-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GCJgQmQuaxjOX3BS873TVEoeCgeuOoDu9BW1V+peOgwO5awxpDx3VeaX8/5hpT2y K3P6ni5C9GGf1ifb0bLN6A== 0001000096-01-000040.txt : 20010212 0001000096-01-000040.hdr.sgml : 20010212 ACCESSION NUMBER: 0001000096-01-000040 CONFORMED SUBMISSION TYPE: S-3 PUBLIC DOCUMENT COUNT: 7 FILED AS OF DATE: 20010209 FILER: COMPANY DATA: COMPANY CONFORMED NAME: POLLUTION RESEARCH & CONTROL CORP /CA/ CENTRAL INDEX KEY: 0000763950 STANDARD INDUSTRIAL CLASSIFICATION: INDUSTRIAL INSTRUMENTS FOR MEASUREMENT, DISPLAY, AND CONTROL [3823] IRS NUMBER: 952746949 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3 SEC ACT: SEC FILE NUMBER: 333-55276 FILM NUMBER: 1530486 BUSINESS ADDRESS: STREET 1: 506 PAULA AVE CITY: GLENDALE STATE: CA ZIP: 91201 BUSINESS PHONE: 8182477601 MAIL ADDRESS: STREET 1: 506 PAULA AVE CITY: GLENDALE STATE: CA ZIP: 91201 FORMER COMPANY: FORMER CONFORMED NAME: DASIBI ENVIRONMENTAL CORP DATE OF NAME CHANGE: 19900529 S-3 1 0001.txt FORM S-3 As filed with the Securities and Exchange Commission on February 9, 2001 Registration No. ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 -------------- 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]
CALCULATION OF REGISTRATION FEE =============================================================================================================================== Proposed Title of Each Maximum Proposed Maximum Amount of Class of Securities Amount to Offering Price Aggregate Offering Registration To be Registered Be Registered Per Share (1) Price (1) Fee - --------------------------------------- --------------------- --------------------- --------------------- --------------------- Common Stock, no par value, 924,370 $1.31 $1,210,925 $302.73 underlying debentures (2) - --------------------------------------- --------------------- --------------------- --------------------- --------------------- Common Stock, no par value 750,000 $1.31 $982,500 $245.63 - --------------------------------------- --------------------- --------------------- --------------------- --------------------- Common Stock, no par value, 618,000 $1.31 $809,580 $202.40 underlying warrants (3) - --------------------------------------- --------------------- --------------------- --------------------- --------------------- Common Stock, no par value, 115,000 $1.31 $150,650 $37.66 underlying options (4) - --------------------------------------- --------------------- --------------------- --------------------- --------------------- TOTAL 2,407,370 $1.31 $3,153,655 $788.42 - --------------------------------------- --------------------- --------------------- --------------------- --------------------- (1) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457. Pursuant to Rule 457(c), based upon 924,370 shares of common stock underlying debentures, 750,000 shares of common stock being offered by selling shareholders, 618,000 shares of common stock underlying warrants and 115,000 shares of common stock underlying options, and the average of the high and low sales prices of the common stock on the NASDAQ SmallCap Market System on January 30, 2001, of $1.31. (2) Represents the shares of common stock underlying the outstanding $500,000 face amount 18% Subordinated Convertible Debenture Due December 31, 2001, and the outstanding $500,000 face amount 12% Subordinated Convertible Debenture Due February 23, 2001. 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 the debentures. (3) Represents the shares of common stock underlying warrants exercisable at exercise prices ranging from $1.50 to $5.00 per share on or prior to their various expiration dates commencing on June 1, 2002, through July 17, 2005. Pursuant to Rule 416, the number of shares of common stock issuable upon exercise of the warrants is subject to adjustment in accordance with the anti-dilution provisions of the warrants. 2
(4) Represents the shares of common stock underlying options exercisable at exercise prices of $.875 or $2.25 per share on or prior to their expiration dates on June 6 or December 21, 2003. Pursuant to Rule 416, the number of shares of common stock issuable upon exercise of the options is subject to adjustment in accordance with the anti-dilution provisions of the options. -------------- The registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. DOCUMENTS INCORPORATED BY REFERENCE: Certain exhibits to this Registration Statement on Form S-3 as set forth in the Exhibit Index located at page 34. 3 SUBJECT TO COMPLETION PROSPECTUS 2,563,640 Shares of Common Stock POLLUTION RESEARCH AND CONTROL CORP. -------------- This Prospectus relates to an aggregate of 2,407,370 shares of common stock of Pollution Research and Control Corp. ("PRCC"), including 924,370 shares of common stock underlying outstanding debentures that may be issued upon conversion by the holders of the debentures on or prior to their maturity dates on February 23 or December 31, 2001, 618,000 shares of common stock underlying outstanding warrants that may be issued upon exercise by the holders of all of the warrants on or prior to their various expiration dates commencing on June 1, 2002, through July 17, 2005, and 115,000 shares of common stock underlying outstanding options that may be issued upon exercise by the holders of the options on or prior to their expiration dates on June 6 or December 21, 2003. The debenture holders who convert the debentures into a total of 924,370 shares of common stock, the shareholders of a total of 750,000 shares of common stock and the warrant and option holders who exercise the warrants and options to purchase an aggregate of 733,000 shares of common stock, being offered by this prospectus are hereinafter collectively referred to as the "Selling Security Holders." Information regarding the Selling Security Holders is set forth in this prospectus under "Selling Security Holders." Of the 924,370 shares of common stock underlying outstanding debentures, 476,191 shares of common stock may be issued upon the conversion by the holder of the outstanding $500,000 face amount 18% Subordinated Convertible Debenture Due December 31, 2001, and 448,179 shares of common stock may be issued upon the conversion by the holder of the outstanding $500,000 face amount 12% Subordinated Convertible Debenture Due February 23, 2001. We issued the $500,000 face amount 18% Subordinated Convertible Debenture Due December 31, 2001, and the $500,000 face amount 12% Subordinated Convertible Debenture Due February 23, 2001, on May 19, 1999, and February 16, 2000, respectively. Each debenture is convertible in denominations of $50,000. The $500,000 face amount 18% Subordinated Convertible Debenture Due December 31, 2001, is convertible at the conversion price per each share of the lesser of $2.25 or 80% of the market price of the common stock on the conversion date. The conversion price per share of common stock of the $500,000 face amount 12% Subordinated Convertible Debenture Due February 23, 2001, is the lesser of $2.00 or 85% of the market price of the common stock on the conversion date. Information regarding the debenture holders and the circumstances under which they may convert their respective debentures into the underlying shares of common stock, is set forth in this prospectus under "Description of Securities - Common Stock That May Be Offered by the Debenture Holders." Of the 750,000 shares of common stock being offered by selling shareholders, 700,000 shares, and 50,000 shares, of common stock were issued on January 4, 2001, and December 22, 2000, respectively. Of the 618,000 shares of common stock underlying outstanding warrants, 320,000 shares of common stock may be issued upon the exercise by the holders of three outstanding warrants exercisable at exercise prices of $2.25 or $4.50 per share on or prior to February 23, 2003; 100,000 shares of common stock are issuable upon the exercise by the holder of an outstanding warrant exercisable on or prior to June 6, 2003, 4 at an exercise price of $5.00 per share; 75,000 shares may be issued upon the exercise by the holder of an outstanding warrant exercisable on or prior to June 1, 2002, at an exercise price of $1.50 per share; 63,000 shares of common stock are issuable upon the exercise by the holders of three outstanding warrants exercisable at an exercise price of $2.25 per share on or prior to September 1, 2002; and 60,000 shares may be issued upon the exercise by the holder of an outstanding warrant exercisable at an exercise price of $2.2875 per share on or prior to July 17, 2005. We issued the warrants that expire on June 1 and September 1, 2002, and June 6 and February 23, 2003, three years prior on June 1 and September 1, 1999, and June 6 and February 23, 2000, respectively, and the warrant that expires on July 17, 2005, five years prior on July 18, 2000. Of the 115,000 shares of common stock underlying outstanding options, 100,000 shares of common stock may be issued upon the exercise by the holder of an outstanding option exercisable at an exercise price of $.875 per share on or prior to December 21, 2003, and 15,000 shares are issuable upon the exercise by the holder of an outstanding option exercisable on or prior to June 6, 2003, at an exercise price of $2.25 per share. We issued the options that expire on June 6 and December 21, 2003, three years prior on June 6 and December 22, 2000. Information regarding the selling shareholders and the warrant and option holders and the circumstances under which the warrant holders and the option holders may exercise their respective warrants or options so as to acquire the underlying shares of common stock, is set forth herein under "Description of Securities - Selling Shareholders," "- Common Stock That May Be Offered by the Warrant Holders" and "- Common Stock That May Be Offered by the Option Holders." The debenture holders who convert their debentures into the underlying shares of common stock, the shareholders of 750,000 shares of common stock and the warrant and the option holders who exercise their warrants or options so as to acquire the underlying shares of common stock (collectively, the "Selling Shareholders"), or pledgees, donees, transferees or other successors to the Selling Shareholders, may offer and sell the shares of common stock from time to time in each case in open market transactions, in private or negotiated transactions or in a combination of such methods of sale, at fixed prices, at prices then prevailing on the NASDAQ SmallCap Market System at the time of sale, at prices related to such prevailing market prices or at negotiated prices. To the extent required at the time of a particular offer of common stock by the Selling Shareholders, a supplement to this Prospectus will be distributed that will set forth the number of shares of common stock being offered and the terms of the offering, including the name or names of any underwriters, dealers, brokers or agents, the purchase price paid by any underwriter for shares of common stock purchased from the Selling Shareholders, any discounts, commissions and other items constituting compensation from the Selling Shareholders and any discounts, commissions or concessions allowed or re-allowed to dealers, including the proposed selling price to the public. The Selling Shareholders reserve the sole right to accept and, together with any agent of the Selling Shareholders, to reject in whole or in part any proposed purchase of the shares of common stock. The Selling Shareholders will pay any sales commissions or other seller's compensation applicable to such transactions. The Selling Shareholders and agents who execute orders on their behalf may be deemed to be underwriters as that term is defined in Section 2(11) 5 of the Securities Act of 1933 and a portion of any proceeds of sales and discounts, commissions or other seller's compensation may be deemed to be underwriting compensation for purposes of the Securities Act of 1933. (See "Plan of Distribution.") This prospectus also covers such additional shares of common stock as may be issuable to the Selling Shareholders in the event of a stock dividend, stock split, recapitalization or other similar change in the common stock. We will not receive any of the proceeds from the sale of the shares of common stock by the Selling Shareholders. Prior to the sale of common stock, however, we will have received up to a maximum of $2,182,750 ($.875 to $5.00 per share) in cash from the exercise of the warrants and the options. If all of the warrants and the options are exercised on or prior to their respective expiration dates on June 1, 2002, through July 17, 2005, we would receive gross proceeds aggregating $2,061,500 and $121,250, respectively, in cash. We have agreed to pay all costs of the registration of the shares of common stock underlying the debentures, the warrants and the options and otherwise being offered by the Selling Shareholders. Such costs, fees and disbursements are estimated to be approximately $35,100. SEE "RISK FACTORS" FOR CERTAIN CONSIDERATIONS RELEVANT TO AN INVESTMENT IN THE SHARES OF COMMON STOCK. Our common stock is traded over-the-counter and is quoted on the NASDAQ National Market System under the symbol "PRCC." On January 30, 2001, the last sale price of the common stock on the NASDAQ National Market System was $1.38. -------------- THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION, NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. -------------- The date of this Prospectus is February __, 2001. 6 TABLE OF CONTENTS Page ---- Available Information................................................... 7 Incorporation of Certain Documents by Reference......................... 7 The Company............................................................. 8 The Offering............................................................ 9 Use of Proceeds......................................................... 10 Risk Factors............................................................ 10 Plan of Distribution.................................................... 16 Market Information...................................................... 17 Selling Security Holders................................................ 17 Description of Securities............................................... 20 Legal Matters........................................................... 23 Experts................................................................. 24 AVAILABLE INFORMATION We are subject to the informational and reporting requirements of the Securities Exchange Act of 1934 and, in accordance therewith, file reports, proxy statements and other information with the Securities and Exchange Commission. Such reports, proxy statements and other information that we file with the Commission may be inspected and copied at the public reference facilities maintained by the Commission at its principal offices at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's regional offices located at Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511, and 7 World Trade Center, Suite 1300, New York, New York 10048, and on the Commission's web site at www.sec.gov. Copies of these materials can also be obtained at prescribed rates from the Public Reference Section of the Commission at its principal offices in Washington, D.C., set forth above. Additional information with respect to this offering may be provided in the future by means of supplements or "stickers" to the prospectus. We have filed a Registration Statement on Form S-3 (including all amendments and supplements thereto, the "Registration Statement") with the Commission under the Securities Act of 1933 with respect to the shares of common stock underlying the debentures, the warrants and the options, and otherwise offered hereby. This prospectus, which forms a part of the Registration Statement, does not contain all of the information set forth in the Registration Statement and the Exhibits filed therewith, certain parts of which have been omitted in accordance with the rules and regulations of the Commission. Statements contained herein concerning the provisions of such documents are not necessarily complete and, in each instance, reference is made to the Registration Statement or to the copy of such document filed as an Exhibit to the Registration Statement or otherwise filed with the Commission. Each such statement is qualified in its entirety by such reference. Copies of the Registration Statement and the Exhibits thereto can be obtained upon payment of a fee prescribed by the Commission or may be inspected free of charge at the public reference facilities and regional offices referred to above. 7 INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE Our Annual Report on Form 10-KSB for the fiscal year ended December 31, 1999, and our Quarterly Reports on Form 10-QSB for the quarters ended March 31, June 30 and September 30, 2000, which were previously filed with the Commission (File No. 0-14266), are incorporated by reference in this prospectus and the registration statement of which it is a part. All documents that we filed pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 after the date of this prospectus and prior to the termination of the offering of the shares of common stock, shall be deemed to be incorporated by reference herein and to be part hereof from the respective dates of the filing of such documents. Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this prospectus and the registration statement of which it is a part to the extent that a statement contained herein or in any other subsequently filed document that also is or is deemed to be incorporated by reference herein, modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this prospectus or the registration statement of which it is a part. We will furnish without charge to each person, including any beneficial owner, to whom this prospectus is delivered, upon the written or verbal request of such person, a copy of any or all of the documents incorporated herein by reference, other than exhibits to such documents. Requests should be addressed to: Secretary, Pollution Research and Control Corp., 506 Paula Avenue, Glendale, California 91201; telephone number (818) 247-7601. THE COMPANY We have been engaged in the business of, primarily, designing, manufacturing and marketing electronic analytical instruments used to detect and measure various types of air pollution, such as "acid rain," "ozone depletion" and "smog episodes" through our wholly-owned subsidiary, Dasibi Environmental Corp. ("Dasibi"), for the past approximately twenty-eight years. Although we are the smallest competitor in the marketplace, management believes that we have the most complete "in-house" line of instrumentation. Our products are generally used to measure air pollution levels in geographic areas that range in size from small industrial sites to entire states or countries. We also supply computer-controlled calibration systems that verify the accuracy of our instruments, data loggers to collect and manage pollutant information and final reporting software for remote centralized applications. At the core of this instrumentation are three software systems, including a data logger system that permits the analysis of air samples at remote locations, a central station system that allows the compilation of data at a central site and a predictive pollutant monitoring model, which is currently under development and which management believes is useful for predicting future levels of pollutants across a geographic area. Our instruments have been sold to over 300 customers worldwide, including industrial manufacturers; federal, state, city, local and foreign governmental agencies; major industrial companies; and educational and research institutions in over thirty countries. These customers use our products principally for environmental protection compliance programs. Dasibi has an installed base of equipment in over thirty countries. 8 Since 1993, we have experienced intense price competition in our core business of air pollutant monitoring systems that has reduced both sales and operating margins. In response to these factors, we acquired two companies outside our core business, each of which businesses has been discontinued. Since January 1998, we have explored additional markets outside the United States in which to sell our pollution monitoring and control devices, concentrating, primarily, on the People's Republic of China. On June 10, 1998, Dasibi was awarded, on a designated vendor basis, an approximate $5.2 million contract to install air pollution monitoring systems in eleven cities in the People's Republic of China. Essential completion of the contract and shipment of the products by Dasibi during the five-month period ended November 30, 1999, implemented Phase I of the Nationwide Urban Air Quality Network conceived by China's State Environmental Protection Agency ("SEPA") to address air quality in the People's Republic of China through its ultimate goal of a nationwide network of air pollution monitoring stations in over 600 Chinese cities. On April 17, 2000, we finalized a contract for Phase II of SEPA's Nationwide Urban Air Quality Network involving an additional thirty-three cities in the People's Republic of China. The contract, valued at approximately $13.5 million, will also be performed by Dasibi. It is anticipated, without assurance, that shipments under the Phase II contract will commence in May 2001 and that all payments to Dasibi will be made by letter of credit drawn on China Construction Bank. Financing for Phase II is expected to be available from two of the banks that financed the successfully completed Phase I contract. Again, Dasibi is expected to assist the People's Republic of China in obtaining ten-year financing at a 3.9% interest rate from the U.S. Export-Import Bank, N.A. (the "Ex-Im Bank"). The Ex-Im Bank, in accordance with its customary practice, is expected to guarantee, and Imperial Bank is expected to provide, 100% of the financing. The 161% increase in our revenue for the year ended December 31, 1999, is attributable to our successful completion of the Phase I contract for the installation of air pollution monitoring systems in eleven Chinese cities. Management believes, but cannot assure, that we are well-positioned for substantial additional business in China, and that future awards and shipments to China may result in further employment opportunities for U.S. citizens. In this regard, we doubled our workforce in the performance of the Phase I contract and are again expected to double our workforce from forty-five to approximately one hundred employees during the performance of the Phase II contract finalized in April 2000. It is anticipated that our designated vendor status will give us a competitive advantage in the award of future contracts with the Chinese government. In addition to the joint venture to manufacture PRCC products on-site in China, we are engaged in ongoing discussions with the eleven cities subject to the Phase I contract regarding the installation of monitoring stations in addition to those required by the Phase I contract. A wholly-owned subsidiary of PRCC, formerly known as "Logan Medical Devices, Inc.," changed its name to "Aeron Systems, Inc.," and "Dasibi China, Inc.," on June 25, 1999, and March 17, 2000, respectively. Dasibi China, Inc., commenced start-up business in April 2000 after the discontinuance of its prior business activities in February 1998. (See "RISK FACTORS - 5. Losses on Discontinuance of Operations and Disposition of Nutek and LRL" below.) 9 Our principal executive offices are located at 506 Paula Avenue, Glendale, California 91201, and its telephone number is (818) 247-7601. Our common stock is traded in the over-the-counter market and reported on the NASDAQ National Market System under the symbol "PRCC." THE OFFERING Shares of Common Stock Underlying Debentures................................. 924,370 shares of common stock(1) Shares of Common Stock..................... 750,000 shares of common stock Shares of Common Stock Underlying Warrants. 618,000 shares of common stock(2) Shares of Common Stock Underlying Options.. 115,000 shares of common stock(3) - ------------------ (1) Includes shares of common stock underlying the $500,000 face amount 18% Subordinated Convertible Debenture Due December 31, 2001, and the $500,000 face amount 12% Subordinated Convertible Debenture Due February 23, 2001. (2) Includes shares of common stock underlying nine warrants exercisable at exercise prices ranging from $1.50 to $5.00 per share on or prior to their various expiration dates commencing on June 1, 2002, through July 17, 2005. (3) Includes shares of common stock underlying two options exercisable at exercise prices of $.875 or $2.25 per share on or prior to their expiration dates on June 6 or December 21, 2003. USE OF PROCEEDS We will receive no proceeds from the sale of the shares of common stock underlying the debentures, the warrants and the options, but we will receive proceeds upon the exercise of the warrants and the options. If all of the outstanding warrants and options are exercised at exercise prices in a range from $.875 to $5.00 per share of common stock, the proceeds to PRCC will be approximately $2,182,750. We will use the proceeds from the exercise of the warrants and the options for working capital. RISK FACTORS Prospective investors should consider carefully, in addition to the other information contained in and incorporated into this prospectus and the registration statement of which it is a part, the following factors before purchasing the shares of common stock offered hereby. 10 1. Dependence Upon Phase II Contract with SEPA and Future China Business. Since January 1998, we have focused our business primarily on the air pollution market of the People's Republic of China. The approximate $5.2 million in revenue that we realized from the successful completion of the contract for Phase I of SEPA's Nationwide Urban Air Quality Network awarded, on a designated vendor basis, to Dasibi on June 10, 1998, resulted in an approximate 161% increase in our net revenue for the year ended December 31, 1999 ($7,314,975), as compared to net revenue for the year ended December 31, 1998 ($2,807,511). The approximate $13.5 million price of the Phase II contract finalized with SEPA on April 17, 2000, for the installation of air pollution monitoring systems in an additional thirty-three cities in the People's Republic of China, is approximately 2.6 times greater than the price of the Phase I contract. In addition, in May 2000, our Board of Directors approved letters of intent with SEPA proposing the organization of a joint venture to manufacture our products in the People's Republic of China. Further, we are conducting ongoing discussions with the eleven cities subject to the Phase I contract regarding the installation of monitoring stations in addition to those required by the Phase I contract. Management believes, but cannot assure, that our designated vendor status will give us a competitive advantage in the award of future contracts with the Chinese government and that we are well-positioned for substantial additional business in China. However, failure to complete the Phase II contract to the satisfaction of SEPA or failure to achieve significant future business in China for any reason whatsoever would have a material adverse effect on PRCC and its prospects. 2. Liquidity and Capital Resources. We have experienced cash shortages from time to time preventing us from paying our operating expenses on a timely basis and forcing management to raise funds from private and public equity and debt financing and bank loans. However, our access to capital has been severely restricted since we have no access to bank lines of credit presently and because of the low market value of our common stock combined with our unstable operating performance. When capital has been obtained, it has been necessarily costly. Financing in the form of federal- or state-guaranteed loans, which has generally been unavailable, involves extremely high management fees; non-guaranteed loans demand extremely high interest rates and related loan fees; and equity and debt placements require significant discounts and incentives. Our working capital declined from $1,346,211 at December 31, 1999, to $499,666 at September 30, 2000. During the year ended December 31, 2000, we granted warrants and options exercisable to purchase an aggregate of 1,143,607 shares of common stock. Also, during 2000, we borrowed a total of $1,790,000; $925,000 of which amount represents loans in the amounts of $650,000, $200,000 and $75,000 from three unaffiliated persons at interest rates of 12%, 18% and 10% per annum, respectively, and with maturity dates of February 23, 2001 (or the earlier date on which we receive certain funding), October and March 21, 2000, respectively; and $865,000 of which is the balance of nine convertible debt instruments as follows: (i) $500,000 face amount 12% Subordinated Convertible Debenture Due February 23, 2001, convertible into common stock at the lesser of $2.25 or 80% of the market price of the common stock on the date of conversion; and (ii) eight 9% Convertible Debentures Due July 17, 2001, with an aggregate face amount of $365,000, convertible at the conversion price per share, not to exceed $2.10, of 80% of the market price of the common stock on the date of conversion. We believe, but cannot assure, that we will be successful in our current negotiations to restructure the loans that are past due. We negotiated an 11 extension through July 31, 2001, of $300,000 of loans received in 1999 from three unaffiliated individuals at interest rates of 11% or 12%. Net revenues decreased 71% from $2,814,886 for the quarter ended September 30, 1999, to $824,918 for the quarter ended September 30, 2000, and 61% from $5,756,783 for the nine months ended September 30, 1999, to $2,255,678 for the nine months ended September 30, 2000. For the nine months ended September 30, 2000, our "net cash used for operating activities" was $1,340,457, primarily, because of a net operating loss of $(2,145,072), offset by the collection of accounts receivable. Cash decreased by $49,451, from $214,206 as of December 31, 1999, to $164,755 as of September 30, 2000, as a result of an additional $411,006 in sales of common stock and net borrowings totaling $880,000. During the nine months ended June 30, 2000, we issued 840,000 shares of common stock under PRCC's employee stock plan; issued 100,000 shares of common stock and granted warrants exercisable to purchase 300,000 shares of common stock as an incentive to a finder; granted warrants exercisable to purchase 100,000 shares of common stock at an exercise price of $5.00 per share to an investment banking firm and options exercisable to purchase an aggregate of 63,000 shares of common stock in connection with various loans; and granted warrants exercisable to purchase 131,400 shares of common stock in connection with the issuance of the $365,000 aggregate face amount 9% Convertible Debentures Due July 17, 2001. Since mid-October 2000, because of our very limited working capital, we have entered into, and subsequently rejected, a number of proposed transactions calculated to refinance and reorganize PRCC. At this time, we believe that additional funding from private sources for equity and/or debt financing together with cash flow from the contract for Phase II of SEPA's Nationwide Urban Air Quality Network, anticipated to commence in 2001, will be sufficient to permit us to continue in operation for the foreseeable future. Nevertheless, we cannot be certain that this funding will be sufficient to satisfy our cash requirements and, if additional financing is required, that it will be available on acceptable terms, if at all. 3. Depressive Effect of High Operating and Financing Costs upon Operational Performance. The contracts awarded to us for Phase I and Phase II of SEPA's Nationwide Urban Air Quality Network have required a departure from the self-sustaining, break-even level of operation demonstrated to sustain our "base" core business of approximately $2,600,000 in revenue with a minimum total staff of approximately twenty-five. We doubled our staff to approximately forty-five employees and otherwise increased operating expenses in order to perform the Phase I contract. We are again increasing staffing (by again doubling our workforce from forty-five to approximately one hundred employees), training and other operating expenses in anticipation of the commencement in May 2001 of shipments under the Phase II contract, and in order to maintain a consistent quality control and manufacturing schedule. This is necessary with respect to staffing, in particular, because the highly competitive market for technical personnel, as it has existed in the United States for the past approximately twenty-six months, prevents us from "ramping-up" in periods of peak activity and scaling down afterwards. Each of seven of the twelve months in 1999, each month in 2000 and the first month in 2001 have been characterized by high fixed expenses and resultant operating losses; which staggered monthly profit-loss performance is expected to continue for the foreseeable future until such time, if ever, as we realize a steady flow of revenue from business in China. Accordingly, we can be expected to incur operating losses during the first quarter of 2001 and in any quarter thereafter in which we fail to make product shipments to the People's Republic of China under the Phase II contract or otherwise. In addition to high fixed operating expenses, the high financing costs we are experiencing have the effect of further depressing our operational performance. 12 4. Decline in Net Revenues/Substantial Losses Prior to 1999. During each of the four years commencing with the year ended December 31, 1996, with the exception of the year ended December 31, 1999, in which we realized net income of $1,125,637, we have recognized a net loss. We will recognize a net loss for the year ended December 31, 2000, as well. During the 1996, 1997 and 1998 years, revenue decreased from approximately $8.8 million to less than $3 million as a result of the discontinued operations of two subsidiaries and significant competitive price pressure for PRCC's instruments, thus forcing us to lower our domestic and foreign bids, reducing the number of our bid awards and reducing the profit margin on the bids awarded to us. Our gross profit also steadily decreased from 46% and 41% of net revenue in fiscal 1996 and 1997, respectively, to approximately 35% of net revenue in fiscal 1998. As a result, we suspended major new product development efforts and scaled back our efforts to improve or modify existing technologies in response to the competitive price pressures. The substantial improvement in the results of operations for 1999 is attributable to our award and successful completion of the contract for Phase I of SEPA's Nationwide Urban Air Quality Network. Comparable, or possibly more favorable, operating results for 2000 and future years are expected to be substantially dependent upon our successful performance of the Phase II China contract and the generation of additional future business in China and/or other countries that do not have substantial air pollution monitoring systems. While our net revenues increased approximately 161% to $7,314,975 during the year ended December 31, 1999, as compared to $2,807,511 for the year ended December 31, 1998, because of the product shipments under the Phase I contract, income from continuing operations increased to $1,125,637 from a loss of $(527,197) for 1998, because of the recognition of benefit from income taxes. The Company realized losses of $(758,290) and $(2,145,072) for the quarter and the nine months, respectively, ended September 30, 2000, as compared to net operating income of $252,041 and $463,150 for the quarter and the nine months, respectively, ended September 30, 1999, attributable, primarily, to increased staffing and training in connection with the Phase II contract with SEPA, the absence of shipments under the contract and ongoing competitive price pressures in the United States and Europe. There can be no assurance that we will successfully complete the contract for Phase II of SEPA's Nationwide Urban Air Quality Network awarded to us in April 2000; obtain other business in China and/or other countries; or be capable of returning to profitability. 5. Losses on Discontinuance of Operations and Disposition of Nutek and LRL. Nutek Corp. ("Nutek"), a wholly-owned subsidiary of PRCC that filed for protection under Chapter 11 of the U.S. Bankruptcy Act in April 1998, ceased operations in July 1998 following a ruling that it was insolvent. The revenues generated by Nutek accounted for approximately 48% of our consolidated net revenues for the fiscal year ended December 31, 1997. The assets of Nutek were auctioned in July 1998 to satisfy amounts owed to a secured lender. We realized losses from the discontinuance ($115,301) and the disposition ($1,072,986) of Nutek during the fiscal year ended December 31, 1998. Further, a default judgment in the amount of approximately $766,709, which was subsequently reduced to $449,810, was entered against us in an action by the secured lender in the U.S. District Court for the Northern District of Texas, Dallas Division, to recover the deficiency from the auction of Nutek's assets. The parties entered into the Compromise, Settlement and Release Agreement on August 12, 1999, pursuant to which we paid the secured lender $9,000 and an additional $450,000, together with interest at the rate of twelve per cent, on or before February 1, 2000. Additionally, we issued the secured lender 100,000 restricted shares of common stock that have since been registered for sale and granted the lender a 13 warrant exercisable to purchase 20,000 shares of common stock at an exercise price of $.75 per share during the three-year period terminating on August 11, 2002. On May 17, 2000, the secured lender acknowledged full satisfaction of and released the judgment and the judgment lien(s). Effective February 28, 1998, Logan Medical Devices, Inc. ("LMD"), a wholly-owned subsidiary of PRCC, returned all of the shares of common stock of Logan Research, Ltd. ("LRL"), a United Kingdom corporation engaged in the design, manufacture and marketing of medical instrumentation, owned by LMD and received in exchange all shares of LMD owned by LRL. In addition, we were released from liability on a promissory note payable to LRL in the principal amount of $300,000 that had accrued interest of $47,250. We had previously advanced funds in the amount of $160,000 to LRL that it is making no effort to recoup. We realized a gain in the amount of $154,575 on the disposition. The revenue generated by LRL accounted for 7% of our consolidated net revenues for the 1997 fiscal year. 6. Governmental Approval. We are required to obtain approval by the U.S. Environmental Protection Agency of new air pollution monitoring instruments we produce before the instruments can be sold in the United States. Currently, all air pollution monitoring instruments that we sell in the United States have received EPA approval. If the EPA were to change its regulations or requirements, we could not be certain that our products would comply with these standards or that we would be able to comply with the modified requirements. With the exception of Germany, no foreign country requires governmental approval of air pollution monitoring instruments. We cannot be certain that additional regulations will not be adopted by other foreign governments. Failure to meet any future regulation could have a material adverse effect on us and render certain of our products obsolete. 7. Dependence On Legislation and Regulation. The products that we developed and manufacture monitor air pollutants in accordance with standards established generally by federal, state, local and foreign governmental agencies. Changes in legislation or regulations or a relaxation of standards determined by such agencies could adversely affect the market for our products or render certain of our products obsolete. 8. Competition. We are the smallest competitor in the ambient air pollution instrumentation market. There are other established firms in the same field, both in the United States and in foreign countries, which have substantially greater experience and financial and personnel resources than we do. Therefore, we are subject to the effects of better-financed competitors and their research and development efforts and price competition. Although we are not aware of any other company that competes with us in all of our product lines, all of our competitors have resources substantially greater than our resources. There are also smaller companies that specialize in a limited number of the types of products that we manufacture. Our primary competitors in the domestic market are Thermo Instrument Systems, Inc. and Monitor Labs, Inc. In the foreign market, our primary competitors are Thermo Instrument Systems, Monitor Labs, Environment S.A. of France and Horiba Instruments. All of our competitors also offer a wider range of equipment, monitoring additional pollutants, than we do. 9. Technological Obsolescence; Limited Research and Development. Our future success will depend on our ability to enhance our current products, reduce product costs and develop and introduce new products that keep pace with 14 technological developments in response to evolving customer requirements and governmental regulations. Our failure to anticipate or respond adequately to technological development or introduction could result in a loss of future revenue and impair our competitiveness. Since early 1994, we have sharply limited our product development efforts. For the foreseeable future, management expects to limit research and development to software development and efforts to refine and improve our present products. 10. Risks of Foreign Sales. During the last three fiscal years, foreign sales have represented approximately 55% to 70% of our total revenue and are expected to represent at least such amounts of our future sales. Foreign sales are subject to numerous risks, including political and economic instability in foreign markets, restrictive trade policies of foreign governments, inconsistent product regulation by foreign agencies or governments, the imposition of product tariffs and other trade barriers and the burdens of complying with a wide variety of international and U.S. export laws and differing regulatory requirements. To the extent that foreign sales are transacted in a foreign currency, we would be subject to the risk of losses because of foreign currency fluctuations and difficulties associated with accounts receivable collection. Because we are required to provide financing in connection with the contract for Phase II of SEPA's Nationwide Urban Air Quality Network, we bear the risk of realizing reduced margins from the Phase II contract if the financing is below market at closing. Further, we may experience difficulties in managing or overseeing the technical and training operations to be conducted in China. 11. Reliance on Certain Suppliers. While we manufacture many components and subsystems used in our products, other components, including packaging materials, integrated circuits, microprocessors and minicomputers, are purchased on a non-contractual basis from unaffiliated suppliers. We are not dependent upon any one supplier for any raw material or component that we purchase, and we believe there are available alternative sources for those raw materials and components. We are currently dependent, however, on a limited number of vendors with respect to the availability and quality of certain key instrument components, such as printed circuit board designs and lamps. A vendor's inability to supply these components to us in a timely fashion, or to our satisfaction, would affect our ability to deliver our instruments on time and could damage our reputation. 12. Limited Marketing Capability and other Resources. Our success depends in large part upon our ability to identify and adequately penetrate the markets for our products. Most of our competitors have much larger budgets for marketing, advertising and promotion. We have historically lacked the financial, personnel and other resources required in order to compete with our larger, better-financed competitors in marketing products. Through the year ended December 31, 1998, our revenue had shrunk and we had reduced our staff to approximately twenty and operated without a bank line of credit. While we returned to profitability with the award in 1998, and the successful completion in 1999, of the Phase I China contract, we incurred a sizable net loss for the year ended December 31, 2000. We cannot be certain that that we will again return to profitable operation with the award in April 2000 of the contract for Phase II of SEPA's Nationwide Urban Air Quality Network, the generation of other business in China and/or other foreign countries lacking substantial air pollution monitoring systems and/or otherwise. 15 13. Dependence on Key Personnel. Our success depends in part upon our ability to attract and/or retain highly skilled management, technical and marketing personnel. Loss of the services of Mr. Albert E. Gosselin, Jr., President and Chairman of the Board of Directors of PRCC, could adversely affect the development of our business and our ability to realize or sustain profitable operations. We do not maintain key-man life insurance on any of our personnel and have no present plans to obtain such insurance. 14. Limited Protection of Intellectual Property and Proprietary Rights. We regard all or portions of the designs and technologies incorporated into our products as proprietary and attempt to protect them with a combination of trademark and trade secret laws. It has generally been our policy to proceed without patent protection. It may be possible for unauthorized third parties to copy certain portions of our products or to "reverse engineer" or otherwise obtain and use to our detriment information that we regard as proprietary. Moreover, the laws of some foreign countries do not afford the same protection to our proprietary rights as do U.S. laws. There can be no assurance that any of our efforts to protect our proprietary technology will be adequate or that our competitors will not independently develop technologies that are substantially equivalent or superior to our technologies. 15. Absence of Products Liability Insurance. We do not maintain products liability insurance. In the event that we experience a material liability as a result of a products liability claim, such a liability could have a material adverse effect on us. 16. No Dividends. We have never paid dividends on the shares of our common stock and do not intend to pay any dividends in the foreseeable future. 17. Possible Volatility of Stock Price. The trading price of our common stock has from time to time fluctuated widely and in the future may be subject to similar fluctuations in response to quarter-to-quarter variations in our operating results, announcements of technological innovations or new products by us or our competitors, general conditions in the air pollution monitoring industry in which we compete and other events or factors. In addition, in recent years broad stock market indices, in general, and the securities of technology companies, in particular, have experienced substantial price fluctuations. Such broad market fluctuations also may adversely affect the future trading price of the common stock. In addition, sales of substantial amounts of shares of common stock in the public market following this offering could adversely affect the future trading price of the common stock. 18. Possible Dilutive Effect and Other Disadvantages of Outstanding Debentures, Warrants and Options. As of the date hereof, our outstanding debentures are convertible, based upon a conversion price per share of $l.05 or $1.12 applicable as of January 30, 2001, into approximately 1,271,116 shares of common stock. The conversion price of these debentures may be calculated based upon the market price of our common stock, which has been as low as $.26 from time-to-time. Accordingly, if the debentures are converted at a time when our common stock is trading at a low price, the number of shares issuable upon conversion of the debentures may be extremely large. Further, to the extent that the market price of the common stock at the time of conversion of any of the debentures or exercise of any of the warrants or options exceeds the conversion or exercise price, the conversion or exercise would have a dilutive effect on our shareholders. As of the date hereof, there are an aggregate of 1,957,231 shares of common stock reserved for issuance upon the exercise of outstanding options and warrants currently exercisable at prices in a range from $.75 to $5.00. 16 19. Potential Anti-Takeover and Other Effects of Issuance of Preferred Stock Rights May Be Detrimental to Common Shareholders. We are authorized to issue up to 20,000,000 shares of preferred stock; of which none are currently issued and outstanding. The issuance of preferred stock does not require approval by the shareholders of our common stock. The Board of Directors, in its sole discretion, has the power to issue preferred stock in one or more series and establish the dividend rates and preferences, liquidation preferences, voting rights, redemption and conversion terms and conditions and any other relative rights and preferences with respect to any series of preferred stock. Holders of preferred stock may have the right to receive dividends, certain preferences in liquidation and conversion and other rights, any of which rights and preferences may operate to the detriment of the shareholders of our common stock. Further, the issuance of any preferred stock having rights superior to those of our common stock may result in a decrease in the value or market price of the common stock and, additionally, could be used by the Board of Directors as an anti-takeover measure or device to prevent a change in our control. PLAN OF DISTRIBUTION The shares of common stock may be offered and sold from time to time by the Selling Shareholders or by pledgees, donees, transferees or other successors in interest. The Selling Shareholders will act independently of PRCC in making determinations with respect to the timing, manner and size of each offer or sale. These sales may be made on the over-the-counter market or otherwise at prices and at terms then prevailing or at prices related to the then current market prices, or in negotiated transactions. The Selling Shareholders may sell shares of common stock in any of the following ways: (i) through dealers; (ii) through agents; or (iii) directly to one or more purchasers. The distribution of the shares of common stock may be effected from time to time in one or more transactions (which may involve crosses or block transactions) in the over-the-counter market. Any of these transactions may be effected at market prices prevailing at the time of sale, at prices related to such prevailing market prices, at negotiated prices or at fixed prices. The Selling Shareholders may effect these transactions by selling shares of common stock to or through broker-dealers, and the broker-dealers may receive compensation in the form of discounts, concessions or commissions from Selling Shareholders and/or commissions from purchasers of shares of common stock for whom they may act as agent. The Selling Shareholders and any broker-dealers or agents that participate in the distribution of common stock by them might be deemed to be underwriters and any discounts, commissions or concessions received by any of the broker-dealers or agents might be deemed to be underwriting discounts and commissions under the Securities Act of 1933. In offering the shares of common stock, the Selling Shareholders and any broker-dealers and any other participating broker-dealers that execute sales for the Selling Shareholders may be deemed to be "underwriters" within the meaning of the Securities Act of 1933 in connection with the sales, and any profits realized by the Selling Shareholders and the compensation of the broker-dealers 17 may be deemed to be underwriting discounts and commissions. In addition, any shares of common stock covered by this prospectus that qualify for sale pursuant to Rule 144 may be sold under Rule 144 rather than pursuant to this prospectus. Rule 10b-2 under the Securities Exchange Act of 1934 prohibits persons who are participating in or financially interested in a distribution of securities from making payments to another person for the solicitation of a third party to purchase the securities that are the subject of the distribution, except that Rule 10b-2 does not apply, among other exceptions, to brokerage transactions not involving the solicitation of customer orders. Rule 10b-6 under the Exchange Act prohibits participants in a distribution from bidding for or purchasing, for an account in which the participant has a beneficial interest, any of the securities that are the subject of the distribution. Rule 10b-7 governs bids and purchases made in order to stabilize the price of a security in connection with a distribution of the security. The public offering of the common stock by the Selling Shareholders will terminate on the date on which all shares of common stock offered hereby have been sold by the Selling Shareholders, or on the earlier date on which we file a post-effective amendment that de-registers all shares of common stock then remaining unsold. We will pay certain expenses incidental to the offering and sale of the shares of common stock to the public estimated to be approximately $30,100. We will not pay for, among other expenses, selling expenses, underwriting discounts or fees and expenses of counsel for the Selling Shareholders. To the extent required at the time a particular offer of common stock by the Selling Shareholders is made, a supplement to this prospectus will be distributed that will set forth the number of shares of common stock being offered and the terms of the offering, including the name or names of any underwriters, dealers, brokers or agents, the purchase price paid by any underwriter for shares of common stock purchased from the Selling Shareholders, any discounts, commissions and other items constituting compensation from the Selling Shareholders and any discounts, commissions or concessions allowed or re-allowed to dealers, including the proposed selling price to the public. We will not receive any of the proceeds from the sale of shares of common stock by the Selling Shareholders. MARKET INFORMATION Our common stock is traded over-the-counter and reported on the NASDAQ National Market System under the symbol "PRCC." Set forth below are the high and low closing bid quotations in the over-the-counter market for the common stock as reported by the relevant market makers for fiscal years 2000, 1999 and 1998. The high and low closing bid quotations in the over-the-counter market reported by the relevant market makers on January 30, 2001, were $1.375 and $1.25 for the common stock. Quotations represent inter-dealer quotations, without adjustment for retail mark-ups, mark-downs or commissions, and may not necessarily represent actual transactions. 18
Fiscal 2000 Fiscal 1999 Fiscal 1998 Quarter Ended High Bid Low Bid High Bid Low Bid High Bid Low Bid - ------------- ------------------- ------------------- ------------------- Common Stock: March 31 $4.22 $1.41 $2.00 $.88 $4.52 $2.52 June 30 3.68 1.88 2.38 1.06 3.13 2.48 September 30 2.96 1.66 3.87 1.81 2.25 .26 December 31 2.31 .91 2.91 1.56 1.25 .56 As of January 30, 2001, the approximate number of shareholders of record of our common stock was 1,100. We have never paid or declared any dividends on our common stock and do not anticipate paying dividends in the foreseeable future. We cannot predict the market price for the common stock upon the commencement or the completion of this offering. Since the market for our common stock is thinly traded, sales of the shares of common stock could cause the common stock to trade at levels lower than would otherwise be anticipated. SELLING SECURITY HOLDERS Of the 2,407,370 shares of common stock being offered by this prospectus, an aggregate of 748,179 shares of common stock are being offered by Brittanica Associates Limited. Of these 748,179 shares of common stock, 448,179 shares of common stock are issuable upon the conversion of the $500,000 face amount 12% Subordinated Convertible Debenture Due February 23, 2001, and 300,000 shares are issuable upon the exercise of warrants exercisable on or prior to February 23, 2003, at exercise prices of $2.25 or $4.00 per share. Of the balance of 1,659,191 shares of common stock, a total of 700,000 shares of common stock are being offered by Silverline Partners, Ltd. Of the balance of 959,191 shares of common stock, 476,191 shares of common stock issuable upon the conversion of the $500,000 face amount 18% Subordinated Convertible Debenture Due December 31, 2000, are being offered by Target Growth Fund, Ltd. Of the balance of 483,000 shares of common stock, a total of 318,000 shares of common stock are being offered by IIG Equities Opportunities Fund Ltd., Astor Capital, Inc., and Spiga Limited. Of these 318,000 shares, an aggregate of 157,500 shares of common stock are issuable upon the exercise by IIG Equities Opportunities Fund Ltd. of three warrants exercisable to purchase 75,000 shares, 60,000 shares and 22,500 shares, respectively, at exercise prices of $1.50, $2.2875 and $2.25, respectively, on or prior to June 1, 2002, July 17, 2005, and September 1, 2002, respectively. Of the balance of 160,500 shares, 138,000 shares of common stock are issuable upon the exercise by Astor Capital, Inc., of three warrants exercisable to purchase 100,000 shares, 20,000 shares and 18,000 shares, respectively, at exercise prices of $5.00, $2.25 and $2.25, respectively, on or prior to June 6, 2003, February 23, 2003, and September 1, 2002, respectively. The balance of 22,500 shares of common stock are issuable upon the exercise by Spiga Limited of a warrant exercisable on or prior to September 1, 2002, at an exercise price of $2.25. 19
Of the balance of 165,000 shares of common stock, a total of 150,000 shares of common stock are being offered by Mr. Steven Sion. Of these 150,000 shares of common stock, 100,000 shares are issuable upon the exercise of options exercisable on or prior to December 21, 2003, at an exercise price of $.875 per share. The balance of 15,000 shares of common stock underlying outstanding options exercisable on or prior to June 6, 2003, at an exercise price of $2.25 per share, are being offered by Delta Capital Partners. The table below indicates the name of each selling security holder (the "Selling Security Holder"), any material relationship that he or it has had to PRCC within the last three years, the number and percentage of shares of common stock owned by the Selling Security Holder prior to this offering, the number of shares being offered for sale by the Selling Security Holder and the number of shares of common stock and the percentage of the total shares of common stock outstanding that will be held if all shares offered are sold. (See "Description of Securities - Capital Stock - Common Stock," "- Common Stock That May Be Offered By the Debenture Holders," "- Common Stock Offered By the Selling Shareholders," "- Common Stock That May Be Offered By the Warrant Holders" and "- Common Stock That May Be Offered By the Option Holders.") Selling Debenture- Owned Owned Owned Holder and Relationship Prior to Being After Warrantholder to Company Offering Per Cent Offered Offering Per Cent - ---------------------- ---------- -------- -------- ------- -------- -------- Brittanica Associates 12.80% 748,179(1) 12.80% 748,179(1) -0- 0.00 Ltd. shareholder Shares Shares Shares Owned Owned Owned Selling Relationship Prior to Being After Shareholder to Company Offering Per Cent Offered Offering Per Cent - ---------------------- ---------- -------- -------- ------- -------- -------- Silverline Partners, 12.07% 700,000(2) 12.07% 700,000(2) -0- 0.00 Ltd. shareholder Owned Owned Owned Selling Relationship Prior to Being After Debentureholder to Company Offering Per Cent Offered Offering Per Cent - ---------------------- ---------- -------- -------- ------- -------- -------- Target Growth Fund, 8.54% 476,191(3) 8.54% 476,191(3) -0- 0.00 Ltd. shareholder 20
Owned Owned Owned Selling Relationship Prior to Being After Warrantholders to Company Offering Per Cent Offered Offering Per Cent - ---------------------- ---------- -------- -------- ------- -------- -------- IIG Equities Opportu- N/A 157,500(4) 3.00 157,500(4) -0- 0.00 nities Fund Ltd. Astor Capital, Inc. N/A 138,000(5) 2.64 138,000(5) -0- 0.00 Spiga Limited N/A 22,500(6) .44 22,500(6) -0- 0.00 Selling Shareholder Owned Owned Owned and Relationship Prior to Being After Optionholder to Company Offering Per Cent Offered Offering Per Cent - ---------------------- ---------- -------- -------- ------- -------- -------- Steven Sion 5.29% 277,500(7) 5.29 150,000(7) 127,500 2.43 shareholder Owned Owned Selling Relationship Prior to Being After Optionholder to Company Offering Per Cent Offered Offering Per Cent - ---------------------- ---------- -------- -------- ------- -------- -------- Delta Capital N/A 15,000(8) .29 15,000(8) -0- 0.00 Partners - ------------------ *The number of shares of Common Stock underlying, and the exercise price of, each option described in the table above is shown after giving effect to the reverse split in our common stock effective on May 15, 1998, on the basis of one share for each four shares of Common Stock then outstanding. (1) Includes 448,179 shares of common stock underlying the $500,000 face amount 12% Subordinated Convertible Debenture Due February 23, 2001, 200,000 shares of common stock underlying the Warrant to Purchase Shares of Common Stock of Pollution Research and Control Corp. exercisable on or prior to February 23, 2003, at an exercise price of $4.50 and 100,000 shares of common stock underlying the Warrant to Purchase Shares of Common Stock of Pollution Research and Control Corp. exercisable at an exercise price of $2.25 on or prior to February 23, 2003. (2) Represents 700,000 shares of common stock issued pursuant to the Consulting Agreement dated January 4, 2001, between PRCC and Silverline Partners, Ltd. 21
(3) Includes 476,191 shares of common stock underlying the $500,000 face amount 18% Subordinated Convertible Debenture Due December 31, 2000. (4) Includes 75,000 shares of common stock underlying the Warrant to Purchase Shares of Common Stock of Pollution Research and Control Corp. exercisable on or prior to June 1, 2002, at an exercise price of $1.50, 60,000 shares of common stock underlying the Stock Purchase Warrant exercisable at an exercise price of $2.2875 on or prior to July 17, 2005, and 22,500 shares of common stock underlying the Warrant to Purchase Shares of Common Stock of Pollution Research and Control Corp. exercisable at an exercise price of $2.25 on or prior to September 1, 2002. (5) Includes 100,000 shares of common stock underlying the Warrant to Purchase 100,000 Shares of Common Stock of Pollution Research and Control Corp. exercisable on or prior to June 6, 2003, at an exercise price of $5.00, 20,000 shares of common stock underlying the Warrant to Purchase Shares of Common Stock of Pollution Research and Control Corp. exercisable on or prior to February 23, 2003, at an exercise price of $2.25 and 18,000 shares of common stock underlying the Warrant to Purchase Shares of Common Stock of Pollution Research and Control Corp. exercisable at an exercise price of $2.25 on or prior to September 1, 2002. (6) Represents shares of common stock underlying the Warrant to Purchase Shares of Common Stock of Pollution Research and Control Corp. exercisable at an exercise price of $2.25 on or prior to September 1, 2002. (7) Includes 100,000 shares of common stock underlying the Option to Purchase 100,000 Shares of Common Stock of Pollution Research and Control Corp. from December 22, 2000 Void after 5:00P.M., Los Angeles Time, on December 21, 2003 exercisable at an exercise price of $.875 and 50,000 shares of common stock issued in accordance with the Promissory Noted dated December 22, 2000, payable by PRCC, as the maker, to Steven Sion, as the holder. (8) Represents shares of common stock underlying the Option to Purchase 15,000 Shares of Common Stock of Pollution Research and Control Corp. exercisable at an exercise price of $2.25 on or prior to June 6, 2003. DESCRIPTION OF SECURITIES Capital Stock - ------------- Our authorized capital stock consists of 30,000,000 shares of common stock, no par value per share, and 20,000,000 shares of preferred stock, $.01 par value per share. Common Stock. All shares of common stock have equal voting rights and, when validly issued and outstanding, are entitled to one vote per share in all matters to be voted upon by shareholders. The shares of common stock have no preemptive, subscription, conversion or redemption rights and may be issued only as fully-paid and nonassessable shares of common stock. Cumulative voting in the election of directors is permitted; however, cumulative voting may occur only if 22 a shareholder announces his intention to cumulate his votes prior to the voting, in which case all shareholders may cumulate their votes. In the event of liquidation of PRCC, each shareholder is entitled to receive a proportionate share of our assets available for distribution to shareholders after the payment of liabilities. All shares of our common stock issued and outstanding are fully-paid and nonassessable. Holders of the shares of common stock are entitled to share pro rata in dividends and distributions with respect to the common stock, as may be declared by the Board of Directors out of funds legally available therefor. As of January 30, 2001, there were 5,816,752 shares of common stock issued and outstanding held of record by approximately 1,100 shareholders. PRCC is traded over-the-counter and reported on the NASDAQ National Market System under the symbol "PRCC." Holders of shares of common stock are entitled to share pro rata in dividends and distributions with respect to the common stock when, as and if declared by the Board of Directors out of funds legally available therefor. We have not paid any dividends on our common stock and currently intend to retain earnings, if any, to finance the development and expansion of our business. Future dividend policy is subject to the discretion of the Board of Directors and will depend upon a number of factors, including future earnings, capital requirements and our financial condition. Preferred Stock. Shares of preferred stock may be issued from time to time in one or more series as may be determined by the Board of Directors. The voting powers and preferences, the relative rights of each such series and the qualifications, limitations and restrictions thereof shall be established by the Board of Directors, except that no holder of preferred stock shall have preemptive rights. We have no outstanding preferred stock, and the Board of Directors does not plan to issue any for the foreseeable future unless the issuance thereof shall be in our best interests. Common Stock That May Be Offered by the Debenture Holders - --------------------------------------------------------- On May 19, 1999, the Company issued the $500,000 face amount 18% Subordinated Convertible Debenture Due December 31, 2001, bearing interest commencing June 1, 1999, to The Venezuela Recovery Fund N.V. The debenture was subsequently assigned and transferred to Target Growth Fund. The debenture is convertible in denominations of $50,000 at the conversion price per each share of common stock of the lesser of $2.25 (115% of the market price of the common stock on May 28, 1999) or 80% of the market price of the common stock on the conversion date. The provisions of the debenture are set forth in their entirety in the $500,000 face amount 18% Subordinated Convertible Debenture Due December 1, 1999, dated May 19, 1999, a copy of which is incorporated in the registration statement of which this prospectus is a part by reference to Exhibit 4.18 to our Form S-3 Registration Statement (SEC File Number 333-87965) filed September 28, 1999. The more detailed provisions of the debenture qualify this brief description of the debenture in its entirety. The number of shares of our common stock underlying, and the conversion price of, the debenture is shown after giving effect to the reverse split in the common stock effective on June 8, 1999, on the basis of one share for each four shares of common stock then outstanding. We issued, on February 16, 2000, the $500,000 face amount 12% Subordinated Convertible Debenture Due February 23, 2001, to Brittanica Associates Limited. The debenture is convertible in denominations of $50,000 at the conversion price per each share of common stock of the lesser of $2.00 or 85% of the market price of the common stock on the date of conversion. The provisions of the debenture are set forth in their entirety in the $500,000 face amount 12% Subordinated 23 Convertible Debenture Due February 23, 2001, a copy of which is attached as Exhibit 4.50 to the registration statement of which this prospectus is a part and is incorporated in this prospectus by this reference. The foregoing brief description of certain provisions of the debenture is qualified in its entirety by the more detailed provisions of the debenture. Common Stock Offered by the Selling Shareholders - ------------------------------------------------ On January 4, 2001, we issued 700,000 shares of common stock to Silverline Partners, Ltd. ("Silverline Partners"), pursuant to the Consulting Agreement dated January 4, 2001, between PRCC and Silverline Partners. The shares were issued as a non-refundable due diligence fee for services previously performed by Silverline Partners in the discovery process in preparation of the Consulting Agreement and the services to be provided in accordance with, prior to entering into, the agreement. The Consulting Agreement provides for Silverline Partners to assist us for a period of one year through January 3, 2002, in exploring and obtaining business opportunities in the countries of the United Kingdom, France, Germany, Italy and Spain. These business opportunities include, but are not limited to, locating strategic partners having industrial companies capable of assisting in the distribution of products as well as forming alliances with technology companies having the capacity to improve upon our existing product line. The terms and conditions of the Consulting Agreement are more fully described in the Consulting Agreement, a copy of which is attached as Exhibit 4.49 to the registration statement of which this prospectus is a part, and is incorporated in this prospectus by this reference. On December 22, 2000, we issued Mr. Steven Sion 700,000 shares of common stock as an incentive to lend us the sum of $650,000 in cash. The loan is evidenced by the Promissory Note dated December 22, 2000, in the principal amount of $650,000, bearing interest at the rate of 12% per annum, that matures on the first to occur of February 23, 2001, or the date on which we receive the funds from forfaiting a letter of credit in the amount of $2,000,000 drawn on China Construction Bank. Common Stock That May Be Offered by the Warrant Holders - ------------------------------------------------------- The number of shares of our common stock underlying, and the exercise price of, each warrant described herein is shown after giving effect to the reverse split in the common stock effective on June 8, 1999, on the basis of one share for each four shares of common stock then outstanding. On June 1, 1999, we granted a Warrant to Purchase Shares of Common Stock of Pollution Research and Control Corp. to IIG Equities Opportunities Fund Ltd. exercisable at an exercise price of $1.50 per share on or prior to June 1, 2002, to purchase an aggregate of 75,000 shares of common stock. The terms and conditions of the Warrant to Purchase Shares of Common Stock of Pollution Research and Control Corp., a copy of which is incorporated in the registration statement of which this prospectus is a part by reference to Exhibit 10.196 to the Annual Report on Form 10-KSB for the year ended December 31, 1999, qualify in its entirety the brief description of the warrant set forth above. On September 1, 1999, we granted a Warrant to Purchase Shares of Common Stock of Pollution Research and Control Corp. to each of IIG Equities Opportunities Fund Ltd., Astor Capital, Inc., and Spiga Limited exercisable to purchase an aggregate of 22,500 shares, 22,500 shares, and 18,000 shares, of common stock, respectively, exercisable at an exercise price of $2.25 per share on or prior to 24 September 1, 2002. The brief description of certain provisions of the Warrants to Purchase Shares of Common Stock of Pollution Research and Control Corp. set forth above is qualified in its entirety by the more detailed provisions of the warrants, copies of which are incorporated herein by reference to Exhibits 10.198, 10.199, 10.200 to our Annual Report on Form 10-KSB for the year ended December 31, 1999. On February 23, 2000, we granted two Warrants to Purchase Shares of Common Stock of Pollution Research and Control Corp. to Brittanica Associates Limited exercisable on or prior to February 23, 2003, to purchase 200,000 shares, and 100,000 shares, of common stock at exercise prices of $4.50 and $2.25, respectively, and a Warrant to Purchase Shares of Common Stock of Pollution Research and Control Corp. to Astor Capital, Inc., exercisable on or prior to February 23, 2003, to purchase 20,000 shares of common stock at an exercise price of $2.25 per share. The brief description of certain provisions of the Warrants to Purchase Shares of Common Stock of Pollution Research and Control Corp. set forth above is qualified in its entirety by the more detailed provisions of the warrants, copies of which are incorporated herein by reference to Exhibits 10.211, 10.212, 10.213 to our Annual Report on Form 10-KSB for the year ended December 31, 1999. On June 6, 2000, we granted a Warrant to Purchase 100,000 Shares of Common Stock of Pollution Research and Control Corp. to Astor Capital, Inc., exercisable at an exercise price of $5.00 per share on or prior to June 6, 2003. The terms and conditions of the Warrant to Purchase Shares of Common Stock of Pollution Research and Control Corp., a copy of which is incorporated in the registration statement of which this prospectus is a part by reference to Exhibit 4.42 to our Registration Statement on Form S-3 (SEC File Number 333-48554) filed October 25, 2000, qualify in its entirety the brief description of the warrant set forth above. On July 18, 2000, we granted IIG Equities Opportunities Fund Ltd. a Stock Purchase Warrant exercisable on or prior to July 17, 2005, at an exercise price of $2.2875 per share to purchase 60,000 shares of common stock. The foregoing description of the Stock Purchase Warrant is a brief summary of certain provisions thereof and is qualified in its entirety by the more detailed provisions of the warrant, a copy of which is attached to the registration statement of which this prospectus forms a part as Exhibit 4.47, and is incorporated in this prospectus by this reference. Transfer Agent, Registrar and Warrant Agent - ------------------------------------------- Oxford Transfer & Registrar, Inc., 1130 Southwest Morrison, Suite #250, Portland, Oregon 97205, is the Transfer Agent and Registrar for the common stock and the Warrant Agent for the warrants. Common Stock That May Be Offered by the Optionholders - ----------------------------------------------------- The number of shares of our common stock underlying, and the exercise price of, each option described herein is shown after giving effect to the reverse split in the common stock effective on June 8, 1999, on the basis of one share for each four shares of common stock then outstanding. 25 On June 7, 2000, we granted the Option to Purchase 15,000 Shares of Common Stock of Pollution Research and Control Corp. exercisable at an exercise price of $2.25 on or prior to June 6, 2003, to Delta Capital Partners. The foregoing description of the option is a brief summary of certain of its provisions and is qualified in its entirety by the more detailed provisions of the option, a copy of which is incorporated herein by reference to Exhibit 4.42 to our Registration Statement on Form S-3 (SEC File Number 333-48554) filed October 25, 2000. On December 22, 2000, we granted to Mr. Steven Sion the Option to Purchase 100,000 Shares of Common Stock of Pollution Research and Control Corp. from December 22, 2000 Void after 5:00P.M., Los Angeles Time, on December 21, 2003, exercisable at an exercise price of $.875. The terms and conditions of the option are more fully described in the option, a copy of which is attached as Exhibit 4.48 to the registration statement of which this prospectus is a part, and is incorporated in this prospectus by this reference. LEGAL MATTERS Certain legal matters in connection with the validity of the issuance of the shares of common stock being offered by this prospectus will be passed upon for us by Cudd & Associates, 1120 Lincoln Street, Suite #1507, Denver, Colorado 80203. Patricia Cudd, Esq., the sole proprietor of Cudd & Associates, owns of record and beneficially warrants exercisable to purchase 10,000 shares of our common stock at an exercise price of $4.00 per share on or prior to March 31, 2003. EXPERTS Our financial statements are incorporated herein by reference to our Annual Report on Form 10-KSB for the fiscal year ended December 31, 1999. Such financial statements have been audited by AJ. Robbins, P.C., Certified Public Accountants and Consultants, independent auditors, as stated in their report that is incorporated herein by reference. 26 PART II INFORMATION NOT REQUIRED IN PROSPECTUS Item 14. Other Expenses of Issuance and Distribution. ------------------------------------------- The following is an itemized statement of the expenses incurred in connection with this registration statement and the issuance and distribution of the shares of common stock being registered by this registration statement. All such expenses will be paid by us. Securities and Exchange Commission registration fee.................. $ 789 Legal fees and expenses.............................................. 20,000 Accounting fees and expenses......................................... 3,000 Blue sky fees and expenses........................................... 4,000 Transfer agent fees and expenses..................................... 3,000 Printing, electronic filing and engraving expenses................... 3,000 Miscellaneous expenses............................................... 2,000 ----- TOTAL .......................................................... $35,789 All of the above items except the Securities and Exchange Commission registration fee are estimates. Item 15. Indemnification of Directors and Officers. ----------------------------------------- Our Articles of Incorporation, as amended, provide for (i) the elimination of directors' liability for monetary damages for certain breaches of their fiduciary duties to PRCC and our shareholders as permitted by California law; and (ii) permit the indemnification by PRCC to the fullest extent under California law. At present, there is no pending litigation or proceeding involving a director or officer of PRCC as to which indemnification is being sought. Section 317 of the California Corporations Code, as amended, provides for the indemnification of the officers, directors and controlling persons of a corporation as follows: "(a) For the purposes of this section, "agent" means any person who is or was a director officer, employee or other agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee, or agent of another foreign or domestic corporation, partnership, joint venture, trust, or other enterprise, or was a director, officer, employee, or agent of a foreign or domestic corporation which was a predecessor corporation of the corporation or of another enterprise at the request of such predecessor corporation; "proceeding" means any threatened, pending or completed action or proceeding, whether civil, criminal, administrative or investigative; and "expenses" includes without limitation attorneys' fees and any expenses of establishing a right to indemnification under subdivision (d) or paragraph (3) of subdivision (e). (b) A corporation shall have the power to indemnify any person who was or is a party or is threatened to be made a party to any proceeding (other than an action by or in the right of the corporation to procure a judgment in its favor, 27 an action brought under Section 9243, or an action brought by the Attorney General pursuant to Section 9230) by reason of the fact that such person is or was an agent of the corporation, against expenses, judgments, fines, settlements and other amounts actually and reasonably incurred in connection with such proceeding if such person acted in good faith and in a manner such person believed to be in the best interests of the corporation and, in the case of a criminal proceeding, had no reasonable cause to believe the conduct of such person was unlawful. The termination of any proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere or its equivalent shall not, of itself, create a presumption that the person did not act in good faith and in a manner which the person believed to be in the best interests of the corporation or that the person had reasonable cause to believe that the person's conduct was unlawful. (c) A corporation shall have power to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action by or in the right of the corporation, or brought under Section 9243, or brought by the Attorney General pursuant to Section 9230, to procure a judgment in its favor by reason of the fact that such person is or was an agent of the corporation, against expenses actually and reasonably incurred by such person in connection with the defense or settlement of such action if the person acted in good faith, in a manner in which such person believed to be in the best interests of the corporation and with such care, including reasonable inquiry, as an ordinary prudent person in a like position would use under similar circumstances. No indemnification shall be made under this subdivision: (1) In respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation in the performance of such person's duty to the corporation, unless and only to the extent that the court in which such proceeding is or was pending shall determine upon application that, in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for the expenses which such court shall determine; (2) Of amounts paid in settling or otherwise disposing of a threatened or pending action, with or without court approval; or (3) Of expenses incurred in defending a threatened or pending action which is settled or otherwise disposed of without court approval unless it is settled with the approval of the Attorney General. (d) To the extent that an agent of a corporation has been successful on the merits in defense or any proceeding referred to in subdivision (b) or (c) or in defense of any claim, issue or matter therein, the agent shall be indemnified against expenses actually and reasonably incurred by the agent in connection therewith. (e) Except as provided in subdivision (d), any indemnification under this section shall be made by the corporation only if authorized in the specific case, upon a determination that indemnification of the agent is proper in the circumstances because the agent has met the applicable standard of conduct set forth in either subdivision (b) or (c) by: 28 (l) A majority vote of a quorum consisting of directors who are not parties to such proceedings; (2) Approval of the members (Section 5034), with the persons to be indemnified not being entitled to vote thereon; or (3) The court in which such proceeding is or was pending upon application made by the corporation or the agent or the attorney or other person rendering services in connection with the defense, whether or not such application by the agent, attorney or other person is approved by the corporation. (f) Expenses incurred in defending any proceeding may be advanced by the corporation prior to the final disposition of such proceeding upon receipt of an undertaking by or on behalf of the agent to repay such amount unless it shall be determined ultimately that the agent is entitled to be indemnified as authorized in this section. (g) No provision made by a corporation to indemnify its or its subsidiary's directors or officers for the defense of any proceeding, whether contained in the articles, bylaws, a resolution of members or directors, an agreement or otherwise, shall be valid unless consistent with this section. Nothing contained in this section shall affect any right to indemnification to which persons other than such directors and officers may be entitled by contract or otherwise. (h) No indemnification or advance shall be made under this section, except as provided in subdivision (d) or paragraph (3) of subdivision (e), in any circumstances where it appears that:: (1) It would be inconsistent with a provision of the articles, bylaws, a resolution or the members or an agreement in effect at the time of the accrual of the alleged cause of action asserted in the proceeding in which the expenses were incurred or other amounts were paid, which prohibits or otherwise limits indemnification; or (2) It would be inconsistent with any condition expressly imposed by a court in approving a settlement. (i) A corporation shall have power to purchase and maintain insurance on behalf of any agent of the corporation against any liability asserted against or incurred by the agent in such capacity or arising out of the agent's status as such whether or not the corporation would have the power to indemnify the agent against such liability under the provisions of this section; provided, however, that a corporation shall have no power to purchase and maintain such insurance to indemnify any agent of the corporation for a violation of Section 9243. (j) This section does not apply to any proceeding against any trustee, investment manager or other fiduciary of an employee benefit plan in such person's capacity as such, even though such person may also be an agent as defined in subdivision (a) of the employer corporation. A corporation shall have power to indemnify such trustee, investment manager or other fiduciary to the extent permitted by subdivision (f) or Section 207." 29 Item 16. Exhibits. -------- The Exhibit Index commences on page 34. Item 17. Undertakings. ------------ (a) The undersigned registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post- effective amendment to this Registration Statement: (i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) To reflect in the prospectus any facts or events arising after the effective date of the Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the Registration Statement; (iii) To include any material information with respect to the plan of distribution not previously disclosed in the Registration Statement or any material change to such information in the Registration Statement; provided, however, that the undertakings set forth in paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed by the registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the Registration Statement. (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (b) The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the Registration Statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. 30 (c) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue. 31 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Glendale, State of California, on February 5, 2001. Date: February 5, 2001 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 32 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Albert E. Gosselin, Jr., and Marcia A. Smith, or either one of them, his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all pre- or post-effective amendments to this Registration Statement, and to file the same with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or either of them, or their or his or her substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities and on the dates indicated. Date: February 5, 2001 By: /s/ Albert E. Gosselin, Jr. ------------------------------------- Albert E. Gosselin, Jr., President, Chief Executive Officer and Chairman of the Board Directors (Principal Executive Officer) Date: February 5, 2001 By: /s/ Donald R. Ford ------------------------------------- Donald R. Ford, Chief Financial Officer (Principal Financial and Accounting Officer) Date: February 5, 2001 By: /s/ Gary L. Dudley ------------------------------------- Gary L. Dudley, Director Date: February 5, 2001 By: /s/ Marcia A. Smith ------------------------------------- Marcia A. Smith, Director Date: February 5, 2001 By: /s/ Craig E. Gosselin ------------------------------------- Craig E. Gosselin, Director 33 EXHIBIT INDEX The following Exhibits are filed as part of this Registration Statement on Form S-3 or are incorporated herein by reference. Item Number Description ------ ----------- 4.16 Warrant to Purchase 75,000 Shares of Common Stock of Pollution Research and Control Corp. issued to IIG Capital LLC; Warrant Agreement dated as of June 1, 1999, between Pollution Research and Control Corp. and IIG Capital LLC. (Incorporated herein by reference to Exhibit 10.196 to the Annual Report on Form 10-KSB for the year ended December 31, 1999.) 4.17 Warrant to Purchase 30,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Astor Capital; Warrant Agreement dated as of June 1, 1999, between Pollution Research and Control Corp. and Astor Capital, Inc. (Incorporated herein by reference to Exhibit 10.197 to the Annual Report on Form 10-KSB for the year ended December 31, 1999.) 4.18 Warrant to Purchase 22,500 Shares of Common Stock of Pollution Research and Control Corp. issued to IIG Equities Opportunities Fund Ltd.; Warrant Agreement dated as of September 1, 1999, between Pollution Research and Control Corp. and IIG Equities Opportunities Fund Ltd. (Incorporated herein by reference to Exhibit 10.198 to the Annual Report on Form 10-KSB for the year ended December 31, 1999.) 4.19 Warrant to Purchase 22,500 Shares of Common Stock of Pollution Research and Control Corp. issued to Spiga Limited; Warrant Agreement dated as of September 1, 1999, between Pollution Research and Control Corp. and Spiga Limited. (Incorporated herein by reference to Exhibit 10.200 to the Annual Report on Form 10-KSB for the year ended December 31, 1999.) 4.20 Warrant to Purchase 18,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Astor Capital, Inc.; Warrant Agreement dated as of September 1, 1999, between Pollution Research and Control Corp. and Astor Capital, Inc. (Incorporated herein by reference to Exhibit 10.199 to the Annual Report on Form 10-KSB for the year ended December 31, 1999.) 4.21 Warrant to Purchase 25,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Maria Molinsky; Warrant Agreement dated as of September 13, 1999, between Pollution Research and Control Corp. and Maria Molinsky. (Incorporated herein by reference to Exhibit 10.205 to the Annual Report on Form 10-KSB for the year ended December 31, 1999.) 4.22 Warrant to Purchase 25,000 Shares of Common Stock of Pollution Research and Control Corp. issued to IIG Capital LLC; Warrant Agreement dated as of December 1, 1999, between Pollution Research and Control Corp. and IIG Capital LLC. (Incorporated herein by reference to Exhibit 10.201 to the Annual Report on Form 10-KSB for the year ended December 31, 1999.) 34 4.23 Agreement for Sale of Shares of Common Stock dated February 23, 2000, between Pollution Research and Control Corp. and Britannica Associates Limited. 4.24 Warrant to Purchase 200,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Brittanica Associates Limited; Warrant Agreement dated as of February 23, 2000, between Pollution Research and Control Corp. and Brittanica Associates Limited. (Incorporated herein by reference to Exhibit 10.211 to the Annual Report on Form 10-KSB for the year ended December 31, 1999.) 4.25 Warrant to Purchase 100,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Brittanica Associates Limited; Warrant Agreement dated as of February 23, 2000, between Pollution Research and Control Corp. and Brittanica Associates Limited. (Incorporated herein by reference to Exhibit 10.212 to the Annual Report on Form 10-KSB for the year ended December 31, 1999.) 4.26 Warrant to Purchase 20,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Astor Capital, Inc.; Warrant Agreement dated as of February 23, 2000, between Pollution Research and Control Corp. and Astor Capital, Inc. (Incorporated herein by reference to Exhibit 10.213 to the Annual Report on Form 10-KSB for the year ended December 31, 1999.) 4.27 Option to Purchase 25,000 Shares of Common Stock of Pollution Research and Control Corp. from February 25, 2000 Void After 5:00 P.M., Los Angeles Time, on February 25, 2002, of Anthony Reneau. 4.28 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. 4.29 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. 4.30 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. 4.31 Warrant to Purchase 187,858 Shares of Common Stock of Pollution Research and Control Corp. issued to Ronald E. Patterson; Warrant Agreement dated as of March 31, 2000, between Pollution Research and Control Corp. and Ronald E. Patterson. (Incorporated herein by reference to Exhibit 10.218 to the Annual Report on Form 10-KSB for the year ended December 31, 1999.) 35 4.32 Warrant to Purchase 87,141 Shares of Common Stock of Pollution Research and Control Corp. issued to Phillip T. Huss; Warrant Agreement dated as of March 31, 2000, between Pollution Research and Control Corp. and Phillip T. Huss. (Incorporated herein by reference to Exhibit 10.217 to the Annual Report on Form 10-KSB for the year ended December 31, 1999.) 4.33 Warrant to Purchase 46,875 Shares of Common Stock of Pollution Research and Control Corp. issued to Lee Sion; Warrant Agreement dated as of March 31, 2000, between Pollution Research and Control Corp. and Lee Sion (Incorporated herein by reference to Exhibit 10.219 to the Annual Report on Form 10-KSB for the year ended December 31, 1999.) 4.34 Warrant to Purchase 33,333 Shares of Common Stock of Pollution Research and Control Corp. issued to Maria Molinsky; Warrant Agreement dated as of March 31, 2000, between Pollution Research and Control Corp. and Maria Molinsky. (Incorporated herein by reference to Exhibit 10.224 to the Annual Report on Form 10-KSB for the year ended December 31, 1999.) 4.35 Warrant to Purchase 25,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Steven Sion; Warrant Agreement dated as of March 31, 2000, between Pollution Research and Control Corp. and Steven Sion. (Incorporated herein by reference to Exhibit 10.220 to the Annual Report on Form 10-KSB for the year ended December 31, 1999.) 4.36 Warrant to Purchase 25,000 Shares of Common Stock of Pollution Research and Control Corp. issued to William Richey; Warrant Agreement dated as of March 31, 2000, between Pollution Research and Control Corp. and William Richey. (Incorporated herein by reference to Exhibit 10.223 to the Annual Report on Form 10-KSB for the year ended December 31, 1999.) 4.37 Warrant to Purchase 14,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Alan Talesnick; Warrant Agreement dated as of March 31, 2000, between Pollution Research and Control Corp. and Alan Talesnick. (Incorporated herein by reference to Exhibit 10.222 to the Annual Report on Form 10-KSB for the year ended December 31, 1999.) 4.38 Warrant to Purchase 10,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Patricia Cudd; Warrant Agreement dated as of March 31, 2000, between Pollution Research and Control Corp. and Patricia Cudd. (Incorporated herein by reference to Exhibit 10.221 to the Annual Report on Form 10-KSB for the year ended December 31, 1999.) 4.39 Option to Purchase 24,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Mark S. Rose; Option Agreement, dated as of May 27, 2000, between Pollution Research and Control Corp. and Mark S. Rose. 36 4.40 Option to Purchase 8,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Clare F. Rose; Option Agreement, dated as of May 27, 2000, between Pollution Research and Control Corp. and Clare F. Rose. 4.41 Warrant to Purchase 100,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Astor Capital, Inc.; Warrant Agreement dated as of June 6, 2000, between Pollution Research and Control Corp. and Astor Capital, Inc. 4.42 Option to Purchase 15,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Delta Capital Partners; Option Agreement, dated as of June 7, 2000, between Pollution Research and Control Corp. and Delta Capital Partners. 4.43 Option to Purchase 8,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Sean Rose; Option Agreement, dated as of June 17, 2000, between Pollution Research and Control Corp. and Sean Rose. 4.44 Option to Purchase 8,000 Shares of Common Stock of Pollution Research and Control Corp. issued to Sean Rose; Option Agreement, dated as of June 24, 2000, between Pollution Research and Control Corp. and Sean Rose. 4.45 Warrant to Purchase 250,000 Shares of Common Stock of Pollution Research and Control Corp. from October 20, 2000 Void after 5:00 P.M., Los Angeles Time, on October 20, 2003, issued to East West Network Group Co. 4.46 Investor Relations Agreement Made by and between Pollution Research and Control Corp. and East West Network Group dated October 20, 2000. 4.47* Stock Purchase Warrant to Purchase 60,000 Shares of Common Stock of Pollution Research and Control Corp., issued to IIG Equities Opportunities Fund Ltd. 4.48* Option to Purchase 100,000 Shares of Common Stock of Pollution Research and Control Corp. from December 22, 2000 Void after 5:00 P.M., Los Angeles Time, on December 21, 2003, issued to Steven Sion. 4.49* Consulting Agreement dated January 4, 2001, between Pollution Research and Control Corp. and Silverline Partners, Inc. 4.50* $500,000 Face Amoount 12% Subordinated Convertible Debenture due February 22, 2001, granted to Brittanica Associates Limited. 5.0* Opinion and Consent of Cudd & Associates. 23.1* Consent of Cudd & Associates (included in Exhibit 5.0 hereto). 23.2* Consent of A.J. Robbins, P.C., Certified Public Accountants and Consultants, independent auditors. - ------------------ *Filed herewith. 37 EX-4.47 2 0002.txt STOCK PURCHASE WARRANT Exhibit 4.47 NEITHER THIS WARRANT NOR THE SHARES ISSUABLE UPON EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR ANY OTHER APPLICABLE SECURITIES LAWS IN RELIANCE UPON AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH OTHER SECURITIES LAWS. NEITHER THIS WARRANT NOR THE SHARES ISSUABLE UPON EXERCISE HEREOF MAY BE SOLD, PLEDGED, TRASFERRED, ENCUMBERED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR IN A TRANSACTION THAT IS EXEMPT FROM REGISTRATION UNDER THE PROVISIONS OF THE SECURITIES ACT. STOCK PURCHASE WARRANT No. W-1 To Purchase 60,000 Shares of Common Stock of Pollution Research and Control Corp. THIS CERTIFIES that, for value received, IIG Equities Opportunities Fund Ltd. (the "Holder") is entitled, upon the terms and subject to the conditions hereinafter set forth, at any time prior to the close of business on July 17, 2005 (the "Termination Date"), but not thereafter, to subscribe for and purchase from Pollution Research and Control Corp., a corporation incorporated in California (the "Company"), up to Sixty Thousand (60,000) shares (the "Warrant Shares"), of the common stock, no par value, of the Company (the "Common Stock"). The purchase price of one share of Common Stock (the "Exercise Price") under this Warrant shall be $2.2875. The Exercise Price and the number of shares for which the Warrant is exercisable shall be subject to adjustment as provided herein. Capitalized terms used and not otherwise defined herein shall have the meanings set forth for such terms in the Securities Purchase Agreement dated as of July 18, 2000 between the Company and the Holder. In the event of any conflict between the terms of this Warrant and the Securities Purchase Agreement, the Securities Purchase Agreement shall control. 1. Title to Warrant. Prior to and subject to compliance with applicable laws, this Warrant and all rights hereunder are transferable, in whole or in part, at the office or agency of the Company by the Holder hereof in person or by duly authorized attorney, upon surrender of this Warrant together with the Assignment Form annexed hereto properly endorsed. 2. Authorization of Shares. The Company covenants that all shares of Common Stock that may be issued upon the exercise of rights represented by this Warrant will, upon exercise of the rights represented by this Warrant, be duly 1 authorized, validly issued, fully-paid and nonassessable and free from all taxes, liens and charges in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue). 3. Exercise of Warrant. Except as provided in Sections 3(b) of Section 4 herein, exercise of the purchase rights represented by this Warrant may be made at any time or times on or before the close of business on the Termination Date by the surrender of this Warrant and the Notice of Exercise form annexed hereto duly executed, at the office of the Company (or such other office or agency of the Company as it may designate by notice in writing to the registered Holder hereof at the address of such Holder appearing on the books of the Company), and upon payment of the Exercise Price of the Warrant Shares thereby purchased by wire transfer or cashier's check drawn on a United States bank. The Holder of this Warrant shall be entitled to receive a certificate for the number of shares of the Common Stock so purchased. This Warrant may also be exercised in whole or in part by means of a "cashless exercise" by means of tendering this Warrant to the Company to receive the number of shares of Common Stock equal in total Market Value (as hereinafter defined) to the difference between the total Market Value of the shares of Common Stock issuable upon such exercise of this Warrant and the total cash Exercise Price of that part of the Warrant being exercised. "Market Value" for this purpose shall be the price for the last trade of the Common Stock as reported by Bloomberg L.P. on the Trading Day of such cashless exercise. Certificates for shares purchased hereunder shall be delivered to the Holder hereof within three (3) Trading Days after the date on which this Warrant shall have been exercised as aforesaid. This Warrant shall be deemed to have been exercised and such certificate or certificates shall be deemed to have been issued, and Holder or any other person so designated to be named therein shall be deemed to have become a holder of record of such shares for all purposes, as of the date the Warrant has been exercised by payment to the Company of the Exercise Price and all taxes required to be paid by Holder, if any, pursuant to Section 5 prior to the issuance of such shares, have been paid. If this Warrant shall have been exercised in part, the Company shall, at the time of delivery of the certificate or certificates representing Warrant Shares, deliver to Holder a new Warrant evidencing the rights of Holder to purchase the unpurchased shares of Common Stock called for by this Warrant; which new Warrant shall in all other respect be identical with this Warrant. The Holder is granted all of the rights to registration with the Securities and Exchange Commission and qualification in the states of the Warrants Shares set forth in the Securities Purchase Agreement. 4. No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of the Warrant. As to any fraction of a share that Holder would otherwise be entitled to 2 purchase upon such exercise, the Company shall pay a cash adjustment in respect of such fraction of the Exercise Price based upon the Market Value on the date of exercise. 5. Charges, Taxes and Expenses. Issuance of certificates for shares of Common Stock upon the exercise of this Warrant shall be made without charge to the Holder hereof for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued in the name of the Holder of this Warrant or in such name or names as may be directed by the Holder of this Warrant; provided, however, that in the event certificates for shares of Common Stock are to be issued in a name other than the name of the Holder of this Warrant, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder hereof; and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto. 6. Closing of books.The Company will not close its shareholder books or records in any manner that prevents the timely exercise of this Warrant. 7. Transfer, Division and Combination. (a) Subject to compliance with any applicable securities laws, transfer of this Warrant and all rights hereunder, in whole or in part, shall be registered on the books of the Company to be maintained for such purpose, upon surrender of this Warrant at the principal office of the Company, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by Holder or its agent or attorney, and payment of funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. A Warrant, if properly assigned, may be exercised by a new Holder for the purchase of shares of Common Stock without having a new Warrant issued. (b) This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by Holder or its agent or attorney. Subject to compliance with Section 7(a), as to any transfer that may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice. (c) The Company shall prepare, issue and deliver at its own expense (other than transfer taxes) the new Warrant or Warrants under this Section 7. (d) The Company agrees to maintain, at its aforesaid office, books for the registration and the registration of transfer of the Warrants. 3 8. No Rights as Shareholders until Exercise. This Warrant does not entitle the Holder hereof to any voting rights or other rights as a shareholder of the Company prior to the exercise hereof. Upon the surrender of this Warrant and the payment of the aggregate Exercise Price, the Warrant Shares so purchased shall be and be deemed to be issued to such Holder as the record owner of such shares as of the close of business on the later of the date of such surrender or payment. 9. Loss, Theft, Destruction or Mutilation or Warrant. The Company Covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant certificate or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate. 10. Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall be a Saturday, Sunday or a legal holiday, then such action may be taken or such right may be exercised on the next succeeding day not a Saturday, Sunday or legal holiday. 11. Adjustments of Exercise Price and Number of Warrant Shares. (a) Stock Splits, etc. The number and kind of securities purchasable upon the exercise of this Warrant and the Exercise Price shall be subject to adjustment from time to time upon the happening of any of the following. In case the Company shall (i) pay a dividend in shares of Common Stock or make a distribution in shares of Common Stock to holders of its outstanding Common Stock, (ii) subdivide its outstanding shares of Common Stock into a greater number of shares of Common Stock, (iii) combine its outstanding shares of Common Stock into a smaller number of shares of Common Stock or (iv) issue any shares of its capital stock in a reclassification of the Common Stock, then the number of Warrant Shares purchasable upon exercise of this Warrant immediately prior thereto shall be adjusted so that the Holder of this Warrant shall be entitled to receive the kind and number of Warrant Shares or other securities of the Company which he would have owned or have been entitled to receive had such Warrant been exercised in advance thereof. Upon each such adjustment of the kind and number of Warrant Shares or other securities of the Company which are purchasable hereunder, the Holder of this Warrant shall thereafter be entitled to purchase the number of Warrant Shares or other securities resulting from such adjustment at an Exercise Price per Warrant Share or other security obtained by multiplying the Exercise Price in effect immediately prior to such adjustment by the number of Warrant Shares purchasable pursuant hereto immediately prior to such adjustment and dividing by the number of Warrant Shares or other securities of the Company resulting from such adjustment. An adjustment made pursuant to this paragraph shall become effective immediately after the effective date of such event retroactive to the record date, if any, for such event. 4 (b) Reorganization, Reclassification, Merger, Consolidation or Disposition of Assets. In case the Company shall reorganize its capital, reclassify its capital stock, consolidate or merge with or into another corporation (where the Company is not the surviving corporation or where there is a change in or distribution with respect to the Common Stock of the Company), or sell, transfer or otherwise dispose of all or substantially all is property, assets or business to another corporation and, pursuant to the terms of such reorganization, reclassification, merger, consolidation or disposition of assets, shares of common stock or the successor or acquiring corporation, or any cash, shares of stock or other securities or property of any nature whatsoever (including warrants or other subscription or purchase rights) in addition to or in lieu of common stock of the successor or acquiring corporation ("Other Property"), are to be received by or distributed to the holders of Common Stock of the Company, then Holder shall have the right thereafter to receive, upon exercise of this Warrant, the number of shares of common stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and Other Property receivable upon or as a result of such reorganization, reclassification, merger, consolidation or disposition of assets by a holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such event. In case of any such reorganization, reclassification, merger, consolidation or disposition of assets, the successor or acquiring corporation (if other than the Company) shall expressly assume the due and punctual observance and performance of each and every covenant and condition of this Warrant to be performed and observed by the Company and all the obligations and liabilities hereunder, subject to such modifications as may be deemed appropriate (as determined in good faith by resolution of the Board of Directors of the Company) in order to provide for adjustments of shares of Common Stock for which this Warrant is exercisable which shall be as nearly equivalent as practicable to the adjustments provided for in this Section 11. For purposes of this Section 11, "common stock of the successor or acquiring corporation" shall include stock of such corporation of any class which is not preferred as to dividends or assets over any other class of stock of such corporation and which is not subject to redemption and shall also include any evidences of indebtedness, shares of stock or other securities which are convertible into or exchangeable for any such stock, either immediately or upon the arrival of a specified date or the happening of a specified event and any warrants or other rights to subscribe for or purchase any such stock. The foregoing provisions of this Section 11 shall similarly apply to successive reorganizations, reclassifications, mergers, consolidations or dispositions of assets. 12. Voluntary Adjustment by the Company. The Company may at any time during the term of this Warrant, reduce the then current Exercise Price to any amount and for any period of time deemed appropriate by the Board of Directors of the Company. 13. Notice of Adjustment. Whenever the number of Warrant Shares or number or kind of securities or other property purchasable upon the exercise of this Warrant or the Exercise Price is adjusted, as herein provided, the Company shall promptly mail by registered or certified mail, return receipt requested, to the Holder of this Warrant notice of such adjustment or adjustments setting forth the number of Warrant Shares (and other securities or property) purchasable upon 5 the exercise of this Warrant and the Exercise Price of such Warrant Shares (and other securities or property) after such adjustment, setting forth a brief statement of the facts requiring such adjustment and setting forth the computation by which such adjustment was made. Such notice, in the absence of manifest error, shall be conclusive evidence of the correctness of such adjustment. 14. Notice of Corporate Action. If any time: (i) the Company shall take a record of the holders of its Common Stock for the purpose of entitling them to receive a dividend or other distribution, or any right to subscribe for or purchase any evidences of its indebtedness, any shares of stock of any class of any other securities or property, or to receive any other right, or (ii) there shall be any capital reorganization of the Company, any reclassification or recapitalization of the capital stock of the Company or any consolidation or merger of the Company with, or any sale, transfer or other disposition of all or substantially all the property, assets or business of the Company to, another corporation or, (iii) there shall be a voluntary or involuntary dissolution, liquidation or winding up of the Company; then, in any one or more of such cases, the Company shall give to Holder (i) at least 30 days' prior written notice of the date on which a record date shall be selected for such dividend, distribution or right or for determining rights to vote in respect of any such reorganization, reclassification, merger, consolidation, sale, transfer, disposition, liquidation or winding up, and (ii) in the case of any such reorganization, reclassification, merger, consolidation, sale, transfer, disposition, dissolution, liquidation or winding up, at least 30 days' prior written notice of the date when the same shall take place. Such notice in accordance with the foregoing clause also shall specify (i) the date on which any such record is to be taken for the purpose of such dividend, distribution or right, the date on which the holders of Common Stock shall be entitled to any such dividend, distribution or right, and the amount and character thereof, and (ii) the date on which any such reorganization, reclassification, merger, consolidation, sale, transfer, disposition, dissolution, liquidation or winding up is to take place and the time, if any such time is to be fixed, as of which the holders of Common Stock shall be entitled to exchange their shares of Common Stock for securities or other property deliverable upon such disposition, dissolution, liquidation or winding up. Each such written notice shall be sufficiently given if the addressed to Holder at the last address of Holder appearing on the books of the Company and delivered in accordance with Section 16(d). 6 15. Authorized Shares. (a) Then Company covenants that during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for the Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Principal Market upon which the Common Stock may be listed. (b) The Company shall not by any action, including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder against impairment. Without limiting the generality of the foregoing, the Company will (i) not increase the par value of any shares of Common Stock receivable upon the exercise of this Warrant above the amount payable therefore upon such exercise immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable shares of Common Stock upon the exercise of this Warrant, and (iii) use its best efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof as may be necessary to enable the Company to perform its obligations under this Warrant. (c) Upon request of Holder, the Company will at any time during the period this Warrant is outstanding acknowledge in writing, in form reasonably satisfactory to Holder, the continuing validity of this Warrant and the obligations of the Company hereunder. (d) Before taking any action pursuant to Section 11 or 12 that would cause an adjustment reducing the current Exercise Price below the then par value, if any, of the shares of Common Stock issuable upon exercise of the Warrants, the Company shall take any corporate action that may be necessary in order that the Company may validly and legally issue fully-paid and nonassessable shares of the Common Stock at such adjusted Exercise Price. (e) Before taking any action that would result in an adjustment in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof. 7 16. Miscellaneous. (a) Jurisdiction. This Warrant shall be binding upon any successors or assigns of the Company. This Warrant shall constitute a contract under the laws of New York without regard to its conflict of law principles or rules, and be subject to arbitration pursuant to the terms set forth in the Securities Purchase Agreement. (b) Restrictions. The Holder hereof acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, will have restrictions upon resale imposed by the state and Federal securities laws. (c) Nonwaiver and Expenses. No course of dealing in any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice Holder's rights, powers or remedies; notwithstanding which all rights hereunder terminate on the Termination Date. If the Company fails to comply with any provision of this Warrant, the Company shall pay to Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys' fees, including those of appellate proceedings, incurred by Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder. (d) Notices. Any notice, request or other document required or permitted to be given or delivered to the Holder hereof by the Company shall be delivered in accordance with the notice of provisions of the Securities Purchase Agreement. (e) Limitation of Liability. No provision hereof, in the absence of affirmative action by Holder to purchase shares of Common Stock, and no enumeration herein of the rights or privileges of Holder hereof, shall give rise to any liability of Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company. (f) Remedies. Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive the defense in any action for specific performance that a remedy at law would be adequate. (g) Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors of the Company and the successors and permitted assigns of Holder. The provisions of this Warrant are intended to be for the benefit of all Holders from time to time of this Warrant and shall be enforceable by any such Holder or holder of Warrant Shares. 8 (h) Indemnification. The Company agrees to indemnify and hold harmless Holder from and against any liabilities, obligations, losses, damages, penalties, actions, judgments, suits, claims, costs, attorneys' fees, expenses and disbursements of any kind that may be imposed upon, incurred by or asserted against Holder in any manner relating to or arising out of any failure by the Company to perform or observe in any material respect any of its covenants, agreements, undertakings or obligations set forth in this Warrant; provided, however, that the Company will not be liable hereunder to the extent that any liabilities, obligations, losses, damages, penalties, actions, judgments, suits, claims, costs, attorneys' fees, expenses or disbursements are found in a final non-appealable judgment by a court to have resulted from Holder's negligence, bad faith or willful misconduct in its capacity as a stockholder or warrant holder of the Company. (i) Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder. (j) Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be infective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant. (k) Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant. IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized. Dated: July 18, 2000 POLLUTION RESEARCH AND CONTROL CORP. By: /s/ Albert E. Gosselin, Jr. -------------------------------------- Name: Albert E. Gosselin, Jr. Title: President 9 NOTICE OF EXERCISE To: Pollution Research and Control Corp. (1) The undersigned hereby elects to purchase ______________ shares of Common Stock (the "Common Stock") of e Room Systems Technologies, Inc., pursuant to the terms of the attached Warrant, and [ ] tenders herewith payment of the exercise price in full OR [ ] tenders the Warrant for cashless exercise, together with all applicable transfer taxes, if any. (2) Calculation of cashless exercise value, if applicable: ___________ . (3) Please issue a certificate or certificates representing said shares of Common Stock in the name of the undersigned or in such other name as is specified below: -------------------------------- (Name) -------------------------------- (Address) -------------------------------- Dated: -------------------------------- Signature 10 ASSIGNMENT FORM (To assign the foregoing Warrant, execute this form and supply required information. Do no use this form to exercise the Warrant.) FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to _______________________________________________________________ whose address is - -----------------------------------------------------------. - -------------------------------------------------------------------------------- Dated: ____________, ________ Holder's Signature: ____________________________ Holder's Address: ____________________________ ____________________________ Signature Guaranteed: ___________________________________________________ NOTE: This signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alternation or enlargement or any change whatsoever, and must be guaranteed by a bank or trust company. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant. EX-4.48 3 0003.txt OPTION TO PURCHASE SHARES Exhibit 4.48 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 100,000 SHARES OF COMMON STOCK OF POLLUTION RESEARCH AND CONTROL CORP. FROM DECEMBER 22, 2000 VOID AFTER 5:00 P.M., LOS ANGELES TIME, ON DECEMBER 21, 2003 This certifies that Steven Sion, 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 Eighty Seven and One-Half Cents ($.875) per share ("Purchase Price"). This Option is exercisable at any time to and including 5:00 p.m., Los Angeles time, on December 21, 2003. Registered Owner: Steven Sion Purchase Price: $.875 OPTION AGREEMENT This Option Agreement (the "Agreement") is made and entered into effective as of December 22, 2000, by and between Pollution Research and Control Corp., a California corporation ("PRCC") and Steven Sion ("Optionee"). WHEREAS, Optionee has been providing valuable services as recognized by the Company's Board of Directors to PRCC and PRCC is desirous of having Optionee continue to provide such services to it; and WHEREAS, PRCC is willing to grant Optionee an option to purchase up to an aggregate of 100,000 shares of the no par value common stock of PRCC (the "Common Stock") under the terms and conditions set forth below. NOW, THEREFORE, the parties agree as follows: 1. Grant of Option. PRCC hereby grants to Optionee, as a matter of separate agreement and not in lieu of other compensation for services, the right and option (the "Option") to purchase on the terms and conditions set forth in this Agreement all or any part of up to an aggregate of 100,000 shares of Common Stock (the "Option Shares"). 2. Option Price. At any time when shares of Common Stock are to be purchased pursuant to the Option, the purchase price for each Option share shall be Eighty-Seven and One-Half Cents ($.875) ("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 December 22, 2000 (the "Date of Grant") and shall terminate December 21, 2003. 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 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 her 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 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 nonassessable 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: Steven Sion 9913 Robin Oaks Drive Las Vegas, Nevada 89117 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. PRCC: POLLUTION RESEARCH AND CONTROL CORP., a California corporation By: /s/ Albert E. Gosselin ------------------------------------- Albert E. Gosselin, Jr., President and Chief Executive Officer OPTIONEE: By: /s/ Steven Sion ------------------------------------- Steven Sion 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 EX-4.49 4 0004.txt CONSULTING AGREEMENT Exhibit 4.49 CONSULTING AGREEMENT This Consulting Agreement (the "Agreement") is entered into on January 4, 2001, by and between Pollution Research and Control Corp., 506 Paula Avenue, Glendale, California 91201 (the "Company"), and Silverline Partners, Ltd., 27 Wellington Road, Cork, Ireland (the "Consultant"). WHEREAS, the Company desires to explore and obtain business opportunities in the countries of the United Kingdom, France, Germany, Italy and Spain for purposes, among others, locating strategic partners having industrial companies capable of assisting in the distribution of products as well as forming alliances with technology companies having the capacity to improve upon the Company's existing product line. WHEREAS, the Company recognizes that the Consultant can contribute to the expansion, management and development of the Company in the manner described above. WHEREAS, the Company believes it to be important, both to the future prosperity of the business and to the Company's general interest, to retain Consultant as a consultant to the Company and have Consultant available to the Company for consulting services in the manner and subject to the terms, covenants and conditions set forth herein. WHEREAS, in order to accomplish the foregoing, the Company and Consultant desire to enter into this Agreement to provide certain assurances as set forth herein. NOW, THEREFORE, in view of the foregoing and in consideration of the premises and mutual representations, warranties, covenants, and promises contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound hereby, agree as follows: 1. Retention. The Company hereby retains the Consultant during the Consulting Period (as defined in Section 2 below), and Consultant hereby agrees to be so retained by the Company, all subject to the terms and provisions of this Agreement. 2. Consulting Period. The Consulting Period shall commence on January 4, 2001, and terminate no earlier than January 3, 2002. 3. Duties of Consultant. During the Consulting Period, the Consultant shall use reasonable and best efforts to perform those actions and responsibilities necessary to assist the Company in exploring and obtaining business opportunities in the countries of the United Kingdom, France, Germany, Italy and Spain (the "Services"). For purposes of this Section 3, such business opportunities shall include, but not be limited to, locating strategic partners having industrial companies capable of assisting in the distribution of products as well as forming alliances with technology companies having the capacity to improve upon the Company's existing product line. Consultant shall render such services diligently and to the best of its ability. Consultant shall report to the President of the Company. Consultant shall present various opportunities to the Company; however, the Company shall be under no obligation to accept such opportunities. 4. Other Activities of Consultant. The Company recognizes that Consultant shall perform only those services that are reasonably required to accomplish the goals and objectives set forth herein. The Consultant shall provide services to other businesses and entities other than the Company. Consultant shall be free to, directly or indirectly, own, manage, operate, control, finance, acquire, or invest or participate in (collectively, be "Affiliated" with) any business or enterprise engaged in any business, including, but not limited to, any business that is the same as, substantially similar to, or otherwise competitive with, adverse or otherwise, related to the Company. Consultant may be Affiliated with any entity that may provide services to the Company. In the event Consultant is Affiliated with any entity that proposes to deal with the Company, Consultant shall disclose the nature of such relationship to the Company prior to the Company making any decision, and shall obtain the approval of the Company, which approval shall be conclusively deemed granted upon written notice from the President of the Company, or his, or the Company's, designated representative. The Company hereby waives any conflict of interest that may arise from a relationship between Consultant and any entity with which Consultant is Affiliated. 5. Compensation. In consideration for Consultant entering into this Agreement, the Company shall compensate Consultant as follows: a. Fees and Benefits. i. Expenses. The Company shall pay all such expenses reasonably incurred during the Consulting Period by the Consultant for business purposes related to, or in the furtherance of, the goals and objectives of the Company and/or the provision of the Services (collectively, "Company Purposes"), including expenses reasonably incurred with respect to the Consultant's travel (including Business Class travel for flights of less than three hours and First Class for flights of three hours or more), meals, entertainment, and other customary and reasonable expenses for Company Purposes. The Company shall pay such expenses directly, or upon submission of bills, receipts, and/or vouchers by the Consultant, by direct reimbursement to the Consultant. All expenses shall be pre-approved by the Company prior to their occurrence or such non-approved expenses shall not be required to be paid by the Company to the Consultant. ii. Due Diligence Fee. The Company shall transfer, or cause to be transferred, 700,000 shares (the "Shares") of the Company's common stock, no par value per share, to the Consultant as a due diligence fee for services previously rendered in the discovery process by the Consultant prior to entering into this Agreement. This fee is non-refundable for services rendered by Consultant to the Company in preparation of this Agreement and the Services to be provided herein. Said Shares shall be issued pursuant to a registration statement on Form S-3. If such Form S-3 registration -2- statement is unavailable, then said Shares shall be restricted and subject to Rule 144 of the General Rules and Regulations promulgated under the Securities Act of 1933, as amended (the "Act"). In that event, the Company shall be obligated to prepare and file a registration statement (the "Registration Statement"), and amendments thereto, with the Securities and Exchange Commission (the "Commission) for the registration of the Shares under the Act and shall be obligated to cause such Registration Statement, and amendments thereto, to be declared effective by the Commission as soon as practicable. The Company shall be obligated to the Consultant to continually maintain, at the Company's own expense, the currency and effectiveness of such Registration Statement of the Company, including the filing of any and all applications and other notifications, filings and post-effective amendments and supplements as may be necessary so as to permit the resale of the Shares that are freely-tradable pursuant to a registration statement filed on Form S-3 or otherwise. 6. Termination. a. Subject to the cure provisions contained herein, the Company may terminate the Consulting Period upon written notice. Termination shall not occur for a period of one year except for cause. Cause shall be defined as the Consultant failing to perform the duties outlined in the Agreement in good faith and failing to properly service the Company's needs as reasonably expected under the implied "good faith" provisions herein. Thirty days' written notice (the "Notice of Intended Termination") shall be given to the Consultant with the opportunity to cure within 30 days. Such Notice of Intended Termination shall state specifically the facts and circumstances claimed as the basis for said termination of the Consulting Agreement. Such notice must be approved by a majority of the Board of Directors of the Company. b. Not less than 15 days after receipt of the Notice of Intended Termination, Consultant shall have the opportunity for a full, complete, and fair hearing in the presence of the majority of the Board of Directors (the "Board"). The Board shall present to Consultant its reasons for the termination, including the specific actions, inactions, omissions, or other facts relied upon by the Board in making its determination. Consultant shall have the right to rebut any evidence or allegations of wrongdoing and shall have the right to be represented by counsel of Consultant's choice at such hearing. After such hearing, should the Board determine that this Agreement shall be terminated for Cause, it shall issue a written final notice of termination (the "Final Notice of Termination") to Consultant, approved by a majority of the Board of Directors, setting forth in detail the specific facts, conclusions, and findings of the Board in determining that cause exists for their termination of this Agreement. The Final Notice of Termination shall be effective 30 days from the original Notice of Intended Termination unless otherwise ordered by a majority of the Board of Directors of the Company. -3- 7. Notice. Any notice required, permitted or desired to be given, pursuant to any of the provisions of this Agreement, shall be deemed to have been sufficiently given or served for all purposes if delivered in person or sent via certified mail, return receipt requested, postage and fees prepaid, or by national overnight delivery prepaid service to the parties at their addresses set forth below. Any party hereto may, at any time and from time to time hereafter, change the address to which notice shall be sent hereunder by notice to the other party given under this paragraph. The date of the giving of any notice sent via mail, shall be the day two days after the posting of the mail, except that notice of an address change shall be deemed given when received. The addresses of the parties are as follows: TO THE COMPANY: TO THE CONSULTANT: POLLUTION RESEARCH AND CONTROL SILVERLINE PARTNERS, LTD. 506 Paula Avenue 27 Wellington Road Glendale, California 91201 Cork, Ireland 8. Waiver. No course of dealing, nor any delay on the part of either party in exercising any rights hereunder, will operate as a waiver of any rights of such party. No waiver of any default or breach of this Agreement or application of any term, covenant or provision hereof, shall be deemed a continuing waiver, or a waiver of any other breach or default or the waiver of any other application of any term, covenant or provision. 9. Successors; Binding Agreements. Prior to the effectiveness of any succession (whether direct or indirect, by purchase, merger, consolidation, or otherwise) to all, or substantially all, of the business and/or assets of the Company, the Company will require the successor to expressly assume and agree to perform this Agreement in the same manner, and to the same extent, that the Company would be required to perform it if no such succession had occurred. As used in this Agreement, "Company" shall mean the Company as defined above and any successor to its business and/or assets that executes and delivers the Agreement provided for in this Section 10, or that otherwise becomes bound by all the terms and provisions of this Agreement by operation of law. This Agreement is not transferable by Consultant, since it requires the specific services of Consultant, without the prior written approval of the Board of Directors and the President of the Company. 10. Survival of Terms. Notwithstanding the termination of this Agreement for whatever reason, the provisions hereof shall survive such termination, unless the context requires otherwise. 11. Counterparts. This Agreement may be executed in two counterparts, each of which, shall be deemed to be an original, but both of which together, shall constitute one and the same instrument. Any signature by facsimile, shall be valid and binding, as if an original signature were delivered. 12. Captions. The caption headings in this Agreement are for convenience of reference only, and are not intended, and shall not be construed, as having any substantive effect. -4- 13. Governing Law. This Agreement shall be governed, interpreted, and construed in accordance with the laws of the State of California applicable to agreements entered into and to be performed entirely therein. Any suit, action, or proceeding with respect to this Agreement, shall be brought exclusively in the state courts of the State of California, or in the federal courts of the United States, which are located in Los Angeles, California. The parties hereto, hereby agree to submit to the jurisdiction and venue of such courts for the purposes hereof. Each party agrees that, to the extent permitted by law, the losing party in a suit, action, or proceeding in connection herewith, shall pay the prevailing party its or his reasonable attorney's fees incurred in connection therewith. 14. Entire Agreement/Modifications. This Agreement constitutes the entire agreement between the parties and supersedes all prior understandings and agreements, whether oral or written, regarding Consultant's retention by the Company. This Agreement shall not be altered or modified, except in writing, duly executed by the parties hereto. 15. Warranty. The Company and Consultant each hereby warrant and agree that each is free to enter into this Agreement, that the parties signing below are duly authorized and directed to execute this Agreement, and that this Agreement is valid, binding, and enforceable against the parties hereto. The parties further agree that they shall both use good faith efforts in their performance of the covenants, conditions and obligations stated herein and any failure to do so shall be a material breach of this Agreement. 16. Severability. If any term, covenant, or provision, or any part thereof, is found by any court of competent jurisdiction to be invalid, illegal, or unenforceable in any respect, the same shall not affect the remainder of such term, covenant, provision, any other terms, covenants or provisions, or any subsequent application of such term, covenant, or provision, or portion thereof. In lieu of any such invalid, illegal, or unenforceable provision, the parties hereto intend that there shall be added, as part of this Agreement, a term, covenant, or provision, as similar in terms to such invalid, illegal, or unenforceable term, covenant, or provision, or part thereof, as may be possible, and such similar term, covenant, or provision shall be valid, legal, and enforceable. IN WITNESS HEREOF, the parties hereto have duly executed and delivered this Agreement as of the day and year first written above. POLLUTION RESEARCH AND CONTROL SILVERLINE PARTNERS, LTD. By: /s/ Albert E. Gosselin, Jr. By: /s/ Parratt for Iona Limited, ------------------------------- Director of Silverline Albert E. Gosselin, Jr., Partners, Ltd. President -------------------------------- (Authorized Officer) -5- EX-4.50 5 0005.txt 12% SUBORDINATED CONVERTIBLE DEBENTURE Exhibit 4.50 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 SECRITIES ARE REGISTERED UNDER THE ACT AND APPLICABLE STATE SECRUTIES LAWS OR ARE PERMITTED UNDER THE ACT PURSUANT TO AN AVAILABLE EXEMPTION FROM THE RESITRATION 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% Subordinate Convertible Debenture Due June 1, 2000 (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 $.01 par value per share of the Company ("Common Stock"), or in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts, at the address last appearing on the Debenture Register of the Company as designated in writing by the Holder from time to time. The Company will pay the outstanding principal due upon this Debenture before or on the Maturity Date, less any amounts required by law to be deducted or withheld, to the Holder of this Debenture by check if paid more than ten days prior to the Maturity Date or by wire transfer and addressed to such Holder at the last address appearing on the Debenture Register. The forwarding of such check or wire transfer shall constitute a payment of outstanding principal hereunder and shall satisfy and discharge the liability for principal on this Debenture to the extent of the sum represented by such check or wire transfer 1 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 therof. 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 U.S. $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 attached hereto as Exhibit A, executed by the Holder of the Debenture evidencing such Holder's intention to convert this Debenture or a specified portion (as above provided) hereof, and accompanied, if required by the Company, by proper assignment hereof in blank. Interest accrued or accruing from the date of issuance to the date of conversion shall, at the option of the Holder, be paid in cash or Common Stock upon conversion at the Conversion Rate. No fraction of 2 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 ad primarily liable for the payment of all sums owing and to be owing hereto. 7. The Company agrees to pay all costs and expenses, including reasonable attorneys fees, which may be incurred by the Holder in collecting any amount due under this Debenture. 8. The following shall constitute an "Event of Default": (a) The Company shall default in the payment of principal or interest on this Debenture and such default shall remain unremedied for five (5) business days after the Company has been notified of the default in writing by a Holder, or (b) Any of the representations or warranties made by the Company herein, and in the Registration Rights Agreement or in any certificate or financial or other written statements furnished by or on behalf of the Company in connection with the execution and delivery of this Debenture and the Registration Rights Agreement shall be false or misleading in any material respect at the time made; or (c) The Company fails to issue shares of Common Stock to the Holder or to cause its Transfer Agent to issue shares of Common Stock 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 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. 3 (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 its 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 of business without its consent and shall not be discharged within thirty (30) days after such appointment; or (g) Any governmental agency or any court of competent jurisdiction at the instance of any governmental agency shall assume custody or control of the whole or any substantial portion of the properties or assets of the Company and shall not be dismissed within thirty (30) days therafter; or (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 4 (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 or Default shall have been waived in writing by the Holder (which waiver shall not be deemed to be a waiver of any subsequent default) at the option of the Holder and in the Holder's sole discretion, the Holder may consider this Debenture immediately due and payable, without presentment, demand, protest or (further) notice of any kind (other than notice of acceleration), all of which are hereby expressly waived, anything herein or in any note or other instruments contained to the contrary notwithstanding, and the Holder may immediately, and without expiration of any period of grace, enforce any and all of the Holder's rights and remedies provided herein and any other rights or remedies afforded by law. 9. The Holder of the Debenture, by acceptance hereof, agrees that this Debenture is being acquired for investment and that such Holder will not offer, sell or otherwise dispose of this Debenture or the shares of Common Stock issuable upon conversion thereof except under circumstances which will not result in a violation of the Act or any applicable state Blue Sky or foreign laws or similar laws relating to the sale of securities. 10. Nothing contained in this Debenture shall be construed as conferring upon the Holder the right to vote or to receive dividends or to consent or receive notice as a shareholder in respect of any meeting of shareholders or any rights whatsoever as a shareholder of the Company, unless and to the extent converted in accordance with the terms hereof. 11. This Debenture represents a prioritized obligation of the Company. However, no recourse shall be had for the payment of the principal of, or the interest on, this Debenture, or for any claim based hereon, or otherwise in respect hereof, against any incorporator, shareholder, officer or director, as such, past, present or future, of the Company or any successor corporation, whether by virtue or any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or 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 consolidated with another corporation or sells or transfers all or substantially all of its assets to another person and the 5 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 or the then outstanding principal amount of the Debentures then held by the Holder for an amount (the "Redemption Payment") equal to the sum of (a) such outstanding principal of the Debentures plus all accrued but unpaid interest thereon through the date the Redemption Amount is paid to the Holder (the "Redemption Payment Date"), multiplied by (b)1.25. The Company shall give at least ten (10) business days' written notice of such redemption to the Holder (the "Notice of Redemption"). B. Anything in the preceding provisions of this Section 14 to the contrary notwithstanding, the Redemption Payment shall, unless otherwise agreed to in writing by the Holder after receiving the Notice of Redemption, be paid to the Holder at least ten (10) business days from the date of the Notice of Redemption. Upon the Holder's receipt of the Notice of Redemption, the Holder shall have the right, exercisable within ten (10) business days of the Holder's receipt of the Notice of Redemption, to give a Notice of Conversion to the 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. 6 15. In case any provision in 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 -------------------------------- Albert E. Gosselin, President 7 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 EX-5.0 6 0006.txt CONSENT Exhibit 5.0 February 6, 2001 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 ("PRCC"), in connection with the Registration Statement on Form S-3 filed with the U.S. Securities and Exchange Commission under the Securities Act of 1933 on or about the date hereof. The Registration Statement relates to an aggregate of 2,407,370 shares (the "Shares") of PRCC's common stock, including 924,370 shares of common stock underlying the $500,000 face amount 18% Subordinated Convertible Debenture Due December 31, 2001, and the $500,000 face amount 12% Subordinated Convertible Debenture Due February 23, 2001 (together, the "Debentures"), 750,000 shares of common stock being offered by Silverline Partners, Ltd., and Mr. Steven Sion (together, the "Selling Shareholders"), 618,000 shares of common stock underlying nine warrants (collectively, the "Warrants" and, individually, a "Warrant") exercisable to purchase shares of common stock at exercise prices ranging from $1.50 to $5.00 per share on or prior to their various expiration dates commencing on June 1, 2002, through July 17, 2005, and 115,000 shares of common stock underlying two options (collectively, the "Options" and, individually, an "Option") exercisable to purchase shares of common stock at exercise prices of $.875 or $2.25 per share on or prior to their expiration dates on June 6 or December 21, 2003. The holders of the Warrants include Brittanica Associates Limited, IIG Equities Opportunities Fund Ltd., Astor Capital, Inc., and Spiga Limited and the holders of the Options include Mr. Steven Sion and Delta Capital Partners. In connection with this opinion, we have examined PRCC's Articles of Incorporation, as amended; PRCC's By-Laws; minutes of PRCC's corporate proceedings, as made available to us by officers of PRCC; an executed copy of the Registration Statement, and all exhibits to the Registration Statement 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 PRCC. Board of Directors Pollution Research and Control Corp. February 6, 2000 Page 2 On the basis of the foregoing, and solely in reliance thereon, we are of the opinion that the Shares have been duly authorized and, when issued for consideration received by PRCC (i) upon conversion by the holders of the Debentures and payment of the conversion price as provided in the Debentures in accordance with their terms, (ii) from the Selling Shareholders and (iii) upon exercise by the holders of the Warrants and Options and payment of the exercise price as provided in the Warrants and Options in accordance with their terms, the Shares 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 Registration Statement. Very truly yours, CUDD & ASSOCIATES /s/ Patricia Cudd ------------------------------ Patricia Cudd PC:es EX-23.2 7 0007.txt CONSENT Exhibit 23.2 AJ. ROBBINS, P.C. CERTIFIED PUBLIC ACCOUNTANTS AND CONSULTANTS 3033 EAST 1ST AVENUE, SUITE 201 DENVER, COLORADO 80206 CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS We hereby consent to the use in the Prospectus constituting part of this Registration Statement on Form S-3 of Pollution Research and Control Corporation of our report dated February 22, 2000 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. Denver, Colorado February 6, 2001 -----END PRIVACY-ENHANCED MESSAGE-----