As filed with the Securities and Exchange Commission on March 23, 2000
Registration No. 333-87965
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------
POST-EFFECTIVE AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
--------------
Pollution Research and Control Corp.
------------------------------------
(Exact name of registrant as specified in its charter)
California
----------
(State or other jurisdiction of incorporation or organization)
95-2746949
----------
(I.R.S. Employer Identification No.)
506 Paula Avenue, Glendale, California 91201
(818) 247-7601
--------------
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
Albert E. Gosselin, Jr.
506 Paula Avenue, Glendale, California 91201
(818) 247-7601
--------------
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Please send copies of all correspondence to:
PATRICIA CUDD, ESQ.
Cudd & Associates
1120 Lincoln Street, Suite #1507
Denver, Colorado 80203
Telephone: (303) 861-7273
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
1
<PAGE>
DOCUMENTS INCORPORATED BY REFERENCE:
The contents of the Registration Statement on Form S-3, File Number 333-87965,
filed on September 28, 1999, are incorporated herein by reference.
2
<PAGE>
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
========================================================================================
Proposed
Proposed Maximum
Title of Each Maximum Aggregate Amount of
Class of Securities Amount to Offering Price Offering Registration
To be Registered Be Registered Per Share (1) Price (1) Fee
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, no par value 100,000 $3.91 $391,000 $ 78.20
- ----------------------------------------------------------------------------------------
Common Stock, no par value,
underlying options (2) 64,000 $3.91 $250,240 $ 50.05
- ----------------------------------------------------------------------------------------
Common Stock, no par value,
underlying debentures (3) 45,000 $3.91 $175,950 $ 35.19
- ----------------------------------------------------------------------------------------
TOTAL 209,000 $3.91 $817,190(4) $163.44
========================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457. Pursuant to Rule 457(c), based upon 100,000 shares of
Common Stock being offered by a Selling Shareholder, 64,000 shares of
Common Stock underlying options and 45,000 shares of Common Stock
underlying debentures, and the average of the high and low sales prices of
the Common Stock on the NASDAQ SmallCap Market System on March 14, 2000, of
$3.91.
(2) Represents the shares of Common Stock underlying four options, one of which
options is exercisable to purchase 25,000 shares of Common Stock at an
exercise price of $1.00 per share on or prior to February 25, 2002, and
three of which options are exercisable to purchase 14,500 shares, 14,500
shares, and 10,000 shares, of Common Stock, respectively, at an exercise
price of $1.38 per share on or prior to March 22, 2002.
(3) Represents the additional shares of Common Stock underlying the outstanding
18%-$500,000 face amount subordinated convertible debenture due December 1,
1999, and the 12%-$300,000 face amount subordinated convertible debenture
due June 1, 2000. Pursuant to Rule 416, the number of shares of Common
Stock issuable upon conversion of the debentures is subject to adjustment
in accordance with the anti-dilution provisions of such debentures.
(4) Represents not more than 20% of the maximum aggregate offering price set
forth for the Common Stock, no par value, in the "Calculation of
Registration Fee" table contained in the Registration Statement on Form
S-3, Registration Number 333-87965, filed on September 28, 1999.
3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Post-Effective
Amendment No. 1 to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of Glendale, State of
California, on March 20, 2000.
Date: March 20, 2000 POLLUTION RESEARCH AND CONTROL CORP.
(Registrant)
By: /s/ Albert E. Gosselin, Jr.
-------------------------------
Albert E. Gosselin, Jr., President,
Chief Executive Officer and
Chairman of the Board Directors
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
Date: March 20, 2000 /s/ Albert E. Gosselin, Jr.
---------------------------
Albert E. Gosselin, Jr., President,
Chief Executive Officer, Chairman of
the Board Directors (Principal
Executive Officer) and
Attorney-in-Fact for Gary L. Dudley,
Marcia A. Smith, Craig E. Gosselin
and Barry Soltani, Directors
4
<PAGE>
EXHIBIT INDEX
The following Exhibits are filed as part of this Post-Effective Amendment
No. 1 to the Registration Statement on Form S-3.
Item
Number Description
- ------ -----------
4.1* 12% Subordinated Convertible Debenture Due February 23,
2001, dated February 16, 2000, between Pollution
Research and Control Corp. and Britannica Associates
Limited.
4.2* Agreement for Sale of Shares of Common Stock dated
February 23, 2000, between Pollution Research and
Control Corp. and Britannica Associates Limited.
4.3* Option to Purchase 14,500 Shares of Common Stock of
Pollution Research and Control Corp. from March 22,
2000 Void After 5:00 P.M., Los Angeles Time, on March
22, 2002, of Mike Hamdan.
4.4* Option to Purchase 14,500 Shares of Common Stock of
Pollution Research and Control Corp. from March 22,
2000 Void After 5:00 P.M., Los Angeles Time, on March
22, 2002, of Paz Laroya.
4.5* Option to Purchase 10,000 Shares of Common Stock of
Pollution Research and Control Corp. from March 22,
2000 Void After 5:00 P.M., Los Angeles Time, on March
22, 2002, of Robert Klein.
5.0* Opinion and Consent of Cudd & Associates.
23.1 Consent of Cudd & Associates (included in Exhibit 5.0
hereto).
23.2* Consent of AJ. Robbins, P.C., Certified Public
Accountants and Consultants, independent auditors.
- ------------------
* Filed herewith.
5
Exhibit 4.1
DEBENTURE
NEITHER THIS DEBENTURE NOR THE COMMON STOCK ISSUABLE UPON CONVERSION OF THIS
DEBENTURE (COLLECTIVELY, THE "SECURITIES") HAS BEEN REGISTERED WITH THE UNITED
STATES SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR THE SECURITIES COMMISSION OF ANY STATE UNDER ANY STATE
SECURITIES LAW. THE SECURITIES ARE RESTRICTED AND MAY NOT BE OFFERED, RESOLD,
PLEDGED OR TRANSFERRED UNLESS THE SECURITIES ARE REGISTERED UNDER THE ACT AND
APPLICABLE STATE SECURITIES LAWS OR ARE PERMITTED UNDER THE ACT PURSUANT TO AN
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THOSE LAWS.
$500,000
POLLUTION RESEARCH AND CONTROL CORP.
12% SUBORDINATED CONVERTIBLE DEBENTURE
DUE FEBRUARY 23, 2001
THIS DEBENTURE is the only one of a duly authorized issue of $500,000 in
Debentures of Pollution Research and Control Corp., a corporation duly organized
and existing under the laws of California (the "Company"), designated as its 12%
Subordinated Convertible Debenture Due February 23, 2001 (the "Debenture").
FOR VALUE RECEIVED, the Company promises to pay to Britannica Associates
Limited, the registered holder hereof (the "Holder"), the principal sum of Five
Hundred Thousand Dollars (US$500,000) on February 23, 2001 (the "Maturity Date")
and to pay interest on a monthly basis on the principal sum outstanding, at the
rate of 12% per annum commencing March 16, 2000. Subject to the provisions of
Section 4 below, the principal of, and interest on, this Debenture are payable
at the option of the Holder, in shares of Common Stock no par value per share of
the Company ("Common Stock"), or in such coin or currency of the United States
of America as at the time of payment is legal tender for payment of public and
private debts, at the address last appearing on the Debenture Register of the
Company as designated in writing by the Holder from time to time. The Company
will pay the outstanding principal due upon this Debenture before or on the
Maturity Date, less any amounts required by law to be deducted or withheld, to
the Holder of this Debenture by check if paid more than ten days prior to the
Maturity Date or by wire transfer and addressed to such Holder at the last
address appearing on the Debenture Register. The forwarding of such check or
wire transfer shall constitute a payment of outstanding principal hereunder and
shall satisfy and discharge the liability for principal on this Debenture to the
extent of the sum represented by such check or wire transfer.
<PAGE>
This Debenture is subject to the following additional provisions:
1. The Debenture is issuable in denominations of Fifty Thousand Dollars
(US$50,000) and integral multiples thereof. The Debenture is exchangeable for an
equal aggregate principal amount of debentures of different authorized
denominations (the "Debentures"), as requested by the Holder(s) surrendering the
same, but not less than US$50,000. No service charge will be made for such
registration, transfer or exchange, except that the Holder shall pay any tax or
other governmental charges payable in connection therewith.
2. The Company shall be entitled to withhold from all payments of principal
of, and interest on, this Debenture any amounts required to be withheld under
the applicable provisions of the United States income tax laws or other
applicable laws at the time of such payments, and Holder shall execute and
deliver all required documentation in connection therewith.
3. This Debenture may be transferred or exchanged only in compliance with
the Securities Act of 1933, as amended (the "Act"), and applicable state
securities laws. Prior to due presentment for transfer of this Debenture, the
Company and any agent of the Company may treat the person in whose name this
Debenture is duly registered on the Company's Debenture Register as the owner
hereof for all other purposes, whether or not this Debenture be overdue, and
neither the Company nor any such agent shall be affected or bound by notice to
the contrary.
4. The Holder of this Debenture is entitled, at its option, at any time
immediately following execution of this Agreement and delivery of the Debenture,
to convert all or any amount over $50,000 of the principal face amount of this
Debenture then outstanding (provided that the principal amount is at least
US$50,000, unless if at the time of such election to convert the aggregate
principal amount of all Debentures registered to the Holder is less than
US$50,000, then the whole amount thereof) into shares of Common Stock. The
conversion price (the "Conversion Price") for each share of Common Stock shall
be equal to the lesser of (a) 85% of the Market Price of the Common Stock on the
Conversion Date; or (b) $2.00. The shares of the Company's Common Stock issued
upon conversion of this Debenture shall hereinafter be referred to as the
"Conversion Shares." If the number of resultant Conversion Shares would as a
matter of law or pursuant to regulatory authority require the Company to seek
shareholder approval of such issuance, the Company shall, as soon as
practicable, take the necessary steps to seek such approval.
For purposes of this Section 4, the Market Price of the Common Stock shall
be the closing bid price of the Common Stock on the Conversion Date as reported
by Nasdaq, or the closing bid price on the over-the-counter market on such date
or, in the event the Common Stock is listed on a stock exchange, the closing bid
price shall be the closing price on the exchange on such date as reported in the
Wall Street Journal. Conversion shall be effectuated by surrendering the
Debentures to be converted to the Company with the form of conversion notice
2
<PAGE>
attached hereto as Exhibit I, executed by the Holder of the Debenture evidencing
such Holder's intention to convert this Debenture or a specified portion (as
above provided) hereof, and accompanied, if required by the Company, by proper
assignment hereof in blank. Interest accrued or accruing from the date of
issuance to the date of conversion shall, at the option of the Holder, be paid
in cash or Common Stock upon conversion at the Conversion Rate. No fraction of
shares or scrip representing fractions of shares will be issued on conversion,
but the number of shares issuable shall be rounded to the nearest whole share.
The date on which notice of conversion is given (the "Conversion Date") shall be
deemed to be the date on which the Holder has delivered this Debenture, with the
conversion notice duly executed, to the Company or the date set forth in such
facsimile delivery of the notice of conversion if the Debenture is received by
the Company within two (2) business days therefrom. Facsimile delivery of the
conversion notice shall be accepted by the Company at (818-247-7614); ATTN:
Albert Gosselin). Certificates representing Common Stock upon conversion will be
delivered within three (3) business days from the date the notice of conversion
with the original Debenture is delivered to the Company.
5. No provision of the Debenture shall alter or impair the obligation of
the Company, which is direct, absolute and unconditional, to pay the principal
of, and interest on, this Debenture at the time, place, and rate, and in the
form, herein prescribed.
6. The Company hereby expressly waives demand and presentment for payment,
notice of non-payment, protest, notice of protest, notice of dishonor, notice of
acceleration or intent to accelerate, and diligence in taking any action to
collect amounts called for hereunder and shall be directly and primarily liable
for the payment of all sums owing and to be owing hereto.
7. The Company agrees to pay all costs and expenses, including reasonable
attorneys' fees, which may be incurred by the Holder in collecting any amount
due under this Debenture.
8. The following shall constitute an "Event of Default":
(a) The Company shall default in the payment of principal
or interest on this Debenture and such default shall
remain unremedied for five (5) business days after the
Company has been notified of the default in writing by
a Holder; or
(b) Any of the representations or warranties made by the
Company herein, and in the Registration Rights
Agreement or in any certificate or financial or other
written statements furnished by or on behalf of the
Company in connection with the execution and delivery
of this Debenture and the Registration Rights Agreement
shall be false or misleading in any material respect at
the time made; or
3
<PAGE>
(c) The Company fails to issue shares of Common Stock to
the Holder or to cause its Transfer Agent to issue
shares of Common Stock upon exercise by the Holder of
the conversion rights of the Holder in accordance with
the terms of this Debenture, fails to transfer or to
cause its Transfer Agent to transfer any certificate
for shares of Common Stock issued to the Holder upon
conversion of this Debenture and when required by this
Debenture or the Registration Rights Agreement, or
fails to remove any restrictive legend or to cause its
Transfer Agent to transfer on any certificate or any
shares of Common Stock issued to the Holder upon
conversion of this Debenture as and when required by
this Debenture, the Securities Purchase Agreement or
the Registration Rights Agreement and any such failure
shall continue uncured for five (5) business days after
the Company has been notified of such failure in
writing by Holder.
(d) The Company shall fail to perform or observe, in any
material respect, any other covenant, term, provision,
condition, agreement or obligation of the Company under
this Debenture and such failure shall continue uncured
for a period of thirty (30) days after notice from the
Holder or such failure; or
(e) The Company shall (1) become insolvent; (2) admit in
writing its inability to pay its debts generally as
they mature; (3) make an assignment for the benefit of
creditors or commence proceedings for it dissolution;
or (4) apply for or consent to the appointment of a
trustee, liquidator or receiver for its or for a
substantial part of its property or business; or
(f) A trustee, liquidator or receiver shall be appointed
for the Company or for a substantial part of its
property or business without its consent and shall not
be discharged within thirty (30) days after such
appointment; or
(g) Any governmental agency or any court of competent
jurisdiction at the insistance of any governmental
agency shall assume custody or control of the whole or
any substantial portion of the properties or assets of
the Company and shall not be dismissed within thirty
(30) days thereafter; or
4
<PAGE>
(h) Any money judgment, writ, warrant of attachment, or
similar process, in excess of One Hundred Thousand
($100,000) Dollars in the aggregate shall be entered or
filed against the Company or any of its properties or
other assets and shall remain unpaid, unvacated,
unbonded or unstayed for a period of fifteen (15) days
or in any event later than five (5) days prior to the
date of any proposed sale thereunder; or
(i) Bankruptcy, reorganization, insolvency or liquidation
proceedings or other proceedings for relief under any
bankruptcy law or any law for the relief of debtors
shall be instituted by or against the Company and, if
instituted against the Company, shall not be dismissed
within sixty (60) days after such institution or the
Company shall by any action or answer approve of,
consent to, or acquiesce in any such proceedings or
admit the material allegations of, or default in
answering a petition filed in any such proceeding; or
(j) The Company shall have its Common Stock suspended or
delisted from an exchange or over-the-counter market
from trading for in excess of five trading days.
Then, or at any time thereafter, unless cured, and in each and every such case,
unless such Event of Default shall have been waived in writing by the Holder
(which waiver shall not be deemed to be a waiver of any subsequent default) at
the option of the Holder and in the Holder's sole discretion, the Holder may
consider this Debenture immediately due and payable, without presentment,
demand, protest or (further) notice of any kind (other than notice of
acceleration), all of which are hereby expressly waived, anything herein or in
any note or other instruments contained to the contrary notwithstanding, and the
Holder may immediately, and without expiration of any period of grace, enforce
any and all of the Holder's rights and remedies provided herein and any other
rights or remedies afforded by law.
9. The Holder of the Debenture, by acceptance hereof, agrees that this
Debenture is being acquired for investment and that such Holder will not offer,
sell or otherwise dispose of this Debenture or the shares of Common Stock
issuable upon conversion thereof except under circumstances which will not
result in a violation of the Act or any applicable state Blue Sky or foreign
laws or similar laws relating to the sale of securities.
10. Nothing contained in this Debenture shall be construed as conferring
upon the Holder the right to vote or to receive dividends or to consent or
receive notice as a shareholder in respect of any meeting of shareholders or any
rights whatsoever as a shareholder of the Company, unless and to the extent
converted in accordance with the terms hereof.
5
<PAGE>
11. This Debenture represents a prioritized obligation of the Company.
However, no recourse shall be had for the payment of the principal of, or the
interest on, this Debenture, or for any claim based hereon, or otherwise in
respect hereof, against any incorporator, shareholder, officer or director, as
such, past, present or future, of the Company or any successor corporation,
whether by virtue of any constitution, statute or rule of law, or by the
enforcement of any assessment or penalty or otherwise, all such liability being,
by the acceptance hereof and as part of the consideration for the issue hereof,
expressly waived and released.
12. If the Company merges or consolidates with another corporation or sells
or transfers all or substantially all of its assets to another person and the
holders of the Common Stock are entitled to receive stock, securities or
property in respect of or in exchange for Common Stock, then as a condition of
such merger, consolidation, sale or transfer, the Company and any such
successor, purchaser or transferee agree that the Debenture may thereafter be
converted on the terms and subject to the conditions set forth above into the
kind and amount of stock, securities or property receivable upon such merger,
consolidation, sale or transfer by a holder of the number of shares of Common
Stock into which this Debenture might have been converted immediately before
such merger, consolidation, sale or transfer, subject to adjustments which shall
be as nearly equivalent as may be practicable. In the event of any proposed
merger, consolidation or sale or transfer of all or substantially all of the
assets of the Company (a "Sale"), the Holder hereof shall have the right to
convert by delivering a Notice of Conversion to the Company within fifteen (15)
days of receipt of notice of such Sale from the Company. In the event the Holder
hereof shall elect not to convert, the Company may prepay all outstanding
principal and accrued interest on this Debenture, less all amounts required by
law to be deducted, upon which tender of payment following such notice, the
right of conversion shall terminate.
13. Concurrently with the execution and delivery of this Debenture, the
parties hereto will execute and deliver a Registration Rights Agreement in which
the Company will undertake to register the Conversion Shares under the
Securities Act of 1933.
14. A. Notwithstanding any other provision hereof to the contrary, at any
time prior to the Conversion Date, the Company shall have the right to redeem
all or any portion of the then outstanding principal amount of the Debentures
then held by the Holder for an amount (the "Redemption Payment") equal to the
sum of (a) such outstanding principal of the Debentures plus all accrued but
unpaid interest thereon through the date the Redemption Amount is paid to the
Holder (the "Redemption Payment Date"), multiplied by (b) 1.25. The Company
shall give at least ten (10) business days' written notice of such redemption to
the Holder (the "Notice of Redemption").
B. Anything in the preceding provisions of this Section 14 to the
contrary notwithstanding, the Redemption Payment shall, unless otherwise agreed
to in writing by the Holder after receiving the Notice of Redemption, be paid to
the Holder at least ten (10) business days from the date of the Notice of
Redemption. Upon the Holder's receipt of the Notice of Redemption, the Holder
6
<PAGE>
shall have the right, exercisable within ten (10) business days of the Holder's
receipt of the Notice of Redemption, to give a Notice of Conversion to the
Company for any or all of the principal amount of the Debenture covered by the
Notice of Redemption (such Notice of Conversion, a "Redemption Notice of
Conversion"). The Redemption Notice of Conversion shall take precedence over the
Notice of Redemption and such Debentures shall be converted in accordance with
the terms hereof. The Redemption Payment for any portion of the Debentures
covered by the Notice of Redemption but not by a Redemption Notice of Conversion
shall be paid no later than on the date ( the "Redemption Payment Date") which
is ten (10) business days after the date the Notice of Redemption is given.
15. In case any provision of this Debenture is held by a court of competent
jurisdiction to be excessive in scope or otherwise invalid or unenforceable,
such provision shall be adjusted rather than voided, if possible, so that it is
enforceable to the maximum extent possible, and the validity and enforceability
of the remaining provisions of this Debenture will not in any way be affected or
impaired thereby.
16. This Debenture and the agreements referred to in this Debenture
constitute the full and entire understanding and agreement between the Company
and the Holder with respect to the subject hereof. Neither this Debenture nor
any term hereof may be amended, waived, discharged or terminated other than by a
written instrument signed by the Company and the Holder.
17. This Debenture shall be governed by and construed in accordance with
the laws of the State of California. Each of the parties consents to the
jurisdiction of the federal courts whose districts encompass any part of the
State of California sitting in connection with any dispute arising under this
Agreement and hereby waives, to the maximum extent permitted by law, any
objection, including any objection based on forum non coveniens, to the bringing
of any such proceeding in such jurisdictions. At Holder's election, any dispute
between the parties may be arbitrated rather than litigated in the courts,
before the arbitration board of the American Arbitrators Association in New York
City and pursuant to its rules. Upon demand made by the Holder to the Company,
the Company agrees to submit to and participate in such arbitration. This
Agreement may be executed in counterparts, and the facsimile transmission of an
executed counterpart to this Agreement shall be effective as an original.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed by an officer thereunto duly authorized.
Dated: February 16, 2000
POLLUTION RESEARCH AND CONTROL CORP.
By: /s/ Albert E. Gosselin, Jr.
-------------------------------
Albert E. Gosselin, President
7
<PAGE>
EXHIBIT I
NOTICE OF CONVERSION
(To be Executed by the Registered Holder in order to Convert the Debenture)
The undersigned hereby irrevocably elects to convert $________ of the above
Debenture No.________________ into shares of Common Stock of Pollution Research
and Control Corp. (the "Company") according to the conditions set forth in such
Debenture, as of the date written below.
If Shares are to be issued in the name of a person other than the
undersigned, the undersigned will pay all transfer and other taxes and charges
payable with respect thereto.
Date of Conversion
- --------------------------------------------------------------------------------
Applicable Conversion Price
- --------------------------------------------------------------------------------
Signature
- --------------------------------------------------------------------------------
Print Name Holder and Title of Signer
- --------------------------------------------------------------------------------
Address
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SSN or EIN
- --------------------------------------------------------------------------------
Shares are to be registered in the following name:
Name
- --------------------------------------------------------------------------------
Address
- --------------------------------------------------------------------------------
Tel.
- --------------------------------------------------------------------------------
Fax
- --------------------------------------------------------------------------------
SSN or EIN
- --------------------------------------------------------------------------------
Shares are to be sent or delivered to following account:
Account Name
- --------------------------------------------------------------------------------
Address
- --------------------------------------------------------------------------------
8
Exhibit 4.2
AGREEMENT FOR SALE OF SHARES OF COMMON STOCK
THIS SGREEMENT FOR SALE OF SHARES OF COMMON STOCK (hereinafter referred to as
the "Agreement") is made and entered into this 23rd day of February, 2000, 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 Britannica Associates Limited, a British
Virgin Islands corporation (hereinafter referred to as the "Purchaser"), whose
address is 3rd Floor, Omar Lodge Building, Road Town, Tortola, British Virgin
Islands.
RECITALS:
WHEREAS, the Company, as the maker, has, contemporaneously with the execution of
this agreement, entered into that certain Convertible Debenture (hereinafter
referred to as the "Note") of even date herewith in the principal amount of
$500,000, bearing interest at the rate of 12 per cent (12%) per annum, payable
to the Purchaser, as the holder, on February 23, 2001.
WHEREAS, the Company desires, in consideration for and as an incentive to the
Purchaser to make the loan described in the Note, to issue, sell and deliver to
the Purchaser a total of 100,000 freely tradable shares of common stock, no par
value per share (hereinafter referred to as the "Common Stock"), of the Company
owned by the Company on the terms and subject to the conditions set forth
herein.
WHEREAS, the Purchaser desires to purchase and acquire 100,000 freely tradable
shares of Common Stock from the Company on the terms and subject to the
conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants, agreements, representations and warranties contained herein, the
parties hereto agree as follows:
ARTICLE I
SALE OF SHARES
On the date hereof, as an incentive and in consideration for the Purchaser's
making the loan to the Company described in the Note, the receipt and
sufficiency of which consideration is hereby acknowledged, the Company hereby
agrees to sell, convey and deliver 100,000 freely tradable shares (hereinafter
referred to as the "Shares") of Common Stock owned by the Company to the
Purchaser, and the Purchaser hereby agrees to purchase and acquire said Shares
from the Company.
ARTICLE II
AGREEMENT SUBJECT TO PROMISSORY NOTE
This agreement is subject to, and entered into contemporaneously with, that
certain Convertible Debenture of even date herewith in the principal amount of
$500,000, bearing interest at the rate of 12 per cent (12%) per annum, payable
to the Purchaser, as the holder, on February 23, 2001, a copy of which is
attached hereto and incorporated herein by this reference.
1
<PAGE>
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Purchaser as follows (it being
acknowledged that the Purchaser is entering into this Agreement in material
reliance upon each of the following representations and warranties, and that the
truth and accuracy of each of which constitutes a condition precedent to the
obligations of the Purchaser hereunder):
3.1 Authorization. The Company has the full power, legal capacity and authority
to enter into this Agreement, to execute all attendant documents and instruments
necessary to consummate the transactions herein contemplated, to issue, sell and
deliver the Shares to the Purchaser and to perform all of its obligations
hereunder. This Agreement constitutes the legal, valid and binding obligation of
the Company, and this Agreement is enforceable with respect to the Company in
accordance with its terms. Neither the execution and delivery of this Agreement,
nor the compliance with any of the provisions hereof, will (a) conflict with or
result in a breach of, violation of or default under any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, license, lease,
credit agreement or other agreement, document, instrument or obligation to which
the Company is a party or by which the Company or any of its assets or
properties may be bound or (b) violate any judgment, order, injunction, decree,
statute, rule or regulation applicable to the Company or the assets or
properties of the Company.
3.2 Shares Unencumbered. Upon delivery by the Purchaser to the Company of the
consideration described in Article I hereinabove, the Company shall sell, convey
and deliver the Shares to the Purchaser, free and clear of any lien, claim,
charge or other encumbrance whatsoever.
ARTICLE IV
MISCELLANEOUS PROVISIONS
4.1 Parties in Interest. This Agreement shall be binding upon and inure to the
benefit of the parties hereto, and the successors and assigns of each of them,
but shall not confer, expressly or by implication, any rights or remedies upon
any other party.
4.2 Governing Law. This Agreement is made and shall be governed in all respects,
including validity, interpretation and effect, by the laws of the State of
California and the United States.
4.3 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 Company, to: Mr. Albert E. Gosselin, Jr., President
Pollution Research and Control Corp.
506 Paula Avenue
Glendale, California 91201
If to the Purchaser, to:
2
<PAGE>
Either party hereto may change its address by written notice to the other party
given in accordance with this Section 4.3.
4.4 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. Each party hereto
acknowledges that no representations, inducements, promises or agreements, oral
or otherwise, have been made by any party, or anyone acting with authority on
behalf of any party, which are not embodied herein, and that no other agreement,
statement or promise may be relied upon or shall be valid or binding. Neither
this Agreement nor any term hereof may be changed, waived, discharged or
terminated orally. This Agreement may be amended or any term hereof may be
changed, waived, discharged or terminated by an agreement in writing signed by
each of the parties hereto.
4.5 Captions and Headings. The article and section headings throughout this
Agreement are for convenience and reference only, and shall in no way be deemed
to define, limit or add to the meaning of any provision of this Agreement.
4.6 Attorneys' Fees. In the event of any litigation between the parties hereto,
the non-prevailing party shall pay the reasonable expenses, including attorneys'
fees, of the prevailing party in connection therewith.
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this
Agreement as of the day and year first above written.
COMPANY: PURCHASER:
POLLUTION RESEARCH AND BRITANNICA ASSOCIATES LIMITED
CONTROL CORP.
By: /s/ Albert E. Gosselin, Jr. By: /s/ Tony Hurly
- ------------------------------- ------------------
Albert E. Gosselin, Jr., Tony Hurly, Vice President
President
3
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 14,500 SHARES OF COMMON STOCK OF
POLLUTION RESEARCH AND CONTROL CORP.
FROM MARCH 22, 2000
VOID AFTER 5:00 P.M., LOS ANGELES TIME, ON MARCH 22, 2002
This certifies that Mike Hamdan, 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 $1.38 per share ("Purchase Price").
This Option is exercisable from March 22, 2000 to and including 5:00 p.m.,
Los Angeles time, on March 22, 2002.
Registered Owner: Mike Hamdan
Purchase Price: $1.38 per share
1
<PAGE>
OPTION AGREEMENT
This Option Agreement (the "Agreement") is made and entered into effective
as of March 22, 2000 by and between Pollution Research and Control Corp., a
California corporation ("PRCC"), and Mike Hamdan ("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 14,500 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 14,500 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 $1.38 ("Option Price"), and for purposes of record, the bid price of the
Company's stock on this date was $1.25.
3. Option Period. The option period shall commence on March 22, 2000 (the
"Date of Grant") and shall terminate March 22, 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 Law 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
2
<PAGE>
"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;
(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 or jurisdiction;
3
<PAGE>
(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 in 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 on 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:
"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.
4
<PAGE>
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: Mike Hamdan
506 Paula Avenue
Glendale, California 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.
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.
5
<PAGE>
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/ Mike Hamdan
---------------
Mike Hamdan
6
<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 March 22, 2000 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
7
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 14,500 SHARES OF COMMON STOCK OF
POLLUTION RESEARCH AND CONTROL CORP.
FROM MARCH 22, 2000
VOID AFTER 5:00 P.M., LOS ANGELES TIME, ON MARCH 22, 2002
This certifies that Paz Laroya, 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 $1.38 per share ("Purchase Price").
This Option is exercisable from March 22, 2000 to and including 5:00 p.m.,
Los Angeles time, on March 22, 2002.
Registered Owner: Paz Laroya
Purchase Price: $1.38 per share
1
<PAGE>
OPTION AGREEMENT
This Option Agreement (the "Agreement") is made and entered into effective
as of March 22, 2000 by and between Pollution Research and Control Corp., a
California corporation ("PRCC"), and Paz Laroya ("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 14,500 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 14,500 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 $1.38 ("Option Price"), and for purposes of record, the bid price of the
Company's stock on this date was $1.25.
3. Option Period. The option period shall commence on March 22, 2000 (the
"Date of Grant") and shall terminate March 22, 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 Law 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
2
<PAGE>
"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 his current needs and personal
contingencies, and has no need for liquidity in his 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
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 his
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 or jurisdiction;
3
<PAGE>
(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 her;
(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 her herein, and all information furnished by her 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 in 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 on 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:
"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.
4
<PAGE>
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: Paz Laroya
506 Paula Avenue
Glendale, California 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.
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.
5
<PAGE>
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/ Paz Laroya
--------------
Paz Laroya
6
<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 March 22, 2000 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
7
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 10,000 SHARES OF COMMON STOCK OF
POLLUTION RESEARCH AND CONTROL CORP.
FROM MARCH 22, 2000
VOID AFTER 5:00 P.M., LOS ANGELES TIME, ON MARCH 22, 2002
This certifies that Robert Klein, 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 $1.38 per share ("Purchase Price").
This Option is exercisable from March 22, 2000 to and including 5:00 p.m.,
Los Angeles time, on March 22, 2002.
Registered Owner: Robert Klein
Purchase Price: $1.38 per share
1
<PAGE>
OPTION AGREEMENT
This Option Agreement (the "Agreement") is made and entered into effective
as of March 22, 2000 by and between Pollution Research and Control Corp., a
California corporation ("PRCC"), and Robert Klein ("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 10,000 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 10,000 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 $1.38 ("Option Price"), and for purposes of record, the bid price of the
Company's stock on this date was $1.25.
3. Option Period. The option period shall commence on March 22, 2000 (the
"Date of Grant") and shall terminate March 22, 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 Law 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
2
<PAGE>
"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;
(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 or jurisdiction;
3
<PAGE>
(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 in 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 on 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:
"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.
4
<PAGE>
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: Robert Klein
506 Paula Avenue
Glendale, California 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.
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.
5
<PAGE>
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/ Robert Klein
----------------
Robert Klein
6
<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 March 22, 2000 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
7
Exhibit 5.0
CUDD & ASSOCIATES
ATTORNEYS AT LAW
1120 Lincoln Street, Suite 1507
Denver, CO 80203
Telephone 303-861-7273
Fax 303-861-7560
E-Mail: [email protected]
March 20, 2000
Board of Directors
Pollution Research and Control Corp.
506 Paula Avenue
Glendale, California 91201
Gentlemen:
We have acted as counsel to Pollution Research and Control Corp., a
California corporation (the "Company"), in connection with the Post-Effective
Amendment No. 1 to the Registration Statement on Form S-3, File Number 333-87965
(the "Post-Effective Amendment No. 1"), filed with the U.S. Securities and
Exchange Commission (the "Commission") under the Securities Act of 1933, as
amended, on or about the date hereof. The Post-Effective Amendment No. 1 relates
to an aggregate of 209,000 shares (the "Shares") of the Company's common stock,
no par value per share (the "Common Stock"), including 100,000 shares of Common
Stock being offered by Britannica Associates Limited (the "Selling
Shareholder"), 64,000 shares of Common Stock underlying four options, one of
which options is exercisable to purchase 25,000 shares of Common Stock at an
exercise price of $1.00 per share on or prior to February 25, 2002, and three of
which options are exercisable to purchase 14,500 shares, 14,500 shares, and
10,000 shares, of Common Stock, respectively, at an exercise price of $1.38 per
share on or prior to March 22, 2002 (collectively, the "Options"), and 45,000
shares of Common Stock underlying the outstanding 18%-$500,000 face amount
subordinated convertible debenture due December 1, 1999, and the 12%-$300,000
face amount subordinated convertible debenture due June 1, 2000 (together, the
"Debentures").
In connection with this opinion, we have examined the Company's Articles of
Incorporation, as amended; the Company's By-Laws; minutes of the Company's
corporate proceedings, as made available to us by officers of the Company; an
executed copy of such Post-Effective Amendment No. 1, and all exhibits thereto
in the form filed with the Commission; and such matters of law deemed necessary
by us in order to deliver the within opinion.
In the course of our examination, we have assumed the genuineness of all
signatures, the authority of all signatories to sign on behalf of their
principals, if any, the authenticity of all documents submitted to us as
original documents, the conformity to original documents of all documents
submitted to us as certified or photostatic copies and the due execution and
delivery of all documents where due execution and delivery are a prerequisite to
the effectiveness thereof. As to certain factual matters, we have relied upon
information furnished to us by officers of the Company.
<PAGE>
Board of Directors
Pollution Research and Control Corp.
March 20, 2000
Page 2
On the basis of the foregoing, and solely in reliance thereon, we are of
the opinion that the Shares of Common Stock have been duly authorized and, when
issued for consideration received by the Company (i) from the Selling
Shareholder, (ii) upon exercise by the holders of the Options and payment of the
exercise price as provided in the Options in accordance with the terms thereof
and/or (ii) upon conversion by the holders of the Debentures and payment of the
conversion price as provided in the Debentures, the Shares of Common Stock have
been or will be validly issued, fully-paid and nonassessable.
We hereby consent to the filing of this letter as an exhibit to the
Post-Effective Amendment No. 1.
Very truly yours,
CUDD & ASSOCIATES
/s/ Patricia Cudd
-----------------
Patricia Cudd
PC:hs
EXHIBIT 23.2
AJ. ROBBINS, PC
Certified Public Accountants
and Consultants
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Form S-3 Amendment #1 of Pollution Research and
Control Corporation of our report dated February 12, 1999 relating to the
consolidated financial statements of Pollution Research and control Corporation
and to the reference made to our firm under the caption "Experts" which appear
in such documents.
/s/ AJ. Robbins, P.C.
---------------------
AJ. Robbins, P.C.
Denver, Colorado
March 16, 2000
3303 East 1st Avenue * Suite 201 * Denver, CO 80206
303 321-1281 * Fax 303 321-1288
