provide the Optionee an opportunity to purchase
shares of its common stock, no par value (the "Common Stock"), as hereinafter
provided.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth herein, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. Definitions. As used in this Agreement, the following terms shall mean:
(a) "Board" - the Board of Directors of the Company.
(b) "Common Stock" - the Common Stock, no par value, of the Company.
(c) "Company" - Pollution Research and Control Corp., a California
corporation, 506 Paula Avenue, Glendale, California 91201.
(d) "Effective Date" - January 27, 1999.
(e) "Optionee" - Mark S. Rose
(f) "Exercise Period" - from January 27, 1999, through and including
January 27, 2002.
(g) "Expiration Date" - January 27, 2002.
(h) "Option" - The right to purchase shares of Common Stock of the
Company as provided herein, and any options delivered in
substitution or exchange therefor, as provided herein.
(i) "Purchase Price" - $.75 per share.
(j) "Shares" - 48,000 shares of Common Stock of the Company.
(k) "Subscription and Acknowledgement Form" - The form attached to
this Agreement as Exhibit "A".
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<PAGE>
2. Grant of Option. Subject to the terms and conditions of this Agreement,
the Company hereby grants to the Optionee the right to purchase all or any part
of an aggregate of 48,000 shares of Common Stock of the Company at the Purchase
Price set forth in Section 3 hereof and in accordance with the schedule set
forth in Section 5 hereof. This right to purchase Shares is hereinafter referred
to as the "Option."
3. Purchase Price. The purchase price of the shares of Common Stock of the
Company issuable pursuant to the exercise of this Option shall be $.75 per Share
(the "Purchase Price.")
4. Term of Option. Notwithstanding anything to the contrary contained in
this Agreement, no option granted hereunder shall be exercisable after the
expiration of the Expiration Date.
5. Exercise.
(a) Time of Exercise. This Option may be exercised commencing on the
Effective Date, in whole or in part (but not as to a fractional share) at the
principal executive offices of the Company, at any time or from time to time,
through and including January 27, 2002; provided, however, that this Option
shall expire and be null and void if not exercised in the manner herein provided
by 5:00 p.m., Pacific Standard Time, on January 27, 2002.
(b) Manner of Exercise. This Option is exercisable at the Purchase
Price, payable in cash or by cashier's check payable to the order of the
Company, subject to adjustment as provided in Section 6 hereof. Upon surrender
of this Option to the Company at its principal executive offices with the
annexed Subscription and Acknowledgment Form duly executed, together with
payment of the Purchase Price for the Shares purchased (and any applicable
transfer taxes) at the Company's principal executive offices, the Optionee shall
be entitled to receive a certificate or certificates for the Shares so
purchased. The Optionee hereby acknowledges and agrees to the taxable nature of
the event of the exercise of the Option and that the Optionee will not hold the
Company responsible for the reporting or payment of such taxes.
(c) Delivery of Stock Certificates. As soon as practicable, but not
exceeding five days after complete or partial exercise of this Option, the
Company, at its expense, shall cause to be issued in the name of the Optionee
(or upon payment by the Optionee of any applicable transfer taxes, the
Optionee's assigns) a certificate or certificates for the number of fully-paid
and nonassessable Shares to which the Optionee shall be entitled upon such
exercise, together with such other stock or securities or property or
combination thereof to which the Optionee shall be entitled upon such exercise,
determined in accordance with Section 6 hereof.
(d) Record Date of Transfer of Shares. Irrespective of the date of
issuance and delivery of certificates for any stock or securities issuable upon
the exercise of this Option, each person (including a corporation or
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<PAGE>
partnership) in whose name any such certificate is to be issued shall for all
purposes be deemed to have become the owner of record of the stock or other
securities represented thereby immediately prior to the close of business on the
date on which a duly executed Subscription Form containing notice of exercise of
this Option and payment of the Purchase Price is received by the Company.
6. Adjustment of Purchase Price.
The Purchase Price shall be subject to adjustment as follows:
(a) In case the Company shall (i) pay a dividend in shares of its
capital stock (other than an issuance of shares of capital stock to holders of
Common Stock who have elected to receive a dividend in shares in lieu of cash),
(ii) subdivide its outstanding shares of Common Stock, (iii) reduce, consolidate
or combine its outstanding shares of Common Stock into a smaller number of
shares or (iv) issue by reclassification of its shares of Common Stock any
shares of the Company, the Purchase Price in effect immediately prior thereto
shall be adjusted to that amount determined by multiplying the Purchase Price in
effect immediately prior to such date by a fraction, of which the numerator
shall be the number of shares of Common Stock outstanding on such date before
giving effect to such division, subdivision, reduction, combination,
consolidation or stock dividend and of which the denominator shall be the number
of shares of Common Stock after giving effect thereto. Such adjustment shall be
made successively whenever any such effective date or record date shall occur.
An adjustment made pursuant to this subsection (a) shall become effective
retroactively to the Effective Date immediately after the record date in the
case of a dividend and shall become effective immediately after the effective
date in the case of a subdivision, reduction, consolidation, combination or
reclassification.
(b) In case the Company shall issue rights or options to all or
substantially all holders of its Common Stock entitling them (for a period
expiring within 45 days after the record date mentioned below) to subscribe for
or purchase shares of Common Stock (or securities convertible into Common Stock)
at a price per share (the "Offering Price") less than the Purchase Price at the
record date mentioned below, the Purchase Price shall be determined by dividing
the Purchase Price in effect immediately prior to such issuance by a fraction of
which the numerator shall be the number of shares of Common Stock outstanding on
the date of issuance of such rights or options plus the number of additional
shares of Common Stock offered for subscription or purchase, and of which the
denominator shall be the number of shares of Common Stock outstanding on the
date of issuance of such rights or options plus the number of shares which the
aggregate Offering Price of the total number of shares so offered would purchase
at such fair market value. Such adjustment shall be made whenever such rights or
options are issued, and shall become effective retroactively, immediately after
the record date for the determination of shareholders entitled to receive such
rights or options.
(c) In case the Company shall distribute to all or substantially all
holders of its Common Stock evidence of its indebtedness, shares of any class of
the Company's stock other than Common Stock or assets (excluding cash dividends)
or rights or options to subscribe for or purchase shares of Common Stock or
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securities convertible into Common Stock (excluding those referred to in
subsection (b) above), then in each such case the Purchase Price shall be
determined by dividing the Purchase Price in effect immediately prior to such
issuance by a fraction, of which the numerator shall be the Purchase Price on
the date of such distribution and of which the denominator shall be such fair
market value per share of the Common Stock, less the then fair market value (as
determined by the Committee, whose determination shall be conclusive, and
described in a statement, which will have the applicable resolutions of the
Board of Directors attached thereto, filed with the Company) of the portion of
the assets or evidences of indebtedness or shares so distributed or of such
subscription rights or options applicable to one share of the Common Stock. Such
adjustment shall be made whenever any such distribution is made and shall become
effective retroactively immediately after the record date for the determination
of stockholders entitled to receive such distribution.
(d) If the Common Stock issuable upon the conversion of the Option
shall be changed into the same or a different number of shares of any class or
classes of stock, whether by capital reorganization, reclassification or
otherwise (other than a subdivision or combination of shares or stock dividend
provided for above, or a reorganization, merger, consolidation or sale of assets
provided for in this Section 6), then, and in each such event, the Optionee
shall have the right thereafter to convert such Option into the kind and amount
of shares of Common Stock and other securities and property receivable upon such
reorganization, reclassification or other change by the holders of the number of
shares of Common Stock into which such Option might have been converted, as
reasonably determined by the Committee, immediately prior to such
reorganization, reclassification or change, all subject to further adjustment as
provided herein.
(e) If at any time or from time to time there shall be a capital
reorganization of the Common Stock (other than a subdivision, combination,
reclassification or exchange of shares provided for elsewhere in this Section 6)
or a merger or consolidation of the Company with or into another corporation, or
the sale of all or substantially all of the Company's properties and assets to
any other person (except as provided for in Section 6(f)), then, as a part of
such reorganization, merger, consolidation or sale, provision shall be made as
reasonably determined by the Committee so that the Optionee shall thereafter be
entitled to receive upon conversion of such Option, the number of shares of
stock or other securities or property of the Company or of the successor
corporation resulting from such merger or consolidation or sale, to which a
holder of Common Stock deliverable upon conversion would have been entitled on
such capital reorganization, merger, consolidation or sale.
(f) The adjustments provided for in this Section 6 are cumulative and
shall apply to successive divisions, subdivisions, reductions, combinations,
consolidations, issue, distributions or other events contemplated herein
resulting in any adjustment under the provisions of this Section; provided that,
notwithstanding any other provision of this Section, no adjustment of the
Purchase Price shall be required unless such adjustment would require an
increase or decrease of at least 1% in the Purchase Price then in effect;
provided, however, that any adjustments which by reason of this subsection (f)
are not required to be made shall be carried forward and taken into account in
any subsequent adjustment.
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(g) Notwithstanding Sections 6(b) and (c) above, no adjustment shall
be made in the Purchase Price if provision is made for the Optionee to
participate in such distribution as if the Optionee had converted all of the
principal balance of the Option into shares of Common Stock at the Purchase
Price in effect immediately prior to such distribution.
(h) Upon each adjustment of the Purchase Price, the Company shall give
prompt written notice thereof addressed to the Optionee at the Optionee's
address as shown on the records of the Company, which notice shall state the
Purchase Price resulting from such adjustment and the increase or decrease, if
any, in the number of shares issuable upon the conversion of such Optionee's
Option, setting forth in reasonable detail the method of calculation and the
facts upon which such calculation is bases.
(i) In the event of any question arising with respect to the
adjustments provided for in Section 6, such question shall be conclusively
determined by an opinion of independent certified public accountants appointed
by the Company (who may be the auditors of the Company) and acceptable to the
Optionee. Such accountants shall have access to all necessary records of the
Company, and such determination shall be binding upon the Company and the
Optionee.
(j) The Company may, in its sole discretion and without any obligation
to do so, reduce the Purchase Price then in effect by giving fifteen days'
written notice to the Optionee. The Company may limit such reduction as to its
temporal duration or may impose other conditions thereto in its sole discretion.
7. Acceleration of Right to Exercise Options. Notwithstanding anything to
the contrary contained herein regarding the time for exercise of this Option,
the following provisions shall apply:
(a) Mergers and Reorganizations. If the Company or its shareholder
enter into an agreement to dispose of all or substantially all of the assets of
the Company by means of a sale, merger or other reorganization of liquidation,
or otherwise in a transaction in which the Company is not the surviving
corporation, this Option shall become immediately exercisable with respect to
the full number of Shares subject to the Option during the period commencing as
of the date of the agreement to dispose of all or substantially all of the
assets or stock of the Company and ending when the disposition of assets or
stock contemplated by the agreement is consummated or this Option is otherwise
terminated in accordance with its provisions, whichever occurs first. This
Option shall not become immediately exercisable, however, if the transaction
contemplated in the agreement is a merger or reorganization in which the Company
will survive.
(b) Change in Control. In the event of a change in control or
threatened change in control of the Company, this Option shall become
immediately exercisable. The term "change in control," for purposes of this
Section, shall refer to the acquisition of 20 per cent or more of the voting
securities of the Company by any person or by persons acting as a group within
the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended; provided that no change in control or threatened change in control
shall be deemed to have occurred if, prior to the acquisition of, or offer to
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acquire, 20 per cent or more of the voting securities of the Company, the full
Board of Directors shall have adopted by not less than two-thirds vote a
resolution specifically approving such acquisition or offer. The term "person"
refers, for purposes of this Section, to an individual or a corporation,
partnership, trust, association, joint venture, pool, syndicate, sole
proprietorship, unincorporated organization or any other form of entity not
specifically listed herein. Whether a change in control is threatened shall be
determined solely by the Committee.
8. Restrictions on Transfer.
(a) This option may not be sold, assigned, transferred, pledged or
otherwise disposed of or encumbered in any manner otherwise than by will, the
laws of descent and distribution, or pursuant to a qualified domestic relations
order as defined by the Code; provided, however, that the Optionee may assign or
transfer this Option to members of his immediate family or to a trust for the
benefit of such members of his immediate family and, during the lifetime of the
Optionee, this Option may be exercised only by the Optionee or assignee, as the
case may be, or his legally authorized representative. The Optionee shall not
have any right to sell, assign, transfer, pledge or otherwise dispose of or
encumber this Option, and any attempted transfer, sale, assignment, pledge or
encumbrance shall have no effect on the Company. The Company may also require a
Optionee to furnish evidence satisfactory to the Company, including a written
and signed representation letter and consent to be bound by any transfer
restrictions imposed by law, legend, condition or otherwise. The Shares shall
not be issued with respect to any Option unless the exercise of the Option shall
comply with the terms and conditions of the Consulting Agreement and all
relevant provisions of federal and state law, including without limitation the
Securities Act of 1933, as amended, the rules and regulations promulgated
thereunder and the requirements of any stock exchange upon which the Shares may
then be listed, and shall be further subject to the approval of counsel for the
Company with respect to such compliance.
(b) The Optionee, by its acceptance hereof, represents, opines,
covenants and agrees that (i) the Optionee has knowledge of the business and
affairs of the Company, and (ii) this Option is being acquired for investment
and not with a view to the distribution hereof and that, absent an effective
registration statement under the Securities Act of 1933, as amended (the "Act"),
covering the disposition of this Option, it will not be sold, transferred,
assigned, hypothecated or otherwise disposed of without first providing the
Company with an opinion of counsel (which may be counsel for the Company) or
other evidence, reasonably acceptable to the Company, to the effect that such
sale, transfer, assignment, hypothecation or other disposal will be exempt from
the registration and prospectus delivery requirements of the Act, as amended,
and the registration or qualification requirements of any applicable state
securities laws. The Optionee consents to the making of a notation in the
Company's records or giving to any transfer agent of the Option an order to
implement such restriction on transferability.
This Option shall bear the following legend or a legend of similar
import; provided, however, that such legend shall be removed, or not placed upon
the Option if such legend is no longer necessary to assure compliance with the
Act:
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THIS OPTION HAS NOT BEEN REGISTERED WITH THE UNITED STATES SECURITIES
AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE
BECAUSE IT IS BELIEVED TO BE EXEMPT FROM REGISTRATION UNDER THE ACT.
THIS OPTION IS "RESTRICTED" AND MAY NOT BE RESOLD OR TRANSFERRED
EXCEPT AS PERMITTED UNDER THE ACT PURSUANT TO REGISTRATION OR
EXEMPTION THEREFROM.
9. Information to Optionee. The Company shall furnish to the Optionee a
copy of the annual report, proxy statements and all other reports sent to the
Company's shareholders. Upon written request, the Company shall furnish to the
Optionee a copy of its most recent Annual Report on Form 10-K and each quarterly
report to shareholders issued since the end of the Company's most recent fiscal
year.
10. Payment of Taxes. All Shares issued upon the exercise of this Option
shall be validly issued, fully-paid and nonassessable and the Company shall pay
all taxes and other governmental charges (other than income tax) that may be
imposed in respect of the issue or delivery thereof. The Company shall not be
required, however, to pay any tax or other charge imposed in connection with any
transfer involved in the issue of any certificate for Shares in any name other
than that of the Optionee surrendered in connection with the purchase of such
Shares, and in such case the Company shall not be required to issue or deliver
any stock certificate until such tax or other charge has been paid or it has
been established to the Company's satisfaction that no tax or other charge is
due.
11. Reservation of Common Stock. The Company shall at all times reserve and
keep available out of its authorized but unissued shares of Common Stock, solely
for the purpose of issuance upon the exercise of this Option, such number of
shares of Common Stock as shall be issuable upon the exercise hereof. The
Company covenants and agrees that, upon exercise of this Option and payment of
the Purchase Price thereof, all Shares of Common Stock issuable upon such
exercise shall be duly and validly issued, fully-paid and nonassessable.
12. Notices to Optionee. Nothing contained in this Option shall be
construed as conferring upon the Optionee hereof the right to vote or to consent
or to receive notice as a share- Optionee in respect of any meetings of
share-Optionees for the election of directors or any other matter or as having
any rights whatsoever as a share-Optionee of the Company. All notices, requests,
consents and other communications hereunder shall be in writing and shall be
deemed to have been duly made when delivered or mailed by registered or
certified mail, postage prepaid, return receipt requested:
(a) If to the Optionee, to the address of such Optionee as shown on
the books of the Company; or
(b) If to the Company, to the address set forth in Section 1(b)
hereof.
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13. Replacement of Option. Upon receipt of evidence reasonably satisfactory
to the Company of the ownership of and the loss, theft, destruction or
mutilation of this Option and (in case of loss, theft or destruction) upon
delivery of an indemnity agreement in an amount reasonably satisfactory to the
Company, or (in the case of mutilation) upon surrender and cancellation of the
mutilated Option, the Company will execute and deliver, in lieu thereof, a new
Option of like tenor.
14. Successors. All the covenants, agreements, representations and
warranties contained in this Option shall bind the parties hereto and their
respective heirs, executors, administrators, distributees, successors and
assigns.
15. Change; Waiver. Neither this Option nor any term hereof may be changed,
waived, discharged or terminated verbally but only by an instrument in writing
signed by the party against which enforcement of the change, waiver, discharge
or termination is sought.
16. Headings. The section headings in this Option are inserted for purposes
of convenience only and shall have no substantive effect.
17. Law Governing. This Option shall for all purposes be construed and
enforced in accordance with, and governed by, the internal laws of the State of
California, without giving effect to principles of conflict of laws.
IN WITNESS WHEREOF, the Company has caused this Option to be signed by its
duly authorized officer and this Option to be dated as of the date first above
written.
POLLUTION RESEARCH AND CONTROL CORP.
By: /s/ Albert E. Gosselin, Jr.
----------------------------------------
Albert E. Gosselin, Jr., President
E-109
EXHIBIT 10.171
FINDER'S AGREEMENT
THIS FINDER'S AGREEMENT (the "Agreement") is made and entered into this
27th day of January, 1999, by and between Pollution Research and Control Corp.,
a California corporation (hereinafter referred to as the "Company"), with its
address at 506 Paula Avenue, Glendale, California 91201, and Rosemary Althaus
(hereinafter referred to as the "Finder"), 78 B Yaphank Avenue, Yaphank, New
York 11980.
WHEREAS, the Company desires to compensate the Finder in the event that an
investor(s), including but not limited to Mark S. Rose who is contemplating an
investment in the Company in the amount of $100,000, referred to the Company by
the Finder invests funds in the Company via a debt and/or equity instrument; and
WHEREAS, the Finder desires to be compensated by the Company as provided
herein for referring an investor(s) who invest funds in the Company..
NOW, THEREFORE, in consideration of the mutual agreements and covenants
contained herein, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:
1. Services. The Finder hereby agrees to employ her best efforts to arrange
an investment in the Company in the amount of approximately $100,000 by
introducing the Company to a potential investor(s).
2. Compensation. Upon the receipt by the Company of the proceeds of the
investment(s) via a debt and/or equity instrument made by an investor(s)
referred to the Company by the Finder, the Company will:
(a) Pay to the Finder by cashier's check an amount equivalent to ten
per cent (10%) of the gross amount(s) of the investment(s); and, in addition
thereto
(b) Issue to the Finder an option (hereinafter referred to as the
"Option") exercisable to purchase a total of 5,000 shares of common stock, no
par value per share (hereinafter referred to as the "Common Stock"), of the
Company at an exercise price of $.75 per share during the exercise period
commencing on the date hereof through January 27, 2002.
3. Restricted Nature of Option and Underlying Shares of Common Stock. The
Option and the underlying shares of Common Stock to be issued to the Finder in
accordance with the provisions of paragraph 2 hereinabove will be "restricted"
as that term is defined under the Securities Act of 1933, as amended; shall bear
a restrictive legend; and shall be issued for investment only and not with a
view to distribution.
4. Other Documents. Both parties hereto shall execute and deliver such
other and further documents and instruments, and take such other and further
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actions, as may be reasonably requested of them for the implementation and
consummation of this Agreement and the transactions herein contemplated.
5. Waiver of Breach. Waiver by either party of a breach of any provision of
this Agreement shall not operate or be construed as a waiver of any subsequent
breach.
6. Assignment. This Agreement and the rights and obligations of the Company
hereunder shall inure to the benefit of and shall be binding upon its successors
and assigns. This Agreement and the duties and responsibilities created hereby
shall not be assigned, transferred or delegated by the Finder without the prior
written consent of the Company.
7. 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.
8. Notices. All notices, requests or demands and other communications
hereunder must be in writing and shall be deemed to have been duly made if
personally delivered or mailed, postage prepaid, to the parties as follows:
a. If to the Finder: Rosemary Althaus
78 B Yaphank Avenue
Yaphank, New York 11980
b. If to the Company: Albert E. Gosselin, Jr., President
Pollution Research and Control Corp.
506 Paula Avenue
Glendale, California 91201
Any party may change his, her or its address by written notice to the
other party.
9. Entire Agreement. This Agreement contains the entire agreement between
the parties and supersedes all prior agreements, understandings and writings
between the parties with respect to the subject matter hereof. All parties
acknowledge that no representations, inducements, promises or agreements, oral
or otherwise, have been made by either party which are not embodied herein. This
Agreement may be amended only in writing signed by bother parties.
10. Attorneys' Fees. In the event of any litigation among the parties, the
non-prevailing party or parties shall pay the reasonable expenses, including the
attorneys' fees, of the prevailing party or parties in connection therewith.
11. Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original but all of which taken together shall
constitute but one and the same document.
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IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement as of the day and year first above written.
FINDER: COMPANY:
POLLUTION RESEARCH AND CONTROL CORP.
/S/ Rosemary Althaus By: /s/ Albert E. Gosselin, Jr.
- ---------------------- -------------------------------------
Rosemary Althaus Albert E. Gosselin, Jr., President
E-112
EXHIBIT 10.172
THE OPTION REPRESENTED BY THIS CERTIFICATE AND THE SHARES OF COMMON STOCK
ISSUABLE UPON THE EXERCISE OF THE OPTION HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR REGISTERED OR QUALIFIED UNDER
THE SECURITIES LAWS OF ANY STATE AND THUS MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED UNLESS REGISTERED UNDER THAT ACT AND REGISTERED OR QUALIFIED UNDER
APPLICABLE SECURITIES LAW OR UNLESS AN EXEMPTION FROM SUCH REGISTRATION OR
QUALIFICATION IS AVAILABLE.
OPTION TO PURCHASE 5,000 SHARES OF COMMON STOCK OF
POLLUTION RESEARCH AND CONTROL CORP.
FROM JANUARY 27, 1999
VOID AFTER 5:00 P.M., LOS ANGELES TIME, ON JANUARY 27, 2002
This certifies that Rosemary Althaus or registered assigns, is entitled,
subject to the terms set forth below, to purchase from Pollution Research and
Control Corp., a California corporation (the "Company"), the above number of
fully paid and nonassessable shares of Common Stock of the Company ("Common
Stock") at a purchase price of $.75 per share ("Purchase Price").
This Option is exercisable from January 27, 1999 to and including 5:00
p.m., Los Angeles time, on January 27, 2002.
Registered Owner: Rosemary Althaus
Purchase Price: $.75 per share
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OPTION AGREEMENT
This Option Agreement (the "Agreement") is made and entered into effective
as of January 27, 1999 by and between Pollution Research and Control Corp., a
California corporation ("PRCC") and Rosemary Althaus ("Optionee").
WHEREAS, Optionee has been providing valuable services as recognized by the
Company's Board of Directors to PRCC and PRCC is desirous of having Optionee
continue to provide such services to it; and
WHEREAS, PRCC is willing to grant Optionee an option to purchase up to an
aggregate of 5,000 shares of the no par value common stock of PRCC (the "Common
Stock") under the terms and conditions set forth below.
NOW, THEREFORE, the parties agree as follows:
1. Grant of Option. PRCC hereby grants to Optionee, as a matter of separate
agreement and not in lieu of other compensation for services, the right and
option (the "Option") to purchase on the terms and conditions set forth in this
Agreement all or any part of up to an aggregate of 5,000 shares of Common Stock
(the "Option Shares"), for continuous, uninterrupted, employment service to PRCC
or by specific acknowledgement of exception by the Company's Board of Directors.
2. Option Price. At any time when shares of Common Stock are to be
purchased pursuant to the Option, the purchase price for each Option share shall
be $.75 ("Option Price"), and for purposes of record, the bid price of the
Company's stock on this date was $1.00.
3. Option Period. The option period shall commence on January 27, 1999 (the
"Date of Grant") and shall terminate January 27, 2002.
4. Exercise of Option. The Option may be exercised in whole or in part at
any time after the date hereof by delivering to the Chief Financial Officer of
PRCC (a) a Notice and Agreement of Exercise of Option, substantially in the form
attached hereto as Exhibit "A," specifying the number of Option Shares with
respect to which the Option is exercised, and (b) full payment of the Option
Price for such Shares.
5. Securities Laws Requirements. The Option Shares have not been registered
under the Securities Act of 1933, as amended (the "Act"), and no Shares may be
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sold, offered for sale, transferred, pledged, hypothecated or otherwise disposed
of except in compliance with the Act and any other applicable federal and state
securities laws. Additionally, the Option and the Option Shares have not been
qualified under the California Securities Law of 1968, as amended (the
"California Law"). PRCC has no obligation to register the Option shares under
the Act or qualify the Option Shares under the California Law. Optionee
acknowledges that she is aware that Rule 144 of the General Rules and
Regulations under the Act ("Rule 144") affords a limited exemption from
registration for the public resale of registered securities and under the terms
of Rule 144 as currently in effect, the Shares received by Optionee may be sold
to the public without registration only after a period of two (2) years has
elapsed from the exercise date of the Option and then only in compliance with
all other requirements of Rule 144 and the Act. Optionee hereby acknowledges,
represents, warrants and agrees as follows:
(a) That the Option and the Option Shares are not registered under the
Act or qualified under the California Law, and the Option Shares shall be,
acquired solely for the account of Optionee for investment purposes only and
with no view to their resale or other distribution of any kind;
(b) Neither the Option nor any Option Share shall be sold or otherwise
distributed in violation of the Act, the California Law or any other applicable
federal or state securities law;
(c) Her overall commitment to investments that are not readily
marketable is not disproportionate to her net worth, and her investment in PRCC
will not cause such overall commitment to become excessive;
(d) She has the financial ability to bear the economic risk of her
investment, has adequate means of providing for her current needs and personal
contingencies, and has no need for liquidity in her investment in PRCC;
(e) She either: (i) has a preexisting personal or business
relationship with PRCC or its officers, directors or controlling persons, or
(ii) has evaluated the business of PRCC and the high risks of investing in PRCC,
the competitive nature of the business in which PRCC is engaged, and has the
business or financial experience or has business or financial advisors who are
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unaffiliated with, and not compensated by, PRCC and protect her interests in
connection with the transaction;
(f) She has been given the opportunity to review all books, records
and documents of PRCC and to ask questions and receive answers from PRCC
concerning PRCC's business, to obtain additional information necessary to verify
the accuracy of the information she has desired in order to evaluate her
investment, and to consult with such attorneys, accountants and other advisors
as she has desired;
(g) Her residence set forth below is her true and correct residence,
and she has no present intention of becoming a resident or domiciliary of any
other state of jurisdiction;
(h) In making the decision to accept the Option and/or purchase the
Option Shares, she has relied solely upon independent investigations made by or
on behalf of him;
(i) No federal or state agency has made any finding or determination
as to the fairness of an investment in PRCC; and
(j) She understands that all the representations and warranties made
by him herein, and all information furnished by him to PRCC, is true, correct
and complete in all respects.
6. Optionee hereby acknowledges that she understands the meaning and legal
consequences of the representations, warranties and covenants contained herein
and that PRCC has relied on the representations made by Optionee in paragraph 5
hereof in granting this Option, and Optionee agrees to indemnify and hold
harmless PRCC and its officers, directors, controlling persons, attorneys,
agents and employees from and against any and all loss, damage or liability,
together with all costs and expenses (including attorneys' fees and
disbursements) which any of them may incur by reason of any breach and any
representation, warranty, covenant or agreement contained herein. All
representations, warranties, covenants and agreements, and the indemnification
contained herein shall survive the grant of the Option and the issuance of the
Option Shares by PRCC.
7. Legend of Certificates. All Option Shares issued pursuant to this
Agreement shall be subject to the provisions of this Agreement and the
certificates representing such Option Shares shall bear the following legend or
language substantially equivalent thereto:
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"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
OR QUALIFIED UNDER FEDERAL OR STATE SECURITIES LAWS. THE SHARES MAY
NOT BE OFFERED FOR SALE, SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS
SO REGISTERED OR QUALIFIED OR UNLESS AN EXEMPTION EXISTS, THE
AVAILABILITY OF WHICH IS TO BE ESTABLISHED TO THE SATISFACTION OF THE
COMPANY."
8. Transferability of Option. The Option shall not be transferable except
by the laws of descent and distribution and any attempt to do so shall void the
Option.
9. Adjustment. The Option Price and the number and kind of Option Shares
shall be subject to corresponding adjustment in the event of any change in the
Common stock by reason of any reclassification, recapitalization, split-up,
combination, exchange of shares, readjustment or stock dividend, in like manner
as if such Option Shares had been issued and outstanding, fully paid and
non-assessable at the time of such occurrence.
10. Privilege of Ownership. Optionee shall not have any of the rights of a
shareholder with respect to the shares covered by the Option except to the
extent that one or more certificates for such Shares shall be delivered to her
upon one (1) or more exercises of the Option. 11. Notices. Any notices required
or permitted to be given under this Agreement shall be in writing and they shall
be deemed to have been given upon personal delivery or two (2) business days
after mailing the notice by postage, registered or certified mail. Such notice
shall be addressed to the party to be notified as shown below:
PRCC: POLLUTION RESEARCH AND CONTROL CORP.
506 Paula Avenue
Glendale, CA 91201
Attn: President
OPTIONEE: Rosemary Althaus
78B Yaphank Avenue
Yaphank, NY 11980
Any party may change its address for purposes of this Section by giving the
other party written notice of the new address in the manner set forth above.
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12. General Provisions. This Agreement:
(a) Contains the entire agreement between PRCC and Optionee regarding
options of PRCC to Optionee and supersedes all prior communications, oral or
written;
(b) Shall not be construed to give Optionee any rights as to PRCC or
the Common Stock, except as specifically provided herein;
(c) May not be amended nor may any rights hereunder be waived except
by an instrument in writing signed by the party sought to be charged with such
amendment or waiver;
(d) Shall be construed in accordance with, and governed by, the laws
of the State of California; and
(e) Shall be binding upon and shall inure to the benefit of PRCC and
Optionee, and their respective successors and assigns, except that Optionee
shall not have the right to assign or otherwise transfer her rights hereunder to
any person.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
PRCC:
POLLUTION RESEARCH AND CONTROL
CORP., a California corporation
By: /s/ Albert E. Gosselin, Jr.
---------------------------------
Albert E. Gosselin, Jr.,
President and Chief Executive Officer
OPTIONEE:
/s/ Rosemary Althaus
-------------------------------------
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EXHIBIT A
To Pollution Research and Control Corp.
NOTICE AND AGREEMENT OF EXERCISE OF OPTION
I hereby exercise the Option granted to me by POLLUTION RESEARCH AND
CONTROL CORP., a California corporation ("PRCC"), dated as of ..............as
to .......................... shares of PRCC's no par value Common Stock.
Enclosed are the documents and payment specified in Paragraph 4 of my
Agreement regarding the Option.
- -------------------------------- --------------------------
(Print Your Name) Signature
E-119
EXHIBIT 10.173
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 25,000 units
consisting of 25,000 shares of common stock, no par value per share (the "Common
Stock") and 25,000 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 $18,750.00 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 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.
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<PAGE>
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
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)
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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 os 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
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
E-122
<PAGE>
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 ______ 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 as follows:
29 years as broker & investment banker
-----------------------------------------------------------------------
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.
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<PAGE>
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%
( ) 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:
(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:
( ) Less than $100,000
(x) $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 an represents that he has received no assurances of any kind
E-124
<PAGE>
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/ William T. Richey
----------------------------------
William T. Richey
Current Residence Address: 4960 Lakeshore Drive, Littleton, Co 80123
Current Residence Telephone Number: 303-794-7411
SS. No. ###-##-####
Current Occupation and/or Business Position: Stock Broker
Current Business Telephone Number: 303-629-5555
Current Name of Business with which Associated: Rocky Mtn. Securities
Name of Person connected with Pollution Research
And Control Corp., with whom conferred
Concerning this investment: Al Gosselin
Relationship, if any, with the above mentioned Co. Rep: None
Agreed and accepted this 11th day of March, 1999, on behalf of Pollution
Research and Control Corporation.
/s/ Albert E. Gosselin, Jr.
- ---------------------------
Albert E. Gosselin, Jr., President and CEO
E-125
<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.
E-126
EXHIBIT 10.174
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 133,333 units
consisting of 133,333 shares of common stock, no par value per share (the
"Common Stock") and 133,333 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
$99,999.75 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.
E-127
<PAGE>
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
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)
E-128
<PAGE>
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 os 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
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
E-129
<PAGE>
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
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:
Wharton School Graduate U of P Finance & Investments Major
-----------------------------------------------------------------------
35 years as a 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.
E-130
<PAGE>
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%
(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
E-131
<PAGE>
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/ Ronald E. Patterson
-------------------------------
Ronald E. Patterson
Current Residence Address: 17 Prestile Place, Robbinsville, NJ 08691
Current Residence Telephone Number: 609-259-2662
SS. No. ###-##-####
Current Occupation and/or Business Position: Venture Capitalist
Current Business Telephone Number: 609-259-2662
Current Name of Business with which Associated: N/A
Name of Person connected with Pollution Research
And Control Corp., with whom conferred
Concerning this investment: Philip Huss, Phoenix Alliance
Relationship, if any, with the above mentioned Co. Rep: None
Agreed and accepted this 4th day of March, 1999, on behalf of Pollution Research
and Control Corporation.
/s/ Albert E. Gosselin, Jr.
- ---------------------------
Albert E. Gosselin, Jr., President and CEO
E-132
<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.
E-133
EXHIBIT 10.175
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 66,666 units
consisting of 66,666 shares of common stock, no par value per share (the "Common
Stock") and 66,666 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 $49,999.50 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.
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<PAGE>
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
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)
E-135
<PAGE>
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 os 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
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
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<PAGE>
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:
Investment Relations Professional - University of Mn
-----------------------------------------------------------------------
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.
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<PAGE>
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:
(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:
( ) 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
(x) $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
(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
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<PAGE>
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/ Phillip T. Huss
------------------------------
Phillip T. Huss
Current Residence Address: 22 Cedar Ct. Durango, Co 81301
Current Residence Telephone Number: 970-259-7263
SS. No. ###-##-####
Current Occupation and/or Business Position: Investor Relations Consultant
Current Business Telephone Number: 970-259-7241
Current Name of Business with which Associated: Phoenix Alliance, Inc.
Name of Person connected with Pollution Research
And Control Corp., with whom conferred
Concerning this investment: N/A
Relationship, if any, with the above mentioned Co. Rep:
Agreed and accepted this 4th day of March, 1999, on behalf of Pollution Research
and Control Corporation.
/s/ Albert E. Gosselin, Jr.
- ---------------------------
Albert E. Gosselin, Jr., President and CEO
E-139
<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.
E-140
EXHIBIT 10.176
THE OPTION REPRESENTED BY THIS CERTIFICATE AND THE SHARES OF COMMON STOCK
ISSUABLE UPON THE EXERCISE OF THE OPTION HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR REGISTERED OR QUALIFIED UNDER
THE SECURITIES LAWS OF ANY STATE AND THUS MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED UNLESS REGISTERED UNDER THAT ACT AND REGISTERED OR QUALIFIED UNDER
APPLICABLE SECURITIES LAW OR UNLESS AN EXEMPTION FROM SUCH REGISTRATION OR
QUALIFICATION IS AVAILABLE.
OPTION TO PURCHASE 25,000 SHARES OF COMMON STOCK OF
POLLUTION RESEARCH AND CONTROL CORP.
FROM NOVEMBER 1, 1999
VOID AFTER 5:00 P.M., LOS ANGELES TIME, ON FEBRUARY 25, 2002
This certifies that Anthony Reneau or registered assigns, is entitled,
subject to the terms set forth below, to purchase from Pollution Research and
Control Corp., a California corporation (the "Company"), the above number of
fully paid and nonassessable shares of Common Stock of the Company ("Common
Stock") at a purchase price of $1.00 per share ("Purchase Price").
This Option is exercisable from November 1, 1999 to and including 5:00
p.m., Los Angeles time, on February 25, 2002.
Registered Owner: Anthony Reneau
Purchase Price: $1.00 per share
E-141
<PAGE>
OPTION AGREEMENT
This Option Agreement (the "Agreement") is made and entered into effective
as of February 26, 1999 by and between Pollution Research and Control Corp., a
California corporation ("PRCC") and Anthony Reneau ("Optionee").
WHEREAS, Optionee has been providing valuable services as
recognized by the Company's Board of Directors to PRCC and PRCC is desirous of
having Optionee continue to provide such services to it; and
WHEREAS, PRCC is willing to grant Optionee an option to purchase up to an
aggregate of 25,000 shares of the no par value common stock of PRCC (the "Common
Stock") under the terms and conditions set forth below.
NOW, THEREFORE, the parties agree as follows:
1. Grant of Option. PRCC hereby grants to Optionee, as a matter of separate
agreement and not in lieu of other compensation for services, the right and
option (the "Option") to purchase on the terms and conditions set forth in this
Agreement all or any part of up to an aggregate of 25,000 shares of Common Stock
(the "Option Shares"), for continuous, uninterrupted, employment service to PRCC
or by specific acknowledgement of exception by the Company's Board of Directors.
2. Option Price. At any time when shares of Common Stock are to be
purchased pursuant to the Option, the purchase price for each Option share shall
be $1.00 ("Option Price"), and for purposes of record, the bid price of the
Company's stock on this date was $1.38.
3. Option Period. The option period shall commence on November 1, 1999 (the
"Date of Grant") and shall terminate February 25, 2002.
4. Exercise of Option. The Option may be exercised in whole or in part at
any time after the date hereof by delivering to the Chief Financial Officer of
PRCC (a) a Notice and Agreement of Exercise of Option, substantially in the form
attached hereto as Exhibit "A," specifying the number of Option Shares with
respect to which the Option is exercised, and (b) full payment of the Option
Price for such Shares.
E-142
<PAGE>
5. Securities Laws Requirements. The Option Shares have not been registered
under the Securities Act of 1933, as amended (the "Act"), and no Shares may be
sold, offered for sale, transferred, pledged, hypothecated or otherwise disposed
of except in compliance with the Act and any other applicable federal and state
securities laws. Additionally, the Option and the Option Shares have not been
qualified under the California Securities Law of 1968, as amended (the
"California Law"). PRCC has no obligation to register the Option shares under
the Act or qualify the Option Shares under the California Law. Optionee
acknowledges that he is aware that Rule 144 of the General Rules and Regulations
under the Act ("Rule 144") affords a limited exemption from registration for the
public resale of registered securities and under the terms of Rule 144 as
currently in effect, the Shares received by Optionee may be sold to the public
without registration only after a period of two (2) years has elapsed from the
exercise date of the Option and then only in compliance with all other
requirements of Rule 144 and the Act. Optionee hereby acknowledges, represents,
warrants and agrees as follows:
(a) That the Option and the Option Shares are not registered under the
Act or qualified under the California Law, and the Option Shares shall be,
acquired solely for the account of Optionee for investment purposes only and
with no view to their resale or other distribution of any kind;
(b) Neither the Option nor any Option Share shall be sold or otherwise
distributed in violation of the Act, the California Law or any other applicable
federal or state securities law;
(c) His overall commitment to investments that are not readily
marketable is not disproportionate to his net worth, and his investment in PRCC
will not cause such overall commitment to become excessive;
(d) He has the financial ability to bear the economic risk of his
investment, has adequate means of providing for his current needs and personal
contingencies, and has no need for liquidity in his investment in PRCC;
(e) He either: (i) has a preexisting personal or business relationship
with PRCC or its officers, directors or controlling persons, or (ii) has
evaluated the business of PRCC and the high risks of investing in PRCC, the
competitive nature of the business in which PRCC is engaged, and has the
business or financial experience or has business or financial advisors who are
unaffiliated with, and not compensated by, PRCC and protect his interests in
connection with the transaction;
E-143
<PAGE>
(f) He has been given the opportunity to review all books, records and
documents of PRCC and to ask questions and receive answers from PRCC concerning
PRCC's business, to obtain additional information necessary to verify the
accuracy of the information he has desired in order to evaluate his investment,
and to consult with such attorneys, accountants and other advisors as he has
desired;
(g) His residence set forth below is his true and correct residence,
and he has no present intention of becoming a resident or domiciliary of any
other state of jurisdiction;
(h) In making the decision to accept the Option and/or purchase the
Option Shares, he has relied solely upon independent investigations made by or
on behalf of him;
(i) No federal or state agency has made any finding or determination
as to the fairness of
an investment in PRCC; and
(j) He understands that all the representations and warranties made by
him herein, and all information furnished by him to PRCC, is true, correct and
complete in all respects.
6. Optionee hereby acknowledges that he understands the
meaning and legal consequences of the representations, warranties and covenants
contained herein and that PRCC has relied on the representations made by
Optionee in paragraph 5 hereof in granting this Option, and Optionee agrees to
indemnify and hold harmless PRCC and its officers, directors, controlling
persons, attorneys, agents and employees from and against any and all loss,
damage or liability, together with all costs and expenses (including attorneys'
fees and disbursements) which any of them may incur by reason of any breach and
any representation, warranty, covenant or agreement contained herein. All
representations, warranties, covenants and agreements, and the indemnification
contained herein shall survive the grant of the Option and the issuance of the
Option Shares by PRCC.
7. Legend of Certificates. All Option Shares issued pursuant to this
Agreement shall be subject to the provisions of this Agreement and the
certificates representing such Option Shares shall bear the following legend or
language substantially equivalent thereto:
E-144
<PAGE>
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
OR QUALIFIED UNDER FEDERAL OR STATE SECURITIES LAWS. THE SHARES MAY
NOT BE OFFERED FOR SALE, SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS
SO REGISTERED OR QUALIFIED OR UNLESS AN EXEMPTION EXISTS, THE
AVAILABILITY OF WHICH IS TO BE ESTABLISHED TO THE SATISFACTION OF THE
COMPANY."
8. Transferability of Option. The Option shall not be transferable except
by the laws of descent and distribution and any attempt to do so shall void the
Option.
9. Adjustment. The Option Price and the number and kind of Option Shares
shall be subject to corresponding adjustment in the event of any change in the
Common stock by reason of any reclassification, recapitalization, split-up,
combination, exchange of shares, readjustment or stock dividend, in like manner
as if such Option Shares had been issued and outstanding, fully paid and
non-assessable at the time of such occurrence.
10. Privilege of Ownership. Optionee shall not have any of the rights of a
shareholder with respect to the shares covered by the Option except to the
extent that one or more certificates for such Shares shall be delivered to him
upon one (1) or more exercises of the Option.
11. Notices. Any notices required or permitted to be given under this
Agreement shall be in writing and they shall be deemed to have been given upon
personal delivery or two (2) business days after mailing the notice by postage,
registered or certified mail. Such notice shall be addressed to the party to be
notified as shown below:
PRCC: POLLUTION RESEARCH AND CONTROL CORP.
506 Paula Avenue
Glendale, CA 91201
Attn: President
OPTIONEE: Anthony Reneau
506 Paula Avenue
Glendale, Ca 91201
Any party may change its address for purposes of this Section by giving the
other party written notice of the new address in the manner set forth above.
E-145
<PAGE>
12. General Provisions. This Agreement:
(a) Contains the entire agreement between PRCC and Optionee regarding
options of PRCC to Optionee and supersedes all prior communications, oral or
written;
(b) Shall not be construed to give Optionee any rights as to PRCC or
the Common Stock, except as specifically provided herein;
(c) May not be amended nor may any rights hereunder be waived except
by an instrument in writing signed by the party sought to be charged with such
amendment or waiver;
(d) Shall be construed in accordance with, and governed by, the laws
of the State of California; and
(e) Shall be binding upon and shall inure to the benefit of PRCC and
Optionee, and their respective successors and assigns, except that Optionee
shall not have the right to assign or otherwise transfer her rights hereunder to
any person.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
PRCC:
POLLUTION RESEARCH AND CONTROL
CORP., a California corporation
By: /s/ Albert E. Gosselin, Jr.
----------------------------------
Albert E. Gosselin, Jr.,
President and Chief Executive Officer
OPTIONEE:
/s/ Anthony Reneau
--------------------------------------
Anthony Reneau
E-146
<PAGE>
EXHIBIT A
To Pollution Research and Control Corp.
NOTICE AND AGREEMENT OF EXERCISE OF OPTION
I hereby exercise the Option granted to me by POLLUTION RESEARCH AND
CONTROL CORP., a California corporation ("PRCC"), dated as of
............................. as to ..................................... shares
of PRCC's no par value Common Stock.
Enclosed are the documents and payment specified in Paragraph 4 of my
Agreement regarding the Option.
- -------------------------- ----------------------------
(Print Your Name) Signature
E-147
EXHIBIT 10.177
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 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.
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<PAGE>
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
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)
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<PAGE>
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 os 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
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
E-150
<PAGE>
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
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:
MBA 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.
E-151
<PAGE>
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%
( ) 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
E-152
<PAGE>
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/ Alan Talesnick
--------------------------------
Alan Talesnick
Current Residence Address: 5030 Bow Mar Drive, Littleton,Co 80123
Current Residence Telephone Number: 303-795-5990
SS. No. 314-830-1776
Current Occupation and/or Business Position: Securities Attorney
Current Business Telephone Number: 303-830-1776
Current Name of Business with which Associated: Patton Boggs LLP
Name of Person connected with Pollution Research
And Control Corp., with whom conferred
Concerning this investment: Phillip Huss
Relationship, if any, with the above mentioned Co. Rep:
Agreed and accepted this18th day of March, 1999, on behalf of Pollution Research
and Control Corporation.
/s/ Albert E. Gosselin, Jr.
- ---------------------------
Albert E. Gosselin, Jr., President and CEO
E-153
<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.
E-154
EXHIBIT 21
LIST OF SUBSIDIARIES
Dasibi Environmental Corp.
506 Paula Avenue
Glendale, Ca 91201
Logan Medical Devices
506 Paula Avenue
Glendale, Ca 91201
E-155
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<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 216
<SECURITIES> 3
<RECEIVABLES> 680
<ALLOWANCES> (19)
<INVENTORY> 2,076
<CURRENT-ASSETS> 2,967
<PP&E> 1,837
<DEPRECIATION> 418
<TOTAL-ASSETS> 4,643
<CURRENT-LIABILITIES> 1,690
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 4,643
<SALES> 1,271
<TOTAL-REVENUES> 0
<CGS> 723
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 538
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> (19)
<DISCONTINUED> 128
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 109
<EPS-PRIMARY> .01
<EPS-DILUTED> 0
</TABLE>
